1. 320RK 1
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

2. 320RK 2
Agricultural Transformation and
Rural Development: Outline
 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

3. 320RK 3
Agricultural Transformation and
Rural Development: Introduction
 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

4. 320RK 4
Agricultural Transformation and
Rural Development
 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?

5. 320RK 5
Agricultural stagnation and Growth Since
1950: Output and employment, 1995
Region % of L force in
Agriculture
Agricultural
output as a %
of GDP
South Asia 64 30
East Asia 70 18
Latin America 25 10
Africa 68 20

6. 320RK 6

7. 320RK 7

8. 320RK 8

9. 320RK 9
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

10. 320RK 10

11. 320RK 11
Structure of Agrarian Systems
 Two kinds of world agriculture:
 Efficient agriculture- high labour and land
productivity
 Inefficient agriculture- diminishing returns
to labour

12. 320RK 12
Agricultural in Latin America, Asia,
and Africa
 Peasant agriculture in Latin America, Asia, and
Africa
 Latin America

The Latifundio-Minifundio pattern

Resource underutilization
 Asia

Fragmentation and subdivision of peasant land in
Asia
 Africa

Extensive cultivation patterns

Shifting cultivation

13. 320RK 13

14. 320RK 14
Latifundio-Minifundio pattern
 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

15. 320RK 15
Fragmentation and subdivision
 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

16. 320RK 16
Subsistence Agriculture and
Extensive cultivation
 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:
 Traditional farming practices
 Intensive and shifting cultivation
 Scarce labour supply during peak season

17. 320RK 17
Economics of agricultural
development
 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

18. 320RK 18
Economics of agricultural
development: Transition process
Subsistence
farming
Diversified or
mixed farming
Specialized,
modern
commercial
farming

19. 320RK 19
Subsistence farming: Risk aversion
and uncertainty
 Small farmer attitudes toward risk: Exploding the myth
of irrational producers

20. 320RK 20
Subsistence farming: Risk aversion
and uncertainty

21. 320RK 21
Crop yield of different farming
techniques

22. 320RK 22
Incentives under share cropping

23. 320RK 23
Sharecropping and interlocking factor
markets
 Sharecropping occurs when a peasant farmer uses the
landowner’s farmland in exchange for a share of food
output which the peasant farmer grows.
 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

24. 320RK 24
Sharecropping and interlocking factor
markets
 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.h

25. 320RK 25
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:

Land tenure reform

External inducements or market based incentives

External controls

Confirmation of title

26. 320RK 26
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:

Land tenure reform

External inducements or market based incentives

External controls

Confirmation of title

27. 320RK 27
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

28. 320RK 28
Land reforms
 Additional material:
Land Reforms: Prospects and Strategies by
Abhijit V. Banerjee, Massachusetts Institute of Technology at
http://lnweb18.worldbank.org/ESSD/essdext.nsf/24DocByUnid/86356E62C8A
You may like to use the points for discussion to go through the paper or
rely on your class notes.

29. 320RK 29
Toward a strategy of agricultural and rural
development
 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