Agricultural Transformation and Rural
Development
“It is in the agricultural sector that the
battle for long-term economic
development will be won or lost.”
Gunnar Myrdal
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Agricultural Transformation and
Rural Development: Outline
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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
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Agricultural Transformation and
Rural Development: Introduction
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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
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Agricultural Transformation and
Rural Development
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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?
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Agricultural stagnation and Growth Since
1950: Output and employment, 1995
Region
% of L force in
Agriculture
South Asia
64
Agricultural
output as a %
of GDP
30
East Asia
70
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Latin America
25
10
Africa
68
20
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Distribution of Farms and Farmland
Avg.
Operational
farm size
hectares
% of
farmland
above 50
hectares
% of tenanted
area in
farmland
Asia:
Bangladesh
India
Philippines
1.6
2.3
3.6
Na
3.7
13.9
20.9
8.5
32.8
Latin America:
Brazil
Costa Rica
Peru
59.7
38.1
16.9
84.6
79.7
79.1
10.2
9.0
13.6
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Structure of Agrarian Systems
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Two kinds of world agriculture:
 Efficient agriculture- high labour and land
productivity
 Inefficient agriculture- diminishing returns
to labour
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Agricultural in Latin America, Asia, and
Africa
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Peasant agriculture in Latin America, Asia, and
Africa
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Latin America
 The Latifundio-Minifundio pattern
 Resource underutilization
Asia
 Fragmentation and subdivision of peasant land in
Asia
Africa
 Extensive cultivation patterns
 Shifting cultivation
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Latifundio-Minifundio pattern
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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
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Fragmentation and subdivision
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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 lender
3. Rapid population growth
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Subsistence Agriculture and Extensive
cultivation
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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:
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Traditional farming practices
Intensive and shifting cultivation
Scarce labour supply during peak season
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Economics of agricultural
development
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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
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Economics of agricultural
development: Transition process
Diversified or
mixed farming
Subsistence farming
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Specialized,
modern
commercial
farming
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Subsistence farming: Risk aversion
and uncertainty
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Small farmer attitudes toward risk: Exploding the myth
of irrational producers
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Subsistence farming: Risk aversion
and uncertainty
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Crop yield of different farming
techniques
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Incentives under share cropping
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Sharecropping and interlocking factor
markets
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Sharecropping occurs when a peasant farmer uses the
landowner’s farmland in exchange for a share of food
output which the peasant farmer grows.
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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
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Sharecropping and interlocking factor
markets
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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
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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:
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Land tenure reform
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External inducements or market based incentives
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External controls
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Confirmation of title
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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:
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Land tenure reform
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External inducements or market based incentives
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External controls
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Confirmation of title
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Land Reform: Inevitable for Tenant’s
Welfare
Points 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
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Land reforms
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Additional material:
Land Reforms: Prospects and Strategies by
Abhijit V. Banerjee, Massachusetts Institute of Technology at
http://lnweb18.worldbank.org/ESSD/essdext.nsf/24DocByUnid/86356E62C
8A4329385256B9F0053E7F7/$FILE/landreform.pdf
You may like to use the points for discussion to go through the paper or
rely on your class notes.
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Toward a strategy of agricultural and rural development
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Improving small-scale agriculture
Technology and innovation
Institutional and pricing policies
Supportive social institutions
Conditions for rural development
Land reform
Supportive policies
Integrated 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
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