RESEARCH PROPOSAL

AGRICULTURAL PRODUCTIVITY AND RURAL POVERTY NEXUS

By
Kubra Siddique

Abstract
In agricultural economies of developing countries, overall development of agriculture sector
is always the major driving force behind the overall economic development. Poverty alleviation
is one of the indicators of assessing economic development of a country. Despite many times
implementation of pro-industrial policies and indirect influence of industrialists in policy design
and implementation, still agricultural growth is perceived as the source of overall development.
As poverty is relatively more prevalent in the rural areas, therefore, rural poor are expected to be
the direct beneficiaries of agricultural growth. However, a simple comparison of growth rates in
the agriculture sector vis-à-vis rural poverty does not establish this relationship. There are
periods when agricultural growth rate was very high but it has not contributed to alleviate rural
poverty in particular and overall poverty in general. The present study is intended to decode the
macro level relationship by a deep investigation of the issues at cropping system and tenancy
status levels. The findings are expected to help diagnose the nature of relationship at micro level,
which shall in turn help designing more realistic policies for poverty alleviation through
improving agricultural productivity.

1. INTRODUCTION
1.1 Researchable Issues and Their Significance:

Agriculture policies have a crucial role in reducing rural as well as aggregate poverty, given
that the bulk of the poor are in rural areas, and are involved in agriculture. There is considerable
international evidence from low-income agriculture-dependent countries that broad based rural
growth starts with increased labor productivity in small farm agriculture. The multidimensional
nature of the relationship between agriculture and poverty is being acknowledged more widely.
Higher farm productivity affects family earnings and nutrition, which in turn supports labour
productivity and results in better health and well-being of the people (Oshaug and Haddad,
2002). Despite the satisfactory performance of agriculture sector (both the crop and livestock
sectors) in Pakistan over the last four decades, poverty has increased during the 1990s. This may
be due to the removal of all subsidies during the 1990s, as part of structural and adjustment
programmes of the government, which resulted in manifold increase in input prices and thus
greater cost of production (Ahmad, 2003). To compensate for the higher production cost, the
government followed the policy of increasing the price support prices of major crops. However,
the increase in input prices has been much faster than the compensation in term of higher output
prices. Such trends in prices have been squeezing the profitability of the agriculture sector in
general and poor farmers in particular. Consequently, poverty increased among the landless,
tenants, and small farmers during the 1990s (Ahmad, 2003).

Several studies have been conducted to estimate poverty level using different approaches.
The most important of them are Naseem (1977), Irfan (1984), Cheema and Malik (1984), Akhtar
(1988), Malik (1988), Havinga et al. (1989), Ercelawn (1990), Malik (1991), Mahmood et al.
(1991), Zaidi (1992), Ahmed (1993), Shirazi (1993), Ali (1995), Jafri and Khattak (1995), World
Bank (1995), Bhatti (1996) and Jafri (1999). This shows that, much has been written about
poverty in over the last two and half decades. However, there is scarcity of empirical studies to
show the relationship between the agricultural productivity and rural poverty, except Ahmad
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(2003) that explores the agricultural productivity, efficiency and rural poverty in irrigated
Pakistan.
With the crop intensification, different cropping systems are emerged and these cropping
systems are varyingly contributing towards total agricultural production and also vary in terms of
total productivity and prevalence of rural poverty. Since the project in hand is intended to
establish a relationship between agricultural growth and poverty, it seems plausible to investigate
the relationship across cropping systems.

The continued division of agricultural lands due to heredity transfer of right from father to
the children decreases average farm size and some of the families unable to operate very small
size generally rent out their lands to other co-villagers. In this way, the percentage of owners-
cum-tenant farmers is expected to increase in future. As the review of literature on crop
management across tenancy status shows that in general the intentions about making long-term
investments on agricultural lands (e.g. installation of tubewells, plantation of fruit orchards)
could not be practiced on rented lands. It is therefore, worth investigating the relationship
between agricultural productivity and poverty across various tenancy groups.

Therefore, the project intends to extend the work of Ahmad (2003) and others to establish the
relationship between the agricultural productivity and poverty, covering different cropping zones
and across the tenancy status. It is concluded from the review of literature that institutional support
in the form of access to improved technology and rural infrastructure had made important
contributions to agricultural growth vis-à-vis poverty alleviation.

1.2 Specific Objectives:

 To estimate the levels of poverty of agricultural households in different cropping

zones.
 To estimate the incidence of poverty across the tenancy status in different cropping
zones.
 To compare the household consumption pattern and diversity across tenancy status.
 To find out the relationship between agricultural productivity and rural poverty.
 To study the relationship between farm size and agricultural productivity.
 To suggest policy recommendations based on the findings of the study.

2. Review of Relevant Literature:

Ahluwalia (1978) concluded that “there is evidence of some trickle down associated with
agricultural growth” while Saith's (1981) have view “there can be little doubt that current growth
processes have served as generators of poverty”. The debate continues; in more recent literature,
Singh (1990) found that “rapid agricultural growth has benefited all classes of the poor” and
Gaiha (1995) says that “acceleration in agricultural growth by itself is unlikely to make a dent in
rural poverty”. Datt and Ravallion (1998) found that higher farm productivity brought both
absolute and relative gains to poor rural households in India. Madhusudan and Ghosh (1998)
noticed that the changes that had taken place in agrarian structure had reduced the incidence of
rural poverty via agricultural development channel by affecting favorably agricultural
productivity. Lenne (2000) argued that without the agricultural development, the effects of
poverty would have been far worse. Fan et al (2000) found that improved technology and rural
infrastructure had made important contributions to agricultural growth and poverty reduction in
India. Ahmad (2003) estimated the input elasticities for poor and non-poor farms using stochastic
frontier production function for irrigated areas in Pakistan. He concluded that the least efficient
group was not only operating far below the frontier but also operated at the lower portion of the
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production frontier. It was argued that access to the inputs would likely raise productivity and
reduces poverty. Thirtle et al (2003) found a strong correlation between productivity gains in
agriculture and poverty reduction. Similarly, Dorward, (2003) and Poulton and Dorward (2003)
showed that agricultural productivity gains had raised rural incomes by directly increasing
farmers’ incomes, employment opportunities and wage rates. Levin and Mbamba (2004)
concluded that expansion of agricultural production has the strongest employment and income
effects, but the bulk of income increases, would go to non-poor both in rural and urban areas.
Sarris et al (2006) explored how farm productivity affects poverty, and how various factor market
constraints affect farm productivity. They found that agricultural productivity directly affected
household consumption and hence overall poverty and welfare.

3. Methodology including data analysis and analytical design:

The analysis of the study will be based primary as well as secondary data. The primary data
will be collected through a representative survey of households covering all the cropping zones.
While the secondary data will be amassed from various published and unpublished sources.

Much has been written about poverty over the last two and half decades. Three major
approaches may be distinguished in the history of research studies on poverty. Firstly, poverty is
taken as a subjective phenomenon how people perceive poverty. The second approach, relative
poverty, is being used to highlight the income inequality. The third approach, absolute poverty,
indicates the position of an individual or household in relation to the minimum cost of food and a
set of basic needs consistent with the spending pattern of the poor.

The purpose of this study is to illuminate agricultural productivity and rural poverty nexus.
The poverty will be estimated by applying the absolute poverty approach used by Naseem
(1977), Cheema and Malik (1984), Irfan (1984), Malik (1988), Ali (1995), Havinga et al. (1989),
Ercelawn (1990), Mahmood et al. (1991), Malik (1991), Shirazi (1993), Jafri (1999), Ali (1995),
Jafri and Khattak (1995), World Bank (1995) and Bhatti (1996) in the earlier studies on poverty.
However, to show the relationship between the agricultural productivity and rural poverty very
little work has been conducted. Ahmad (2003) investigated the agricultural productivity,
efficiency and rural poverty in irrigated Pakistan. Therefore, the project intends to extend the
work of Ahmad (2003) and others, covering different cropping zones with special emphasis to
estimate the relationship between the agricultural productivity and poverty.

3. Expected Outputs and Outcome/Impact:

The findings of the study regarding the poverty prevalence in different cropping zones and
across the tenancy status in rural areas and will provide a base for future planning regarding the
uplift of rural poor.

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