Agricultural Transformation and Rural Development

1. 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 320RK

2. Agricultural Transformation and Rural Development: Outline • 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 320RK

3. Agricultural Transformation and Rural Development: Introduction • 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 320RK

4. Agricultural Transformation and Rural Development • 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? 320RK

5. Agricultural stagnation and Growth Since 1950: Output and employment, 1995 320RK

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9. Distribution of Farms and Farmland 320RK

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

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

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14. Latifundio-Minifundio pattern • 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 320RK

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

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

17. Economics of agricultural development • 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 320RK

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

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

20. Subsistence farming:Risk aversion and uncertainty 320RK

21. Crop yield of different farming techniques 320RK

22. Incentives under share cropping 320RK

23. Sharecropping and interlocking factor markets • Sharecropping occurs when a peasant farmer uses the landowner’s farmland in exchange for a share of food output which the peasant farmer grows. • 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 320RK

24. Sharecropping and interlocking factor markets • 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 320RK

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. • Agrarian reform embraces improvements in both land tenure and agricultural organization. • Types of land reform intervention: • Land tenure reform • External inducements or market based incentives • External controls • Confirmation of title 320RK

26. 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. • Agrarian reform embraces improvements in both land tenure and agricultural organization. • Types of land reform intervention: • Land tenure reform • External inducements or market based incentives • External controls • Confirmation of title 320RK

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

28. Land reforms • Additional material: Land Reforms: Prospects and Strategies by Abhijit V. Banerjee, Massachusetts Institute of Technology at http://lnweb18.worldbank.org/ESSD/essdext.nsf/24DocByUnid/86356E62C8A4329385256B9F0053E7F7/$FILE/landreform.pdf You may like to use the points for discussion to go through the paper or rely on your class notes. 320RK

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