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    Sectoral Strategies For Inclusive Growth: The Role of Agriculture

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    Manish Prasad
    This document discusses the role of agriculture in promoting inclusive growth and reducing poverty. Some key points: 1) A large proportion of the world's poor live in rural areas and depend on agriculture for their livelihood. However, agricultural growth has been low in recent decades in poorer regions. 2) Agricultural growth can help reduce poverty by increasing incomes for farmers and generating rural employment. However, the ability of agriculture to eliminate poverty is limited due to constraints like lack of land and declining commodity prices. 3) For structural transformation to continue, agricultural productivity needs to increase to free up labor for other sectors. But many countries still have a large agricultural workforce with low productivity.

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    Sectoral Strategies For Inclusive Growth: The Role of Agriculture

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    Manish Prasad
    32 views16 pages
    This document discusses the role of agriculture in promoting inclusive growth and reducing poverty. Some key points: 1) A large proportion of the world's poor live in rural areas and depend on agriculture for their livelihood. However, agricultural growth has been low in recent decades in poorer regions. 2) Agricultural growth can help reduce poverty by increasing incomes for farmers and generating rural employment. However, the ability of agriculture to eliminate poverty is limited due to constraints like lack of land and declining commodity prices. 3) For structural transformation to continue, agricultural productivity needs to increase to free up labor for other sectors. But many countries still have a large agricultural workforce with low productivity.

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    Lecture 2

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    This document discusses the role of agriculture in promoting inclusive growth and reducing poverty. Some key points: 1) A large proportion of the world's poor live in rural areas and depend on agriculture for their livelihood. However, agricultural growth has been low in recent decades in poorer regions. 2) Agricultural growth can help reduce poverty by increasing incomes for farmers and generating rural employment. However, the ability of agriculture to eliminate poverty is limited due to constraints like lack of land and declining commodity prices. 3) For structural transformation to continue, agricultural productivity needs to increase to free up labor for other sectors. But many countries still have a large agricultural workforce with low productivity.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    32 views16 pages

    Sectoral Strategies For Inclusive Growth: The Role of Agriculture

    Uploaded by

    Manish Prasad
    This document discusses the role of agriculture in promoting inclusive growth and reducing poverty. Some key points: 1) A large proportion of the world's poor live in rural areas and depend on agriculture for their livelihood. However, agricultural growth has been low in recent decades in poorer regions. 2) Agricultural growth can help reduce poverty by increasing incomes for farmers and generating rural employment. However, the ability of agriculture to eliminate poverty is limited due to constraints like lack of land and declining commodity prices. 3) For structural transformation to continue, agricultural productivity needs to increase to free up labor for other sectors. But many countries still have a large agricultural workforce with low productivity.

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    of 16

    Sectoral Strategies for Inclusive

    Growth: The role of Agriculture


    Readings
    1) Mellor(1995) Introduction to Agriculture
    on the Road to Industrialization
    2) Byerlee, Diao and Jackson(2005)
    Agriculture, Rural Development, and Pro-
    poor Growth
    http://ruta.org:8180/xmlui/bitstream/handle/1
    23456789/492/RN33.pdf?sequence=1
    (The readings constitute background
    material for the lecture and not direct
    references)
    Poverty and Agriculture
    A large proportion of worlds poor are concentrated in the
    rural areas (70% according to IFAD, 2011)
    500 million rural poor are in South Asia, the largest
    concentration of poverty in the world
    Moreover, urban poverty alleviation is impossible without
    reducing rural poverty
    Agriculture continues to be the major source of livelihood
    in rural areas
    However, agricultural growth has been very low in the
    last two decades for the poorer regions of the world
    Should the revival of agriculture be the ideal policy
    option to induce an equitable growth path?

    Agricultural Growth and Poverty
    Reduction: The Possible Linkages
    Growth brings about higher entitlement for the producers
    with land
    Labour-intensive agriculture also generates employment
    for the landless but to what extent?
    Higher production of food grains make them more
    affordable for the net buyers
    What about net sellers?
    Can agricultural growth eliminate poverty?
    The limit to labour absorption in traditional agriculture
    The related question of surplus labour
    The question of linkages with the non-farm sector


    Agriculture and growth of non-farm
    sectors
    High agricultural growth frees up labour and capital for
    industrialisation(structural transformation)
    High agricultural growth and the demand for capital
    goods (fertilizers, pesticides and basic machinery and
    machine parts)
    High growth in agriculture => higher income for farmers
    => higher demand for consumption goods and services
    => impetus for rural non-farm activities (consumption
    linkage)
    High growth in food grain production => cheap wage
    goods for industrialisation in the rural as well as the
    urban sector => higher non-farm employment

    Problems of Agricultural Growth
    Local constraints ranging from inadequate
    irrigation, soil fertility to low human capital
    Unequal access to land and the
    implications for growth linkages
    General trend of falling prices for
    agricultural commodities: possibility of a
    rapture in the consumption linkage
    The new policy regime and the withdrawal
    of the state from agricultural development

    Implications of State Withdrawal
    Sharp decline in public investment in
    agriculture in terms of infrastructure,
    provision of credit and other non-land
    inputs
    Absence of an institutional framework that
    reduces the problems of transaction costs
    and information asymmetries in agriculture
    Role of the state in Green Revolution

    Digression: The Possibilities of the
    Second Green Revolution
    Biotechnology and its ties to the
    multinationals
    The risk associated with the new
    technology and the absence of a safety-
    net
    The case of farmers suicide in India
    The role of large scale land grabbing in
    Africa
    Some Figures
    World Bank loans to agricultural projects fell
    from 30 percent (of total loans) in 1980 to 12
    percent in 2007
    The labour productivity in most Asian countries
    is below $1000/per worker as against
    $40,000/per worker in the USA
    Although proportion of output from agriculture
    has gone down, proportion of employment
    continues to be high: Lewisian transition from
    agriculture to the non-agricultural sectors has
    slowed down considerably
    Structural
    Transformation/Change
    Long term changes in composition of
    output and employment with movement
    from agriculture to industry and services in
    conjunction with economic growth
    Continuous increase in agricultural
    productivity required to maintain the same
    level of production with the declining
    labour force

    The Lewis Model as a model of
    structural transformation
    Model of dual economy with low
    productivity agricultural sector and high
    productivity industrial sector
    Surplus labour in the rural/agricultural
    sector
    With a wage differential, transfer of labour
    from agriculture to industry at constant
    wage rate in the industrial sector
    This process continues until the surplus
    labour disappears( Lewisian turning point)


    Employment & GDP by Sector in India(% of total)

    Year

    Sector
    1978 1993 2004
    GDP Employment GDP Employment GDP Employment
    Agriculture,
    Forestry & Fishing
    44 71 33 64 22 57
    Industry &
    Construction
    24 13 28 15 28 18
    Services
    32 16 39 21 50 25
    Total
    100 100 100 100 100 100
    Employment & GDP by Sector in China (% of total)
    Year

    Sector
    1978 1997 2007
    GDP Employment GDP Employment GDP Employment
    Agriculture,
    Forestry & Fishing
    28.2 70.5 18.3 49.9 11.3 40.8
    Industry &
    Construction
    47.9 17.3 47.5 23.7 48.6 26.8
    Services
    23.9 12.2 34.2 26.4 40.1 32.4
    Total
    100 100 100 100 100 100
    Implications
    Structural transformation is still not
    complete
    Difference in labour productivity between
    industry and agriculture is not coming
    down
    Excess labour is trapped in agriculture
    In order to ensure a decent standard of
    living to this huge labour force agriculture
    needs to be the main target of any pro-
    poor strategy
    Elements of an pro-poor strategy
    Ensure equitable access to land
    Provide complimentary inputs including credit,
    seeds, fertilisers as well as ag. extension
    services
    Increase public investment on rural
    infrastructure and appropriate technology in
    agriculture-the possible role of public works
    programme
    Prepare to prioritize agriculture for budget
    allocation and development planning

    Rural Non-Farm Employment: Is it an
    Alternative?
    The recent increase in the proportion of
    rural non-farm employment
    The possibility of the non-farm sector as a
    back up to the crisis ridden agrarian sector
    The complication of being a residual
    sector
    Need to re-assess the quality of
    employment in this sector

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