Agricultural Transformation and Rural Development It is in

Agricultural Transformation and Rural Development “It is in the agricultural sector that the battle for long-term economic development will be won or lost. ” Gunnar Myrdal 320 RK 1

Agricultural Transformation and Rural Development: Outline n n n n Integrated rural development Growth and stagnation of the agricultural sector since 1950 Characteristics of agrarian systems in Latin America, Asia, and Africa Economics of peasant subsistence agriculture and transition to commercial farming Land reform and land markets Role of women in agriculture Case Study 320 RK 2

Agricultural Transformation and Rural Development: Introduction n n The heavy emphasis in the past on rapid industrialization may have been misplaced Agricultural development is now seen as an important part of any development strategy Although agriculture employs the majority of the LDC labor force, it accounts for a much lower share of total output Trends in per capita food and agricultural production, 1950 -1994 320 RK 3

Agricultural Transformation and Rural Development n n n How can agricultural output and productivity per capita be substantially increased that will benefit the small farmer and support the urban population? What is the process by which traditional farms are transformed into commercial farms? Why do traditional farmers resist change? Are price incentives sufficient to increase output? How can rural development be achieved? 320 RK 4

Agricultural stagnation and Growth Since 1950: Output and employment, 1995 Region % of L force in Agriculture South Asia 64 Agricultural output as a % of GDP 30 East Asia 70 18 Latin America 25 10 Africa 68 20 320 RK 5

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Distribution of Farms and Farmland Avg. Operational farm size hectares % of farmland above 50 hectares % of tenanted area in farmland Asia: Bangladesh India Philippines 1. 6 2. 3 3. 6 Na 3. 7 13. 9 20. 9 8. 5 32. 8 Latin America: Brazil Costa Rica Peru 59. 7 38. 1 16. 9 84. 6 79. 7 79. 1 10. 2 9. 0 13. 6 320 RK 9

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Structure of Agrarian Systems n Two kinds of world agriculture: n Efficient agriculture- high labour and land productivity n Inefficient agriculture- diminishing returns to labour 320 RK 11

Agricultural in Latin America, Asia, and Africa n Peasant agriculture in Latin America, Asia, and Africa n n n Latin America n The Latifundio-Minifundio pattern n Resource underutilization Asia n Fragmentation and subdivision of peasant land in Asia Africa n Extensive cultivation patterns n Shifting cultivation 320 RK 12

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Latifundio-Minifundio pattern n n Latifundios- employment of 12 or more Minifundios- employment of 2 or less Family farms- employment of 4 -12 workers Inefficient operation of latifundios Inequality in land distribution 320 RK 14

Fragmentation and subdivision n High population density and small patches of land Equal distribution of land Traditional pattern of land ownership arose from 3 forces: 1. Colonial rule 2. Power of money lender 3. Rapid population growth 320 RK 15

Subsistence Agriculture and Extensive cultivation n n Importance of subsistence agriculture in the village community Practice of shifting cultivation Right to common property such as land water Historical forces restricting growth of output: n n n Traditional farming practices Intensive and shifting cultivation Scarce labour supply during peak season 320 RK 16

Economics of agricultural development n Three broad stages in the evolution of agricultural production: Primitive stage- subsistence peasant farm Mixed family agriculture- consumption+sale Modern farm- specialized and commercial farming 320 RK 17

Economics of agricultural development: Transition process Diversified or mixed farming Subsistence farming 320 RK Specialized, modern commercial farming 18

Subsistence farming: Risk aversion and uncertainty n Small farmer attitudes toward risk: Exploding the myth of irrational producers 320 RK 19

Subsistence farming: Risk aversion and uncertainty 320 RK 20

Crop yield of different farming techniques 320 RK 21

Incentives under share cropping 320 RK 22

Sharecropping and interlocking factor markets n Sharecropping occurs when a peasant farmer uses the landowner’s farmland in exchange for a share of food output which the peasant farmer grows. n n n Is share cropping inefficient? Marshall’s observations Cheung’s findings Shaban’s study Hayam’s findings Recent approach to share cropping in the event of interlocking factor markets 320 RK 23

Sharecropping and interlocking factor markets n n Interlocking factor markets occur when different inputs are provided by the same suppliers and these suppliers exercise monopolistic or oligopolistic control over resources. Case study of Sharecropping and Constraints on Agrarian Reform: India at http: //wps. aw. com/aw_todarosmit_econdevelp_8/0, 6111, 284582, 00. html 320 RK 24

Land Reform: Is it inevitable for tenant’s welfare Land reform means the redistribution of property or land rights for the benefit of the landless, tenants, and farm laborers. n Agrarian reform embraces improvements in both land tenure and agricultural organization. n Types of land reform intervention: n Land tenure reform n External inducements or market based incentives n External controls n Confirmation of title n 320 RK 25

Land Reform: Is it inevitable for tenant’s welfare Land reform means the redistribution of property or land rights for the benefit of the landless, tenants, and farm laborers. n Agrarian reform embraces improvements in both land tenure and agricultural organization. n Types of land reform intervention: n Land tenure reform n External inducements or market based incentives n External controls n Confirmation of title n 320 RK 26

Land Reform: Inevitable for Tenant’s Welfare Points for discussion: n What is the case for equitable land distribution? n Are big farms more efficient? n Design of a land reform n Should land reform be a permanent, one-shot reform? (revolutionary) n. Should landlords be compensated? (evolutionary) n Alternatives to traditional land reform n Market assisted land reform n Tenancy reform 320 RK 27

Land reforms n Additional material: Land Reforms: Prospects and Strategies by Abhijit V. Banerjee, Massachusetts Institute of Technology at http: //lnweb 18. worldbank. org/ESSD/essdext. nsf/24 Doc. By. Unid/86356 E 62 C 8 A 4329385256 B 9 F 0053 E 7 F 7/$FILE/landreform. pdf You may like to use the points for discussion to go through the paper or rely on your class notes. 320 RK 28

Toward a strategy of agricultural and rural development n n n Improving small-scale agriculture n. Technology and innovation n. Institutional and pricing policies n. Supportive social institutions Conditions for rural development n. Land reform n. Supportive policies n. Integrated development objectives Role of women in agriculture (case study applies to supportive policies and integrated RD as well) n. Microfinance - Hope for the Poor: The Grameen Bank of Bangladesh at Microfinance at http: //wps. aw. com/wps/media/objects/277/284582/todarocasestudies. pdf 320 RK 29