Post on 20-Dec-2015
2
Roles for Ag in Development
• Raises income per capita with productivity
• Increases income equality
• Reduces rural urban migration
• Reduces population growth rate
• Reduces food imports, perhaps raises exports
3
Role of Demand
• Factors that lead to shortage;– 1. Population Growth of 2.0 % per annum– 2. Growth in income per capita of 2.5 % and – 3. Elasticity of demand for foodstuffs of unity
• Leads to annual increase in demand of 4-5% per annum
4
Role of Supply
• 1. Tenurial arrangements: – How is productivity affected by ownership of land?– What is APP of land, labour and capital by tenure ?
• 2. Economies of scale:– Is large more productive than small?– Is there an optimal size for operation ?
• 3. Agricultural production functions:– What is role of labor, land and technology?
• 4. Technical change– What is labour bias in technical change ?
5
Average Productivity and Tenure
• What is optimal size ?• Equalize MPP per unit
cost – if cost of land
and capital same,
then X is optimal size
Hectacres
APP input
APP Land
APP Cap
X
X
6
Scale Economies in Ag
0
10
20
30
40
50
60
70
80
90
1stQtr
2ndQtr
3rdQtr
4thQtr
EastWestNorth
• Start at C, small scale• Move to B,
• Note K-Land ratio constant
• Note large increase C-B
• Move B to A• Note K-Land ratio
constant• Note B-A less
• Conclusion, increase inputs by t does output increase by more or less t?
Land
Capital
A
B
C
7
Green Revolution; Three Generations
• 1. First generation: seed revolution• Mexico, wheat productivity 1950s• Philippines, rice IR8 and mariculture 1960s• India and Pakistan, wheat, cotton 1970 to 1980s• Africa, upland rice failed
• 2. Second generation:• fertilizer pesticide • tube well• credit• marketing problem
• 3. Third generation: Regional equity, income distribution and displaced workers
8
Green Revolution; Third Generation
• Third generation: all problems– regional equity, north-south issue
• productivity differences
• no land taxes in northern India
– income distribution • wage labour and rise in land value
– displacement of workers to urban areas
9
Historical Growth Patterns
• Annual change in per capita food output, 1950-1996
• Region LA F.E. N. E. Africa LDC
• 1948-60 .4 .8 .7 .0 .6
• 1960-70 .6 .3 .0 -.7 .1
• 1970-80 .9 .7 .7 -1.2 .5
• 1980-94 .8 1.7 1.3 .0 .9
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What does the above tell us ?
• 1. In general, improvement for LDCs 1970-96 • 2. Large differences, Africa versus Far East
– Implications: - Poverty in rural sectors has increased in Africa and most of Near East.
- Note 68 % of African population is on land and only produce 20% of GDP
• 3. Why do these differences arise ?– a. population growth– b. technological change– c. land tenure
11
Productivity Gap
• Country Kilos grain per hec Pop– Japan 6,119 125m
– USA 5,136 263m
– Bangladesh 2,602 120m
– Mexico 2,506 92m
– India 1,943 929m
– Nigeria 1,172 111m
12
What Causes Productivity Gap?Risk Aversion
• Why is technique A, which is less productive than technique B, chosen?– technique B is feed, fertilizer revolution– need credit, irrigation and no pests– no insurance schemes– failure is starvation
13
Risk-Productivity Trade-off
• Both mean of 8• Range of A
– 6 to 10
• Range of B– 4 to 16
• Mean variance of– A is 8/8 = 1
– B is 8/10 = .8
14
Tenure and Productivity
Country Mini %output Mini % of land Latifundio % output Latifundio of land
Argentina 43.2% 3.4% .8% 36.9% Brazil 22,5 .5 4.7 59.5 Chile 36.9 .2 6.9 81.3 Peru 88.0 7.4 1.1 82.4
15
Policy Issues
• Would land redistribution – raise output ?– lower output ?– increase equality ?– lead to more democracy or violence ?