AGRICULTURAL ECONOMICS NOTES

INTRODUCTION
SUBJECT MATTER

We apply the theory of economics to agricultural problems. The question to ask is what is
agriculture? Agriculture is a science and art of farming (crop production, animal husbandry.)
This definition focuses on the production side – the traditional definition of agriculture.
However, agriculture involves production, processing, marketing and consumption. It also
includes the acquisition of inputs and their use.

Agricultural economics deals with a wide range of areas in agriculture.

 Farm production
 Farm management
 Marketing
 Accounting and Financing
 Agriculture Law
 Agriculture policy

NB: Our interest is more on applying the principles of micro and macro economics to
agriculture.

Microeconomics aspects
 marketing
 Production
 pricing policy

Macroeconomics aspects
 Trade issues (exchange)
 Monetary & Fiscal policy
 Agriculture policy.

We must understand the basics of the biological and physical nature of agricultural production.
This is essential with respect to the economic analysis. It determines the nature of production function/
relationship that exists so that the theoretical issues may fit in well. The notion of diminishing marginal
returns will cause us not to use linear production functions but non- linear functions.

We also need to know sociology since agricultural economics is a social science—dealing with farmer’s
behavior. The field of Agriculture economics is unique because it blends in logic of ideas from different

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disciplines – this creates problems in that it is not pure economics. But it strengthens the discipline and
has real life examples to demonstrate economics.

Historical Developments of Agricultural Economics

It started as Farm management Agronomists were interested in the amount of inputs to use & the
prices. An understanding of economics theory was essential in helping them to optimize profits.

Methodology
Not different from the methodology of economics. It uses scientific methods: systematic and orderly –
emphasizing objectivity. We must base our conclusions on facts.

There is debate among agriculture economists on whether we should reject or reconstruct (restructure)
economic theory. For instance how do we deal with value issues e.g. utility theory? To overcome this
problem we tend to emphasize objectivity. There is room for arguments on whether a thing is right or
wrong. We can use value judgements as long as we can justify our arguments using facts.

Philosophy and logic of science in relation to agricultural economics

Induction (specific to general) vs deduction (general to specific)

Positive economics vs normative economics

Positive economics – we are looking at what the economy is.

Normative economics -we are looking at what ought to be. Dealing with predictions and policy analysis.
That’s the induction approach. The positive side gives us the constraints- this is the deductive approach
to economics.

Mathematical models

Models are abstractions from reality- similar to experiments. These can be mathematical or non-
mathematical. Agricultural Economics emphasize the use of econometric models. Are the
mathematical models useful in agriculture economics? The models are useful if they give valid results.
The usefulness of the results depends on the specification of the model. Correct specification results in
valid results. The use of models which can be solved by electronics cannot compensate for good
economic theory and understanding.

Mathematical models must be based on economic theory. The models may also use erroneous data,
creating data problems. However, sophisticated techniques are required because of the complexity of
the world. The quantitative tools of handling complex problems are now available especially through
the use of computers.

SESSION 2: AGRICULTURE DEVELOPMENT- AN OVERVIEW

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It falls under the field of development economics. Development economics gained prominence in the
1950s. It focused on the developing world. It has three main distinct periods of development:

1) Economic growth with modernization

 focus was on growth in GNP (1950s to 1960s)

2) Growth with equity era (1970s period)

 where the focus was on income distribution,
employment and nutrition
3) Economic growth & policy reforms (1980s)
 Economic structural adjustment programmes

The subfield of agriculture development has a similar framework:

Phase 1: ROLE OF AGRICULTURE (1950S TO 1960S)

The period was dominated by the perception of the developed world. There was a belief that
development could be achieved through industrialization.

a) The role of the agriculture sector was ignored.

b) It was seen as a source of raw materials.
c) Arthur Lewis, -“economic development with unlimited supplies of labor”.

Lewis model

Elements of the Lewis model

It’s a two sector model.

a) Capitalist/ modern sector – Industries and large agriculture plantations.

b) Traditional sector – dominated by subsistence farming.

Modern Sector

Features:

i) The modern sector consisted of reproducible capital. Uses capital intensive methods of
production.
ii) Modern sector was characterized by hiring of labor.
iii) Sold output for profits.

Traditional sector

Features:

i) Dominated by self-employed individuals.

ii) Does not use hired labor or reproducible capital.
iii) Never sold output for profits.

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Lewis was more concerned about how labor could be transferred from the traditional sector to the
capitalist sector. Basic assumption – the traditional sector has surplus labor
(MVPL => 0). Labor could be extracted from this sector infinitely (=> infinitely elastic supply) without
affecting agriculture output. Extraction would continue until the MVPTL = MVPKL , where T represents
the traditional sector and K represents the capitalist sector. The assumption about surplus labor led to
negligence of the agriculture sector development. It was seen as a source of labor.
This negligence was reinforced by a few observations.
As the economy develops the contribution of the agriculture sector declined.
Economic Explanation:
 Engel’s Law – the proportion of income spent on consumption decreases as income
increases.
 As we increase labor productivity in the agriculture sector, few workers are required, thus
there is surplus labour and possibility of labour transfer.
 It was also observed that the terms of trade (ToT) tends to worsen for the agriculture
dominated countries unlike the industrial dependent countries- through observation.
Implication is at the development of the agriculture sector is limited
 Linkages – the agriculture sector does not have strong linkage effects. Thus its role is
limited in development.
Lewis’ model was used by other people to justify the development of the agriculture sector

Arguments:
a) The non – agric sector depends on the growth of agriculture surplus e.g. If we move workers
from the agriculture sector we reduce agriculture output required in the industrial sector – this
retard s growth.
L => Q => Industrial growth (Production)

The contributions of the agriculture sector to the economy are many

1) Labour
2) Foreign earnings
3) Food
4) Market for industrial goods
5) Raw materials

There is interdependence between the agriculture and industrial sector.

Eg In Zimbabwe as agriculture production declines, the growth of industrial output also declines.

b) There arose the need to look at how to develop both sectors side by side due to
interdependence.

Strategies used in the development of the Agriculture sector (1950s)

1. Direct transfer of technology from industrial world to the developing world [Diffusion model] –
because agriculture development in the developing world was not well developed due to lack of
technology.

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 The problem faced was the incompatibility of technology with the developing world
environment. Technology transfer failed to work for the developing countries. The reasons given
for the failure were that peasants were lazy, poor decision makers and irrational.

The diffusion model ignored institutional barriers for example communal ownership of land.
The mode of land ownership was different.
However, empirical studies showed that peasants respond to economic incentives and they
were efficient in resource use only that they were poor. (Schultz T. W in his book , Transforming
Traditional Agriculture published in 1964.)

Supply response analysis in terms of economic incentives like prices – this brought an increase in
thinking towards agriculture, like development of country specific technologies (Green
Revolution). This resulted in institutions like IRRI (rice development), CIMMYT, CIAT, and
ICRISAT to come up with appropriate technology resulted in High Yielding Varieties (HYV).
[ICRISAT – The International Crops Research Institute for the Semi-Arid Tropics.
IRRI – The International Rice Research Institute.
CIAT – International centre for tropical agriculture
CIMMYT – International Maize and Wheat Improvement Centre.]

Conclusions:
1. Models used were based on abstract theory.
2. The models ignored the need for technical change in agriculture.
3. Models ignored biological and location specific nature of agriculture production.
4. Ignored the micro-foundations for empirical research- what was happening at the farm
level.

Towards the end of the period and despite the Green Revolution it was found that most people did not
benefit. It was found that the beneficiaries were large scale farmers and landlords. The Green
Revolution had very little impact on most people and led to disparities in income distribution.

Phase 2: GROWTH- WITH – EQUITY (1970S)

It was realised that emphasis on economic growth (GNP) was not a useful indicator of development
economics because it does not indicate distribution of income (income disparities) and GNP does not
indicate employment issues. Because of these reasons, there was a shift from economic growth to
growth with equity. Focus shifted to
 income distribution
 employment
 poverty
Justification – it was realized that despite efforts of economy growth in the 1960s most developing
countries were dependent on industrial countries for capital goods.

What was happening in the Agricultural sector?

Most of the people were affected more due to the developments in the economy given the nature of
the activities. Agriculture was also ignored and due to little investments this reinforced the argument of
growth -with –equity.

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Models Used

Induced institutional Innovation Model

(Ruttan V.W. and Hayami Y, 1984)

This model was used to identify different paths for technological developments. The scarcity of
resources should be the basis for technology development. If land is a constraint then we need land
saving technologies (eg fertilizers, HYV). If labor is a constraint we need labor saving technologies
(machinery).

Inter-sectoral linkages
The focus was on the interdependence between the agricultural and industrial sectors. Eg it was found
that employment strategies based on potential linkages in HYV could increase employment.
HYV=> output => Income=> high demand => employment.
Small Scale farming was an important sector for the growth of the economy.
Small scale production => output => income => demand=> employment.

Factor Markets
The focus was on how unemployment could be generated using rural based markets .Through analysis
of factor markets –unemployment and underemployment were understood. The implication was
profound in agriculture. It was realized that in the agricultural sector there was stationarity in labor
requirements.

Employment

time

This shows that there is surplus labor.

Rural – Urban migration

During 1970s there was large numbers of people into urban areas.
People were in town despite the fact there were no jobs.

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Harris & Todaro (1970) found that the decision to migrate was based on expected income.
This created a lot of social costs in the rural areas.
 Loss of able- bodied man.
 Instability in rural families.

Performance of product markets

Growth of urban areas had effects on production markets. There was collusion between traders who
generated monopoly profits. Analysis showed that there were no monopoly profits among private
traders. It was found that the monopolistic state (parastatals) marketing agencies created marketing
problems.

Farming Systems Research

This evolved as a way of understanding the farmers’ problems. It involved farmers in coming up with
new technology. In recent years they realized the importance of social scientists rather than natural
scientists only.

Research on Agriculture in 1970s accumulated knowledge on the following issues:

1) They were able to understand behavior of farmers.
2) Able to come up with constraints to farm and non-farming production, income distribution and
employment.
3) They were able to observe the linkages between agricultural sector and industry sector.
4) They were also able to underscore the complex nature of agriculture development.
This was due to the focus on micro – level. However, they were not able to understand macroeconomic
issues with respect to food policy and the role of agriculture.
In the 1980s the shift was to macro economic reforms, food security, income generation and sustainable
agriculture.

MACROECONOMIC POLICY REFORMS (1980s)

The HYV research in the 1970s was able to increase production in Asia but in Africa and Latin America it
was a disaster. One of the arguments for this flop was the macro economic policies. The macroeconomic
reforms were formed by the W Bold Bank. It was believed that controls on fiscal, foreign currency, and
monetary policies were responsible for the decline in agriculture. This was because farmers did not get
enough incentives.

Food Policy (1980s)

(Timmer C.P., 1983)
Efforts were made to undertake rigorous` food policy analysis. The main purpose was to give a critical
analysis of the effects of macroeconomic issues on food production and income distribution as a result
of food policy. There was focus on food trade.
Major finding: – the policies of the 1960s and 1970s on food led to high producer prices and low
consumer prices (problem of subsidies).

Food security (1980s)

Definition: refers to access to food to all people at all times. Food self sufficiency – is ability to produce
enough for a country or individuals.

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This is a strategy of ensuring food security. It can be achieved through buying (imports)
 Chronic food insecurity is a situation of inadequate food supply
 Transitory food insecurity is a temporary thing.

Rural income and employment generation

It was critical because of food security problems. Population pressure was another problem.

Sustainable Agricultural Growth (1980s)

There were a number of consequences of agriculture growth:
 Pollution of the environment for example, led to acid rains.
 Environmental degradation
 Desertification
How can agriculture growth be achieved while preserving the environment?

For the 1980s the main lessons are:

1. Sufficient domestic and international effective demand for agriculture products is necessary for
agriculture development.
2. Public investments in research and rural infrastructure are essential for agriculture
development.
3. An enabling political environment to mobilize resources and improve the capability of rural
people is necessary.

Challenges in Agricultural Development.

1) How to strengthen institutions for small-holder agriculture development for example research
institutions, training, extension and policy analysis institutions.
2) Issue on how to broaden the macro economic framework for analysis of agriculture
development issues (critical because people looked at agriculture as a domestic issue).
Agriculture development is looked at in a broad context (Handbook for Development
Economics)

Differences between Agricultural and Industrial Sectors

Agricultural sector is unique
1. The production function is slightly different from what is observed in the industrial sector.
[nature of production].
In industry the entrepreneur has control on most of the inputs (factors of production)
- The Agriculture entrepreneur has no control over other things like climate, diseases, soils.
2. Source of output for household consumption and for the market (Agriculture Production) eg
peasants produce for consumption. In the Industrial sector production is done to maximize
profits.
3. Peculiarity of agriculture production
-Agriculture production is not concentrated in one area – spatial distribution (geographically)
the implication is that farmers face high transport costs; it affects industrial location due to
bulkiness; perishability may require some products to be produced on the site.
- Seasonality affects labor requirements and also high storage costs.
4. Agriculture’s role as a resource reservoir:

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 - Can provide water, labor and natural resources.

AGRICULTURE DEVELOPMENT IN THE AFRICAN CONTEXT

Contribution
1) Contribution to economic growth: - the agriculture sector is the largest in most sub-Saharan
Africa. On average it contributes about 30% of the GDP

Country Year 1990 Year 1965

Kenya 27 35
Ethiopia 41 58
Swaziland 55
Uganda 67 46
Ghana 48 44
Tanzania 46 59
Zimbabwe 30 18

It contributes to the Industrial sector - raw materials

-Supply of labor
- provides a market

Services sector

 Consumption of goods
 Services like transport
In general a 1% growth in agriculture sector leads to 1.5% growth of the economy (GDP) because of the
linkages. The trend in agriculture growth shows the trend of economic growth.

2) Poverty alleviation and food security.

Most of the people live in the rural areas and they rely on the agriculture sector for their food
needs.
Comment analysis indicate that Sub Saharan Africa is facing problems with respect to food
security – due to population growth rate in Africa is 3% - but the growth rate of food production
is less than 3%
Trends in Africa

Population Growth Food production growth

1960s 2.3 2.3
1970s 2.9 1.5
1980s 3.2 2

Solutions
a) Reduce population growth
-Increase education on family planning. Mortality rates in Africa have gone down while
fertility rates have gone up. So efforts should try to reduce fertility rates.

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 The problem is cultural values.
b) Increase agriculture production
- Technological advancement is the key factor.
- The problem is lack of appropriate technology
- Problem of unfavorable climatic conditions

3) Source of employment
- Agriculture creates employment directly by agricultural sector absorption and indirectly
through its contribution to other industries.
- In Africa the agriculture sector absorbs about 2.5% increase of labor annually arguments
- As agriculture develops more machinery is used. The implication is that the ability of the
absorption of labor is hindered – In Africa this is not the case because there is “abundant” labor
relative to capital.
-There is a shortage of labor in the agriculture sector in Africa because:
*Expectations of high income in urban areas.
*Land tenure system.
*Low remuneration in the agricultural sector.
* Prestige.

4) Foreign Exchange Earnings

-It is the major source of foreign currency through the export of agricultural products.
-Africa has comparative advantages in the production of tropical commodities (cocoa, coffee,
tea, pyrethrum, tobacco, pine apple) and horticulture crops.
Problem: The prices of these commodities have been very low on the world market.The way we have
been exporting raw materials that are unprocessed that have little added value
[Appreciate the extent of contribution –Criticize]
Trends of contributions
Economic growth: has been fluctuating in most African countries. In the 1960s growth in agriculture was
increasing. The growth was 3% and above.
1970s – There was an increase initially followed by a decline of 1.8% on average.
1980s – There was a general decline with an average of 1.4%
The trends vary from country to country.
In the 1960s to 70s the growth rates for some countries was very high (about 7%).

Reasons for these Trends

- Drought Can be overcome by irrigation
- Civil strifes.
- Inconsistencies in economic policy.
 In the 1960s farmers were subsidized thus production was high.
 Marketing was complex in the 1970s.
 Level of taxing in the 1970s and 1980s was high.
-indirect: controlled exchange rates lead to costly exports.
-Tax on factor inputs

1990s Structural Adjustment programme

 Food sector – mixed situation

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  Increases and decreases
 Export sector – mixed

Food Security and poverty alleviation

Two aspects - self – sufficient and ability to import
We use the proxies of food security.

If we have the capacity to import there is no problem – means we must look at agriculture exports.
Much of the imports are food and thus dependence on the Western states. Food security at household
level might be worse than at national level.

Conclusion on food security

There has been a gap in production and consumption (dd >ss) due to internal and external factors.
Internal population growth, drought, prices.
Food production per capital declined in the 1970s & 1980s and therefore most countries had to rely on
agriculture exports as a means of achieving food security by increasing imports. Unfortunately
agriculture imports were declining. Much of the decline in food production was in West Africa, while
most countries in Southern Africa were attaining surplus.Problem in Africa is ignoring the traditional
food crops.

Constraints to Agriculture Development in Sub- Sahara n Africa

Three major groups

1. Natural Conditions
-Drought
-Floods
-Diseases and pests

2. World market and Prices

-very critical because most African countries produce raw materials that are similar and there is
high competition for markets.
- In general the world market prices have shown a decreasing trend over the years.
i) Growth of production is faster than growth in dd →ss dd →↓ P
ii) The subsidiaries of export crops by industrial countries.
- Sugar, cereals, dairy Products are subsidized thus they depress prices on the world markets.
If you compare costs of production and world market prices = find cost of production to be
higher?
3 Development of substitutes like:
sisal – synthetics
Sugar - sweetners

Slow Development of Agriculture Technologies

- To increase agricultural production we should increase agriculture technologies.
- However there are a number of problems that led to slow development of agriculture technology.

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 a) Lack of demand by farmers e.g.we should expect that with population pressure we should
expect land scarcity and expect land saving techniques like the use of fertilizers.
b) Decline in relative prices of input relative to output prices. Relative prices are not favorable
c) Efforts by research institutions to come up with new technologies are limited. –(agronomists)
d) Poor state of infra- structure.
e) Risks due to uncertain climatic factors.
f) Lack of incentives – high prices.
g) The role of women and the use of technology.
-Women access to credit is limited.
-Access to technology is limited.

Source: 1994 WB publication

Adjustments in Africa

BEHAVIOUR OF PEASANTS FARMERS

Theory of the Firm (Production Economics)

The farmer is the decision maker and has to make decisions on how and what to produce.
To answer these questions we need to understand:
1) Factor – production relationships – production function
2) Factor – Factor relationships - Isoquants
3) Product – Product relationships - PPC

Basic Assumption
The farmer maximizes profits but this is not the case in real life since this assumption is but one of the
objectives of production like food security like food security, income stability and community obligation.
Profits are maximized subject to some constraints:
Land, Capital, labor, markets, social
The classical analysis of the production function ignores consumption; this is not real in African context.

Neoclassical Approach
Production Function

Υ=ƒ(x) Υ= (x͵/x₂…xn)

TPP

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 0
X
1. No output if there is no input.
- This is applicable to land, water, seed, light.
2. We can attain a technical optimum if other factors are fixed.
3. The slope of the curve is very important since it shows us the amount of output as we increase
inputs.
-MPP we come up with the law of diminishing returns.

¹ ² ³

AP

0 ε>1 ε=1 ε=0 ε<0 X

MP

 AP indicates the productivity of the input.

 The elasticity of production.

p = =

p =

When =0 MPPL0

0MPP 0

Why region 2 is the rational region for production?

-In region 1 productivity is increasing so we can increase production by using more inputs.
- An increase in inputs in region 3 will cause a decline in total output.

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Economic Optimum
- To maximize profits we need a profit function
Input approach

=
=
=

Pyf I (x) = Px

Py MPPx = Px

MVPx =Px

Output Approach

Policy implication

FACTOR – FACTOR RELATIONSHIP

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-How much of 2 inputs we can use to produce a particular level of output.
-Useful when dealing with two inputs.
xn)

Family labor & hired labor x 2

x 2 x 2 tractor driver

Y3

Y2

Y1

x
1 Substitutes x 1 Complements x 1

Cost minimization is the goal. (How to Produce)

 It indicates production surface
The slope of the isoquant is the markets
We talk of substitution in terms output increasing or decreasing.
We are not changing technical functions of inputs
 The isoquants are convex – indicating diminishing markets.
 Spacing of isoquants indicate returns to scale.
-If they are closely spaced they indicate increasing returns to scale.
- If they are equally spaced we have constant RTS.
-If the space is increasing we have decreasing RTS.

Returns to Scale indicate the policy to be employed to increase output.

Optimum Output

x 2

1 , x 2)
y 2
Y1

This relationship is explained by principle of factor substitution.

x1X1 –Px2 X2
x1 –Px1 = 0

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x2 – Px2

Marginal values product of each input must be equated to the price of the input.
x1 = Px1

x2 =Px2

Slope of Isoquant

Slope of the TC curve

Px1X1 + Px2X2

Optimum

For every isoquant we can find optimum point. The line combining these points is the least cost
combination line – lowest cost of producing an output.
The least cost combination is not always the economic optimum because we must introduce prices of
products.
The least cost combination is important because of the concept of technical change. The slope of the
isocost curve might however change.

From (2) we can introduce the marginal value product

Principle of equip marginal returns.

The economic optimum of using many inputs occurs where the ratio of the MVP of each input as a ratio
of the price is equal to 1.

ESTIMATE DEMAND OF INPUT FROM LEAST COST COMBINATION

We can use the least cost combination to derive the demand for an input

A B
x 2

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 P1
y 2 P2
Xa Xb x
1 Xa Xb

Given the least cost combination we can derive the supply curve as well.

[FAO MANUAL, (1990) PEASANT ECONOMICS: CH1]

The least cost combination of inputs changes either if there is a change in the technology. (Change
location or shape of Isoquants) or change in the ratio of factor prices

PRODUCT – PRODUCT RELATIONSHIP FACTOR (ENTERPRISE CHOICE)

Indicates the combination of output we can get using one input

Y1=f(x1)
Y2= fx1) Or X1 = f-1(y1,Y2)

The boundary gives us the technical efficiency

y 2
1 2

y 1

1 Complimentarily – increase both outputs using the same input (crop rotation) beans and millet
2 Competitions – maize and groundnuts
3 Supplementary – they do not compete for resources e.g poultry project and piggery.
4 Joint products – produced together eg beef and wheat and straw
5 Antagomistic product – agriculture and paddy cultivation

Characteristics PPC

1) Technical efficiency occurs along the line.

2) Slope =
3) The PPC is concave to the origin
- The market rate of product transformation- MRPT increases as more of the input is used in the
production of the other product.

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 x

MPPx

If we reduce X we increase MPPx.

In our case if we increase the input to produce Y₁ we increase MRPT of Y₂ with input respect to the
input.

Economic Optimum

Py1Y1+Py2Y2

Py1Y1+Py2Y2 -PX

This is the slope of the PPF

Y₂

Superimpose the Iso-revenue line on the PPF

Slope of the Iso-revenue line
Py1Y1+Py2Y2

For optimum equate (i) & (ii)

By cross-multiplication

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xy2 = MVPxy1 = Px

Can use this Principle to explain the concept of opportunity cost.

If -y₁Py₁ > ∆y₂Py₂
reduce X on production of Y₂
↑MPPx on Y1

THE PROFIT MAXIMISING PEASANT “EFFICIENT BUT POOR HYPOTHESIS”

The hypothesis was advanced by Schultz T.W

- Was trying to answer the accession that farmers were lazy.
- He proved that farmers were poor by efficient
- Basic objectives of farmers were to maximize profits.
- You cannot separate efficiency from profit max.
Economy Efficiency
- Has two components
- Technical efficiency
- Allocative efficiency
Technical efficiency – producing the max possible from given input.
Allocative efficiency – adjustments of inputs and outputs to reflect relative prices given technology.

Y X2 Y1 PPF1

(a) TPP1 (b) *D (c)

A
* C PPF2
B* C TPP2 * y=100
A
*D *B y=100

X X1 Y2

a) Given B & D – B is producing efficiently because with same we produce more. A is allocative
efficient than B. Also C is allocative efficient given A& C. A is more efficient than C(taking
technical efficiency into consideration)
A is superior to all points (economically efficient) both technically & allocatively efficient
b) A is more efficient because we are using less inputs & satisfies technical & allocatively efficient.
c) Same applies to (C) where A is economically efficient than all points

PROVING THAT FARMERS ARE TECHNICALLY & ALLOCATIVELY EFFICIENT.

1) Estimate production function
2) Price ratios
3) MPP1
4) Null К1 famers in efficient
Alterative К=1 farmers efficient
К 1

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 Price of input is higher thus we are overusing the resources
К<1 Region 3
К>1 Region 1

Approach
-Sample farmers = n
- Use econometric analysis to come up with the line of best fit.

*
* * TPP
* *

The line of simply best fit supply proves allocative efficiency only thus it does not prove technical
efficiency.
Technical efficiency can be proven by using many production functions for individual farmers.

It’s not possible to attain the maximum yield in practice thus we talk of “yield gap” – maximum
attainable at research stations less the farmers actual output.
From this analysis Schultz got by using the average of farmers.
This is why this hypothesis is efficient but poor. (It’s not max)
Assumptions
 Homogeneous production conditions and resources use
 Assumes competitive markets
Weaknesses (of Schultz results)
1) Averaging:
By using the line of best fit we are overlooking the various differences that exist among farmers.
2) The analyses ignores the complex nature of peasant economies
- different goals
- imperfect markets exist
We accept Schultz hypothesis under certain conditions:
1. Trade-offs in their objectives, they should concentrate on profit maxization.
- We assume markets are working to take care of the perfect competition.
- In 1960s this hypothesis proved of farmers are not lazy and irrational.

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- It helped by focusing on the problems of farmers.

Policy Implications
1. Education – farmers are operating below par because of lack education need for extension
service.
2. Credit requirements – to boost capital requirements.
3. Output/input prices marketing.
4. Shows the importance of technology – to move the production frontier to a higher level.

AGRICULTURE HOUSEHOLD MODELS

- Household is both a producer and consumer.
- Production and consumption are done simultaneously

Goals
The household wants to maximize utility.
Labor is used for leisure or to obtain money.
leisure
( H)

A
I₃
I₂
I₁
0 B money (Y)

The slope of the indifference curve should be equal to the slope of the budget line.

The slope of the budget line describe rates at leisure hours are converted into income

We must analyse production and consumption decisions simultaneously.

Chayanov’s Farm household Models

(Drudgery Averse peasant model)
-focused on the decision – making by household
-aim was to explain how households allocate labor in production to meet consumption needs.
- The household has two objectives:
1. Income objective
2. leisure – avoid work.
Key asssumption – household provides workers and consumption units.
C – number of consuming units
W – working units
– ratio that determines production
If is high expect more consumption – more working hours.

Assumptions in analysis.
1. No market for labor – implies no hiring.
2. Farm output can be used for household consumption or surplus sold.
3. Flexible access to land (free).

21
 4. There is a minimum acceptable level of consumption.

Production function I
Income I
(Y)

A
Ye

Y min

0 Le L max

labour for production leisure

This labor can be divided into 2

Leisure –Ɩe limax
Production labor – 0Le

Mathematically production:
Utility is a function of labor:

Constraints on labor use:

 The minimum level of income as you reduce the minimum level of income, income goes down,
people will value leisure more.
 As we increase income or the maximum labor available, people will value labor more than
leisure
Max
st

22
 The MRS =MVPL and it is the same as the subjective wage rate. (because there is no labor
market)

Features of the model

1. Does not involve a fixed consumption target. The minimum level of income shows is how
utility increases or decreases
2. The analysis is consistent with backward supply curve for labor. As you increase productivity
of labor less land is required for production.
3. The proportion of farm output that is the return on household consumption has no
inference on the income leisure curve and increasing output and labor used.

Importance of this Model.

1. We can use this model to come up with a wage rate for labor given two products. This
involves unique calculus
2. How important the composition of the household is and how the equilibrium changes.
Equilibrium – changes when constraints are changed, L max and Y min
 Change the price of output
 Change the technology
Weakness
When we make the changes the impact of labor is not clear.
- We have both income and the substitution effect.
- The impact of labor is indeterminate.
It means that this analysis has no predictive power on factors that affect the production function. If you
change the consumption – work ratio you can either increase or decrease labor but not how. But it does
have predictive power concerning the impact of factors of family size and composition that affect the
slope and position of indifference curves.

SUMMARY
This model can be used to analyse peasant behavior or decision making where production and
consumption are considered simultaneously. The important result is that peasant households vary in
their economic performance depending on the labor and on size and structure.
Limitation is with respect to the changes in the production function that is ambiguous.

CONCERNS FROM THIS ANALYSIS

1. How do we change MVP to indicate responses to external changes such as taxation?
2. How to change the marginal utilities especially of income to respond to changes in
prices of various goods/ response from the utility function.
3. What happens if land is a constraint? – Access to land is not free. (production function).
When we focus on labor we are ignoring the active conditions in that peasants operate
(eg external factors, availability of land and other goods).
- Model is inapplicable to SSA because of land shortage and there are labor markets.

HOUSEHOLD DECISION MODELS WITH LABOR MARKET.

23
- We relax the assumption of no labor market.
- There is a predetermined wage rate (externally).

HIRING OUT LABOR

y

I w’

ymin TVP

0 Le LT

Labor is used for farm production and home activities (leisure& other activities) –also called Z- goods

At Le , MVPL = W
Labor =Ole= is used on the farm
LT - le = sold out of the household so as to maximize utility.
Given the wage rate at LT the peasant is producing less MVPL than the external wage rate
At LT
The household is well off by selling some of its labor. So labor is valued higher than the Z- goods.

HIRING IN LABOUR

N1
L

TVP

Ymin

24
 Le LT
At le , , At LT , MVPL = w
They are hiring in labor to work because they value leisure more than working on the farm. We are not
using the subjective wage rate.
If we introduce the labor market, production decisions become independent from consumption and
decisions we can predict the production, changes with respect to changes in prices.
If we increase wages we can see what happens to (a) farm output
(b) Farm labor

We can easily observe the income & substitution effect.

ADDITIONAL NOTES

TOPIC: The theory of the optimizing peasant – The drudgery – averse peasant.

To be covered in two lectures and two tutorials

Aim
- To achieve a more accurate representation of the totality of economic behavior encompassed in
household production.

Objectives
-To discover the extent to which consumption decisions might alter the production response of the
household.

- To examine A.V Chayanov’s household model.

- Policy aspects of the theory

Conclusion: concept of the peasant mode of production.

Activity: Students to discuss the predictions of the model and the usefulness of the model.

THE DRUDGERY – AVERSE PEASANT.

-The profit maximisation and risk aversion theories of peasant household behaviour took no account of
the consumption side of peasant decision making.

- Wolf (1966: 2) observed that the peasant “runs a household, not a business concern”

- The dual character of the peasant household as both family and enterprise, consumer and producer is
an important facet of the definitions of the peasant.

25
- The Chayanov farm household model incorporates consumption goals of households.

Chayanov’s theory emphasizes the influence of family size and structure on household economic
behaviour.

CONSUMER CHOICE BETWEEN LEISURE AND INCOME.

-Personal utility maximization is represented in neoclassical economics using indifference curves.

- a set of indifference curves describe successively higher given levels of personal happiness which can
be met by alternative combinations of leisure and income.

- Indifference curves are convex because of diminishing MU.

- The slope of the indifference curves represent MRS of the income for leisure in the case of indifference
curves of choice between leisure and income as shown below:

Leisure A
Hours

H1 I3

I2

I1

0 Y1 B Money Income Y

This slope is negative: the indifference curve slopes downward from left to right, and the slope can be
expressed either as the amount of leisure which would be foregone (dH/dY) or as the inverse ratio of
the marginal utilities of income and leisure

MRS

-Line AB is the income constraint (leisure conversion into money income at a given wage rate per hour)
is the budget line. The consumer maximizes utility this line with the highest attainable indifference
curve. (Point E on the fig above.)

-The slope of the income constraint is given by the inverse of the wage rate .

26
-The utility maximizing position occurs where the slope of the indifference curve and the budget line is
equal i.e. where:

EFFECT ON UTILITY MAXIMISATION OF A WAGE INCREASE

Leisure hours

A I3

I2

H3 F

H1 E I3

H2 I2

0 Y1 Y2 Y3 B C

Money income Y

-A wage increase has the effect of increasing the amount of obtained for each hour worked and this
changes the slope of AB.

-The movement from E to F can be divided between a substitution effect’ (s) and an income effect’ of
the wage increase.

-The ‘income effect’ normally tends to counterbalance the substitution effect’.

THE CHAYANOV FARM HOUSEHOLD MODEL

-Is a theory of household utility maximization?

-focuses especially on the subjective decision made by the household with respect to the amount of
family labour to commit to farm production in order to satisfy its consumption needs.

27
- The subjective decision involves a trade-off between the dinogery or irksomeness of framework
disutility of work) and the income required to meet the consumption need of the household (utility of
income)

-The household has two opposing objectives:

(i) an income objective which requires work on the farm and

(ii) a work-avoidance objective which conflicts with income generation

Main factor influencing this trade-off is the size of the peasant household and its composition between
working and non-working members. (demographic structure)

This is summarized by the consumers to workers ratio or ratio

This makes it a democratic model of household decision making.

Assumptions

(i) There is no market for labour (no hiring or being hired)

(ii) Farm output may be retained for home consumption or sold in the market and is valued at
the market price;
(iii) All peasant households have flexible access to land for cultivation.
(iv) Each peasant community has a social norm for the minimum acceptable consumption level.

The central elements of Chayanov’s theory are depicted in the figure below.

Output/ I1 I2

Income (Y)

TVP

Ye I1

I2

Ymin Y min

Le Lmax

Labour days(L) Leisure days(H)

-The gross output which is equal to gross farm income is measured on the vertical axis.

-The horizontal axis measures total labor time available to the household (number of workers)

- Total time can be allocated either to farm work or to other activities (leisure)

28
- Model contains both production and consumption decisions.

-The production aspect is handled by a production function. The production function TVP displays the
property of diminishing marginal returns to labour.

-The TVP curve is a family income curve:

-This production function does not capture the flexible land access an important part of Chayanov’s
theory. The impact of flexible access to land is to defer the onsel of diminishing returns as labor use
increases.

-The production function may have a linear or near linear portion before diminishing returns set in
(Low 1986:3-5)

-The consumption side is represented by a set of indifference curves

-In utility notation

Utility or happiness of the peasant household is a function of income (Y) and leisure (H).

-Any point on the income – leisure indifference curve say B describes the subjective value placed by the
household on work at that point.

-The slope of the curve at a pointy like B, describes the amount of income (dy) which the household
would need to gain in order to compensate for the loss of one unit of leisure, dH: it is the household’s
subjective wage level.

-The range and relative level of this subjective wage is constrained by the requirement that the
farmhouse hold meets its minimum acceptable standard of living (Y min) on one hand and by the
maximum number of full working days which use physiologically feasible for worker members of the
household to perform (L max)

The equilibrium position of the farm household is given by the point of tangency of the production
function to the highest possible indifference curve of utility which can be achieved given the technology
of production (point A on fig above)

At this point the marginal product of labor (MVP l ) equals the subject value of family labor time (dy/dH)
is the amount of income required to compensate for the loss of one unit of leisure.

Economic problem:
Max utility subject to three constraints

29
 a) The production function
b) The minimum acceptable income level
c) The maximum number of working days available mathematically:

s.t . f ( L); y  Y min; L  L max

SOLUTION:

Occurs where the MRSH,Y (the subjective wage) equals the MVPL

Features of the model

-It is not the same as a target income hypothesis. It does not involve a fixed consumption target, but if
does embody the motion that at the margin, when the consumption norms of the family have mef, the
disutility of additional work is high relative the utility of additional income.

- The model is consistent with the observation of a backward bending supply curve but does not predict
such a result.

-The degree of subsistence of the household (portion for consumption) has no influence on the slope of
indifference curves or on the equilibrium output and labour use of the household use of the household.

-The importance of family size and family composition for this theory is evident. Between them they
define both the minimum and maximum level of output and thus for the peasant community as a whole
their average levels determine the lower and upper limits of the volume of economic activity.

-the subjective nature of the microeconomics equilibrium of the household is what Chayanov’s regarded
as a unique economic calculus of peasant households which made them quite distinct from capitalist
enterprises MPL in peasant production is variable between households according to demographic
structure.

Impact on equilibrium output and labor use of a change in production function.

The production function may be altered by:

a) Changes in other resources which combine with labour to produce output

b) A change in the technology of production
c) A change in the market price of output.
An increase will shift the family income curve upwards and thus place the household on a higher
indifference curve than before. Their impact on labor use is indeterminate because the positive
‘substitution effect’ of such changes is offset by a negative ‘income effect’ and the final balance
predicted from within the logic of the simple model.

30
- The Chayanov’s model thus has no predictive power concerning the response of the household
to factors which affect the production function. But it does have predictive power concerning
the impact of factors of family size and composition which affect the slope and position of the
indifference curves.

Graphical analysis of changes in family size and structure

I2
I1

Y2e TVP
Y2min Y2min
Y1min Y1min

L1e L2e Lmax L

Various aspects of relevance to be drawn from diagram B and comparisons with the previous
equilibrium are as follows.
a) The number of workers (total person – days available) and the TVP curve stay the same.
b) The minimum consumption constraint is raised from Y1min to Y2min reflecting the increase
consumption.
c) The shape and position of the income – leisure in difference curve changes. Preferences of
the household change due to the need to feed a larger family. The household is prepared to
accept a smaller rise in income ( dy ) in order to compensate for the loss of one unit of
leisure ( dH ) than before at all points on the curve  there is a fall in the subjective wage.
d) A new equilibrium is established at higher output Y 2e and higher labor input L2e than was
formally the case. MVPL is lower at B than if was at A, consistent with optimization at a
lower subjective wage. This capacity of the farm family to intensify labour use by lowering

31
 the subjective wage, Chayanov terms the capacity of the peasant household for ‘self-
exploitation’
e) The effect of flexible land access is to widen the range of labor input levels across which the
MPL remains roughly constant – it means that a rise in the minimum income line, Y min is less
likely to push the household into the area of zero marginal returns to labour than would be
the case with rigid land access.

SUMMARY
The Chayanov model set up a theory of the peasant household containing both consumption and
production components.

- Key elements of the theory are the size of the peasant family, consumer/worker ratio, the
absolute number of worker ration, the absolute number of workers in the family and the social
norm of a minimum acceptable standard of living.
- Economic calculation of peasants *equate the MVPL to the subjective wage.

This demographic model yields the following propositions

1) The marginal and average products of labor should vary significantly between households
according to their demographic structure.
2) The number of days devoted to farm work per family worker should vary directly with the
consumer/worker ratio. As the ratio rises, so the amount of time devoted to farm labor by each
worker should increase.
3) The size of the area shown should vary directly with family size.
4) The lower the ratio, the higher the average income per person in the household. This is because
a low ratio means a higher subjective wage, placing the family in a position on the production
function with high marginal returns to labor.

The model has been found to be most applicable in Africa because of flexibility of access to land and
limited engagement in labor markets.

Policy Implications

In general it was not found to be useful for policy purpose except in dictating some caution about the
degree of responsiveness of peasant households to exogenous changes in technology or prices. This is
due to the ambiguity which surrounds the impact on household decisions of changes in the production
function.

Earlier policy analysis suggested some ways of influencing the income leisure tradeoff so as to reuse the
MU of income, decrease the slope of the utility function and provoke peasant households to operate at
a higher output and lower MVPL on their production functions. These ways are as follows:

a) Taxation of the marketed output with the effect of reducing the cash income obtained per day of
work, reducing the subjective wage and resulting in a higher labor input at lower MVP

32
b) Increase the range and availability of consumer goods in rural area thus provoking a rise in the
marginal utility of income.

c) Land redistribution from large to small peasant farms on the basis that small farmers have to operate
further out along the production function in order to survive and tend to have a higher marginal utility
of income relative to leisure than larger farmers who can meet their subsistence more easily.

CHAYANOV’S THEORY OF PEASANT ECONOMY. (MARK HARRISON)

- Chayanov belonged to the neo-populist tradition (Russian).

- The neo-populist emphasized the viability of peasant agriculture and its viability to survive and prosper
under any circumstances – for the peasantry had no tendency to develop the increasing economy
inequalities and class antagonisms of bourgeois industrial society.

- Chayanov saw modernization of neither traditional small farming as lying along neither a capitalist nor
a socialist road but as a peasant path of raising the technical level of agricultural production through
agricultural extension work and co-operative organisation at the same time concerning the peasant
institutional framework of the family small holding

Family labor and household property

What distinguished Chayanov’s school from all others interested in agrarian resource allocative was its
highly specific theoretical position, characteristic of neo-populist social science (organisation of
production). Organisation of production meant the peasant’s activity of economic organisation or
resource allocation, guided by a peasant rationality, which makes the peasant form a fundamental
organism of the national economy.

-Chayanov introduced the motion of a trade – off between total factor income and leisure, that is utility
maximization. In the manner of Jevous he defined a short-run partial equilibrium with respect to family
labor supplies and in applying to peasant economy called if the ‘labor consumer
balance’(Chayanov,1966 pp68-79).

-He developed a systematic theory of peasant economy based on the specific structure of peasant
economy – the application of non-wage family labor to the family household farm.

SHORT-RUN ANALYSIS OF THE LABOR- CONSUMER BALANCE

It proceeds from a single organizational concept of the peasant labor farm independent of the economic
system into which it enters (Chayanov 1966 pp48)and seeks to establish ‘the living organisational ideas,

33
the machinery of its individual economic organism which is the subjective teleological unity of rational
economy activity ‘’(running the farm). The analysis proceeds from its internally generated needs and
resources, taking an explicitly subjective approach to farm organisation within a give environment.

-The institution for this analytical isolation of the family economy was the absence of a market for wage-
labour.

The peasant family becomes the unit of production, distribution and exchange. To this atomistic, self-
determining entity. Chayanov applied the logic of utilitarian individualism. The labor process is
dominated by the relationship between work done and incomes receive.

Increased income brings diminished marginal utility and increase intensity or duration of labor bring
increased marginal disutility. As a result, the elasticity of demand for income with respect to income per
day worked is positive but less than unity, while the elasticity of supply of labor with respect to income
per day worked lies between zero and minus one.

Chayanov assumed variable supplies of non-labor inputs, as the family grows and decays the family
economy will also experience a cyclical development. The addition of children to the nuclear couple will
expand family needs relative to resources in terms of labor – power. The family’s equilibrium will shift
towards increased effort and output per worker reduced leisure and reduced per capital income. As the
children’s mature the tendency is reversed. The family divides into new sets of nuclear couples and the
cycle is repeated. The population of families within a local peasant economy will thus manifest a degree
of inequality in the utilization of labor-power, productivity and income per head which is ‘’demographic’’
or at any rate non-social in origin.

Over time, as per population pressure increases relative to the availability of non-labor inputs, the family
life cycle is repeated### a constantly shifting structure of activities in the direction of more intensive,
high-yielding products.

Chayanov assumed that the availability of the means of production was variable in the short run and
fixed in the LR. In the LR he saw the possibilities of accumulation as limited by the technical constraints
described above and by the subsistence motivation of the peasant family.

The inference which Chayanov drew can be summarized as follows:

a) Peasant economy involves an intrinsic social relation: self –exploitation of labor

b) Peasant economy reproduces itself through the family. The aim of production is household
consumption, not fendal rent or bourgeois profit.
c) Peasant economy embodies contradiction between human needs and the forces of production.

Summary
Chayanov had a definite theory of the relationship between peasant labour-power and the means of
production. It was based on a non-social view of human nature.

34
Sometimes utilitarian man who exercises choice and whose behaviour is analysed as a set of revealed
preferences; sometimes as the agent who determines the goal of his own labor, in the sense ### of
chayanov’s work.

Chayanov’s utilitarianism while set firmly within the populist ideological tradition, was a great scientific
advance. Peasants cannot be analysed either as innocent savages or as split personalities. Perhaps
Chayanov was the Newton of Agrarian studies.

John Harriss – ‘’Rural Development theories of peasant economy and agrarian change’’ (Rountledge)
Hutchinson & co Pub Ltd. (1982)

THEORY OF SHARE TENANCY/SHARE CROPPING.

A situation where the landowners allow tenants to work on their land and the share output e.g
Kenya – tea producing households and Ghana
 This has been a cause for concern since some people see it as exploitation.
 There is a puzzle because of 3 reasons
a) Despite exploitation it coexists and persists alongside other forms of farming in form of * wage
– labor * cash – tenancy
b) The customary crop shares between the landlord and the tenant cannot be easily explained.
Shares,
- Depend on institutional systems.
- Depend on the scarcity of inputs.
c) Share cropping is less efficient in the use of resources particularly land and labor.
- Exploitation because it concentrates power in the hands of landowners.
- Explanation of share cropping can come from the theory of interlocked markets – simultaneous
fixing of transactions between markets e.g land and labor markets are interlinked.

How does the complexity in share cropping arise?

Issues
 Simultaneously transactions in land and labor markets.
 The contracts that are involved in the process:
- Provision of credit by the landlord.
- Provision of inputs.
- Marketing issue.
 Lack of clear distinction between landowners and landless.

Basic concern – Is to explain why share cropping exists?

Use two models
 Tenant model – Mashallian
 Landlord model – Cheunguian

Tenant Model
Basic assumption
 Tenant maximises profit subject to the shares. The landlord takes say S share. While the tenant
takes 1-S.
Y

35
 Y2 B TVP
Y1 TC

(I-S) TVP

D
C

Labour (L)

Tenant will produce where : labor = L₁

: Output=Y1
Family farm : Labor=L₂
: Output=Y₂
The profits would be higher without share cropping where output Y₂ is produced.

G E

F A B W

L1 L2 D
0HEL₁ = TVP 0(1-S) inefficient
0hbL₂ = TVP – efficient
The tenant is providing labor and landlord provides the land. What goes to the tenants is 0GAL; FGA is
the landlords profit that the tenant gets. If we are to produce at E then AEB indicates the deadweight
loss FHEA is what the landlord is supposed to get.
If production is to take place at B then production will be efficient since there is no deadweight loss.
But at the same time the tenant will lose FGA.
Thus there is every reason for the landlord to compensate the tenant so that production takes place
efficiently. (Through some compensation bonus).
For the tenant he equates (i-s) MVPL=w
If land was variable for the tenant the MVPL=0
Under share cropping there is excess demand for land.
Under the Marshallian model the landlords will not be willing to engage in sharecropping.
Share tenanery is not exploitative.

LANDLORD MODEL
Assumption
Landlord maximise profits by producing at L₂
*The landlord has the capability to share the land among many tenants by putting a land constraint.
* The landlord must be able to decide the shares
* There must be a stipulation in the contract about the amount of labor the tenant must provide.

36
The landlord must have control over the resources.
Criticism
According to this model the landlord will be a monopolist.
there is no competition in share cropping
By producing at point B we are assuming the landlord is concerned with efficiency of land
use but share cropping is customary or there is a question of whether the landlord has
control over tenants.
 Extent control depends on the scarcity of resources.
- The model cannot explain why share cropping persists.

Uses of the models

The tenant model indicates how motivation of tenants can be undertaken.
- Can use the model to approximate efficiency in resource use with respect to share of costs
between the landlord and tenant.

Why models fail to explain persistence of share cropping?

 Share cropping persists because of
1. Risk – When the shares are fixed in advance then there is a possibility of risk through
bad weather – this risk is shared between the two (tenant and landlord).
- This persistence can be due to the risk – averse nature of landlords and tenants.
- Tenants are favored by this argument because they have no alternative.

2. Imperfect market – of labor and land- imperfect information – transaction costs. Eg

landlord may want to hire labor of high skills thus he takes tenants as an alternative.
 Incomplete/non- existence of markets for labor, credit, other inputs.

3. Lack of information: is a major contributor to share cropping.

Share tenancy is used to interlock markets – allowing simultaneous transactions.
 The interlocking of markets has got two opposing effects.
Increase efficiency in resource use & adoption of technology.
 Leads to exploitative tendencies.
This is supported by the landlord model. A landlord can use credit to exploitation tenant
.Transactions in share cropping are not aimed at clearing the market.
Landlords are not interested in social efficiency.

Policy Implications
- Interest is on how institutions affect the farmer’s behavior, to find ways of intervening
- Share cropping has implications on income distribution and equity it leads to unequal
income distribution.

Solutions:
1. Land reform with respect to making land accessible to all individuals eg latin America,
Ethopia
Pre 1970 – landlords
In the 1970s – Nationalization (for redistribution) Zimbabwe, Kenya and South Africa-
most land owned by whites – re aquisition and distribution a problem.

2. Regulations – on shares by government so that there is a clear program. Problem of of

implementation of the laws and making the decisions of shares.

37
 3. Provide credit to the tenants
- Allow the tenants to purchase land - credit to purchase inputs.
Problem – defaulting in repayment.
- Misuse of the credit
- Cost of collecting back repayments of credit.

ECONOMICS OF TECHNICAL CHANGE

1.0 Introduction
Technical change means the adoption of new methods of production by farmers but it should be
noted that technical changes are not just about the frontiers of knowledge and their applied
transfer to agriculture.

Technology- Technology is a stock of available techniques or the state of knowledge concerning

the relationship between inputs and a given amount of output or all those methods of production
which have been developed or could be developed with the existing state of scientific
knowledge.
Technological change
- refers only to advances in scientific knowledge from which new methods of production
can be derived.
Technique of production
-is any single production method, that is, it is a precise combination of inputs used to produce a
certain output. It is a single point on an isoquant curve e.g. point A

P2

P2
L P1
D
P1
B

III
A
C

38
 II
I1

There are 2 different types of changes in techniques eg. from A to B or from A to C. The relative
price ratio at point B is steeper than at point A (movement along the same isoquant. This is
called factor substitution, that is MRT changes and movement from A to C is called technical
change. Movement from A to C means that we are now using better production methods.

1.1 Factor Substitution

- means a change in the combination of inputs used to produce the same level of output.

Main Features
(a) A change in relative prices changes the slope of the isocost line from P1 to P2 (Fall in PL).
(b) This change has both an output and a substitution effect and there are analogous to the
output and substitution effect in consumption theory.
(c) The output effect means that a higher level of output can be obtained for the same total
cost after input price fall. This is represented on the diagram by point D.
(d) The substitution effect is movement A to B , i.e. It is the operating position on the old
isoquant at the new factor price ratio after the rise in output has been taken away.
(e) Factor substitution is the pure substitution effect (SE) of a change in the relative factor
prices holding technology constant, i.e. the substitution (S) occurs within the existing set
of the available techniques represented by isoquant IA .

1.2 Technical change

Technical change in contrast means a reduction in the quantity of resources required to produce
the same or a given output or alternatively more output for the same level of resources
(movement from A to C). This movement from A to C corresponds to the technological change
which moves the same isoquant I11 inwards towards the origin.

Main Features-
There is a reduction of the quantity of one or more inputs required to produce a given output
irrespective of what happens to the relative factor prices.
This means that the efficiency or productivity of one or more of the resources has increased.
Technical change implies a reduction in total production costs for given factor prices as indicated
by a parallel inward shift of the isocost line P1.

Ways of measuring Technical Change

1. Measure the increase in output obtained from the same level of input.
2. Measure the decrease in total costs (TC) for the same level of output at constant input
prices.

39
Method 1 has the disadvantage that the old combination of inputs may not be suitable for the
new technology eg. hole digging in planting versus modern ways 2 plant seed. For example new
seed varieties require better soil preparation and more regular water supply.
Method 2 is more preferred and for practical purposes technical change is usually defined as the
proportional decrease in costs of production achievable by the innovation when both the old and
the new techniques operate at their optimal input combination and when factor prices are held
constant, (Binswanger 1978:20).

1.3 Relevance of the distinction between Factor Substitution and Technical change

The purchase of a tractor on a farm which has previously used manual labour makes a
considerable difference to the assessment of the impact of this change in method whether it
involves (a) the same level of output for a different combination of inputs and different factor
prices (factor substitution) or (b) higher output for the same production costs at constant factor
prices (Technical change). The standard neo classical approach to technical change treats it as
exogenous to the economic system. Technical change is termed disembodied when the reasons
for the increased productivity cannot be identified. In practice, technical change is always
embodied in the particular resource which results in greater efficiency, eg. if higher yields per
unit area results from using new seeds then technical change is embodied in new seeds (HYV vs
OPV).

1.4 Technology and Innovation

Invention refers to creation of a new technological knowledge.
Innovation- embodiment of the new knowledge in the actual production process.
Adoption- general acceptance of the new innovation by farmers.

Innovation
There are two types of innovation
1. Product innovation – involves creation of new products
2. Process innovation – a change in the mode of production at the existing input prices
while product innovation involves creation of new products.

Innovation is virtually synonymous to technical change. It refers to the 1st practical use of a new
more productive technique.
Types of Innovation
1. process innovation
2. product innovation

Process innovation
An innovation which changes the unit, combination, quality or type of inputs required to produce
the same kind of output. Most innovations in agriculture are process innovations in which the
output produced remains unchanged.

Product innovation

40
One on which the nature of the output changes and is usually considered more prevalent in
industry than agriculture. The manufacturing sector often undertakes product innovation. In the
production of agricultural inputs, eg. new machines, chemicals etc which then become process
innovations in agricultural production.

In agric economics there are biological innovations and mechanical innovations. Biological
innovations involve creating better varieties of existing crops while mechanical innovations
involve creation of implements used in the process. Innovations are communicated hence
communication leads to adoption.

1.5 Types of Diffusion Processes

Diffusion- is defined in relation of speed of innovation at the aggregate level but viewed over
time. It is the cumulative process of adoption measured in successive time periods.

Determinants of Diffusion

1. Time- it occurs over time and relies on the extent of the interaction between farmers. The
process of diffusion is depicted as one of learning such as the demonstration effect of
early adopters is important.
2. It also depends on the extent to which technology is location specific or is adaptable to
the conditions under which most farmers operate.
Social- cultural and historical environment will also influence the speed at which the use of new
technology will spread through the farming community
1. Vertical Diffusion
2. Horizontal Diffusion

Vertical occurs when innovation is diffused within the boundary in which the innovation is
developed. Horizontal diffusion involves the transfer of innovation from boundaries of one
country to another.
Vertical Diffusion – there are two ways of looking at it (a) supply led and (b) Demand led.

Supply Led Diffusion- In this we have

RESEARCH ORGANISATION

CHANGE AGENT

( f

FARMER
41
Demand led- it starts from farmers who have needs which have to be catered for.

FARMER

CHANGE AGENT

RESEARCH AGENT

Horizontal Diffusion- most of the innovations are developed in DCs and transferred to LDCs.

42
 DEVELOPED COUNTRY LDC

Research Agent Research Agent

Change Agent Change Agent

Farmer Farmer

There are 3 types of technological transfer:

(a) Capacity transfer- transfer of the ability to use the variant suited to LDC needs
(modification takes place in the LDC itself). Research agents developed in LDCs
similar to those in DCs.
(b) Material transfer- simply taking the innovation as it is eg. tractor.
(c) Design transfer – transfer of information, material importation for testing and
copying designs.

Stages of innovation

1. Awareness stage
2. Interest stage
3. Evaluation stage (Is there a chance of gaining).
4. Trail Stage
5. Adoption.

What factors determine the rate of technological adoption from stage 1 to stage 4.
1 Cost Factor- You look at Fixed Cost Factor and Variable Cost Factor. If Innovation involves
large fixed cost then small farmers may not adopt innovation.
2. Risk factor – amount of risk involved in adoption of a new technology. Farmers are generally
risk averse. They use well known techniques so they take time to adopt new innovations.
3. Communication – how efficient is the communication system? Extension services, media,
more progressive farmers. Risk awareness of farmer – for an innovation to be adopted it has to
be proven.

1.6 Adoption and Diffusion of new technologies

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Adoption studies relate to the use or non use of a particular technology by an individual at a
point in time or during an extended period of time. The adoption process analyse the reasons or
determinants of whether and when adoption takes place. By convention in a population, people
are classified as (1) innovators (2) early adopters (3) early majority, (4) late majority (5)
laggards.

Innovativeness and Adopter categories

Innovativeness is the degree to which an individual is relatively earlier in adopting new ideas
than other members of his social system. Adopter categories are the classifications of members
of a social system on the basis of innovativeness. (Supe, S.V. (1997:7)).

Early adopters Early Majority

Innovators Late majority

Laggards

2.5% 13.5% 34% 34% 16%

All farmers do not adopt a new practice at the same time. Farmers may be classified into five
adopter categories according to the relative time at which they adopt a new practice.
1. Innovators- first farmers to adopt a new idea. They are the experimenters. They are
characterized by large farm size, relatively higher income, high social status, access to
many sources of information and a venturesome spirit.
2. Early adopters- when compared with the average farmer, the early adopters have slightly
higher education, are a little younger in age, and participate more in formal organisations.
Their social status is high and they have many informal contacts within the community.
They are looked upon as good sources of advice and information by the neighbours. They
have more contacts with extension workers.
3. Early majority- these farmers adopt innovations a little earlier than the average farmers.
In most respects they are typical average farmers, their education, farming experience and
contacts with extension workers are only slightly higher than that of the average farmers.

44
 4. Late majority- these farmers adopt new ideas just after the average farmers, and have
about the same characteristics as the early majority but to a slightly lesser degree. They
have slightly less education, social status and extension contacts than the average farmer.
5. Laggards- the last to adopt new ideas. They are the oldest farmers and they have the least
education, few social contacts and low participation in formal organisations. They resist
new farm practices until everyone else in the community has adopted them. They regard
extension workers with negative attitudes and suspicion. (Supe, S.V. (1997:7)).

Factors affecting adoption of new technologies

1. Technical attributes of a given technology- If technology is complex, very few people
will attempt to use it. Is the technology divisible? If technology is ‘lumpy’ eg. combine
harvester, small scale trials are not possible and the farmer may be more reluctant to
adopt.
2. The economic potential (yields, profits etc)- unfamiliarity with new technology will make
the initial impact and innovation usage uncertain. The new technology may affect the
extent to which the farmer is exposed to the vagaries of nature, eg. HYVs may be more
susceptible to diseases. Since the adoption decision takes place in an uncertain
environment, the farmer’s attitude to risk and in particular the degree of risk aversion
must be taken into account.
3. Characteristics of the farmer- age, sex, experiences, education all those do determine
whether people will adopt a certain technology. These factors determine the farmer’s
awareness and interest in new technology and the ability to implement it. The adopter
may be confronted with constraints in terms of purchasing power of access to credit and
information and poor communication links with products and input markets..

1.7 Sources of technological change.

There are 3 main sources of technological change.

1. Learning by using- local based, improvements with time. This is technological change
that comes through experience with a production process on a farm. With time, the
producer learns how to get the most out of the inputs and the production process which
has been adopted.
2. Private and public research and development- is technology generated within the country
and takes different forms (1) Basic and (2) Applied research. Research is basic when it is
undertaken with no specific commercial objective. It is applied research when it is
directed on an immediate commercial end. In the development stage, the most
commercially promising research is selected and used to create new processes or
products.. In the industrial sector, most firms have research and development and
development teams but are rarely found in agriculture. In contrast, most agricultural
research development activities are undertaken by public agencies.. Governments are
willing to provide financial support for R and D because (1) new technology may take
several years to develop (2) The research input may be too costly for an individual farmer
to bear and it may also be too costly to disseminate information on a new process. (3) It is
difficult to patent a researcher’s interest in the new process.

45
 3. Imported research and development (R&D)- most R&D is conducted in industrialized
countries and many LDC rely on the import of foreign technology (technological
transfer). One option is to screen foreign technology and adopt the “best” without
adaptation, i.e. without changing technology. Transfer of technology in this way has
created some concern that foreign technology may not be appropriate to the needs and
condition in the recipient countries and may generate indirect costs as well as benefits.
An alternative would be to select foreign technology for subsequent modification through
adaptive research to suit local conditions.

1.8 Neutral or Biased technical change

Technical change is called neutral technical change if there is a parallel movement of the
isoquant inwards towards the origin implying that at given factor prices, the ratio of the inputs
(L/K) is the same after the change as before the change.
Neoclassical economists often like to think of technology change as being neutral because this
means that technology change itself cannot be blamed for altering the combination of L and K
used in production. This type of technology change is shown in diagram (a) below.
If technology change is biased in terms of using more of one resource than another, then
different social as well as economic implications follow from the technology change. Fig (b)
below is biased to labour.

K K
Isocline
Biased to labour

A K1 A

B K2 B

Labour L2 L1 Labour
(a) (b)

The diagram below shows technology change biased to capital and against labour.

Labour M

46
 P

L1 A

dL C

L2 B

O k1 k2 Capital
dk

Instead of moving inwards parallel towards the origin, the isoquant representing a given level of
output is skewed inwards making it much steeper. This change of slope means that more labour
(dL) is displaced for a given rise in capital than on the previous isoquant. More formally, the
MRTSKL rises between the two technologies. Point A is the initial equilibrium representing
efficiency of resource use given an inverse factor price ratio (r/w) which underlies the slope of
the isocost line P1. At point A, labour use is L1 and capital use is K1. The biased technology
change results in a new equilibrium at point B for the same price ratio entailing a greater decline
in labour use from L1 to L2 than the increase in capital use from K1 to K2. It is a labour saving
technical change. The factor ratio (L/K) falls and at given factor price, so does the share of
labour (WL) in the total value of output.

An alternative expression of the biased technical change is to consider the direction of change in
relative factor prices which will be required in order to maintain the same factor proportions
(L/K) as before. Constant factor proportions are shown by the ray OM passing from the origin
through point M. That line joins all points with the same (L/K) ratio on the graph. In order to
keep the same factor proportions with the new technology at point C, the price of labour (w)
must fall relative to the price of capital (r); yielding a new isocost- line P2.

This fall in the price of labour relative to capital reduces the share of labour (wL) in the total
value of output for a given labour–capital ratio. If the income share of labour (WL) rises relative
to that of capital (rK), then we have a labour biased or capital saving technology change, but if
the income level shares stay the same we have neutral technology change and if the share of
labour falls we have a labour saving technology change (Hicks neutrality).

These alternatives are defined with respect to a definition of neutrality called the constant labour
capital ratio (Hicks neutrality). In LDCs like Zimbabwe, new seeds are considered to represent
land saving technology change while some kinds of mechanization are considered to be labour
saving technology change.
New seeds are land augmenting because they increase yields per unit area. Tractors and other
farm machinery may be biased to both technology change and scale. They have a labour saving
bias in technology change and have a scale bias towards larger farm size due to resource
indivisibilities.

1.9 Farm Mechanisation

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These are non-human sources of power for undertaking agricultural tasks and activities.

Main types of mechanization technology

1. Hand tools eg. hoes
2. Animal draught power. It is a case in which machines or equipment are driven by animals
such as buffalo, donkey, oxen, horses, camels etc. eg. carts, ploughs.
3. Mechanical power- engines or motors powered by petrol, diesel or electricity which are
used to drive a great diversity of farm machines. The machines can be stationary or
mobile eg. water machines, irrigation pumps, windmill.

Farm mechanization policy is concerned with the appropriate pace of the transmission between
the 3 main types of mechanization technology, given the resources and constraints on both the
farm sector and the economy at large. The induced innovation theory distinguishes 3 broad paths
of technological development in agriculture corresponding to labour saving and land augmenting
technological change. This distinction is common in the literature because it seems to correspond
reasonably to the different character of Farm mechanization compared to biological innovation.
This gives the perception that peasant agriculture should be more oriented to biological than to
mechanical innovation.

However, not all mechanization is of necessity labour saving and not all biological innovations
is of necessity labour using, e.g. mechanization in the form of irrigation pumps is important in
wet rice cultivation is complementing with more labour use since it permits more intensive
cultivation and the potential for multiple cropping. Biological innovations in the form of
herbicides (weedicides) – this is usually labour saving.

Main issues surrounding farm mechanization in LDCs

Emphasis is on tractors and big machines because they excite the most controversy and seem to
depart most from considerations of social efficiency, employment creation and more equal
distribution of income. It is important to note that machines come in different sizes shapes and
function. It is futile to generalize about mechanization.

Each separate item of mechanical equipment must be assessed on its merits taking into account
whether it substitutes or complements labour, its farm size requirements for optimal operation
and the basis of its claims to raise farm output. For most LDCs, the pace and direction of
mechanical innovations in agriculture is well within the capacity of the state to regulate via
import and sales taxes which determine the relative costs of different machines for farmers. In
Zimbabwe, duty has been reduced.

Debates surrounding mechanization concerns the impact of tractors on farm size, productivity
and employment. Two lines of the arguments may be identified and these have been referred to
as the substitution view and the net contribution view. These correspond to the concepts of factor
substitution and technological change in economic analysis and emphasis on the one hand on
tractorisation as pure substitution for animal power and labour whilst on the other hand, the net
increases in productivity achieved by tractors.

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Substitution view
Argues that the net effect of tractorisation is more or less substitution for animal draught power
and labour. There is little or no reduction in the overall costs of producing a given output and not
net efficiency gains in terms of higher outputs. Higher yields if observed are affected by higher
production costs especially if resources are valued at social rather than efficiency prices.

Net Contribution view

Based on several reasons for expecting a net increase in output from using tractors. Tractors
allow previously unutilized land to be brought into production due to the larger area which can
be cultivated where land is not a binding constraint. Tractors permit seasonal shortages of labour
to be overcome and or they release labour in critical periods for other productive tasks. Tractors
result in higher yields per unit area due to more timely ploughing, better seed bed preparation
and more accurate delivery of variable inputs. Tractors may be essential for higher rates of
multiple cropping due to the need for rapid land preparation between sequential crops. A tractor
is not used only for cultivation but can also be used for improving the farm infrastructure eg.
drainage, irrigation etc; for driving pumps and mills and for carrying output to the market and
inputs from the market. Many case studies on the impact of tractors seem to indicate that the net
productivity contribution of tractors is low and non-existent in most LDCs. The substitution view
thus seems to approximate more closely a nature and impact of tractors than the net contribution
view.

1.10 Technological change in Agric and Green Revolution

Definitions of Green Revolution

Green revolution is a technological phenomenon representing a biological breakthrough in

genetic biological engineering. Producing crops giving HY per acre. Green revolution was
mainly concentrated in S E Asia, Indonesia, Pakistan. Most of the research into Green revolution
went into rice and wheat. Biological engineering started in Taiwan. When the International Rice
Research Institute was set up by the Ford Foundation in 1962.

Green revolution –other people use it on broad structural transformation of agriculture with a
view to increasing food output. Experiences of LDCs makes it difficult to apply the term to
describe the structural transformation of LDCs would include Land Reform, credit facilities,
marketing facilities. The more specific definition refers to technological breakthrough in HYV
rice and wheat. Green revolution is purely technological growth and progression of agric sector.

New varieties of wheat came from CIMMYT in Mexico and also rice from the IRRI in
Phillipines. When combined with correct amounts of the complementary inputs of water,
fertilizer and other farm chemicals, these varieties promised yields which were higher than those
from traditional varieties. These HYVs were rapidly adopted and with quite dramatic results in
some instances. As a result India became self sufficient in wheat in the late 1970s. China,
Pakistan, Turkey and Bangladesh also recorded substantial increases in wheat production and for

49
developing countries as a whole wheat yields rose by 2.7% p.a. between 1961 and 1980 (World
Bank, 1982 (Colman and Young , 1989: 62-64).
Rice yields also rose by 1.6% p.a. in same period with higher yields > 3% p.a. in Philippines and
Indonesia. The high yielding wheat area is heavily concentrated in Asia as was high yielding rice
area. In India and Bangladesh the new varieties produced yields two or 3 times higher than
traditional varieties.

An attractive feature of the Green revolution is that, in principle, the new biological technology
is scale neutral : it may be adopted by small scale as well as large scale farmers although the
institutional and policy setting in which the new technology has been introduced has often been
found to be biased in favour of large farmers. Large farmers were first to adopt although small
farmers catch up. The following are reasons why some farmers may not gain the benefits offered
by the Green Revolution:
1. The technology may not suit their climate and soil.
2. There may be inadequate water resources.
3. Transport and marketing infrastructure may be deficient.
4. Prices and other incentives may be insufficient

Basic characteristics of HYV

They tend to be short, stalky and are not amenable to winds, flooding and are more seedy. They
ripen within a short period- possibility of multicropping per year. Because of the smallness of the
plant they have a greater grain to straw ratio. While there has been attempt to engineer
biologically in other crops (maize etc), there has not been such success as in rice and wheat in
SEA.

How green was Green Revolution?

Two aspects to look at: (1) Growth performances and experiences of countries that underwent
the revolution. (2) Economic impact and consequences of the green revolution in the countries.
First empirical study was done by Keith Griffin (1974) and revised in 1978. His main thesis was
Green revolution was a revolution that failed. It was not as revolutionary as proponents argued.
What happens in labs is not necessarily practicable. His main contention was if the Green
Revolution was a success we should see an acceleration of ratio of growth of agric in post and
pre revolution period. His results showed a failure in Latin America but marginal increase
elsewhere. For wheat in Asia there was a Green Revolution. For Rice there was no green
revolution. The method used also came under attack.

Why Green Revolution failed?

1. HYV require large quantity of complementary inputs particularly purchased inputs to
achieve potential (irrigation water, pesticides etc.). Problem of supplying these at right
time can be formidable.
2. Rate of adoption by small peasants might not be as by large farmers. There is need for
proper water control to realize potential of HYV.
3. Because of short growing season of HYV this demands changes in cropping patterns-
may need use of mechanization, storage facilities i.e. high capital investment.
4. Risk involved in using HYV is high (risk of failure).

50
 5. Other problems (Organisational and institutional) - Green Revolution increased
organization for existing input channels but for new inputs they needed organization.
6. Marketing and storage of output- Pregreen revolution production done on subsistence
basis but with revolution there needed infrastructure development which was not geared
to high levels of production. LDCs did not have much choice – they had to rely on govt
marketing boards- to supply inputs and buy output or they had to rely on private business
or farmer cooperatives.
7. Efficiency needed, costs have to be minimized, and marketing needs provided at
appropriate time. All three were used in the Far East. Inputs delivered late. Marketing
boards ran into continuous deficits. Marketing boards (and private business) – problem of
undervaluing of farmers’ output. Middlemen raising prices up. This caused a squeeze on
the small farmer and disincentive to him. In terms of agribusiness (extension service and
supply of inputs) there is no guarantee that in the interests of increasing profit it can be
that the business may take farmer to buy unnecessary inputs.

8. Failure of green revolution may have been due to weak institutional / organizational
framework existing in S.E. Asia. This tended to be a disincentive for farmers to keep
producing.

Economic side effects of Green Revolution

Its impact on intra rural equality- Green Revolution did not spread evenly over regions. There is
therefore interregional inequality and intraregional inequality (small vs big farmer). Regions with
irrigation water progressed while those without failed. Small farmer is less capable of adopting
new technology- differential rates at which technology spreads from farmer to farmer. Green
revolution needs high capital outlay, irrigation water, pesticides. Larger farmers have greater
financial resources and grow faster while small farmers retrogress. Where credit facilities are
available and repayment is criterion, most credit accrues to large farmers. If small farmers resort
to loan sharks they get credit on penalty rates while big farmers are subsidized. Because capital
is lowly priced the big farmers may use capital intensive techniques. Large farmers may have a
fairly disproportionate share of political influence- have thus larger share of public resources.
Net result of all these issues, the Green Revolution has brought a widening gap between small
and big farmers. Therefore, the Green revolution has failed in certain localities. Small farmers
may be forced to sell land to money lenders and become landless labourers.

Employment Implications of the Green Revolution

- Growth in labour saving technology on large farmers, interest rates very low, low tariffs
for machinery etc. With such cheap financing this encourages mechanization. Therefore
Green revolution was anti-employment.
-
Policy Issues and Implications

While HYV can generate growth, as long as the varieties are limited to a few regions, the
problem of political and social instability will continue to exist. In many LDCs there is rain fed
agric so there is need for research into yields for dry land farming. When consideration is taken
of production to big farmers there is to be considerable degree of pauperization of small farmer.
Appropriate policies should bridge social costs and benefits. Perhaps policy of land reform

51
establishing how much land a farmer should have. Ceiling may discourage large farmer to use
capital intensive methods. Removing factor price distortions – capital is lowly priced labour is
highly priced. This is relevant to employment aspects of agriculture.

There should be some change in credit granting including subsidization of credit to small
farmers. Multiple pricing of output could help small farmers say $100 for 1st 20 bags, $80 for
next 50 bags.

There are three basic points concluded about Green Revolution:

1. Has raised more developmental problems than it solved (does not deny significant gains
in agriculture).
2. Has not brought about a major structural change and rural development.
3. Has reinforced dualism in agric itself and industry.

According to Ellis (1992) the complementarity between new crop varieties, water control and
chemical inputs, leads to the idea of delivering an input package to farmers- the “Green
Revolution package”. The package approach envisages a major role for the state: investment in
public irrigation schemes, delivery to farmers of certified seeds plus appropriate quantities of
fertilizers and advice on proper agronomic practices. Problems with the approach – high
overhead cost per farmer, relatively small numbers of farmers that could be included in each
scheme, insensitivity to local variations in soil and climate, failures of credit repayment, failures
of input delivery.

1.11 Relevance to Zimbabwe

Irrigation schemes and need to look at flooding varieties in Zimbabwe.

Green Revolution for Zimbabwe

A green revolution logically occurs in the more favourable natural resource area as the maize
production in Zimbabwe (Region 1, 2 and 3). The Zimbabwe’s overflowing grain silos of white
maize dispels some pessimism about a green revolution for Africa. From 1980-1987,
Zimbabwe’s small holder farmers tripled white maize production. The maize revolution has its
origins in research on hybrid varieties launched in 1932. It took 28 years of local research to
produce the SR52 hybrid variety. Between 1960 and 1979, researchers concentrated on
developing short- season hybrid maize varieties for small scale farmers in low rainfall areas.
100% of commercial farmers in Zimbabwe plant hybrids as compared to 80% of small holders.
However no single factor was responsible for tripling food production by small holders in
Zimbabwe. At independence, the new government removed racial barriers limiting small
holders’ access to credit and increased public investment in roads, extension, and marketing
services and buying points. Strengthening the scientific and institutional base for agriculture is
the message that emerges from Zimbabwe’s maize revolution.

Maize breeding commenced in 1933 and concentrated on hybrids. The first double hybrid was
released in 1949 and the first single hybrid for commercial production, the SR52 was released in
1960 making Zimbabwe the first country in the world to use a single hybrid commercially. Since
then a number of single and three way hybrids of different maturities have been released of both
white and yellow dent grain which are well adapted to local conditions. A small sorghum

52
breeding programme which commenced in 1960 made its first releases of brown grained types
used for brewing opaque beer. More recently, however, greater emphasis has been placed on
white-grained sorghum for human consumption. The programme has received germplasm and
assistance from the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT).
The releases made by ICRISAT by the end of 2004 had been open-pollinated varieties but there
was continued work on developing hybrids. Other breeding programmes are on cotton, potato,
sunflower, oilseed crops (soyabeans, groundnuts and sunflowers), barley and wheat. In recent
years, much of the germplasm has come from the International Maize and Wheat Improvement
Centre (CIMMYT) in Mexico (Havazvidi and Tattersfield, 2006:243-44.

Modern varieties and their impact

The term Green Revolution has tended to fall into disuse because modern varieties have
certainly not transformed the economic situation and prospects of developing countries. The term
HYVs places rather too much emphasis on just one attribute: their potential to achieve greater
output per unit area of land at the expense of other attributes like disease, or pest resistance,
drought tolerance and shorter growing seasons. Modern varieties change over time through the
activities of a worldwide network of International Agricultural Research Centres (IARC) and
local research agencies eg. Matopo Research Station.

This means that observation of a defect in say for a particular strain of rice grown in one region;
say over a couple of crop seasons eg. perhaps it was acutely susceptible to pest or had low
tolerance in variation of moisture or required far more quantities of fertilizers for most farmers to
afford does not necessarily apply to the same region a few years let alone to the entire
technology.

No person is only a farmer, an employee or a consumer. Most people are in at least two groups
and many are in all three. With modern varieties, poor consumers gained as extra cereals
supplied, restrained food prices. Producers in non-modern varieties areas including many poor
farmers gained nothing from the new technology. Often they lost as extra modern varieties sales
from modern variety areas, restricted farm gate prices in impoverished areas. Some of the seed
varieties were much more fertilizer responsive but also had higher requirements for inputs and
management. (Lipton and Longhurst, 1989: 18-20). Small farmers everywhere enjoy less
extension advice than their bigger neighbours in similar circumstances. Small farmers are likely
to face high ‘background risk’ e.g. from ill-health and thus to reject extra perceived risk from a
little known modern variety. Although small holders are slower to adopt modern varieties, the
proportion of land that adopting smallholders sow to modern varieties is frequently higher than
for adopting larger farmers. This is called the ‘Paradox of proportions’. Some of the explanations
include that they eat a much bigger proportion of what they grow. Benefits to the poor are
reduced by problems of timing. Poor farmers usually adopt modern varieties late, after better off
early innovators have raised output supply and input demand; hence poorer, later innovators pay
more for inputs and get less for outputs.

Modern varieties are developed with a great number of factors in view:

1. High yield responsiveness
2. Plant nutrients

53
 3. Wind resistance
4. Drought resistance
5. Pest resistance
6. Tolerance to variation to soils and water.
7. Shorter growing seasons
8. Acceptability in consumption (GMOs – contamination)

Social and economic attributes of modern varieties

- few people dispute or doubt the output increasing capabilities of modern varieties.
- Their net impact is technological change rather than factor substitution.
- however controversy has existed concerning their different rates of adoption by a different
kinds of farmers, their reliance on high levels of complementary purchased inputs, regional
disparities and their uptake and their overall impact on income distribution.

Advantages
1. Modern varieties have resulted in substantial output increases in countries exhibiting high
rates of their diffusion and adoption eg. modern rice varieties have enabled some
countries to achieve and to sustain food self sufficiency with minimum recourse to food
imports.
2. The main basis for these are higher yield per unit area and to some extent multiple
cropping and new land cultivation.
3. Some modern varieties outyield traditional varieties even without changing input
regimes.
4. Peasant farmers have proved just as capable as just commercial in achieving the benefits
of modern varieties.
Disadvantages
1. Locational disparities in rates of adoption has been widely noted and these relate to
natural soil and water endowments, irrigation availability and infrastructural disparities
between places.
2. Modern varieties are thought to be more susceptible to yield variability than traditional
varieties. However at the aggregate level of output, higher variability in a single crop is
offset by an increase in multiple cropping which modern varieties permit.
3. The greater reliance on purchased inputs of modern varieties locks up peasants more
firmly in market transactions and makes them prey to the unequal exercise of market
power in imperfect markets. High cash incomes are traded against the loss of security in
subsistence. However modern varieties are technical scale neutral. In the absence of
tractorisation, modern varieties are labour using- more labour is required for cultivation,
weeding, input application, water control, multiple cropping or harvesting thus modern
varieties have increased rural employment.
4. High incomes have tended to result in les farm work by women members of the
households but it increases the casual wage employment from poorer rural families. High
output meant lower food prices and this has benefited urban folks and the landless rural
poor and lower grain prices mean more staple food for the poor. However the tendency to

54
 monocrop modern varieties in preference to the diverse production of traditional foods
may lower the nutritional status of farm families. Modern varieties have been much less
successful in resource poor and semi- arid environments (Africa) than in zones with
richer soils and more stable climate condition (Asia). Farming systems in resource poor
conditions are characterized by this complexity, diversity and risk proneness. However
modern varieties are not a ‘panacea’ for inequality and poverty in developing countries.

Mechanisation Policy
Mechanisation comprises non-human sources of power for undertaking agriculture tasks and
activities. Types of technology fitting this definition are hand tools or implements, animal
draught power and mechanical power. Mechanisation policy is about the comparative impact of
different types of mechanical innovation on input, employment, income distribution and farm
size.

Research Policy
Is about the role of the state in and about alternative approaches to, the generation and diffusion
of new agricultural technology for farm households. Diffusion of new agric technology refers to
the factors underlying the adoption of innovations by farmers. It includes farm level and
economy wide constraints affecting technology adoption, off-farm and on-farm trials of new
crop varieties, and dissemination methods for spreading information between farmers.

Generation of new agric technology refers to factors underlying the supply of innovations.
Includes forces determining topic for research institutional organizations of research, resources
allocation to research management of research and the outcomes of research.

Informal research – experimentation and innovation undertaken by farmers themselves. It

includes adaptation by farmers of innovations emanating from the formal research system,
farmers’ own inventions with respect to variety selection, cultivation practices, design of farm
implements. Farmers possess an accumulated and mostly unwritten fund of knowledge
concerning plants, soils, climate, seasons, pests, diseases etc. This knowledge remains largely
untapped and ignored by formal research systems and conventional approaches to research.
Formal research- research activities undertaken within national or international research
institutions or by large private corporations.

Irrigation Policy
- This is about the role of the state in promoting or providing irrigation facilities. It is also
about policy choices that exist with respect to alternative irrigation technologies,
management of large scale irrigation schemes, and alternative methods for recouping
from farmers the cost of providing them with irrigation.. Irrigation represents an example
of market failure.
Objectives of irrigation policy
1. Output or resource use efficiency.
2. Equity in income distribution.
3. Long-term sustainability.
4. Food security at micro and at macroeconomic levels.
Contributions of irrigation towards farm output

55
 1. Reduces risk by diminishing the adverse impact of rainfall variation on crop growth and
yields.
2. Increases crop yields directly by reducing the incidence of water stress in plants caused
by uneven water supply.
3. Permits farm output to be increased because the household can swith to a higher value
crop mix, or because HYVs that are more responsive to high levels of complementary
inputs can be cultivated.
4. Permits a rise in the multiple cropping index (the average number of crops that can be
grown sequentially on a given area of land during an annual cycle.
5. Permits previously uncultivated land to be brought into cultivation by extending the
margin of cultivation into semi-arid or arid regions (soils should be capable of sustaining
crop production).

ADDITIONAL NOTES

Technological transfer typology

There are 3 phases:

1. Material transfer: simple transfer or importation of new materials like seeds, plants machines or
management practices. Adaptation not highly institutionalized.
2. Design transfer: involves the transfer of information in form of blueprints, formulas, journals
,books and related software material transfer will be for testing purposes or in order to copy
imported machines are tested and designs modified to adapt them.
3. Capital transfer: occurs through the transfer of scientific and technical knowledge and capacity
– objective will be to institutionalize local capacity for invention and innovation. Both biological
and mechanical technologies are invented that are adapted to the ecological conditions. There is
migration of individual scientists and building of institutions with advanced research,
development and training capacity.

Example: Diffusion and development of sugarcane varieties portrays the 3 phase of international
transfer.

Material transfer was from India to china, Arabia and the Mediterranean Design transfer was from
Java and Barbados

Almost every sugarcane, producing country has the capacity to produce locally adapted varieties.

Issues and problems Technology transfer and innovation technology Transfer

56
  The economic models unlike other disciplines have concentrated on economic variables
such as profitability and asset position of firm in influencing technological transfer rates.
 The diffusion literature concentrated on material and design transfer which lead to capacity
transfer.
 Ecological conditions and factor endowments severely restrict the diffusion or direct
transfer of agriculture technology.

Induce Technological change: is an important aspect of technology.

 It involves the implications of relative resource endowments and factor prices on the choice of
technology and on the direction of technical effort.
 Technical changes in developed countries (US, Japan) have been a response to relative factor
prices. In LDCs institutionally determined biases in relative prices have induced patterns of
technical change inconsistent with relative resource endowments, the induced innovation
perspective give a useful guide to the design of a national research strategy. The transfer of high
–yielding race varies from Japan to the tropics was stimulated by the relative prices of fertilizer
to land and rice prices.
 Delay in transfer of high- yielding rice technology was due to lay in the development of
institutions of research capacity.
 Another essential aspect is the process of institution transfer and innovation. Successful capacity
transfer depends on the successful institutionalization of the public sector capacity. Two bodies
of literature help in understanding the process of institutional transfer and innovation:
i. Institutional building from public administration.
ii. Models of bureaucratic behavior

There is great concern with problem of transferring particular organizational forms from developed to
developing nations and with institutionalization. It was discovered that it is easier to institutionalize an
organization whose operations are concerned with a well- developed technology.

Induced institutional change and agricultural policy

The second enclosure movements in England represent a classic institutional change. The enclosure Acts
paved way for the intensive system. The Acts were seen as institutional innovation designed to exploit
the new technical opportunities opened up by innovations in crop rotation utilizing the new fodder
crops.

Modernization of the land tenure system in western agriculture was designed to internalize the
potential gains of innovative activity by individual farmers.

The policies a country adopts with respect to allocation of resources to technology and institutional
innovation must be consistent with physical and human resources if an efficient growth path is to be

57
attained. Progress is also needed in the contribution of social sciences to the process of institutional
change.

Technology discovery and diffusion

a) From the direct inference commodity studies – technology generation is seen as a sequence of
innovations. The studies showed that there was too little investment in agriculture research.
Studies established the proposition that research programs in developing countries.
b) Implicit technology generation function (production function) studies relied on estimation to
suggest a relationship between research activity and new technology used an aggregative
production function refer to transparent: the function is assumed to be homog of degree 1 and
producers maximize profits. Measured productivity is regressed on measures of research
extension and schooling or an aggregative production function is specified with research,
extension and schooling variables as factors of production. The Hayam-Buttan study represents
an important pioneering effort revealed a systematic relationship between productivity change,
research and extensive developing countries.
c) Discovery and diffusion was also investigated through transfer and information specification.
This was based on two specification improvements:
i. The explicit treatment of errors and information supply. This allows an improvement in
the distribution between the economic contribution of extension and extension type
activities and research effort.
Error – reduction is viewed as part of an information market. Thus, profit maximizing
producers demand information so that they increase profits and reduce errors.
But in LCDs the demand for the demand for information is low and information
suppliers find an unreceptive audience. The introduction of real new techniques, factor
quality improvements or new factors can change the situation.
Estimation show that errors were positively related to technology generation but
negatively associated with schooling

ZIMBABWE
Zimbabwe made impressive achievements after independence:- rapid economy growth, resettlement
and increase in smallholder agricultural production.

Succession of boom and recession is a problem of rainfall.

Carl Eicher
Because of the important contributions of international agricultural research centres to the green
revolution in Asia, there has been a widespread belief that the same will happen to Africa. But the green
revolution has achieved the impact of a small footprint on Africa’s rural landscape since the green
revolution has achieved the impact of a small footprint on Africa’s rural landscape.

58
Since the green revolution has barely touched Africa, it is time to reexamine the strategy of relying on
13CGIAR centres and the French Int research intitrites as primary institutions to develop new technology
for African agriculture.

How can African nations of varying sizes become more technologically proficient? Building national
scientific research and training capacity is an incremental process that extends over many decades.
Colonial record documents the creativity of small teams of highly motivated and well-funded scientists
in national and research systems and suggest that African governments and donors should progressively
strengthen the capacity of national R&D initiatives to enable scientists to play a leading role in
generating new technology in Africa in the future.

A strategy to increase Africa’s technology proficiency in Agriculture should focus on:

1. The role of science based agriculture development.

2. The role of research in generating new technology to produce new income streams in food,
livestock, export crops, flowers and spices.
3. Building science and technology (S&T) in a country and at sub regional level.
4. Relying on intelligent borrowing of technology as the primary means gaining access to new
technology. A high level of local scientific capacity is a prerequisite for borrowing screening,
testing and adapting technology to microenvironments.
5. Africa requires donor assistance to strengthen the capacity to offer sound Masters Degree
training in Science, Agriculture and economics.
6. International technical cooperation should be overhunted Africa requires gifted scientists,
research advisors and financial managers on farm to five year contracts.

Green revolution in Africa for example maize production in Zimbabwe’s overflowing grain silos of white
maize help to dispel some of the pessimism about a green revolution for Africa 1980-1987 smallholders
tripled white maize production. *40% of the market surplus.

Origin
Originates in research on hybrid varieties that was launched. In 1932 – it was 38 years of local research
that produced SR-52 hybrid variety.

1960 -1978 – emphasis was on short season hybrid maize varieties, 100% of commercial farmers plan
hybrid varieties in 80% by smallholders.

 Ready and assumed availability of fertilizer and hybrid maize throughout the country.
 Strengthening the scientific and institutional base for agriculture over decades is the message

Post independence

59
Zimbabwe made impressive achievements immediately after independence, with rapid economic
growth, resettlement of under utilized and a sharp increase in small holder agricultural production. The
independent government inherited a highly centralized, heavily regulated economic structure with wide
spread state involvement in the economy. Government borrowed abroad to invest in post war
reconstruction, expand the civil service, imposed a high minimum wage and offered high nominal farm
prices to improve agricultural incomes.

The system of tight import control established under UDI was maintained after independence. This
complied with rapidly growing domestic demand, caused the real exchange rate to depreciate sharply
while the nominal rate remained static.

Blackie & Muir (1991) noted that macro-economic policies have had a significant effect on agriculture
since independence. The over valued exchange rate has taxed agriculture even more during the 1980s
than during the UDI year (1965). Farmers producing exported commodities, particularly those who do
not rely heavily on imported inputs have been disadvantaged AU of agriculture has, however been taxed
by exchange rate policy since independence.

The overvalued rates induce an administrative allocation of foreign exchange for imports, with all the
inefficiencies and distortions that are unavailable with such a system. Exporters have little incentive to
expand their operations. The Zimbabwean economy since UDI has been plagued with stringent
regulations in relation to trade, agricultural marketing and pricing.

NEW ECONOMIC REFORM PERIOD.

The government’s framework for economic reform (Zimbabwe, 1991) sets out detailed measures for
dealing with some of the problems over a five year period to 1995. The subject of Zimbabwe’s trade
policy and foreign –exchange allocation system has been well documented in Jamsen &Muir 1991.
Takavarasha 1990 and Masters 1990.

A key factor in Zimbabwe SAD is trade liberation. Trade liberation refers to the process of relaxing
measures affecting external trade policy/exchange rate management and allocation of foreign currency.
Since the 1980s, many developing countries have to follow industrialization strategies based on import
substitution. Quantitative restrictions, import licensing and a complex network of controls, including the
direct allocation of foreign currency by category of commodity, by type of domestic use, by source of
foreign currency and sometimes even by individual enterprise emerge as a result of this domestically
oriented trade policy between May & August 1991 the exchange rate was effectively devalued by more
than 30%. Foreign exchange however, remained scarce and the black market continued to operate. An
overvalued exchange has the effect of implicitly taxing those sectors that are net earners of foreign
exchange, in particular agriculture.

Historically, the emphasis in agriculture policy in Zimbabwe has been promoting national food self
–sufficiency in food and raw materials even where comparative advantage would have time, the
importance of agriculture in generating export revenues was acknowledged, given the limited capacity
of this industrial sector to earn foreign currency. Many programs have been introduced to offset the

60
foreign currency shortages for imports and the effect of an overvalued exchange rate. These programs
include the export revolving fund, the export promotion program, the export retention scheme etc.

Export Retention Scheme , agriculture producers are entitled to retain 5-7% of the foreign currency
earned, which they can use to import capital goods and essential inputs.

The intention was that these export incentive schemes will gradually be planned out as more imported
goods are placed on open general import license (091l) and as exchange rate distortions diminishing.
The major developments in the area of trade liberalization are devaluation of the Zimbabwean dollar
and placing of selected import goods on OGIL with their prices decontrolled.

FOOD POLICY AND SECURITY

Introduction
According to the the FAO/WFP Crop and Food Supply Assessment Mission (CFSAM),
Zimbabwe was estimated to have harvested 1.14 million tons of maize in 2009 due to generally
good and well-distributed rainfall across the country. This represents an increase of 130 percent
compared to 2008's record low level. The production of sorghum and millet also doubled.
Zimbabwe still faces a cereal shortfall of around 677,000 tons during 2010 (April 2009 - March
2010). (http://www.wfp.org/countries/zimbabwe).

Scope and definition

Food policy is concerned with
- the integration of state actions affecting the domestic supply, distribution and consumption of
food in order to ensure continuity of access to enough food for all people in a given country.
On the supply side, this concerns domestic food production and rate of growth of food
production. Food production encompasses issues of inputs, output and technology of farm
production. If the domestic side is lacking, then food imports and food aid provide an alternative
to production.

Distribution looks at the working of food marketing channels and the effectiveness of the time,
place or form of marketing systems.

Consumption (or the demand side) refers not just to the aggregate volume of staple food
consumed but the distribution of this volume between people and the ability of the different
groups to acquire staple foods given their patterns of employment and incomes and the levels
and trend of food prices.

Looked at another way, food policy is therefore concerned with the adequacy of food
(distribution across all groups of people and individuals in the society). It also looks at aggregate
and average nutritional status of the population, purchasing power and policy instruments
designed to improve the access to food by the vulnerable. It is further concerned with the ability
of the food marketing system to achieve efficiently the required spatial and temporary
distribution of food including inter-seasonal stabilization of volume and prices. (Ellis, 1992).

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Food Policy (concepts)
(a) Food Availability- refers to the supply of food available at international, national
and local levels. Short supply and unstable prices in world markets mean the
national food stability must depend on domestic production. The solution is for
the state to intervene in order to ensure continuous supply and stable prices across
the national territory. Many countries pursued food- self sufficiency as a prime
objective through parastatal grain agencies i.e. for buffer stocks or to act as sole
purchasing and distribution agencies. Sometimes these parastatals failed in the
production/ procurement of staple grains thus leading to food shortages.
(b) Food entitlement- It refers to the command over food of households or
individuals. The essence of the entitlement approach is that people do not
necessarily or mainly starve because of the insufficient supply of food. They
starve because they possess insufficient command over food.

Types of entitlement- According to Ellis (1992:307) there are various ways of

gaining entitlement.
1. Trade based entitlement- basically ownership of goods or services obtained by
trading something.
2. Production based entitlement is ownership of output produced using personal or
household labour power.
3. Own labour entitlement- is ownership of personal labour power for trade.
4. Inheritance and transfer entitlement- ownership of goods or resources
bequeathed or freely given to the person or household.
(c) Nutrition- The fundamental nutritional problem in food policy is under- nutrition
i.e. insufficient dietary energy or calories rather than malnutrition which refers to
defective combinations of energy, protein, vitamins and other dietary elements.

d) Food self-sufficiency at the national level does not translate into local self-
sufficiency. The intensity of drought increases from natural region I to natural region
V. Most of the communal areas are situated in natural regions III to V and this is
where many are vulnerable to food insecurity. Households’ vulnerability to food
insecurity is a manifestation of chronic poverty, inappropriate and failed policies, and
physical and natural constraints. This is compounded by the problem of HIV and
AIDS and repeated livelihood shocks which have been mostly weather related.

e) Food security
Food security is access by all people at all times to enough food for an active, healthy
life. It is also defined as a state in which ‘…..all people, at all times, have physical,
social and economic access to sufficient, safe and nutritious food to meet their dietary
needs and food preferences for an active and healthy life.’ (1996 World Food Summit
definition). From this it is apparent that the essential elements of food policy are
availability of and ability to acquire food.
The main threats to food security are poverty, HIV /AIDS and low agricultural
technology.

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 Food security can be addressed at several levels: food security of the individual or
family, national food security and international food security.

Basic Principles of food security

1. Emphasis is placed on access to food rather than supply of food and that is consistent
with the concept of entitlement and focuses on whether people have sufficient command
over food and thus on methods to supplement deficiency.
2. Emphasizes access to food by all people that is individual social groups at risk etc.
3. It refers to both the availability and ability to acquire food.

National Food security Indicators

(a) Food production per capita- this is a measure of a country’s ability to feed its
population. Food production per capita is calculated as follows=
Total food production in every year  the 1989  91 world price in US $ *
Total population of the corresponding year
* from the FAO statistical database
(b) The ratio of total exports to food imports- is a measure of a country’s ability to finance
its food imports from its total export revenues.
(c) Calories per capita and protein per capita- are used to estimate consumption levels and
therefore food availability at the national level.
(d) Non-agricultural population – useful in assessing how a country may be affected by
changes in trade and agricultural policies and the potential distribution impact on the urban/
rural population. (Ingco et al, 2004)

f. Food insecurity -This is the lack of access to enough food.

There are two types of food insecurity, Chronic and Transitory Food Insecurity
Chronic refers to continuously inadequate diet caused by persistent inability to acquire enough
food while Transitory food insecurity is a temporary decline in a household access to enough
food (famine). The occurrence of each requires large scale , urgent and coordinated relief.

g. Food risk
Is measured as the probability that a given population may experience inadequate access to food.
The probability is the product of environment risk (probability of failing to earn enough) and
income risk. The overall thrust of a food security policy is to reduce the level of these
probabilities.

Individual or family level food insecurity is due to poverty (inadequate buying power). In urban
areas poverty is due to unemployment but in rural areas this is due to lack of productive
resources, poor technology, inadequate infrastructure, and marginal land cultivation. These are
compounded by civil strife, corruption, and government policies (e.g. holding down internal food
prices).

National Level Most discussions of food security are focused on food security at the national
level, not at the individual level. At national level it concerns having an adequate total food
supply to enable the population of a country on the average to maintain a reasonable level of
consumption. What this approach ignores is that if individual households have adequate

63
purchasing power, national food security follows automatically. In their quest to have a high
degree of self sufficiency in all basic foodstuffs they have had to extend agricultural production
to less favourable areas and often have less developed infrastructure and support to expand
agricultural output- consumers end up paying high prices for the products undermining the food
security of the poor by reducing their purchasing power. This acts as a regressive tax. This is
troubling in light of evidence that there may be a shift in poverty to urban areas and that the
poorest of the poor in rural areas are landless labourers. These do not benefit from the higher
food prices. Diversion of resources from export production also reduces the long-term forex
earning capacity of the country and thereby undermines its structural capacity to import food and
other products. Too little attention has been given to the obligations of food-exporting countries
to make supplies available to all food- importing countries. Without export restrictions, taxes,
etc. (Ingco et al, 2004)

Food Insecurity in Zimbabwe

Zimbabwe was able to meet its grain requirements in the 1980s. The increased production in the
1980s was due to improved technology and agricultural services to the smallholder sector. The
smallholder sector increased production and accounted for 60% of marketed maize output to the
GMB. At the peak of maize production during the 1980s the GMB was holding over 3 years of
food security reserves and eight years supply of small grains.

According to Jayne et al (2006) problems of food insecurity in Zimbabwe started in the 1990s
but shortages were mostly met from stocks from the grain reserve and food imports.
Unfortunately food shortages in the period 2000-2004 were difficult to cover. Zimbabwe has
been receiving emergency food support since 1999/2000 period. Zimbabwe, normally a food
surplus country turned into a deficit country and required the intervention of the World Food
Programme and other donors to feed its people. Many farmers in Zimbabwe rely on natural
resource products to make a living. The newly resettled areas are also facing an onslaught from
people from the urban areas seeking to harvest the natural resources for their own survival.

Causes of Food Insecurity in Zimbabwe

According to Jayne et al (2006) there were and are many causes of food insecurity. The major
ones are:
1. Poverty and malnutrition
In general resettlement communal farming areas have the highest prevalence of household
poverty. Traditionally the sources of income for rural households are limited and only vary in
between seasons. Crop productivity per household is low. Households are focused on obtaining
food and other vital household requirements such as health and education expenditures. These
are often out of reach of the majority. Runaway inflation since 1999 resulted in prices of basic
commodities increasing beyond the reach of many households. In many instances the basic
goods were not available through formal channels.

2. Policy choices and failures

The food security policy area has been where government, donors and civil society have had
major differences e.g. government accusing donors and civic society of understating food
production figures and exaggerating number of people in need of food for political purposes.

64
Donors on the other hand accuse government of promoting food insecurity because it uses food
as a political weapon. Policy regimes failures are found in the lack of comprehensive framework
for collecting statistics on food security. Other policy choice failures are found in the discussion
of food security policy within the context of a humanitarian crisis. There is limited attention to
issues of trade and production incentives and support beyond the immediate spheres of influence
of the state. This policy regime has to do with boosting own food production for self sufficiency.
Key issues to be looked at include production incentives (credit, technology development, input
distribution and support schemes, commodity pricing, and irrigation). This policy regime has to
do with legal instrument and government administrative regulations underpinning food security
management. This includes such trade policy issues with respect to food imports certification
assessment of food quality (sanitary and phytosanitary regulations) and restrictions on
genetically modified crops and food preferences of Zimbabweans (white maize), transportation
border procedures and trade agreements and these need to be clearly spelt out.

3. Physical and natural constraints

Zimbabwe has experienced nine years of drought since 1980. It is prone to erratic rainfall,
droughts and floods. The limited amount of arable land that can be irrigated poses a constraint on
food security. Most of the area under irrigation was on white commercial farms. Also much of
the irrigation infrastructure which is expensive to replace was vandalized during the fast track
resettlement programme. Rural areas are constrained by generally poor infrastructure (roads and
communication) which hinders access to markets and services. Physical, natural and
infrastructural constraints have contributed to low land use and productivity which in turn
contribute to low output and low incomes and the vicious cycle of poverty for many households,
particularly in communal areas and among displaced farm workers.

4. Lack of coordinated policy on access to production resources.

Although land has been distributed to many indigenous populations through the land reform
programme, the process disrupted food production by the large scale commercial farmers and has
contributed to the food crisis since 2001. There have been poor tenure arrangements. Labour
problems have been experienced since 2000. The ongoing land and agrarian reform displaced
farm workers and where workers remained co-habitating with new landowners has proved
difficult. HIV and AIDS pandemic is also taking its toll on farm workers and landowners. The
displaced farm workers lack access to land for food production. On the other hand production by
newly resettled farmers is low due to lack of farming experience, inadequate extension and
shortage of inputs and labour in an environment where mechanization is limited. According to
RBZ some of the beneficiaries of funds earmarked for the agricultural sector (under the support
to the productive sector programme) invested these funds in the stock market where interest rates
were higher than the rate of borrowing. This has created low investment in agriculture
contributing to food insecurity.

5. Unclear food security policy and strategies in vulnerable areas.

Government has implemented policies and adopted strategies that treat farmers as a
homogeneous group. During drought years the government distributed unsuitable maize varieties
in low rainfall areas e.g. little research has been done on goat production and yet goats are a
source of livelihood for many households in the drier regions. Lack of support in production,

65
processing and use of crops that are tolerant to drought has led people in the drier areas to change
their tastes from millet and sorghum to maize.

6. Lack of food security policy for the urban poor.

From the late 1990s the assumption that the urban poor would be cushioned by government
intervention through price controls on basic food commodities did not work because of the
emergence of parallel food markets.

7. Lack of diversification of diet.

In Zimbabwe food security is mainly based on maize and wheat (for bread). Small grains
(sorghum, rapoko and mhunga (pearl millet) play a small role. Foods that are underused in local
diets are sweet potatoes, yams and cassava for carbohydrates and cowpeas, soyabeans, ground
nuts and roundnuts for protein.

8. Restrictions on Commercial marketing and trade for maize and wheat.

Government imposed restrictions on the amount of grain that could be moved by individuals to
urban areas. This meant urban people had to access maize on the parallel market where it was
expensive and rural farmers could not secure high prices for their maize as they were forced to
sell directly to the GMB.

9. Dissolution of the strategic grain reserves.

During the 1980s the GMB had sufficient grain reserves to cover several years of low maize
production. The centralized grain marketing system suffered administrative and operational
inefficiencies and the GMB had a huge deficit at the end of the 1980s. Thus maintaining a 3 year
stock of maize for national and regional food security became unaffordable. During the ESAP
era (subsidies removal) the national food security and strategic grain reserve programme were
severely paralysed. GMB failed to maintain the required grain reserves from 1998 onwards.
Capacity to import food in years of low production was reduced due to poor performance of the
economy (Jayne et al (2006:538)).

10. HIV and AIDS

Zimbabwe has a high HIV and AIDS prevalence rate. The HIV and AIDS pandemic has an
impact on agricultural production, food security and nutrition. HIV / AIDS increases
vulnerability to livelihood shocks as capacities and skills to produce, earn income and cope with
food shortages are eroded. On the other hand, poor nutritional status increases the risk of
opportunistic infections and tends to speed up the progression of the disease. As the HIV/ AIDS
pandemic continues one of its worst effects has been the increase in the number of orphans –
thus there are many households that are child headed with no agricultural knowledge and
capacity to earn an income. Zimbabwe is now trapped in a vicious cycle of HIV and AIDS, food
insecurity and poverty and the cycle is difficult to disentangle. (Jayne et al (2006:538)).
Zimbabwe has a high HIV/AIDS prevalence rate (15.3%)(
http://www.wfp.org/countries/zimbabwe)

Food Policy Instruments

66
The shift in emphasis from food availability to a food entitlement of food security lead also to a
shift in the combination of food policy instruments that are appropriate for integrated food
strategy.

Instruments for the supply side

1. Ensure self –sufficiency (domestic) in staple foods. This is based on avoiding undue
reliance on unpredictable and unstable world food markets. Domestic food production is
promoted by producer price policy, input policy, credit policy or research policy and
irrigation policy. Self sufficiency addresses the problem of aggregate food availability.
2. Price Stability-is approached by the creation of natural food security stock built up from
domestic production. The food security stock is used to stabilize consumer prices by
releasing grain output to defend a ceiling retail price. Price stability based on domestic
production and domestic stocks requires the existence of a parastatal authority with wide
ranging, sometimes monopoly powers to buy and sell grain and regulates the price and
quantity of imported supplies.
3. Conventional Food Policy Model-In this model, concern is for political stability and the
avoidance of urban unrest. This means that keeping consumer prices low in urban areas is
sometimes given priority in the model. At the aggregate level, food security is viewed as
a balance in supply and demand. Pursuing domestic self sufficiency is regarded
nowadays as potentially costly and socially inefficient method for achieving supply side.
Self sufficiency is neither a necessary nor sufficient condition for food security. It is not
necessary because import supply can be used. It is not sufficient because with self-
sufficiency there may be categories of the economy facing chronic or transitory food
insecurity due to lack of food entitlement.

Instruments on the Food Demand side

(a) Nutritional status of the population. – This needs to be regularly monitored. To do this it is
necessary to
1. Construct the national balance sheet in order to have an overall picture of the nutritional
status of the country.
2. Use households incomes and expenditures surveys.
3. Use similar sources to identify the category income class and location of vulnerable
groups.
4. More specific investigations of vulnerable groups to assess the degree, nature and
intensity of their social inability to acquire sufficient food.

(b) Tackling lack of entitlement- this usually takes the following forms:
1. Subsidies- lowering the price of food to improve exchange entitlement or
2. Increase command over food- increase employment opportunities, food for work, cash
transfers. This is generalized intervention
3. Self –regulated Targeting

Subsidies

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 - use of subsidies normally avoid identification of vulnerable groups. Consumer subsidies
have high budgetary costs, they have an impact on farm price and have an implicit
incentive to produce.
- Targeting suffers from high administration costs, inevitable leakages and abuses of such
facilities.
- Alternatives to general food subsidies is to target relief to groups known to be at risk eg.
in other countries, they have what are called “fair price” shops or food stamps (coupons),
public employment programme, food for work etc.

Self- regulated Targeting

- this is implemented by choosing commodity, location of subsidies and employment
programmes. However consensus on policy instrument in that target intervention are
preferable to generalized intervention and that self- regulated targeting is preferable to
administered target. Targeting is preferable because it avoids creation of economy wide
distortions. Demand side intervention with food markets are aimed at alleviating the
chronic long-term food insecurity of vulnerable groups.

Food Aid
Is a method of disposing of food surplus produced in industrialized countries. The main source
for such aid is USA. About 20% of food aid is delivered to developing countries as multilateral
food aid through FAO and World Food Programme (WFP). Food Aid takes 4 forms:
1. Programme Food Aid – is the largest in quantity terms and is delivered for purposes of
sale by recipient government. For example sorghum (from USAID) available in some
shops in Zimbabwe.
2. Project Food Aid- aid designed for specific food related projects (e.g. nutrition project,
food for work schemes, rural development projects).
3. Emergency Food Aid- urgent food aid to overcome acute local or national food deficit
e.g. famine, natural disaster etc.
4. Adjustment Food Aid -this comes as part of structural adjustment package and is
designed to mitigate social groups affected by the policy reform packages. It is concerned
with compensating people affected by transitory loss of food entitlement, caused by
changes in macroeconomic or sectorial policies. (Ellis,1992:316).

Controversy surrounding Food Aid

Food aid is the most contentious because it is not about delivery of food to the poor people per
se but about macroeconomic effects of that on BOP, government budget and the general level of
food security. Programme food aid is conceived as conveying general benefits.

Positive Effects of Programme Food Aid

1. Releases forex which can be used to import other commodities required for fulfillment of
development objectives.
2. Generates government budgetary income to support recurrent or capital cost of
development activities including employment creation rural development projects or
poverty alleviation schemes.

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 3. Assists in the operation and management of food price stability schemes by providing
low cost supplies to supplement domestic purchases. They operate as a buffer stock.
4. Creates a higher general level of food consumption and nutritional status for the whole
population through price stability.
5. Acts as an addition to the financial aid resources.

Defects of the Programme

1. By increasing domestic supply, it depresses domestic market prices or cause a reduction
of domestic output.
2. Food aid causes a substitution of imported grain, this causes a decline in their demand of
domestic output and dependence on imported food supply.
3. Food aid is erratic in volume due to its reliance on fluctuating surpluses of developed
countries and state of food markets. High world prices reduce the food aid.

DROUGHT AND DROUGHT MANAGEMENT STRATEGIES

In Africa, most of the agriculture production is rain fed production. Drought disrupts production.
Sometimes it completely paralyses whole agricultural base in a nation or even in a region (e.g.
the 1991-1992 drought). Reduced national food can be replenished by imports to translate into
food security to households and individuals an efficient distribution system must be in place.
Drought, generally continued over several years is a major natural cause of crop failure in much
of Africa. Too much rain through destructive flooding may also severely damage crop systems
and trigger famine. Disease has also served as the major cause of famine by its effects upon
crops, domestic animals or men himself (Cox, 1981:8).

Famine
Famine may be defined as the regional failure of food production or distribution systems, leading
to sharply increased mortality due to starvation and associated disease. Famine may be
characterized as epidemic malnutrition, chronic scarcity as endemic malnutrition (Cox,1981).
According to Robson (1981:3) Famine is the result of the combination of natural phenomena
such as climate, cyclone activity, disease and pest attacks, rodents, insects , and floods and even
larger number of man –made factors (wars, poor political decisions, transportation problems,
communication difficulties, incompetence, poverty, disease, panic and food speculation).

Effects of famine
Famine breeds famine since organized activities of society may become disrupted to the point
that purposeful action to improve conditions becomes impossible. Breeding livestock and seed
grain may be consumed, thus compounding future food supply problems. In addition, conditions
of sanitation of food and water may deteriorate, setting the stages for disease epidemics……
Increased threat of infectious disease follows from two main mechanisms: the increased chance
of disease transmission, and the increased severity of disease attacks upon malnourished
individuals. Factors favouring disease transmission include deterioration of food and water
sanitation and the crowding of individuals that have abandoned attention to matters of personal
hygiene in food distribution. (Cox, 1981:12).

Several basic mechanisms of disease resistance are compromised by starvation. Tuberculosis is a

disease long known to increase in times of famine. Mortality rates are highest for the weakest

69
and most energy-requiring segments of the population: children, the aged and infirm, and
pregnant and nursing women. Many of the individuals are not seen by visitors to famine areas
since they remain in seclusion to a greater degree. (Cox, 1981:13).

Effects of famine on rural population

- unusual drop in labour price.
- Unusual items appear for sale in the village markets e.g. hoes, iron sheets, ornaments.
These items are usually never sold unless one is forced to do so. Their presence in the
rural markets is a sure sign of distress and famine.
- Numbers of beggars increase tremendously.
- People resort to eating unusual items of food.
- Unusual increase in petty crimes.
- Changes in moral values.
- Villagers look unusually thin and the children even more so.
- Unusual and paradoxical prices of food materials. – a large number of cattle and goats
appear in the market. Many of these are bullocks used for ploughing the land and are sold
as a last resort./ Prices of beef or mutton in some areas become unusually low compared
to the prices of rice, wheat and legumes as too many people try to sell off their
belongings at the same time.
- High incidence of suicides- parents unable to feed their families often commit suicide to
escape slow and lingering death. Sometimes they poison their children first.
(Rahaman,1981:137).

Drought Management
Drought management can be found at all levels: national, regional, community and individual
level.
(a) At national level the government is in charge of drought management and the state can pursue
the following strategies:
1. Strategic Grain Reserves/stock
2. Operation of public works programmes in which people work on community
infrastructure projects like dam construction, roads, schools and they are paid some
minimum wage which they can use to purchase food. In Zimbabwe it started in 1980.
3. Operating food for work programmes- these are programmes in which people work in
community project and are paid directly in food terms. These programmes were supposed
to be self targeting in the sense that those in need would normally go to the project and
there is a social stigma associated with the programme.
4. Children and pregnant mothers free food schemes.
5. Free food rations- these have since been abandoned as they result in dependence
syndrome.
6. Drought recovery programme- giving people heifers livestock resettlement programme,
subsidies, tillage facilities etc.
7. Grain loan scheme- refundable in good seasons.
8. Investing or encouraging resistant varieties.
9. Social welfare assistance or food main schemes.
10. Irrigation schemes.

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(b) Community level At this level there are non-state actors. These can be local or
“international”. Normally, NGOs along similar lines as the state but in specific communities
where their limited resources can manage. NGOs have become a significant intervention in
drought mitigation strategy in Africa. Quite often some of these organizations may not be fully
conversant with the local conditions/ pertinent requirements in a country, some of the aid may
not meet the local requirements.

This can be shown by the following oriental proverb

“Once upon a time there was a great flood, and involved in this flood were two creatures, a
monkey and a fish. The monkey being agile and experienced, succeeded in scrambling up a tree
and escaping the raging waters. As he looked down from his safe perch, he saw a poor fish
struggling against the swift current. With the best of intentions, he reached down and lifted the
fish from the water. Unfortunately, in spite of this aid, the fish died.” Oriental Proverb (Forster,
1962 in Cox, 1981).

(c) Individual level (Households and individuals) Households and individuals can also present
drought mitigation strategies.
1. Seeking jobs both in towns and rural areas.
2. Destocking in order to purchase basic food stuffs.
3. Small Agricultural and non agricultural production activities for sale.
4. Adaptation: cultivation of sorghum, maize, millet is combined with herding of cattle,
sheep and goats. The advantage of such a system are those of diversification: complete
dependence is not placed on crop production which may fail in a given year due to
inadequate rainfall, nor is complete dependence on animal herds, which may be
decimated by disease or poor range conditions (Cox, 1981:7).

MAJOR FOOD AND AGRICULTURE ISSUES IN THE REGION.

MAJOR ISSUES ON FOOD SECURITY.

Food insecurity exists when there is not enough food for the people who need it. Food security of the
region can be achieved when all SADC Member states ensure that all members of their population have
access to an adequate diet to lead an active & normal life. Two essential and integral components of
food security are food availability and access. Throughout the SADC region the bulk of people who suffer
either seasonal or semi-permanent food insecurity are in rural areas. The main objectives of the SADCC’s
food security sector are to improve food supplies to all the people in the region, to achieve regional self-
sufficiency in food supply to the maximum extent possible in order to reduce the region’s dependence
on external sources of food crises.

SADCC’S UPDATED FOOD SECURITY STATEGY K.J.M Dhliwayo

FOOD AND AGRICULTURAL TRENDS:

Although statistics on population, areas that cultivation and crop yields in Africa are unreliable, available
data confirm the steady increase in the population growth rate and food production gap and Africa’s

71
loss of world market share of export crops. This is the essence of Africa’s empty harvests. During the
1990s food production kept pace with population growth. From 1970 to 1984, the average rate of food
production growth was about half the 2.8% rate of population growth in Africa.

Food trade trends; Africa was a net exporter of an average of 1.2 million tons of staple food in 1961-5.
By the mid 1970s, however, Africa was importing 2.5 million tons of staple a year and West Africa
accounted for about half of total imports. Africa’s total food grain imports – commercial and food aid –
increased steadily from an average of 1.9 million tons in 1969-1971, 4.6 million in 1976-1978, 9.2 million
in 1981, 12 million during the great African fame of 1984-1985 and 7.6 million in 1988-1989. Because of
a shortage of foreign exchange to pay for food imports, most countries have relied increasingly on food
aid to meet their food production gap. About 20 percent of Africa’s cereal imports are now in the form
of food aid.

The second component of Africa’s empty harvest is the dramatic loss of export crop shares in world
trade especially since 1970. Africa’s share of world trade in primary products such as cocoa, oil palm and
groundnuts declined from 16 to 10 percent over the1970 -1983/4 period. This loss in trade shares,
foreign exchange earnings and government tax revenues has been a major contributor to rural
stagnation. And since poverty is a major cause of malnutrition and food insecurity it follows that the
recovery of Africa’s competitiveness in world trade is essential for sustained alleviation of rural poverty.
The food outlook in southern Africa is optimistic in the 1990s because of a backlog of proven technology
of white maize – the food staple that supplies around half the calories in the average diet in Zimbabwe,
Zambia and Malawi. Indeed Zimbabwe, Zambia and Tanzania had a food surplus (primarily maize) of 2.7
million tones in 1989-1990 (SADCC 1990)

Intra – regional Trade Growth in Africa

SADCC

Est 1980 b a frontline states objective was to reduce their extreme dependence on SA by strengthening
regional cooperation. Priority has been given to developing transport and infra structure in the region,
promoting industrial investments and agriculture trade.

SADCC; Regional trade flows. (% of total trade)

The table below shows that SADCC countries sent about 7% of their exports to and received about 30%
of their imports from South Africa

Exports to Imports from

SADCC S.A 1982-1984 SADCC S.A 1982-1984
Botswana 4.0 8.8 19.2 8.8 78.2 18.5
Lesotho 3.5 0.2 74.3 0.1
Malawi 8.6 7.3 8.6 11.0 40.4 9.4

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Mozambique 11.7 4.4 5.7 5.0 11.7 9.4
Swaziland 1.5 37.0 2.9 0.3 90.0 1.1
Tanzania 1.9 1.6 1.0 8.7
Zambia 4.1 0.7 14.3 7.4 21.2 17.4

SADCC 4.3 7.2 100.0 4.2 29.7 100.0

Zimbabwe 11.3 18.3 46.9 7.0 19.3 31.2
Angola 0.8 0.2 4.3

Source :Stephen R .Lewis (1986)

SADCC (1986)
The share of intra-SADCC trade is around 4 percent but the mean ration is 8 percent. The table below
shows that one-third of intra-SADCC trade is in manufactured goods, just over one- fifth is in food
production and live animals and around one-sixth is trade in fuels Zimbabwe accounts for over 40% of
regional exports and about 35% of intra-regional imports. Zambia, Botswana and Mozambique are the
only other countries with these four countries account for close to 85% of infra-SADCC exports and more
than three quarters of its imports. See page 434-35 – table 16.6

For infra-SADCC major commodities flows

‘’The Bias Against Agriculture’’ – Trade and Macroeconomics policies in Developing Countries. R.
Bantista & A Valdes.

Performance of African Agriculture. In view of the heavy reliance on exports of primary commodities,
the performances of African Agriculture has significant implications for the countries foreign exchange
earnings, as the trend in export volume and market share of Africa’s major export crops indicate. These
were substantial declines in the volume and market share of Africa’s major export crops indicate. These
were substantial declines in the volume of virtually all agriculture export crops, particularly during the
1970s and early 1980s. As a result Africa suffered significant losses in market shares between the early
1960s and 1980s. In the few cases where gains were achieved such as coffee, tea and sugar they were
marginal.

GROWTH OF AFRICA’S MAJOR AGRICULTURAL EXPORTS 1961-1982

Average annual change (%) Africa’s share of world exports %
Export 1961-63 to 1969-72 to 1980- 1961-1963 1980-1982
1969 82
Cocoa 0.2 -0.3 79.9 68.3
Coffee 3.4 -0.2 25.6 25.9
Tea 9.0 4.1 8.7 9.3
Groundnuts, oil 2.2 -6.0 53.8 27.8

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Groundnuts shelled -6.1 -13.9 85.5 18.0
Oil seed cake 5.3 -3.8 9.5 2.2
Palm kernel oil 8.9 -1.3 55.2 21.6
Palm kernels -6.2 -9.6 90.4 75.8
Palm oil -8.6 -5.1 55.0 3.0
Sesame seed 3.8 -6.2 68.6 40.7
Bananas 1.7 -5.4 10.9 3.0
Cotton 5.6 -3.5 10.8 9.2
Rubber 3.0 -2.9 6.8 4.4
Sisal -2.1 -8.7 60.7 60.4
Sugar 3.2 1.1 4.7 4.8
Tobacco -3.2 6.6 12.1 11.8

Source: WB 1984 c, 80-81

Africa’s agriculture growth record worsened in the early 1980’s and the region’s food self-sufficiency
declined. The incremental demand for food had to be met increasingly by commercial imports and food
aid. As far back as the 1960’s, Africa’s imports of food and agricultural products had grown rapidly in
volume and value. In the low-income countries, the average annual value of food and agricultural
imports rose from US $16.5 million in 1962 -1969 to US $ 83.7 million in 1980 – 1984. The figures for the
middle –income oil importers ranged between US $24.4 and US 158.9 million, while for the middle-
income oil-exporting countries they rose dramatically from US $33 million in 1962-1969 to over $US
$616 million in 1980-1984.

Although imports of cereals by low-income African countries roughly doubled in value between 1974
and 1986, these countries also received substantial amounts of food aid over the same period (World
Bank, 1988)

Policy Reforms
Many of the countries of ISA have open economies: in most of them foreign trade as a proportion of
GDP is at least 25%. This trade is dominated by the export and import of food and agricultural products.
It is precisely in this kind of economy that the indirect effects of trade, exchange rate and general macro
econopolies can be large enough to overwhelm the impact of more direct sector –specific policies. The
lesson from the African experience with the consequences of macroeconomic policies in relation to
agricultural incentives and performance seems clear. Since general economic conditions have worsened
in Africa and no immediately viable alternative prescriptions have appeared to be forth coming, the
movement toward policy reform has gathered momentum.

Policy reform has not necessarily been easy to implement or sustain. Two sharply contrasting views on
Africa’s economic crisis emerged in the early 1980s. On the one hand, the Lagos Plan of Action,
articulated by the OAU placed most of the blame for the plight of African agriculture on adverse external

74
and climatic environments specifically the world recession, falling real commodity prices, declining
terms of trade and Africa’s drought.

On the other hand the world bank’s report attributed most of the problem to domestic factors such as
poor economic management, inefficient parastatals and a failure to exploit Africa’s comparative
advantage in export agriculture largely because of unnecessarily low producer prices. These two views
led to contrasting policy prescriptions.

One camp recommended promoting regions co-operation and integration based on an essentially
inward-looking strategy which sought to put some distance between African economies and ‘’an
‘’unreliable and hostile’’ external environment . The other recommended an outward-looking strategy
that become operational through domestic policy reforms.

SSA countries have either ignored or set aside the prescriptions of the Lagos Plan of Action because their
reforms involve a clear shift toward an export oriented development strategy. The question is, does this
radical policy shift reflect a genuine conversion to an outward looking strategy or does it indicate an
involuntary acceptance for an externally imposed ‘’conditionally’’ since virtually all of the ongoing
domestic policy reform packages have been supported, in one way or another by arrangements with WB
and the IMF, it may be assumed that external advice has played an important role in bringing about
many of the policy changes.

The reforms are focusing not on sector-specific policies-such as raising the levels of agricultural producer
price, abolishing agriculture crop procurement by parastatals and marketing authorities or removing
their monopsony/monopoly powers and reducing marketing margins – they are also giving attention to
trade and general macroeconomic policies as indicated by the establishment of market- determined
exchange rates, lowering of tariffs, restructuring , general liberation of external trade, deregulation of
domestic product and financial markets and reduction of current account and fiscal deficits (WB 1986a)

The policy reforms have concentrated on correcting currency overvaluation and shifting the internal
terms of trade in favour of agriculture and export production. Many countries have taken steps to
establish more flexible and largely market- determined exchange regimes and to deregulate their
agricultural marketing system (Quirk et al 1987). As a result substantial devaluation of local currencies
took place. Preliminary assessments indicate that agricultural production and exporting have responded
dramatically to the incentives provided by the new policy environments in many parts of Africa.

In Tanzania, the improved policy environment has been given credit for the substantial increases in
agricultural production and non traditional exports between 1983 and 1987 (ndulu 1988). Estimated
maize production increased by 14% between 1983 and 1984 and a further 6.7% by 1987. Paddy
production went up more sharply, rising by 53.7% between 1983-84 and 1985-6 and a further 17.7% by
1986-87. Cotton output more than doubled in the second half of the 1980s and established a historical
peak in 1987. In terms of exports, the significant result was the rise in exports of manufacturers (37%)
and other non-traditional exports (46%) during 1986-87

75
It is clear that some of the increases in agricultural exports reflect diversions from the parallel market
rather than new output and it is nuclear how much is diversion and how much is new trade. Another
issue is the medium – and no longer term sustainability of the increases in the production and exports.
Excess capacity may soon be used up, climatic conditions are an important factor and the external
environment retains its significance for export expansion. Although reforms of trade, exchange rate and
macroeconomic polices may be a necessary condition to the permanent revival of African agriculture,
they are by no means sufficient.

FOOD SECURITY
Food insecurity is defined here as inability of all individuals within a household to secure a diet that
supports a healthy life (von Braun etal 1991). Famine on the other hand can be seen as a short term
intensification of long-term food insecurity, were the spread of extreme hunger results in drastic loss of
body weight and a raising rate of mortality. Africa as a whole does not produce sufficient food to meet
effective demand nor does it import sufficient quantities to make up the gap. Through trade and food
aid. Even if Africa did meet all theoretical food needs many (absolute poor) would still go hungry. The
real income of Africa’s poorest households is inadequate to secure a sufficient share of available food or
to raise effective demand.

While the production of food staples in SSA grew at an annual rate of only 1.7% between the early 1960s
and the mid-1980s food consumption expanded at an annual rate of 2.5%, fueled largely by population
growth of almost 3/5 (von Braun and Paulinio 1990)

Even Zimbabwe with its enviable record of expanded production, trade and consumption during the
1980s, found that over 5 million people required food aid to severe hunger in 1992.

Causes of food insecurity and famine

The genesis of these food crises must be understood in holistic terms of an interaction between
environmental, economic and policy variables both in short-term and long-term.

Environmental side
There is no doubt that drought is a primary agent of famine in Africa. Mean annual rainfall declined in
western Sudan by 7% between 1960s and 1970s followed by further 18% into the 1980s. The current
relationships between rainfall, production, prices and consumption are so strong that actions against
drought and degradation are needed immediately.

However, production failures caused by drought, even those that last several years thereby contributing
to accelerated resource degradation, do not become famines unless other conditions are propitious
such conditions include:

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  A lack of improved agricultural technology and inputs, which prevents, the food insecure from
realizing existing yield and output potentials.
 High rates of environmental degradation, which limit the sustainability of any productivity gains
that are achieved.
 A lack of alternative rural and urban employment opportunity, which limits non-farm incomes.
 Fragmented markets due to poor infrastructure and / or policy constraints which contribute to
steep price rise and rapid purchasing power collapse.
 Limited access to education, which hinders human capital improvement and keeps birth rates at
excessively high levels.
 Severely underdeveloped financial markets which impede the stabilization of consumption.
 Poor health and sanitation environments. These conditions are all characteristics of poverty at
both national and household levels. Wherever they are concentrated the prevalence of drought,
locust in vasion or armed conflict is likely to head to famine.

A proximate cause of famine is low and variable income among the poor. But if poverty lies at the root
of food insecurity, then it should be recognized that policy failure has much to answer for famine.

Real progress towards sustained food security has been slow. Much of the blame for this lies with
excessive state interference in macroeconomic activity and deficiencies in public policy.

For example exchange rate regulations, export taxes, monopolistic marketing systems and producer
price regulations have all been turned against the rural economy. The state control of marketing in
Zimbabwe has raised processing and transport costs for the smallholder thereby restricting some of the
recent income gains related to expanded productivity (Jayne etal 1991)

Well developed rural infrastructure serves to stimulate the non-farm rural economy, permitting poor
households to diversify their income sources. The rural poor in Africa typically obtain 30-40% of their
total income from non-agriculture sources ranging from less than 10% in Eastern Zambia to over 50% in
Western Kenya. (von Bran & Pandya - lorch 1991)

Food security and famine are inseparable from poverty which is in turn inseparable from deficiencies in
public policy as well as environmental shocks.

A policy framework for improved food security.

Three sets of policy instruments are proposed as foundation stones for a sustained reduction in
household food security.

1st, agriculture growth based technological change and commercialization 2nd, employment creation
through labour intensive public works 3rd .stabilization of food entitlements for the poor in famine prone
areas through improved early warning, food reserves, developed financial markets and emergency relief
distribution.

Technological change in agriculture and commercialization

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Agricultural growth plays a key role in generating employment and income as well as food in rural areas
and the need to reverse downward trends in smallholder productivity must remain a high priority,
especially in countries facing land locked borders, highly variable inter-annual production and severe
foreign exchange constraints (Tshibaka, 1990; Hazell and Anderson 1991). While opportunities for
bringing new land under cultivation have compensated for slow yield growth in the past, continued
attempts to expand agriculture’s land will entail larger investments, accelerated deforestation and land
degradation and ultimately, falling yields (Delgado etal, 1993)

Productivity increases must be sustainable in the long term. Complementary avenues which government
could explore include promotion of Agriculture through technological change and commercialization.
The adoption of improved technology is one of the keys to long-term famine prevention both through its
potential to enhance Agriculture productivity and through its related capacity to increase rural
employment.

Other technological innovations have been promoted in Africa that have resulted in locally significant
advances in productivity. Such as appropriate irrigation technology in Senegal and Sudan, genetically –
improved livestock in Malawi, chemical fertilizers and higher-yielding cultivators in Ghana and Tanzania.
Improved crop technology need not be restricted to the production of staple food crops.

Labor-intensive public works

Employment creation for urban and rural population has become an urgent political priority in many
African countries. Policies for arresting unemployment while seeking to reduce poverty have been
directed at stimulating general economic growth transferring the ones for employment creation to the
organized private sector and in some cases initiating labor intensive employment programmes such as
food and cash for work to support the purchasing power of the poor. While not a panacea to the
massive employment problem in Africa, labor-intensive works constitute an attractive poverty-
alleviating development instrument. Such programmes hold considerable potential for addressing food
insecurity throughout Africa, providing direct and sustainable poverty alleviation and strengthening self-
help capacities.

Consumption stabilization.
There remains a need for a strategy aimed at stabilizing consumption of the poor in the food-deficit
regions of famine-prone countries such a strategy needs to encompass both food supply stabilization
and the stabilization of access to food for the poor.

The fundamentals of a consumption stabilization strategy include:

 The capability to record and diagnose distress signals and alert necessary institutions of the
danger.
 The institutional capacity to organize an effective response to the alert.

78
Public intervention to *** consumption shortfalls can take many forms.

1. Stabilization of prices and food supply can be achieved through an open trade policy combined
with improved rural infrastructure.
2. Private trading and stockholding cannot alone be relied upon for famine prevention, especially
when purchasing power is eroded emergency food stocks may still have a role to play at national
and at local levels cereal reserves have been estimated in many countries.

Food aid has represented a major element of food imports in a number of African countries

Constraints to agriculture trade in the region.

In the actual economic environment, the scope for expanding intra-regional trade is constrained by
internal as well as external realities, including and external trading regime dominated by the shortage
foreign currency allocation system governed by internal policies which distort relative prices and result
in overvalued exchange rate and financially policies that aim to achieve food security through self-
sufficiency and dependency on food aid.

The potential for trade.

Factor endowment and ecological conditions.

The data on land resources and land use reveals that to the extent that inputs other than land are
available, there remains an unexploited production potential in Malawi, Tanzania, Zambia and
Zimbabwe and the land constraint differs noticeably between them. Malawi, the least-endowed country
had 39% of potential cultivatable land unused in 1980, although this figure is projected to 23% by 2010.
Zambia on the other hand had reserves of potentially cultivated land nearly nine times the cultivated
land in 1980. It is projected that even in 2010 reserves will equal more than six times the cultivable land.

Crop land per capita, 1980 and projected, 2010.

1980 Annual and Reserves of 2010 Projected Remaining reserves
Permanent crop potential crop land demand of cultivatable land
land cultivable land
Malawi 0.42 0.27 0.20 0.06
Tanzania 0.48 0.44 0.29 0.36
Zambia 0.95 8.18 0.41 2.83
Zimbabwe 0.56 1.62 0.25 0.49
Source: F.A.O of UN, 1986

Tanzania and Zimbabwe fall between the other countries, Zambia has a comparative advantage in
moving to move land-tied agriculture production. Land distribution also differs among the four counties:
Malawi allocates 25% of its land area to crops, a much larger share than the other three countries
allocate. Tanzania and Zambia reserve nearly 50% of their land area to pasture.

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Land distribution 1987 (%)
Land area as share of total area Arable & Permanent Forest & wood
permanent land Pasture
Malawi 79 25 20 46
Tanzania 94 6 40 48
Zambia 98 7 47 39
Zimbabwe 99 7 13 52
Calculations based on data from FAO 1989b

Constraints to Agriculture trade in the region

Given the dissimilarities in factor endowment, including natural resources and existing patterns of
production and consumption, there exists a trade potential between Malawi, Tanzania, Zambia and
Zimbabwe. To the extent that these countries could adjust their production and consumption pattern to
reflect their comparative advantage, the scope for intra-regional trade could be enhanced,

In the actual economic environment, the scope for expanding intra-regional trade is constrained by
internal as well as external realities, including an external trading regime dominated by the shortage of
foreign exchange and high external indebtedness, a marketing, licensing and foreign currency allocation
system governed by internal policies which distort relative prices and result in overvalued exchange rate
and financially policies that aim rate to achieve food security through self sufficient and dependency on
food aid.

LAND REFORM POLICY

Introduction
The essential attributes of land are as follows:
1. Land is a resource in Agriculture production but is ultimately fixed in supply within a
nation state. The fixed nature of land supply makes it different from labour power,
fertilizers, ploughs or camels of which varying ways are reproducible resources.
2. Land is a stock of capital- a fixed asset or Investment and a measure of wealth.
3. Land is often private property and as such it is inalienable in law- Land ownership is
formalized in legal documents in the form of title deeds etc and inscribed in land
registration lists exceptions are communally owned land in peasant societies where
ownership is by use or state owned land.

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 4. Agricultural land ownership involves social relations say between the feudal lord and serf
or landlord and share tenant or land owner and cash tenant or land owner and cash tenant
or owner occupier and wage labour.
5. Land is more than just another resource in farm production. It is the base on which
farming takes place.
Land ownership structures are inseparable from structure of social status and power in the
agrarian economy.

Nature, scope and Definitions

Land tenure
- the nature of the rights of access to land eg. Freehold land ownership or leasehold , share
cropping, village/ customary use rights (communal use system )
- Land tenure systems are old and thickly interwoven in the social and economic fabric and
are therefore only changed with difficulty.

Land Reform
- is the redistribution of property ownership in land or other rights of access to the use of
land.
- Is used to describe only the transfer of ownership and rights over land.
- change in land rights or transfer of property ownership rights from one group of
individuals to another. It can also be viewed as the redistribution. It is a type of state
intervention affecting farm investments. It is special because :
- It is often associated with social upheavals and dramatic change rather than the relatively
stable political and social conditions upon which the implementation of other policies is
typically predicted.

Land reform seldom involves only making a minor adjustment in the social economic
environment. Many land reforms have attempted to change social relationships of property
ownership, wealth, social status and political power. (Ellis,1992:195)
Land reforms that genuinely overturn the rural society and the economy are frequently the
product of cataclysmic historical events (violent, political and social upheavals) often revolution
which are neither policy option nor common occurrences (Ellis,1992))

Agrarian Reform
- describes the whole set of legal, institutional and social changes that accompany or result
or ought to occur from land reform. However, some authors treat land reform and
Agrarian Reform as synonymous.

Land Settlements
- involves creating new farms on new lands or on utilized state lands or in sparsely
populated regions.
- Since land settlements do not involve the redistribution of property rights in land, it is
often excluded from the rubric of Land reform.

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Objectives of Land reform
- Once established and consolidated the land ownership structure tends to remain fixed
with little if any change unless dramatic changes like wars or revolutions sweep away the
existing titles of land owners to their property.
- Pressures for land reform arise due to the growing disparity between highly unequal but
fixed structure of land. Ownership and the rapid changes taking place in the society.
- Such changes include population growth, increased mobility, development of the market,
income growth and changing forms of economic exchange or social interaction.

Political Objectives
According to Ellis(1992:198) there are a number of political objectives for land reform.
1. The main objective is to strengthen and consolidate the basis of a new state that has come
about as a result of revolutionary political change. For example land reform in
Zimbabwe.
2. As a platform for liberal (or market oriented) political groups with the objective of
undermining the power of the land based elite.
3. As a platform for socialist groups to institute co-operative, collective or state forms of
agricultural production.
4. As a defensive measure by conservative political groups determined to prevent social
change by making an appearance of changes in land tenure systems or to maintain the
social status quo.

Social Objectives
- the main objective revolves around “ social justice” (what is unacceptable in terms of
what power some members of society have over others). This is allied both to political
and economic reasons. On the political side, increased social equality is the main
argument. On the economic side is linked to employment, income distribution efficiency
and the size of the domestic markets.

Economic Objectives
- to reduce absolute poverty and
- to increase agricultural output. These are the equity and efficiency goals of land reform.
The output and efficiency goals rest on several propositions about lack of efficiency, i.e. idle
lands, extensive land use methods with low output per unit area or absentee ownership.

Land Reform Instruments

- includes such issues as:
1. Payment of compensation.
2. The setting of exemption or ceilings.
3. Rules of distribution to land reform beneficiaries.

Main groups of Land Reform Instruments

1. Instruments of tenancy reform
-changing the rules concerning legal and illegal types of contract between the land owner
and the tenant. Eg. The ceilings on land owner’s share in share tenancy or prohibition of
certain types of feudal tenancy- no enforced redistribution.

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 2. Instruments of Land Settlement
-involves the release of state land for settlement or opening up of new lands or
resettlement. There is no enforced redistribution.

3. Instruments of Land Redistribution

-Land redistribution means re-allocation the ownership of land between people. Rules for
this are a great deal more to do with formulation and to implementation. There are 4
main components for Land Redistribution and these are :
(i) Expropriation- take away right to ownership. This is politically difficult and is a result
of political process with many trade-offs and compromises. The common instrument in
expropriating is setting a ceiling on the land to be retained by the land owner, eg. One
man one farm.
(ii) Compensation. is a difficult and highly emotive matter. It has two components (a) an
immediate cash payment based on value of land as registered for land tax purposes and
(b) an allocation of government bonds redeemable at some future dates.
(iii) Exemption- Land redistributions contain exemption to the criterion that are
established in law for expropriation e.g. exemption of land under efficient farm
production. There are also political comprises.
(iv) Distribution- legislation must set down the criterion and instruments for post reform
land allocation e.g. owner – occupier or collective farming. Distribute to tenants or owner
occupier or collective. Minimum farm sizes to be specified

Problems of Land Reform Implementation

(i) Foot dragging at legislation stage (Opposition parties delay).
(ii) Modifications and exemptions
(iii) Evasions by landowners (land may be registered in different names, bribes to alter
registration documents).
(iv) Tenants may not understand their rights and obligations under the new legislation.
(v) Role of Courts- Landowners may forestall compliance with land reform legislation by
referring every case to the courts. Courts may rule in favour of landowners thus undermining
credibility and intention of legislation.
(vi) Legal title problems- time consuming to get title deeds.
(vii) Failures of institutional adaptation- institutions may fail to adjust fast enough to change in
their clientele.

Land Reform in Zimbabwe

The land reform programme came on the back of a restive peasantry which frequently contested
the lack of social justice and the problems of inefficiency that underlay the unequal agrarian
structure. Liberal land and agricultural policy reforms in the late 1990s failed to address the land
question. Sporadic illegal land occupations in 1998 (Chief Svosve) set the tone for massive land
occupations in 2000 which were largely backed by the state in view of the collapsed negotiations
for land reform financing with the UK and other donors (Rukuni, 2006:13)

According to Moyo (2006) the land acquisition process was in four phases:
Phase 1: 1980- 1986: Market acquisition era

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 - market land purchases (mainly marginal lands,bought on willing buyer-willing seller
basis.
- accelerated redistribution programme.
- High intensity land occupations.
Phase 2: 1987- 1996: Policy review and reduced acquisition
- economic liberalization
- compulsory acquisition legislated
- low intensity, scattered and low profile occupations
Phase 3: 1997- 2000:Negotiated land acquisition
- economic decline and crisis context
- high intensity, high profile land occupations
- compulsory land acquisition on a mass scale attempted.
- Land reform models negotiations (state vs market assisted).
- Revised law and policy for compulsory acquisition.
Phase 4: 2000-2004: Fast track acquisition
- Economic decline and crisis
- Massive land occupations
- Compulsory land acquisition carried out.
- Revised constitutional provisions for land acquisitions.
- Mass resettlement of people with government acquiring occupied and unoccupied land.
- Renewed agricultural support (Havazvidi and Tattersfield (2006).

Consequences of Fast Track Land Reform

The period of the fast track land reform programme from 2001 to 2003 showed numerous policy,
production and distribution constraints.
- Due to shortages of foreign currency to import the necessary raw materials, fertilizers
were available late in the season.
- Poor road conditions, shortage of transport vehicles and problems in acquiring fuel
created distributional bottlenecks.
- Small holder farmers paid higher farm-gate prices for fertilizers than commercial farmers
because of distances to retail centres and poor input price information. There was no
competition among transporters and retail store owners in communal areas and around
new farms in remote areas.
- Where former large scale farm owners used to have their own personal vehicles to
transport inputs or were on the line of rail, new farmers had to depend on scattered
expensive private transport operators.
- In the new resettlement areas new farmers were worse off because of the poor and
inadequate transport network and lack of agricultural credit at the right time. (Matondi
and Hungwe, 2006).
- period has seen a significant decline in seed production because of the acquisition of land
from large scale farms producing seed. For example National Tested Seeds, which had
based its seed production on its three farms had lost two of them by end of 2002.
Reduced production of seed meant most of the demand had to be satisfied by export bans
and importations. The drop in seed production represented an estimated reduction in
acreage of close to 4000 hectares due to farm acquisition.
- country has also experienced a low level of crop production since 2000.

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- Exacerbating the production situation were on-farm production constraints (poor seed
quality, poor fertilizer availability, erratic supplies of fuel, and electricity outages due to
load shedding (especially for the winter seed crops)). (Havazvidi and Tattersfield
(2006:240)).

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