Study shows which poli­cies suc­ceed in de­vel­op­ing agri­cul­ture

Re­cent re­search by the In­ter­na­tional Food Pol­icy Re­search In­sti­tute and the In­ter­na­tional In­sti­tute for Sus­tain­able De­vel­op­ment an­a­lysed progress in agri­cul­tural de­vel­op­ment in 117 coun­tries in Africa, Asia and Latin Amer­ica to un­der­stand which poli­cies h

Farmer's Weekly (South Africa) - - Contents - The views ex­pressed in our weekly opin­ion piece do not nec­es­sar­ily re­flect those of Farmer’s Weekly. This ar­ti­cle is an ex­cerpt from the re­port, ‘ Trans­form­ing Agri­cul­ture in Africa and Asia: What are the pol­icy pri­or­i­ties?’. To read the full re­port, visi

In­clu­sive eco­nomic growth is es­sen­tial to achiev­ing long-term poverty re­duc­tion and de­vel­op­ment goals. The tran­si­tion from tra­di­tional, ru­ral so­ci­eties dom­i­nated by farm sys­tems with low pro­duc­tiv­ity to­ward more di­ver­si­fied, ur­ban-cen­tred so­ci­eties with high pro­duc­tiv­ity is a com­plex process that de­pends on a coun­try’s re­source en­dow­ments, in­sti­tu­tions and other fac­tors. Within the struc­tural trans­for­ma­tion of the econ­omy, agri­cul­tural trans­for­ma­tion has an es­sen­tial role to play, and suc­cesses and fail­ures in this sec­tor have se­ri­ous con­se­quences for so­cial out­comes, en­vi­ron­men­tal im­pacts and eco­nomic ef­fi­ciency.

Re­search con­ducted by the In­ter­na­tional Food Pol­icy Re­search In­sti­tute and the In­ter­na­tional In­sti­tute for Sus­tain­able De­vel­op­ment looked at govern­ment poli­cies and pub­lic in­vest­ments that drove agri­cul­tural trans­for­ma­tion in African, Asian and Latin Amer­i­can coun­tries be­tween 1970 and 2015.

a chang­ing world

Ac­cord­ing to the find­ings, sig­nif­i­cant progress was made dur­ing this pe­riod to re­duce un­der­nour­ish­ment and pro­vide em­ploy­ment op­por­tu­ni­ties out­side of agri­cul­ture in lower and mid­dle-in­come coun­tries. The great­est suc­cess has been in Asia, Latin Amer­ica and parts of North Africa, while sub-Sa­ha­ran Africa has not ex­pe­ri­enced the same growth.

In 1970, most coun­tries in Africa, Asia and Latin Amer­ica were char­ac­terised by high lev­els of un­der­nour­ish­ment, heavy de­pen­dence on agri­cul­ture for em­ploy­ment, and low pro­duc­tiv­ity. By 2015, most coun­tries had largely achieved trans­for­ma­tion, with only sub-Sa­ha­ran Africa lag­ging be­hind.

To­day, only 10 coun­tries are still in the ear­li­est phase of agri­cul­tural trans­for­ma­tion, namely sub­sis­tence agri­cul­ture, com­pared with 30 coun­tries in 1970. They are the Cen­tral African Repub­lic, Chad, the Demo­cratic Repub­lic of Congo, Eritrea, Haiti, North Korea, So­ma­lia, South Su­dan, Su­dan and Zam­bia. Farm sys­tems in most coun­tries have com­mer­cialised and use mod­ern in­puts. South Africa ranks among the top in­dus­tri­alised economies in terms of agri­cul­tural de­vel­op­ment.

Coun­tries that have failed to trans­form their farm­ing sec­tor can learn from those that have been more suc­cess­ful. How­ever, when pro­vid­ing pol­icy guide­lines, it is im­por­tant to take into ac­count that the global eco­nomic and en­vi­ron­men­tal con­text has changed dra­mat­i­cally since the green rev­o­lu­tion be­tween 1950 and the late 1960s in coun­tries that, at the time, formed part of the so-called de­vel­oped world. In the cur­rent con­text, coun­tries will not nec­es­sar­ily be able, or need, to repli­cate those early strate­gies that fo­cused on pri­mary pro­duc­tion of sta­ples.

agri­cul­tural ac­tiv­ity and fer­tile land are key to spurring eco­nomic growth

Ur­ban­i­sa­tion has pro­gressed ahead of struc­tural trans­for­ma­tion in many coun­tries that have not yet trans­formed their agri­cul­ture. Di­etary changes and the mod­erni­sa­tion of food dis­tri­bu­tion and pro­cess­ing cre­ate new op­por­tu­ni­ties as well as chal­lenges of over­nu­tri­tion. The in­creased fre­quency of ex­treme weather-re­lated events as a re­sult of cli­mate change, de­for­esta­tion, bio­di­ver­sity loss and fresh­wa­ter scarcity are dis­rupt­ing agri­cul­ture’s po­ten­tial, and re­quire new ap­proaches to achieve eco­nomic growth and poverty re­duc­tion. At the same time, ad­vances in sci­ence and tech­nol­ogy have cre­ated new ap­proaches and op­por­tu­ni­ties to sup­port agri­cul­ture.

hav­ing fer­tile land is cru­cial

The re­search pro­duced five key find­ings. Firstly, the avail­abil­ity and fer­til­ity of agri­cul­tural land, as well as pop­u­la­tion dy­nam­ics, are core to the role of agri­cul­ture in eco­nomic trans­for­ma­tion. Where coun­tries have abun­dant and fer­tile agri­cul­tural land and high birth rates, in­creas­ing agri­cul­tural pro­duc­tiv­ity is a key pri­or­ity for spurring eco­nomic growth in the early phase of trans­for­ma­tion. This is ev­i­dent from many suc­cess­ful Latin Amer­i­can coun­tries, such as Brazil and Colom­bia.

Where coun­tries have high birth rates but lim­ited agri­cul­tural land and wa­ter per capita, in­creas­ing non-agri­cul­tural pro­duc­tiv­ity is a key pri­or­ity for spurring eco­nomic growth in the early phase of trans­for­ma­tion. This is ev­i­dent from many suc­cess­ful Asian coun­tries stud­ied.

Se­condly, price poli­cies play a key role in agri­cul­tural trans­for­ma­tion. Price in­ter­ven­tions in­clude mea­sures that change the de­mand and sup­ply of pri­vate goods. They af­fect mar­ket prices (for ex­am­ple, through trade poli­cies, price con­trols and mar­ket­ing boards), or they af­fect pro­ducer prices (through sub­si­dies paid by tax­pay­ers) both for in­puts and out­puts.

Price in­ter­ven­tions can pro­vide ei­ther pos­i­tive as­sis­tance or neg­a­tive as­sis­tance to farm­ers rel­a­tive to the rest of the econ­omy. What re­ally mat­ters when as­sess­ing the bias of a price pol­icy re­gard­ing agri­cul­ture is the no­tion of ‘rel­a­tive rate of as­sis­tance’. If a coun­try im­ple­ments a 5% av­er­age tar­iff on agri­cul­tural prod­ucts but a 10% av­er­age tar­iff on in­dus­trial prod­ucts, it does not sup­port agri­cul­ture (in other words, there is a neg­a­tive rel­a­tive rate of as­sis­tance). In many coun­tries, such as Brazil, In­done­sia, South Korea and Viet­nam, agri­cul­ture took off when the anti-agri­cul­tural bias was re­moved.

On the other hand, coun­tries that have not yet trans­formed their agri­cul­tural sec­tor, such as Ethiopia, Malawi, Togo and Uganda, main­tained an anti-agri­cul­tural bias for the en­tire 45-year pe­riod. Stable macroe­co­nomic poli­cies also played an im­por­tant role, in­clud­ing through ex­change rate in­ter­ven­tions and man­ag­ing in­fla­tion.

In­vest­ment and re­forms

The third key find­ing of the re­search was that pub­lic in­vest­ment is im­por­tant but not suf­fi­cient for suc­cess. Sig­nif­i­cantly ex­pand­ing pub­lic in­vest­ment in sup­port of agri­cul­tural de­vel­op­ment has been a key fac­tor in most suc­cess­ful coun­tries, such as China, Costa Rica and Malaysia. But some coun­tries, for ex­am­ple Ghana and Peru, have achieved im­pres­sive growth with­out sig­nif­i­cant in­creases in pub­lic in­vest­ment. For the group of coun­tries stud­ied, in­vest­ments in re­search and de­vel­op­ment and ex­ten­sion ser­vices have been the most im­por­tant types of pub­lic in­vest­ments and tend to have a greater im­pact when ac­com­pa­nied by other mea­sures.

Ru­ral in­fra­struc­ture, par­tic­u­larly elec­tri­fi­ca­tion and ir­ri­ga­tion, is a cru­cial pub­lic in­vest­ment, and de­liv­ers even bet­ter re­sults when com­bined with roads. Fourthly, the re­search sug­gested that in­sti­tu­tional change and le­gal re­forms were crit­i­cal to achiev­ing trans­for­ma­tion and de­vel­op­ment in the agri­cul­ture sec­tor. Land and other in­sti­tu­tional re­forms are es­pe­cially crit­i­cal in the ini­tial stages to jump­start agri­cul­tural pro­duc­tiv­ity growth and gen­er­ate sur­pluses to fa­cil­i­tate struc­tural change. Land re­form was key in coun­tries with un­equal land dis­tri­bu­tion, such as Brazil, South Korea and Viet­nam. Com­bin­ing these re­forms with pub­lic in­vest­ment has led to far greater suc­cess when well­co­or­di­nated and car­ried out in a proper se­quence. This has been the case with agri­cul­tural in­sti­tu­tional re­forms in China and Viet­nam, land re­forms in Viet­nam and South Korea, and pro­vi­sion of pub­lic credit in Brazil and Colom­bia.

heed­ing the past

The fi­nal find­ing was that com­ple­men­tar­ity is es­sen­tial. No sin­gle mea­sure is suf­fi­cient to make progress, and no coun­try stud­ied suc­ceeded with­out an ap­pro­pri­ate mix of poli­cies and pub­lic in­vest­ment. More­over, the com­po­si­tion of pub­lic spend­ing mat­tered; some coun­tries had low lev­els of spend­ing in re­search and ex­ten­sion and too much fo­cus on in­put sub­si­dies.

Ul­ti­mately, each coun­try will chart its own path with at­ten­tion to the global eco­nomic, so­cial and en­vi­ron­men­tal con­texts, but it will do so more ef­fec­tively by draw­ing on the lessons of the past.

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