AGRICULTURE

Instructor: April Joy T. Limpin, CPA

 Learning Objectives
The students will be able to:
⊷ Describe agriculture and its transformation.
⊷ Discuss the agricultural productivity and
development in Monsoon Asia.
⊷ Describe the agricultural lessons and policy
issues.

2
 Agriculture & Economic Growth
• Plays a key role in the process of economic development.

• Rich source of factor inputs to feed the growing labor force in the industrial sector
and other modern sectors.
➢ Labor- 70% or more of the workforce in agriculture-based employment in
poor and medium-income economies. Agricultural sector is the only
source of increased labor power for the urban sector.
➢ Capital- it comes from invested savings and savings from income
(surplus from Farmer’s Income). It is common for developing countries to
import capital in the form of aid or private investment to speed up the rate
of capital accumulation.
➢ Foreign Exchange- agricultural products serve as the principal source of
foreign exchange in early stages of growth. Enables the economy to
import capital equipment necessary for its continued growth. Availability
of foreign exchange facilitates the inflow of technology and industrial
management expertise.
3
 Agriculture & Economic Growth
• Finally, agriculture provides a rich market for the output of the
modern urban sector.

• The transition from a primarily rural based economy to an

industrial economy requires a strong agricultural sector.

• This is because a surplus from agriculture is needed to fuel

investment in industry.

4
 Decline of the
Agriculture Sector
✓ Experience of a broad range of
countries indicates that the relative
importance of the agricultural sector
to the economy diminishes with
growth over time.

✓ As income increases, share of

agricultural value-added in GDP and
as a source of unemployment
declines.
 Agricultural Transformation in Asia
• The decline of the agricultural sector

“
appeared to be directly proportional to
overall rate of economic growth.

• Agriculture’s share of output declined

gradually from over 60% in the 1950s
in most Asian countries to less than
20% by the 1990s.

• Growth in agriculture was high in

countries where overall growth was
high and vice versa.

6
 Agricultural Transformation in Asia
➢ The tendency for agricultural
sector output to fall as a percent of

“
total output was also the result of
the Engle curve effect.

➢ Engle curve effect- As income

increases, a smaller than
proportional amount of this
increase in income is spent on
agricultural products.

7
 Agricultural Transformation in Asia
• Rapid rises in productivity in agricultural sector such as
through Green Revolution contributed further to

“
declining terms of trade.
❑ Green Revolution-refers to a product of
research and development which resulted to a
higher yielding variety of rice.
• The combination of low-income elasticity of demand
for agricultural products and sluggish prices exerted
strong pressure on resources to move out of the
sector.
• This facilitated and accelerated the
migration to urban areas where
rapidly growing industrial establishments
required more workers.
8
 Productivity in Agriculture
⊷ Labor productivity is usually higher in
agricultural sector than industry at the beginning
of the industrialization process.
⊷ As industrialization moved forward, industrial
productivity exceeded agricultural productivity,
which still remained high .
⊷ This provided a mutually reinforcing positive
impact on economic growth.
⊷ In some countries, productivity came from
expansion of land/irrigation and in others from
improved yields using better crop varieties
9
 Productivity in Agriculture
⊷ The experience in Asia was different from that
observed in other developing regions where
agricultural productivity often stagnated.

⊷ Industrialization strategies in various Asian

countries had been financed in many cases by
internal savings generated primarily from
agriculture.
⊷ One good example is Taiwan. In other cases,
such as Korea, overseas borrowing augmented
these savings from agriculture.

10
 Productivity in Agriculture
⊷ In contrast, the growth of per capita food
production in Asia shows a steady increase over
time, increasing by nearly 40 percent by the end
of the period.

⊷ The largest increments were achieved in the late

80s and early 90s.

⊷ Hence, its astounding agricultural productivity

presents a key link to the chain of developments
that led to Asia’s economic success.

11
 Agricultural Development in
Monsoon Asia
⊷ Monsoon agriculture requires extensive labor
input during planting and harvesting.
⊷ Most agriculture was rain fed in the early part
of the 20th century.
⊷ Farms were small and population densities
high, conditions that were ideal for rice
cultivation.

12
 Agricultural Development in
Monsoon Asia
⊷ Traditional agriculture was quite efficient, given
its limitations.

⊷ Irrigation and higher yielding varieties were the

keys to transforming traditional agriculture and
raising productivity.

⊷ This transformation was required to lift savings

and to provide labor and investment for the
growing industrial sector.

13
 Agricultural Development in
Monsoon Asia
⊷ Adoption of more modern technology was
slowed by the risk averse behavior of small
farmers.
⊷ Several new developments were key
components in the transformation to higher
yielding and more progressive agriculture.
⊷ These included adoption of higher yielding
varieties, application of fertilizers, herbicides
and pesticides and greater use of irrigation.

14
 Agricultural Development in
Monsoon Asia
⊷ Far reaching land reform was difficult, if not
impossible, and changes in tenancy
arrangements didn’t bring about any uniformly
significant gains in productivity.

⊷ Tenancy agreement would include the giving of

proportion of output by the tenants to the
landlords.

15
 Lessons and Policy
Issues in Asian
Agriculture
⊷ Subsidies to mechanization should be
removed.

⊷ Once this is done, mechanization

should be left to the market, since its
profitability and scope of applicability
will depend upon local conditions.

⊷ Higher yielding varieties may have

had an adverse affect on income
distribution.
16
 Lessons and Policy
Issues in Asian
Agriculture
⊷ Further development in genetic
engineering are necessary to sustain
growth in yields.
⊷ These could involve breeding crops that
are disease resistant, drought resistant,
flood resistant and need less fertilizer.
⊷ It would also involve greater transfer of
technology from industrial countries
and development of new varieties in
Asia.
17
 Lessons and Policy
Issues in Asian
Agriculture
⊷ Improved farm extension is needed to
ensure that new developments in seeds,
crop rotation and new varieties can be
spread to farmers efficiently and quickly.
⊷ Greater emphasis on water conservation
and improved productivity.
⊷ Zero tillage minimizes/eliminates tilling
of the land and retain crop residues as
ground cover.
18
 Lessons and Policy
Issues in Asian
Agriculture
⊷ Shift away from primary grains toward
tree crops, horticulture, fishing and
secondary food crops should be
encouraged.
⊷ The demand for protection of agriculture
varies inversely with the level of income
and the share of income going to
agriculture.
⊷ Developing countries must lobby more
effectively for the lowering and eventual
19 removal of these tariff barriers.
 AGRICULTURE
Instructor: April Joy T. Limpin, CPA
 Export Promotion

• Exportation of agriculture, forestry, and fisheries (AFF) products

is a conjoined effort of different agencies of the government
relevant to production, marketing, improving, and transporting
raw materials and processed goods to other countries.
• The main goals in the exportation of AFF products are in the
quality and quantity generating high quality goods in large
amounts that would suffice the need of the international trading
partners.

21
 Infrastructure Development
Success in agriculture infrastructure development largely
may be attributed to building the right roads and markets, rural
education, intensive research and development in agriculture, and
a more stable economic environment for agriculture to flourish.

22
 Genetically Modified Organisms (GMO)

• Organisms in which the genetic material is altered using modern

biotechnology, typically a recombination of deoxyribonucleic acid
(DNA) to create new genes
• The top value GMOs in the USA are cotton, soy, and corn,
followed by rice and other crops.
• Many scientists claim that there is no serious negative impact on
health in its consumption and that it does not destroy the
environment.

23
Green Revolution
The combination of a more modern
mechanized vehicles, better crops and
hybrids, larger farmlands, application
of large-scale business management
skills to growing food
Micronutrients are another product of
green revolution. It is the idea of
infusing more nutrients to the
produced crops.
The Philippines’ abaca, banana, cacao,
coffee, mango, and rubber industries
are high value crops, having a clear
strategic future in the industry.
Ecotourism (Campbell, 2007)
1. Ecotourism occurs “in nature.”
2. Considered to be “low impact” with minimal disturbance
to the environment
3. Portion of profit should be in conservation efforts.
4. There is education to both tourists and local people about
nature and its value.
5. Ecotourism development should be undertaken, ideally
with local participation in planning and management.
 Costs and Benefits of Ecotourism

BENEFITS COSTS
• Conservation of the • Disturbance to wild species of
ecosystem flora and fauna
• Allowing environmental • May lead to overproduction of
recuperation species
• Environmental awareness • May cause pollutants by
• Promotion of culture and tourists
indigenous peoples • Budget of more significant
• Financial and economic purpose may be diverted to
benefits ecotourism
• Negative externalities
26
 Thanks!
ANY QUESTIONS?

27