Agricultural Transformation

and Rural Development

Contents

▪ The Imperative of Agricultural Progress and Rural Development

▪ Agricultural Growth: Past Progress and Current Challenges
 1 The Imperative of Agricultural Progress and
Rural Development

Urban Areas Vs Rural Areas

▪ Urban Areas - High standard of living and fast-paced life.
▪ Rural Areas - Low standard of living.
- More than half of the world lives in rural areas.
- Living Conditions: Precarious and Subsistent
- Wide spread of poverty, growing inequality, unemployment,
and rapid population.
 1 The Imperative of Agricultural Progress and
Rural Development
1.2 Population in Rural Areas
(Developing Countries Context)
▪ Many developing countries present a large size of rural population.
▪ In 2013, over 3.1 billion of people in developing countries live in rural areas and
about quarter of them experiencing extreme poverty.
▪ In South Asia , some 69% of the population live in rural areas in 2011, with the
result that more than 50% of the workforce concentrated in agriculture.
▪ In sub-Saharan Africa rural dwellers constitute 64% of the total population as of
2011.
▪ Countries whose population is more than 80% rural, Ethiopia, Nepal, Papua New
Guinea, Rwanda, South Sudan, Sri Lanka and Uganda.
 1 The Imperative of Agricultural Progress and
Rural Development

Rural Development
▪ Concentrates for the action of social, economic and even human improvements
intended to eradicate poverty, improve quality life , encourage growth &
expansion and transformation in agriculture.
 1 The Imperative of Agricultural Progress and
Rural Development

1. Operational Goals of Rural Development by World Bank 1975

May be categorized as follows:

▪1)improvement of productivity,
▪2.)higher incomes for the target groups,
▪3.) minimum acceptable level of food, shelter, education and health services.
 1 The Imperative of Agricultural Progress and
Rural Development

2.Rural Development by Asian Development Bank 2019-2024

Operations will focus on improving rural services, attracting private sector investments,
and generating jobs in rural areas. These can be achieved by
(i) strengthening rural–urban connectivity;
(ii) providing reliable power supply, including off-grid solutions;
(iii) expanding access to water supply and sanitation, and managing solid waste;
(iv) strengthening cost-effective health and education services;
(v) promoting ecotourism; and
(vi) creating rural economic hubs.
 1 The Imperative of Agricultural Progress and
Rural Development

3. Rural Development Project in Philippines

▪The Philippine Rural Development Project (PRDP 2013-2018) is a six-year

national government project implemented by the Department of Agriculture
which aims to:
▪i) unleash the economic potential of rural producers by enhancing farm and
fishery productivity in 16 regions and 80 provinces and,
▪ii) make the agriculture and fishery sector more market-oriented and climate-
resilient
 1 The Imperative of Agricultural Progress and
Rural Development

Agricultural Progress
▪Agriculture has been assumed to have a “passive and supportive role” in economic
development.
▪It is also thought to be the dynamic “leading sector”.
▪According to Nobel laureate Simon Kuznets , agriculture or agricultural progress
made four “contributions to economic development.
▪ In addition, according to the findings of the study of Cervantes-Godoy, D. and J.
Dewbre (2010) they define agricultural progress as a potent force in reducing
poverty in developing countries.
 1 The Imperative of Agricultural Progress and
Rural Development
Agriculture Four Contributions to Economic Development
By Nobel laureate Simon Kuznets
▪ Product Contributions - for industries such as textiles and food processing.
▪ The foreign-exchange Contributions - agricultural export revenues to import capital equipment.
▪ Market Contribution - the rise of rural incomes that create more demand for consumer products.
▪ Factor market Contribution - divided between the labor contributions and capital contributions
● Labor contributions – investing in agriculture labor productivity goes up sufficiently
that makes economic sense.
● Capital contributions – misapplied as a “ squeezing of the peasantry” but it meant
investing first and later reaping some profits that can be reinvested in agriculture industry.
The Imperative of Agricultural Progress and Rural
Development

Cervantes-Godoy, D. and J. Dewbre

(2010) study findings.

Cervantes-Godoy, D. and J. Dewbre

(2010) they define agricultural progress as
a potent force in reducing poverty in
developing countries.
 1 The Imperative of Agricultural Progress and
Rural Development
•With 85% of the population living in the rural areas and depending on agriculture for livelihood, there is no doubt
for the economic importance of the agricultural sector for sustainable development and poverty reduction in
Ethiopia. A better-performing agricultural sector has provided growth to the overall economy, improved food
security and reduced poverty in recent years.
•
After more than 20 years' steady economic growth and significant poverty reduction, Ghana is aiming to become a
middle income country. Agriculture will continue to be a large and important sector in Ghana's economy, according to
the economic model featured in this analysis
•
Indonesia's achievements in reducing poverty were substantial in the period leading up to the Asian financial crisis of
the late 1990s, which slowed down the pace of poverty reduction. Agricultural growth performance in Indonesia has
been weak, with a decline in real spending on agricultural research.
•
Vietnam's economic recovery since the late 1980s has lifted nearly half the population from below to above the
international dollar-a-day poverty line. The country which could not produce enough rice to feed its own population
in those years is now a major supplier to world markets. Agricultural policy reforms were a major factor in this
recovery, this study finds.
 1 The Imperative of Agricultural Progress and
Rural Development

Two Kinds of World Agriculture

Highly Efficient Inefficient
Developed Countries Developing Countries
High Output per worker Low Productivity
Small number of farmers can feed entire Agricultural output can barely sustain
nations farm population
Technological and Biological Technological stagnation
improvements
 1 The Imperative of Agricultural Progress and
Rural Development

Agriculture and Employment-based Strategy of Economic

Development
It requires 3 basic complementary elements:
1. Accelerated output growth through technological, institutional, and price
incentive changes designed to raise the productivity of small farmers.
2. Rising domestic demand for agricultural output derived from an employment-
oriented , urban development strategy,
3. Diversified, nonagricultural, labor-intensive rural development activities that
directly and indirectly support and are supported by the farming community.
 1 The Imperative of Agricultural Progress and
Rural Development

▪ In general and conclusion the Imperative of Agricultural Progress and Rural

Development plays an indispensable part in any overall strategy of
economic progress ,especially for the low-income developing countries.

▪ To the large extent , therefore, agricultural and rural development has come to be
regarded by many economists as the sine qua non of national development.

▪ Without such, “Integrated rural development”, industrial either stultified , or, if

it succeeded, would create severe internal imbalances in the economy.
 2Agricultural Growth: Past Progress and
Current Challenges
Trends in Agricultural Productivity
Past Progress
World Bank : Growth in the Value of Agricultural Output

1980-2004
Developing Countries 2.6% per year

Developed Countries 0.9% per year

World Bank: Agricultural GDP World Bank: Non Agricultural GDP

1980 -2004 1980-2004
Developing Countries From 56% to 65% Developing Countries 21%
2Agricultural Growth: Past Progress and
Current Challenges

International Food Policy Research Institute

Table 9.1 is the recorded

agricultural output that
significantly has faster growth
from 1970 to 2010 in
developing countries.
 2Agricultural Growth: Past Progress and
Current Challenges

Green Revolution

Green Revolution in Asia is one of the activities they use to improve agriculture. It
is a boost in grain production associated with the scientific discovery of new hybrid
seed varieties of wheat, rice, and corn that resulted in high farm yields in many
developing countries.
 2Agricultural Growth: Past Progress and
Current Challenges

▪ Agriculture still accounts for the largest number of workers in the developing country
labor force.
▪ Most Developing countries , agriculture accounts for much lower share of total output
than its labor force.
2Agricultural Growth: Past Progress and
Current Challenges
2Agricultural Growth: Past Progress and
Current Challenges
Agricultural Production
- Agricultural production is rising but unevenly.

▪ Asian developing countries – from 1.0(1960) to

3.5(2005) yields. Strong gains.

▪ Latin America – between 1.0-1.5(1960) to beyond

3.0(2005). Strong gains.

▪ Sub-Saharan Africa – increased only by 1/3.

Causes, population growth where traditional
“slash-and-burn” agricultural practices are no
longer feasible.

▪ Developed Countries – continuous growth

production.
 2Agricultural Growth: Past Progress and
Current Challenges

Famine
▪ Famine plagued many of the least developed countries including Africa.
▪ 1973- 1974 Sahelian belt, Sahara, Senegal, Ethiopia.
▪ Between 1980’s and 1990’s experienced famine 4 times. Ethiopia Ethiopia
▪ 2000’s Mauritania, Ethio pia, Eritrea, Angola, Zambia, Zimbabwe, Malawi, Mozambique
▪ 2007-2008 – food price spike
 2Agricultural Growth: Past Progress and
Current Challenges

Famine Progress
▪ Green Revolution in Africa likewise to the successful one in Asia.
▪ NEPAD – developed Comprehensive Africa Agricultural Development Program – emphasize investments
and cooperation in agriculture.

▪ NERICA(New Rice for Africa ) – by Africa Rice Center, which was actually successful.
 2Agricultural Growth: Past Progress and
Current Challenges

Market Failures and the Need for Government Policies

Market may fail to achieve economic efficiency as a result of but not limited to:
▪ Neglect on the agriculture sector in the development priorities.
▪ Environmental externalities
▪ Imperfect Information
▪ Absence of property rights0
▪ Public Goods
▪ Monopoly
 References

▪ Cervantes-Godoy, D. and J. Dewbre (2010), "Economic Importance of Agriculture

for Poverty Reduction", OECD Food, Agriculture and Fisheries Papers, No. 23,
OECD Publishing, Paris, https://doi.org/10.1787/5kmmv9s20944-en.