3. Agriculture in Development Flashcards
What is the role of agriculture in development?
Agriculture is seen as a fundamental instrument for sustainable development and poverty reduction (World Development Report, 2008) and as a crucial sector in achieving several SDGs
Agricultural productivity improvement is strongly associated with poverty reduction.
How does the role of agriculture change depending on the stage of development?
Agriculture has a different role at different stages of countries’ development:
- Agriculture-based economies (Sub-Saharan Africa) - Agriculture contributes significantly to growth; the poor are concentrated in rural areas so improving productivity in agriculture will help alleviate poverty
- Transforming economies (Asia, North-Africa, the Middle East) - Agriculture contributes less to growth and poverty is overwhelmingly rural; so growth in agriculture could help narrow the rural-urban divide
- Urbanized economies (Eastern Europe, Latin America) - Agriculture contributes only little to GDP; the rural poor should be included in agriculture as direct producers to create jobs and alleviate poverty
What is the difference between family farms and smallholder farms?
Family farms (no universally agreed definition) One definition -> farms held by an individual, group of individuals or household whose labor is mostly supplied by the family
Small farms are agricultural holdings that operate fewer than 2 hectares of farmland
Why has there been so much support for smallholder agriculture?
In the 60s it was believed that small farms were more responsive to the market and improvements in their productivity had a bigger impact on the growth of the economy and reduction of poverty.
Barrett et al. (2010); Lowder et al. (2021)
‘inverse productivity relationship’ in developing countries meaning that smaller farms are more productive than larger ones (you would think the bigger the farm the more productive it would be, but no)
What are the convenional and new explanations of the ‘inverse productivity size relationship’?
Barrett et al. (2010) & Lowder et al. (2021)
Conventional explanations:
1) Imperfect factor markets:
- > when labor markets are characterized by surplus labor and there is a wage gap because of real cost of labor on peasant farms than the wage rate on capitalist farms, small peasant farms will be more productive
- > hired labor on large farms is more prone to shirking because of lack of constant supervision which in turn makes larger farms less productive
- > absence of insurance markets and imperfections in the land market push small farm households to oversupply labor on their own farms
2) Unobserved factors such as soil quality + climate conditions, that could be unevenly distributed between large, medium, and small farms.
3) Some say issue of systematic measurement errors, self-reported production
New Explanations:
Berrett et al. (2010) test for all of these explanations to see if they hold true and find the following:
- > factor market imperfections explain partly the inverse relationship
- > soil quality has nothing to do with it
- > measurement errors seems to be the main cause of the inverse relationship
What have been the farm size changes in the last decades?
Deininger & Byerlee (2012)
- Land-abundant countries are characterized by rising investment in large-scale farming based on non-family corporate models
Lowder et al (2021)
- Average farm size has decreased, while number of farms has increased 1961-2010 (largely stems from low- and middle-income countries)
- As average income levels rise & economies develop, farmland becomes more concentrated among larger farms
What are the factors favoring recent establishment of large farms?
Deininger & Byerlee (2012)
- New technology that makes it easier to supervise labor supply or occupy it
- Limited availability of labor in frontier areas
- Greater emphasis on integrated supply chains/certification
