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Agricultural Transformation and Rural Development

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560 views37 pages

Agricultural Transformation and Rural Development

todaro

Uploaded by

Archie Tonog
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Chapter 9

Agricultural
Transformation and
Rural Development

Copyright 2009 Pearson Addison-Wesley. All rights reserved.


Importance of Agricultural
and Rural Development
Heavy emphasis in the past on rapid
industrialization at the expense of
agriculture

Agricultural development is now seen


as an important part of any
development strategy

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-2


Contribution of Agriculture

Produce
food to meet basic nutritional needs of the
population
raw materials to help the industry
cash crops for export

Farmers have demand for manufactured


consumer and capital goods

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-3


Contribution of Agriculture

Agriculture employs a large percentage of


the labor force

Agriculture generates a large percentage


of the GDP

With improved farm productivity, the labor


and GDP shares of agriculture will decline
over time
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-4
Improved Farm Productivity
1960-2005

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-5


The Shares of Agriculture

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-6


Agraian Structures

The structure of agrarian systems consists


of three types of countries:

Agriculture-based countries
Transforming countries
Urbanized countries

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-7


Agraian Structures

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-8


Agricultural Dualism: World

MDCs have higher total factor productivity


than LDCs

Land (output per acre)


Labor (output per worker-hour)
Capital (output per machine-hour)
Appropriate technology
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-9
Land Productivity in Developed and
Developing Countries

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-10


Reasons for Poor Performance

Lack of investment in
Human capital (education, nutrition, health)

Social capital (roads, homes, electricity,


irrigation)

Physical capital (mechanical inputs, storage


rooms)

Technological advancement: (high yield


seed variety, better planting methods)
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-11
Reasons for Poor Performance

Unequal land distribution

Large and powerful landowners

Small family farmers and peasants

Sharecroppers, landless peasants, and farm


workers

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-12


Agricultural Land Distribution

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-13


Agricultural Land Distribution

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-14


Agricultural Dualism: Latin America

Latifundios:
Very large landholdings
Commercial farming & advanced farm technology
Employing more than 12 workers

Minifundios:
Small family farms (a few workers)
Subsistence farming & primitive technology
Low standard of living
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-15
Agricultural Dualism: Latin America

Problems:

Land concentration: 71.6% of land


owned by 1.3% of landowners

Inefficiency of latifundios

Subsistence of minifundios

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-16


Agricultural Dualism: Asia

Commercial farming:
Very large landholdings
Massive government subsidies
Subsistence farming:
Small family farms
Sharecroppers and landless peasants
Little or no government support
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-17
Agricultural Dualism: Asia

Colonial heritage of cash crop production


(e.g., cotton, peanuts)

Progressive introduction of monetized


transactions

Powerful absentee landowners residing in


large cities with political & economic
influence

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-18


Agricultural Dualism: Asia

Moneylenders and loan sharks

Lend money for buying seeds and fertilizer


Charge exuberant interest rates (20-50%)
Hold land as collateral
Take over the land in case of loan default in
poor-crop years
Become landowners themselves

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-19


Agricultural Dualism: Asia

Problems:
Poverty
Land and income disparity
Rapid population growth
Growing number of landless peasants
Lack of government programs helping small
farmers
Massive R-U migration
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-20
Agricultural Dualism: Africa

Commercial farming:
Very large landholdings
Massive government subsidies

Subsistence farming:
Small family farms
Primitive technology
Large areas of unusable land
Massive underemployment, but labor shortage in
crop season
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-21
Agricultural Dualism: Africa

Problems:

Poverty
Land and income disparity
Rapid population growth
Lack of government programs helping
small farmers
Massive R-U migration
Rapid deforestation and desertification
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-22
Economic Role of Women

Daily tasks:

Home-making and child rearing

Food processing for consumption and


storage

Farming: weeding, harvesting, raising


livestock
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-23
Economic Role of Women

Cash crop labor

Generate income through cottage industry

Make up 60-80% of farm labor in Asia &


Africa; 40% in Latin America

Are subject to gender discrimination in


education and employment

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-24


Risk Taking in Subsistence Farming

Minimum consumption requirement (MCR):

Amount of food necessary for survival

Fixed by nature

Output below which means hunger and


starvation

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-25


Risk Taking in Subsistence Farming

Minimum desirable consumption level (MDCL):

Amount of food desirable

Increases over time with application of more


protein and sugar

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-26


Risk Taking in Subsistence Farming

Output/Consumption MDCL

Farmer B welcomes change

Farmer A resists change

MCR

Time

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-27


Risk Taking in Subsistence Farming

Farmer A producing a tad over MCR is risk


averter

He is unwilling to risk survival by making a


change in traditional way of life and farming

Crop failure is catastrophic

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-28


Risk Taking in Subsistence Farming

Farmer B producing close to MDCL is risk


taker

He is willing to try new methods of production

Crop failure still provides the minimum food


requirement

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-29


Risk Taking in Subsistence Farming

Farmer A resists change to maintain MCR;


he prefers production technique A with low
mean and low variance

Farmer B welcomes change to produce


closer to MDCL; he prefers production
technique B with high mean and high
variance

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-30


Risk Taking in Subsistence Farming

Technique A: low mean, low variance

Technique B: high mean, high variance

Mean = 10 Mean = 12

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-31


Sharecropping & Efficiency

Supply of labor is fixed at WA and demand for labor is


the Value of Marginal Product, VMP
For a small landowner: WA = VMP for employment = LF
For a sharecropper: WA = 0.5 VMP for employment = LS

Here LS < LF as sharecroppers have less incentive to


Apply inputs including labor, seeds, fertilizer
Use modern farming techniques
Produce maximum output
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-32
Sharecropping & Efficiency

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-33


Rural Development Strategies

Technological change and innovation:

Modern mechanical and chemical inputs

High-yield seed varieties

Modern farming techniques

Appropriate technology: labor-intensive

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-34


Expansion of Modern Inputs in the
Developing Regions

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-35


Rural Development

Institutional and Pricing Policies

Parity pricing: equalization of unit farm and


nonfarm prices

Distribution systems and farmer cooperatives

Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-36


Rural Development Strategies

Land Reform:

Distribute fertile land between small farmers and


landless peasants

Compensate owners for loss of land

Provide supportive services to help increase


production

Establish rural industries and jobs to curb R-U


migration
Copyright 2009 Pearson Addison-Wesley. All rights reserved. 9-37

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