CHAPTER 9: Agricultural Transformation and Rural Development

9.1 The Imperative of Agricultural Progress and Rural Development

• Over 3 billion people lived in rural areas in developing countries in 2018, about a quarter of them in extreme poverty.
And despite the extraordinary urbanization taking place throughout the world (examined in Chapter 7), people living in
the countryside make up more than 60% of the population in both low- and lower-middle-income countries on average.
two-thirds of the world’s poorest people are also located in rural areas and engaged primarily in subsistence agriculture.
Their basic concern is survival.
• Traditionally in economic development, agriculture has been assumed to play a passive and supportive role.
• Nobel laureate Simon Kuznets introduced an early schema, noting that agriculture made four “contributions to
economic development”:
1. The product contribution of inputs for industry such as textiles and food processing;
2. The foreign-exchange contribution of using the agricultural export revenues to import capital equipment;
3. The market contribution of rising rural incomes that create more demand for consumer products; and
4. The factor market contribution, divided between the labor contribution (Lewis’s manpower)—workers not
needed on farms after agricultural productivity was raised could then work in industry—and the capital contribution
(some farm profits could be reinvested in industry as agriculture became a steadily smaller fraction of national
income).
• Today, most development economists share the consensus that far from playing a passive, supporting role in the process
of economic development, the agricultural sector, in particular, and the rural economy in general, must play an
indispensable part in any overall strategy of economic progress, especially for the low-income developing countries.
• An agriculture- and employment-based strategy of economic development requires three 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;
and
3. diversified, non-agricultural, labor-intensive rural development activities that directly and indirectly support and
are supported by the farming community.
• Integrated Rural Development
- The broad spectrum of rural development activities, including small-farmer agricultural progress, the provision of
physical and social infrastructure, the development of rural non-farm industries, and the capacity of the rural sector
to sustain and accelerate the pace of these improvements over time.

9.2 Agricultural Growth: Past Progress and Current Challenges

9.2.1 Trends in Agricultural Productivity
• Green Revolution
- The boost in grain production associated with the scientific discovery of new hybrid seed varieties of wheat, rice,
and corn that has resulted in high farm yields in many developing countries.
- Low-income countries tend to have the highest share of the labor force in agriculture, sometimes as much as 80 to
90%. The share of agriculture in GDP is lower but can represent as much as half of the value of output. These shares
both tend to fall as GDP per capita rises: this is one of the broad patterns of economic development.
- Agricultural production continues to rise around the world, broadly keeping pace with the rising population. But
progress has been very uneven.

9.2.2 Market Failures and the Need for Government Policy

• A major reason for the relatively poor performance of agriculture in low-income regions has been the neglect of this
sector in the development priorities of their governments, which the initiatives just described are intended to overcome.

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9.2.3 Agricultural Extension

• Demonstration and training services for improving agricultural practices and raising farm productivity.
• Policies to improve efficiency and alleviate poverty are closely related. Many market failures, such as missing markets
and capital market failures, sharply limit the ability of poor farmers to take advantage of opportunities of globalization
when governments liberalize trade, for example. If these problems are not addressed prior to deregulation or making
other structural changes, the poor can remain excluded and even end up worse off. A key role for government, then, is
to ensure that growth in agriculture is shared by the poor.
• Farmer Field Schools (FFSs) learning-by-doing adult education. An interesting variation is the Junior FFS, which
adapts the general FFS approach specifically for farm children and youth, focusing on knowledge, skills, productivity,
and food security for farm children along with their families.
• Recent development economics and agricultural extension research has focused on the need to address multiple
constraints to improving performance of low-productivity smallholder agriculture while enhancing food security.
• Africa particularly, has been slow, and is a major explanation of the very slow growth of agricultural productivity.
• Often, there is limited adoption of even basic improved cultivation methods, including crop rotation and use of green
manure.
• For decades, research has made clear that women farmers are underserved by agricultural extension.

9.3 The Structure of Agrarian Systems in the Developing World

• Agrarian system is the pattern of land distribution, ownership, and management, and also the social and institutional
structure of the agrarian economy. It consists of the institutional, economic, socio-organizational, and ethical patterns
found in the agricultural sector and rural areas.
9.3.1 Three Systems of Agriculture
• Systems of Agriculture
1. Agriculture-Based Countries
➢ The agriculture is the major source of economic growth which makes up a large share of GDP.
➢ Agriculture, according to the World Bank, accounts for 32% of GDP growth on average.
➢ More than 2/3 of the poor of these countries live in rural areas.
➢ Some 82% of the rural population of sub-Saharan Africa lives in these countries.
2. Transforming Countries
➢ Agriculture contributes only a small share to GDP growth for about 7% on average.
➢ The share of the poor who are rural is very high, almost 80% on average.
➢ Most of the population of South and East Asia, North Africa, and the Middle East lives in these countries, along
with some outliers such as Guatemala.
3. Urbanized Countries
➢ Agriculture tends to contribute even less to output growth.
➢ Rural–urban migration has reached the point at which nearly half, or more, of the poor are found in the cities.
➢ Urbanized countries are largely found in Latin America and the Caribbean, along with developing Eastern
Europe and Central Asia.
• In many cases, the position of countries is not stagnant. (See Figure 9.4 on page 460)
➢ For example, the India and China which were in the agriculture-based category and then moved to the transforming
category in recent decades.
➢ From 1970 to 1996, Brazil has moved from being a borderline transforming country to a solidly urbanized country
according to the World Bank classification. (See Figure 9.4)

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• Agricultural productivity varies dramatically across countries. (See Table 9.2 on page 461)
➢ The Table 9.2 shows that developed countries are far more productive in value added per worker because they have
more physical and human capital to combine with labor inputs (and land). At the same time, developed countries
are more productive in output per hectare.
• Regional disparities can be quite large within countries.
➢ India has regions that fall within each of the classifications, from modernized Punjab to semi-feudal Bihar.
➢ The Urbanized Mexico has regions also in the south that with high dependence on agriculture.

9.3.2 Traditional and Peasant Agriculture in Latin America, Asia, and Africa
• Traditional Agriculture is a primitive farming style that uses traditional tools, natural resources, and indigenous
knowledge.
• Peasant Agriculture is a farming method that uses small plots of land and basic equipment to produce crops for daily
consumption and sale.
• In many developing countries, various historical circumstances have led to a concentration of large areas of land in the
hands of a small class of powerful landowners. It is true in Latin America and parts of the Asian subcontinent.
➢ This concentration of land ownership often stems from colonial practices, where colonial powers allocated vast
areas of land to a few individuals or families, creating a class of wealthy landowners.
➢ Post-colonial governments sometimes continue these practices. As a result, land ownership became highly unequal,
with a small number of landowners controlling most of the agricultural and productive land, while the majority of
the population remained landless or owned very small plots.

9.3.3 Agrarian Patterns in Latin America: Progress and Remaining Poverty Challenges
• Major agrarian problem in Latin America: Too much land under the control of too few people
• In Latin America, agrarian structures are not only part of the production system but also a basic feature of the entire
economic, social, and political organization of rural life.
• The agrarian structure that has existed in Latin America since colonial times and is still widespread in a substantial part
of the region is a pattern of agricultural dualism known as latifundio-minifundio system.
➢ Latifundio is a very large landholding which is capable of providing employment for more than 12 people, owned
by a small number of landlords and comprising a disproportionate share of total agricultural land.
➢ Minufundio is the smallest farms or landholding which provide adequate employment for a single family, consist
of 2 people, with the typical incomes, markets, and levels of technology and capital prevailing in each county or
region.
• Latifundio-minifundio system does not constitute the entirety of Latin American agricultural holdings. A considerable
amount of production occurs on family farms and medium-size farms.
➢ Family farm is a farm plot owned and operated by a single household which provide work for 2-4 people.
➢ Medium-size farm is a farm which provide work for 5-12 people.
• The economic inefficiency of farming fertile land on latifundios in Latin America is often due to the priorities of wealthy
landowners. These landowners tend to value their vast landholdings more for the social status, power, and prestige they
confer rather than for their agricultural productivity. As a result, these lands are not utilized to their full potential for
national agricultural output.
• Latifundio transaction costs, especially the cost of supervising hired labor, are much higher than the low effective cost
of using family labor on family farms or minifundios.
➢ Transaction costs are costs of doing business related to gathering information, monitoring, establishing reliable
suppliers, formulating contracts, and so on.

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9.3.4 Transforming Economies: Problems of Fragmentation & Subdivision of Peasant Land in Asia
• Major agrarian problem in Asia: too many people crowded onto too little land (See Table 9.3 on page 463)
• The land is distributed more equally in Asia than in Latin America but still with substantial levels of inequality.
(See Table 9.3 on page 463)
• Nobel laureate Gunnar Myrdal identified three major interrelated forces that molded the traditional pattern of land
ownership into its present fragmented condition:
1. The intervention of European rule
➢ Before European colonization, the traditional Asian agrarian structure was organized around the village.
- Land could be redistributed among village members as a result of either population increase or natural
calamities.
- Within the community, families had a basic right to cultivate land for their own use, and they could be
evicted from their land only after a decision was made by the whole village.
➢ The arrival of the Europeans led to major changes in the traditional agrarian structure, such as the landlord was
given unrestricted rights to dispose of the land and to raise the tribute from its customary level to whatever
amount he was able to extract.
➢ Contemporary landlords in India and Pakistan are able to avoid much of the taxation on income derived from
their ownership of land.
- Landlord is the proprietor of a freehold interest in land with rights to lease out to tenants in return for some
form of compensation for the use of the land.
➢ Landlords in South Asia are often absentee owners who live in the town and turn over the working of the land
to sharecroppers and other tenant farmers.
- Sharecropper is a tenant farmer whose crop has to be shared with the landlord, as the basis for the rental
contract. Sharecropper pays rent in form of crops and does not own the land and any of the farming tools.
- Tenant farmer is the one who farms on land held by a landlord and therefore lacks ownership rights and
has to pay for the use of that land. Tenant farmer pays rent in form of money and owns some of the farming
tools used.

➢ Sharecropping is widespread in both Asia and Latin America but more pervasive in Asia while it is almost
unknown in Africa.
- Sharecropping is a system where the landlord allows a tenant to use the land in exchange for a share of
the crop.
- It has been estimated that of all tenanted land, some 84.5% is sharecropped in Asia but only 16.1% in Latin
America.
- It has been estimated that about 48% of all tenanted land is sharecropped in India, 60% in Indonesia, and
79% in the Philippines.
2. The progressive introduction of monetized transactions and the rise in power of the moneylender
➢ The creation of individual titles to land made possible the rise to power of another dubious agent of change in
Asian rural socioeconomic structures, the moneylender.
- A moneylender is a person who lends money at high rates of interest.
- Often moneylenders were more interested in acquiring peasant lands as a result of loan defaults than they
were in extracting high rates of interest. By charging exorbitant interest rates or inducing peasants to secure
larger credits than they could manage, moneylenders were often able to drive the peasants off their land.
❖ Thus, many rural Asians are gradually being transformed from small proprietors to tenant farmers and
sharecroppers, then landless rural laborers, then jobless vagrants, and finally migrant slum dwellers on
the borders of modern urban areas.
3. The rapid growth of Asian populations

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9.3.5 Subsistence Agriculture and Extensive Cultivation in Africa

• Subsistence Farming - It means growing food mainly for your family, not for selling and is the primary way of life for
most African families in agricultural economies. This way of life is deeply rooted in their communities and is central to
how they survive.
• But there are some exceptions. There are certain farms that grow crops to sell, like:
➢ sugar, cocoa, coffee and tea plantations in west and east Africa. ➢ Flowers in Kenya and Ethiopia
➢ Green beans in Niger ➢ Legumes in Tanzania

• 3 Major Characteristics of Traditional African Agriculture

1. The importance of Village- Based Subsistence Farming
- is done to meet the family's basic food needs. It's not about producing for profit or export. This kind of farming
relies heavily on the labor of the family and village members. This creates a system where the focus is on
survival rather than agricultural innovation or efficiency.
2. Availability of Excess Land (Shifting Cultivation)
- It helped maintain soil fertility without the need for external inputs like fertilizers. The practice also allowed
the community to adapt to changes in available land and keep production at sustainable levels.
3. Communal Rights to Land and Water
- Access to land and water is based on family and community rights. Families within the village share resources,
but outsiders, even if they’re from same tribe, are often excluded. This system helps maintain balance, but it’s
breaking down in some areas, leading to more inequality.

• Challenges to Agricultural Productivity

1. Limited tools and technology
- African farmers often have small plots of land to work on because they use basic tools like hoes, axes, and
knives. In some areas, animals cannot be used to help with farming because of challenges like the tsetse fly
(which affects livestock) or the lack of food for animals during dry seasons. Therefore, farmers rely heavily on
manual labor, which limits the area they can effectively farm.
2. Shifting Cultivation
- This practice involves clearing new land to plant crops once the old land has lost its fertility. The old land is
then left to rest and recover. This method doesn’t rely on chemical fertilizers, although farmers may use animal
manure to help maintain soil fertility on heavily cultivated plots.
3. Labor Scarcity
- The seasonal nature of labor demand in agriculture, particularly during planting and weeding seasons, creates
labor shortages at critical times and surpluses during off-peak periods. This imbalance, coupled with the reliance
on traditional farming methods and limited use of modern tools, leads to low agricultural productivity, hindering
the ability to meet the needs of growing populations.

• Consequences of Declining Agricultural Productivity

1. Africa’s food production growth fails to keep up with population growth.
2. Decline in per capita food consumption during the 1980s and 1990s.
3. Increased reliance on imports, especially wheat and rice.

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9.4 The Important Role of Women

1. Dominance in Agricultural Labor
- Ester Boserup’s studies showed that women did around 70-80% of the agricultural labor in African societies, with
most of this work being done with primitive tools like hoes, axes, and knives. Women’s work is physically
demanding and time-consuming, yet it is necessary to meet the family’s food needs. In contrast, men often engage
in cash-earning activities like working on plantations or in cities.
2. Extensive Responsibilities
- Women in rural communities play a crucial role in both agriculture and household management. They actively
participate in cash crop production, although men typically control the income. Alongside farming, they shoulder
domestic responsibilities, such as cooking, cleaning, and childcare. Women also manage livestock, contributing to
household income through animal husbandry. Additionally, they often spend long hours collecting firewood and
water, essential for daily living, especially in areas with limited access to these resources.
3. Time Poverty & Gender Inequality
- Women works longer hours but face limited recognition or financial reward. They often have less time for personal
activities due to household and farm duties.
4. Economic contribution
- Despite working longer hours, women’s contributions are often underappreciated. It is estimated that women
provide 60-80% of agricultural labor in Africa and Asia, and around 40% in Latin America. However, much of this
work is not compensated with money, making it “invisible” in economic terms.
5. Financial Constraints & Risk Aversion
- Women face significant barriers to financial resources, limiting their ability to adopt efficient farming methods and
increasing their economic vulnerability. Female-headed households, in particular, struggle to invest in modern
technologies, leading to stagnant productivity, while men’s productivity continues to grow.
6. Impact of Commercialization
- The commercialization of agriculture is shifting women's roles. Although they remain key contributors, especially
in labor-intensive tasks like weeding and transplanting, men often control commercial farming and reap greater
profits. Resources are increasingly diverted from women's subsistence crops to cash crops. However, non-farm
activities, such as cottage industries and small-scale businesses, are emerging as important avenues for women's
economic empowerment and advancement.
7. Government & Agricultural Programs
- Women are often excluded from government agricultural programs and land reforms, limiting their access to
resources, training, and property ownership, which perpetuates economic inequality and hinders their productivity.
8. Gender Inequality & Efficiency Losses
- Gender inequality in agriculture not only diminishes women’s economic power but also reduces overall
productivity. Studies reveal that providing women with equal access to resources like labor and fertilizer could
boost agricultural output. For instance, in Burkina Faso, women’s lower yields are tied to fewer inputs, highlighting
resource misallocation within households. To achieve successful agricultural reforms, it’s essential to involve and
prioritize rural women in development initiatives.

9.5 The Microeconomics of Farmer Behavior and Agricultural Development

9.5.1 The Transition from Traditional Subsistence to Specialized Commercial Farming
• Stages of Agricultural Evolution
1. Traditional Subsistence Farming
- In the first stage of agricultural development, traditional subsistence farming dominates. This low-productivity
system focuses on producing enough food to sustain the farmer’s family and local community, rather than for
trade. Common in many parts of Africa, it relies on simple tools and labor-intensive methods, resulting in low
yields. The primary goal is to meet immediate family needs, with little surplus for sale or trade.
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2. Diversified/Mixed Agriculture
- The second stage of agricultural transition is mixed or diversified family agriculture, common in much of Asia.
Farms continue to produce food for household consumption while selling a significant portion in the market.
These farms grow a variety of crops and sometimes raise livestock, aiming to generate income from surplus
produce. This stage involves crop rotation, improved techniques, and a shift from subsistence farming to a more
market-oriented system, blending traditional practices with commercial farming.
3. Modern Specialized Farming
- The third stage of agricultural transition involves modern, specialized farming that focuses on high-productivity,
commercial agriculture, using advanced technology and techniques to produce crops or livestock for market
sale, with minimal emphasis on personal consumption.

• Transition Challenges
- The transition to modern, commercial farming requires more than just new technologies and farm restructuring; it
involves broader social, political, and institutional changes. Key factors include land reform for better access and
ownership, education and training for farmers, infrastructure improvements, and supportive policies. Without these
changes, agricultural development could deepen inequalities, leaving smallholders and landless laborers behind
while wealthy landowners’ benefit.

9.5.2 Subsistence Farming: Risk Aversion, Uncertainty, and Survival

Subsistence farming focuses on producing food for family consumption, with low productivity, minimal investment, and
simple tools, and remains dominant in regions like sub-Saharan Africa, where farmers prioritize survival over profit due to
uncertainty and risk.

• Economic Behavior of Subsistence Farmers

- A key aspect of subsistence farming is farmers' risk aversion, driven by uncertainties like unpredictable rainfall and
crop failure. To avoid starvation, farmers prioritize a stable food supply over maximizing profits, making them
hesitant to adopt new technologies that could introduce risks, despite potential benefits.
• Neoclassical Production Theory
- The traditional neoclassical theory of production focuses on land and labor as key inputs, explaining low
productivity through the law of diminishing returns. However, it struggles to explain why subsistence farmers resist
adopting new technologies or diversifying crops, despite the potential for higher yields. This behavior contradicts
the theory, which assumes rational farmers would always adopt innovations that increase output or reduce costs.
• Imperfect Knowledge & Transaction Costs
- The neoclassical theory assumes farmers have perfect knowledge of technologies and market conditions, but in
subsistence farming, this is often not the case. Farmers lack access to accurate information, and the cost of obtaining
it is high. As a result, they rely on local knowledge and trial-and-error. This information gap, along with price
uncertainty, creates a risky environment, discouraging farmers from investing in new methods like fertilizers or
seeds due to the high costs and potential risks.
• Risk Aversion & Survival Focus
- The high uncertainty and risk in subsistence farming, especially in regions with small farms and variable rainfall,
make survival the priority. Farmers are typically risk-averse, preferring stable, low-yield systems over those with
higher potential but greater risks of failure. Their main goal is stability and food security, rather than maximizing
profits with unpredictable outcomes.

• Reasons for Poor Agricultural Performance

1. Landlord Exploitation
- Landlords take the majority of profits from increased crop yields, leaving tenant farmers with little incentive to
invest in improved techniques.

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2. Moneylender Exploitation
- High-interest loans from moneylenders consume most of any increased profits, discouraging investment in
better farming methods.
3. Government Failure
- Government policies, such as price guarantees, often fail, making investments in improved farming techniques
unprofitable.
4. Lack of Complementary Inputs
- The absence of essential resources like fertilizers, pesticides, and reliable irrigation limits farmers' ability to
fully utilize effective farming methods.

9.5.3 The Economics of Sharecropping and Interlocking Factor Markets

• Sharecropping
➢ Sharecropping is an arrangement where a peasant farmer works on land owned by a landlord and gives a portion of
the crop as payment instead of paying rent in money. The landlord typically takes one-third to two-thirds of the
crop, with the exact share depending on factors like labor availability and the inputs (e.g., credit, seeds, tools)
provided by the landlord.
➢ Risk aversion is a key factor in the prevalence of sharecropping, as it reduces financial risk for farmers. Instead of
paying fixed rent in cash, farmers pay a portion of the crop, which lowers their financial burden if the harvest is
poor. However, sharecropping can be inefficient due to poor incentives. Farmers receive only a share of the crop,
not the full marginal benefit of their labor, which reduces their motivation to work harder. Alfred Marshall pointed
out that this lack of full reward for effort leads to lower productivity compared to other systems where the farmer
receives all the benefits from their labor.

• Different economic theories explaining sharecropping, challenging the traditional view that it’s inherently
inefficient
1. The Traditional (Marshallian) View
- suggests that sharecropping is inefficient because it reduces the sharecropper's incentive to work hard. Since
the sharecropper only receives a portion of the increased yield from their extra effort, the overall output is
lower compared to a system where the sharecropper owns the land and receives all the benefits of their labor.
2. Cheung’s Monitoring Approach
- suggests that profit-maximizing landlords would actively monitor their tenants’ efforts and replace
underperforming ones. This monitoring ensures that tenants work efficiently, addressing the inefficiencies
typically associated with sharecropping. According to this theory, landlords would be able to maintain the
efficient labor level (LF) even within a sharecropping system, as they incentivize tenants to put in maximum
effort by holding them accountable for their performance.
3. The Screening Hypothesis
- suggests that landlords may offer both sharecropping and pure rental contracts to screen tenants. Higher-
ability farmers, who can maximize output and profit, would prefer pure rental contracts, while lower-ability
farmers would opt for sharecropping. This allows landlords to extract higher rents from more capable farmers
while still providing a suitable option for less productive farmers through sharecropping.
4. Ali Shaban’s Empirical Evidence
- Ali Shaban's empirical research compared farmers working their own land versus sharecropped land. His
findings supported the Marshallian view, showing that farmers used fewer inputs and produced less on
sharecropped land, which indicates the inefficiency of sharecropping.

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5. The Risk-Sharing Approach

- argues that sharecropping, despite its incentive issues, is a relatively efficient solution to the risks and
uncertainties inherent in agriculture. It serves as a compromise between the landowner’s risk of the tenant not
working hard and the tenant’s risk of crop failure leading to insufficient income. While sharecropping may
be inefficient in a world of perfect certainty, it is considered the best option in the face of real-world
uncertainties and unequal land ownership.

• Tenancy Reform
➢ involves changes to how land is shared between landlords and tenants, particularly by giving tenants a larger portion
of the crop they produce and ensuring security of tenure (protection from eviction). This motivates tenants to work
harder and invest in improving the land, as they benefit more directly from their efforts.
➢ For example, in the 1970s, West Bengal, India, implemented tenancy reforms that provided sharecroppers with
more control over their land and a larger share of the produce. These changes led to increased motivation, better
productivity, and higher incomes for the sharecroppers.

• Interlocking Factor Markets

➢ In sharecropping systems, landlords control key aspects of peasants' lives, including land, labor, credit, and crop
sales, creating both a monopoly and a monopsony. This limits peasants' choices, often trapping them in unfavorable
terms, such as low wages, high-interest loans, and low crop prices. As peasants depend on landlords for resources,
their ability to improve their economic situation is restricted, resulting in reduced income and limited advancement
opportunities.

• Land Reform
➢ Land reform redistributes land from landlords to peasants, granting them ownership and control. This incentivizes
investment and hard work, leading to increased productivity. Without land reform, peasants remain trapped in
dependency, but ownership breaks this cycle, improving economic outcomes for both peasants and society.

9.5.4 Intermediate Steps to Mixed or Diversified Farming

• Transitioning from subsistence farming to specialized farming should be gradual.
• Mixed farming introduces cash crops (e.g., fruits, vegetables) alongside staple crops and simple animal husbandry.
• Advantages:
1. Reduces reliance on staple crops.
2. Maximizes land and labor usage during idle periods.
3. Diversifies income sources, minimizing risks from price fluctuations or crop failure.
• Success depends on access to credit, fertilizers, water, fair market prices, and institutional support.

9.5.5 From Divergence to Specialization: Modern Commercial Farming

• Specialized farming focuses entirely on market production for profit.
• Characteristics:
1. Emphasis on a single crop.
2. Capital-intensive techniques (e.g., irrigation, hybrid seeds, machinery).
3. Large-scale production to reduce costs and maximize profits.
4. Common in developed countries and large agribusinesses.
• Challenges for small-scale farmers:
1. High risks from market changes.
2. Coordination and investment barriers.
3. Coexistence of subsistence, mixed, and specialized farming is typical in developing nations.

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9.6 Core Requirements of a Strategy of Agricultural and Rural Development

9.6.1 Improving Small-Scale Agriculture
• Introducing new technologies (e.g., better seeds, fertilizers, irrigation) increases productivity.
• Major Sources of Technological Innovation:
1. Mechanized Agriculture
➢ Issues with mechanization:
- May cause unemployment in areas with abundant labor.
- Suits large farms but not small, fragmented ones.
2. Biological, Water Control, and Chemical Innovations
➢ Biological and chemical innovations are more accessible for small farmers, especially in tropical regions.
➢ Challenges include environmental sustainability, such as water shortages and soil degradation.

9.6.2 Institutional and Pricing Policies: Providing the Necessary Economic Incentives
• Access to inputs (credit, fertilizers, irrigation) and fair pricing is crucial for small farmers.
• Poorly implemented policies, such as favoring large landowners, worsen inequality.
• Governments should focus on policies that benefit small-scale farmers, such as fair pricing and collective action for
market access.

9.6.3 Conditions for Rural Development

1. Land Reform
➢ Redistribute land to small farmers for better equality and productivity.
➢ Land reforms improve rural incomes and agricultural efficiency.
2. Supportive Policies
➢ Provide credit, technical support, infrastructure, and fair pricing systems to support small-scale farmers.
3. Integrated Development
➢ Improve rural incomes through job creation and better access to education, health, and housing.
➢ Reduce urban-rural disparities while addressing environmental sustainability.

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