MARCH 26, 2020 - high risks and uncertain rewards

Trends - fragmentation and subdivision of

- 2/3 of the world’s poorest are peasant land in Asia
located in rural areas and engaged - overpopulation
primarily in subsistence agriculture - 3 major interrelated forces
(basic concern is survival) that molded traditional
- stagnation and retrogression in pattern of land ownership
economic development in rural into its present fragmented
areas – often the cause of poverty, condition i
growing inequality, rapid population - intervention of
growth & unemployment European rule –
Role of agriculture colonizers
Traditionally – passive and supportive: to (sharecroppers and
provide sufficient low-priced food and tenant farmers )
manpower to expanding industrial economy - progressive
Recently – agricultural sector and rural introduction of
economy play in an important part in any monetized
overall strategy of economic progress; transactions and rise
integrated rural development in power of
- Accelerated output growth – money-lender
technological, institutional and price - rapid growth of Asian
incentive changes populations
- Rising domestic demand for Economics of Agricultural Development
agricultural output 1. Subsistence farming
- Diversified, non-agricultural, - Farming for family consumption
labor-intensive rural development (staple foods)
activities - Low output and productivity
2 Kinds of World Agriculture - Minimal capital investment
- highly efficient agriculture - Land and labor – main factors of
(developed countries) – high production
productivity and output - Labor is unemployed for most of the
- inefficient and low-productivity year
agriculture (developing countries) – - Harsh and static environment
mainly subsistence farming - Highly risky and uncertain
particularly family farm ● Sharecropping and interlocking
Stagnation of LDC agriculture factor markets
Productivity - Occurs when peasant farmer uses
Land productivity – measured as kilograms landowner’s farmland in exchange
of grain harvested per hectare of agricultural for share of food output
land - Leads to inefficiency
Output growth – technological and biological - Screening hypothesis – charge high
improvements effective rents for pure rental
Peasant agriculture
 contracts than sharecropping ● Direct and indirect supports to small
contracts farms in agriculture
- Interlocking factor markets – ● Perception: sector still discriminated
landowner is also employer, loan in public policy?
officer, customer which gives him ● Responses to this discrimination
monopoly power through several decades of RD
2. Transition to mixed and diversified thinking
farming Diversification strategy within
- Output – staple crops, cash livelihoods approach – movement away
crops (fruits vegetables, from ‘agriculture first’ strategy that focused
coffee, tea) and simple on a small farm as main platform for poverty
animal husbandry reduction
- Use of simple labor-saving Agriculture performance vis-à-vis
devices (small tractors, diverse rural livelihoods
mechanical seeders, Three dimensions of this complex
animal-operated steel plows) relationship:
- Use of better technology Dimension 1: ‘Rural growth linkages’ model
(seeds, fertilizers and simple - Refers to the different linkages from
irrigation) agriculture that result in the
- Marketable surplus formation and growth of rural
- Minimize impact of staple non-farm enterprises (RNFE) in rural
crop failure and improve areas.
income security - RNFE - important sub-sector and for
3. Specialized: Modern commercial many years in poverty reduction
farming policy
- Most advanced stage of - Key assumption in argument for
individual holding in a mixed RNFE?
market economy - Focus of policy: diversify sector
- Specialized farming – pure away from agriculture
commercial profit; high Dimension 1 approaches:
productivity - Consumer goods and services -
- Resource utilization expenditure linkages
- Capital formation, - Inputs and services to agricultural
technological progress, production - backward linkages
scientific research and - Processing and marketing services
development related to farm outputs - forward
- Cultivated fruit, vegetable linkages
farms, vast wheat and - Studies on growth multipliers reveal:
cornfields consumption linkages dominate
● ‘Agriculture first’ strategy as the forward and backward linkages in
most dominant approach to explaining total effects
Research and Development Dimension 2: effects on agriculture of
household-level diversification
 - Positive effects on agriculture as
sub-sector benefits from input and
output linkages in rural economy
Dimension 3: Role of on-farm
diversification in contrast to off-farm