Agricultural Systems and
Their Determinants
AAEC 3204
Dr. George Norton
Agricultural and
Applied Economics
Virginia Tech
Copyright 2009
Objectives



1. Identify determinants of
agricultural systems
2. Explore various types of farming
systems, including examples from
China and India
3. Consider factors that cause
changes in farming systems over
time
Determinants of Farming Systems Anywhere
Technical
Institutional and human
Physical
Biological
Exogenous to farm
Climate
Endogenous to farm
Pests
Marketing System
Precipitation
Diseases
Family labor
Management ability
Evaporation
Insects
Communication
Temperature
Weeds
Storage
Education and knowledge
Goals
Land
Crop species
Transportation
Livestock species
Norms and beliefs
Topography
Soil structure
Social
Soil fertility
Cultural
Water Control
Historical
Irrigation
Population density
Drainage
Market opportunities
Capital
Buildings
Machinery
Tools
Distance to market
Political factors
Price policy
Credit policy
Land tenure system
Input supply policy
Trade policy
Macroeconomic policy
Off-farm employment opportunities
Classification of Farming Systems
Examples of farming systems
Examples of farming systems
Planting in Ghana
Weeding in Ghana
Feeding goats in Mali
Intensive vegetables and poultry in
India and Bangladesh
Bangladesh Magic Trap
Ecuador Potato – Pasture System
Objectives today

1. Examine changes in agricultural
systems in large developing
countries
• China
• India
• Brazil
2. Consider determinants of the changes
Major factors affecting change in
agricultural systems over time
•
•
•
•
Population and income growth
Changes in relative endowments of
land and labor
New technologies
Changes in political system
Reforms in India and China
Both India and China had lower per
capita income than sub-Saharan
African countries in the 1970s, but
have outpaced them greatly since
then.
• Chinese agriculture has grown more
rapidly than India. Why?
China liberalized its institutions in
agriculture first, while India focused
more on Macro policies
•
Indian reforms
o
o
o
o
Green revolution in seventies with
productivity increases slowing by the
eighties
Macroeconomic reforms in early
nineties
More recent agricultural sector and
trade reforms (still a ways to go)
Investment in research increasing
India
Chinese Agriculture
•
•
•
•
½ the cropland of the United States
¾ acre per Chinese farm worker compared
to 120 acres in the United States
800 million farmers in China compared to
about 7 million in the United States
United States uses substantially more
machinery
China has been changing
What Changed in Chinese
agriculture?
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

1. Institutions (but what
institutions?)
2. Technologies
Which do you believe was more
important in spurring growth,
institutions or technologies?
Types of Chinese farms
1)
2)
3)
Communes – Major reforms began in 1979:
Households within communes were
assigned individual pieces of land. These
individual pieces often organized into
cooperatives.
State farms (very small percent of total)
Individual farms (significant share of the
farms with land leased from the
government).
Almost all farms now run under a “contract
responsibility system” This system was in
place by 1985, but still tinkering with the
leasing system
China
China
Economies in transition:
Effects on Farming systems

Why has China’s (much) slower
political transition allowed
agricultural productivity to increase
more rapidly than the former Soviet
Union’s more complete but rapid
political transition?
• Property rights through contract
responsibility system
• Freeing up of markets and secure
institutions (including wholesale and
retail marketing institutions)
The importance of the rural nonfarm sector

Extremely important when an
agricultural sector has is many small
farms
• Input suppliers, machinery repair shops,
consumer goods, and many other small
industries absorbed workers and
spurred growth
What institutions are necessary for
agricultural growth to occur?
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1. Property rights
2. Rule of law – ability to enforce
contracts and rules to maintain
market mechanism
3. Financial
4. Insurance
5. Input supply and marketing
What about Brazil?
o
o
o
o
o
o
Dualist structure in agriculture
Rapid growth in large scale
agriculture
One of the few countries still bringing
in large new tracts of land
Investing in agricultural research
Large exporter and potential to be
bigger
Environmental issues
Conclusions
•
•
•
•
Farmers are rational and relatively
efficient
Traditional and all farming systems
are inevitably changing
Many technical and institutional
factors are driving these changes
As systems such as those in China,
India, and Brazil change, the effects
spill over to the rest of the world