320RK 1

Agricultural Transformation and Rural Development

“It is in the agricultural sector that the battle for long-term economic development will be won or lost.”

“Dalam sektor pertanianlah ditentukan berhasil atau tidaknya upaya-upaya pembangunan ekonomi dalam jangka panjang.”

Gunnar Myrdal

320RK 2

Agricultural Transformation and Rural Development: Outline

Integrated rural development Growth and stagnation of the agricultural

sector since 1950 Characteristics of agrarian systems in Latin

America, Asia, and Africa Economics of peasant subsistence agriculture

and transition to commercial farming Land reform and land markets Role of women in agriculture Case Study

320RK 3

Agricultural Transformation and Rural Development: Introduction

The heavy emphasis in the past on rapid industrialization may have been misplaced

Agricultural development is now seen as an important part of any development strategy

Although agriculture employs the majority of the LDC labor force, it accounts for a much lower share of total output

Trends in per capita food and agricultural production, 1950 -1994

320RK 4

Agricultural Transformation and Rural Development

How can agricultural output and productivity per capita be substantially increased that will benefit the small farmer and support the urban population?

What is the process by which traditional farms are transformed into commercial farms?

Why do traditional farmers resist change? Are price incentives sufficient to increase

output? How can rural development be achieved?

320RK 5

Agricultural stagnation and Growth Since 1950: Output and employment, 1995

Region % of L force in Agriculture

Agricultural output as a % of GDP

South Asia 64 30

East Asia 70 18

Latin America 25 10

Africa 68 20

320RK 6

320RK 7

320RK 8

320RK 9

Distribution of Farms and Farmland

Avg. Operational farm size hectares

% of farmland above 50 hectares

% of tenanted area in farmland

Asia:BangladeshIndiaPhilippines

1.62.33.6

Na3.713.9

20.98.532.8

Latin America:BrazilCosta RicaPeru

59.738.116.9

84.679.779.1

10.29.013.6

320RK 10

320RK 11

Structure of Agrarian Systems

Two kinds of world agriculture: Efficient agriculture- high labour and

land productivity Inefficient agriculture- diminishing

returns to labour

320RK 12

Agricultural in Latin America, Asia, and Africa

Peasant agriculture in Latin America, Asia, and Africa Latin America

The Latifundio-Minifundio pattern Resource underutilization

Asia Fragmentation and subdivision of peasant land

in Asia Africa

Extensive cultivation patterns Shifting cultivation

320RK 13

320RK 14

Latifundio-Minifundio pattern

Latifundios- employment of 12 or more Minifundios- employment of 2 or less Family farms- employment of 4-12 workers Inefficient operation of latifundios Inequality in land distribution

320RK 15

Fragmentation and subdivision

High population density and small patches of land

Equal distribution of land Traditional pattern of land ownership arose

from 3 forces:

1. Colonial rule

2. Power of money lender3. Rapid population growth

320RK 16

Subsistence Agriculture and Extensive cultivation

Importance of subsistence agriculture in the village community

Practice of shifting cultivation Right to common property such as land and

water Historical forces restricting growth of output:

Traditional farming practices Intensive and shifting cultivation Scarce labour supply during peak season

320RK 17

Economics of agricultural development

Three broad stages in the evolution of agricultural production:

Primitive stage- subsistence peasant farm

Mixed family agriculture- consumption+sale

Modern farm- specialized and commercial farming

320RK 18

Economics of agricultural development: Transition process

Subsistence farming

Diversified or

mixed farming

Specialized, modern commercial farming

320RK 19

Subsistence farming: Risk aversion and uncertainty

Small farmer attitudes toward risk: Exploding the myth of irrational producers

320RK 20

Subsistence farming: Risk aversion and uncertainty

320RK 21

Crop yield of different farming techniques

320RK 22

Incentives under share cropping

320RK 23

Sharecropping and interlocking factor markets

Sharecropping occurs when a peasant farmer uses the landowner’s farmland in exchange for a share of food output which the peasant farmer grows.

Is share cropping inefficient? Marshall’s observations Cheung’s findings Shaban’s study Hayam’s findings Recent approach to share cropping in the event of

interlocking factor markets

320RK 24

Sharecropping and interlocking factor markets

Interlocking factor markets occur when different inputs are provided by the same suppliers and these suppliers exercise monopolistic or oligopolistic control over resources.

Case study of Sharecropping and Constraints on Agrarian Reform: India at http://wps.aw.com/aw_todarosmit_econdevelp_8/0,6111,284582-,00.html

320RK 25

Land Reform: Is it inevitable for tenant’s welfare

Land reform means the redistribution of property or land rights for the benefit of the landless, tenants, and farm laborers. Agrarian reform embraces improvements in both land tenure and agricultural organization. Types of land reform intervention:

Land tenure reform External inducements or market based

incentives External controls Confirmation of title

320RK 26

Land Reform: Is it inevitable for tenant’s welfare

Land reform means the redistribution of property or land rights for the benefit of the landless, tenants, and farm laborers. Agrarian reform embraces improvements in both land tenure and agricultural organization. Types of land reform intervention:

Land tenure reform External inducements or market based

incentives External controls Confirmation of title

320RK 27

Land Reform: Inevitable for Tenant’s WelfarePoints for discussion:

What is the case for equitable land distribution?

Are big farms more efficient? Design of a land reform

Should land reform be a permanent, one-shot reform? (revolutionary) Should landlords be compensated? (evolutionary)

Alternatives to traditional land reform Market assisted land reform Tenancy reform

320RK 28

Land reforms Additional material:

Land Reforms: Prospects and Strategies byAbhijit V. Banerjee, Massachusetts Institute of Technology at http://lnweb18.worldbank.org/ESSD/essdext.nsf/24DocByUnid/86356E62C8A4329385256B9F0053E7F7/$FILE/landreform.pdf

You may like to use the points for discussion to go through the paper or rely on your class notes.

320RK 29

Toward a strategy of agricultural and rural

development Improving small-scale agriculture

Technology and innovationInstitutional and pricing policiesSupportive social institutions

Conditions for rural developmentLand reform Supportive policiesIntegrated development objectives

Role of women in agriculture (case study applies to supportive policies and integrated RD as well)

Microfinance - Hope for the Poor: The Grameen Bank of Bangladesh at Microfinance at http://wps.aw.com/wps/media/objects/277/284582/todarocasestudies.pdf