74

UNIT -III
THEORIES OF AGRICULTURAL DEVELOPMENT

Structure
3.1 Introduction
3.2 Objective
3.3 Lewis Model
3.3.1Criticism of the Lewis model
3.3.2 Conclusion
3.4 Jorgenson's Model
3.4.1Criticisms
3.4.2 Conclusion
3.5 Theories of Agricultural Development: Schultzian Theory
3.5.1 Definition of Traditional Agriculture
3.5.2 Characteristics of Traditional Agriculture
3.5.3 Schultz's Suggestions for Transforming Agriculture
3.5.4 Criticisms
3.6 Mellor's theory of Agricultural development
3.6.1Traditional Agriculture
3.6.2 Characteristics of traditional agriculture
3.6.3 Critical Evaluation of Mellor' s Theory
3.7 Boserup's Theory of Agricultural Development
3.7.1 Stages of Agricultural Development
3.7.2 Criticisms
3.8 The Chayanov Farm Household model
3.9 Barnum-Squire Farm Household Model
3.10The Low's Model of farm household
3.11Let Us Sum up
3.12 Key terms:
3.13 Questions
3.14 Further/Suggested Readings

3.0 Introduction
This unit deals with the various theories of agricultural development. The important
theories discussed in this unit are Lewis theory, Jorgensen's model. These theories discuss
the problei ns of labour surplus economy. Lewis theory in particular assumes that the
underdevelo: ed countries have surplus labour in the sense that marginal productivity of
labour is zero. He calls for transferring of labour from agricultural sector to industrial for
economic de velopment. Jorgenson model emphasizes on the need to generate agriculture for
transfer of labour from agriculture to industrial sector. He also discusses the importance of
capital formation in the process of development of a dual economy.
 gainfullyelastic. The
be The insistence such labour
laureate
agricultural
primarily Model
Lewis
3.2
agriculturalObjective3.1 arMellor
etraditional
expansion wage
wage 5. 4. 3. 2. 1. Chayanov,
rate a
The labour Giventhese Themodern TheModern The b) a) The Thesurplus W. The The The and The
in equal rate
agriculture Traditional
Modern subsistence
supplysubsistencetraditional economytheory Arthur sector Lewis developmentobjective agriculture. unit
various Boserup.
the labour employedlabour, in surplus third Barnum-Squire
to sector industrial also
modern urban
their off urban is
world Lewis to model theories
transfer who assumptions, Lewis The contains
sector labour was subsistence consists based modern of The
industrial
in economy sector economy
sector. marginal were sector industrial which this various
the capital. sector nations in of
to to
on of theories
and industrialhaving modern is of the 1954. development
urban unit agricultural and theories
The industrial over-populated does is are
productivity. sector through agriculture two through theories
Lewis
modern characterized sector following during It applicable is of
speed not sectors; industrial to
zero became agricultural which
sector remains urban thargues e that sector the provide models. of
at marginal make the development
sector assumptions: 1960s
sector focuses 75
industrial process to farm
which where with thesector.process suggestthe
constant is the by underdeveloped
perfectly and andgeneral knowledge household
development
employment
the productivity development
economic can high zero
they use on
sector of productivity. early The of are
modern so transfer of marginal the
will elastic. theory surplus discussed ways
long at reproducible 1970s. theory structural behavior
about
sectorgrowth contribute in as the of productivity of was countries. are and
constant
the the surplus development labour the propounded means
as
presented
expands traditionalsupply developed
transformation various follows.
depend positively capital
whilethe from
urbanlabour of
is of of transforming
place
take in labour. in by
determined on sector iswage processsubsistence by theories
and perfectly from this
Schultz,
output Nobel
earn can rate. of unit
the in a of
 76

by the rate of investment and capital accumulation in the modern sector. It is assumed that
capitalists reinvest all their profits and reinvestment profits leads to capital accumulation and
are certain
expansion of output and employment in modern sector. However, there
sector.
bottlenecks in the transfer of labour from subsistence sector to modern industrial
employment due to
Firstly, labour may be reluctant to move to urban industrial sector from
Secondly, the capitalist sector
their long term association with land, relatives and home.
traditional sector are unskilled. However,
needs skilled labour but most of the workers in
bottleneck. It can be solved by giving
Lewis argued that skilled labour is only a temporary
urban wage rate should be at least 30%
training to unskilled labour. Further, he argues that
workers to migrate from the traditional
higher than the average rural income to induce
agriculture sector to modern sector.
labour to the modern industrial sector
At the constant urban wage, the supply curve of
is perfectly elastic.

D2

D
G
SL

D D3

D.

D D, DË D

Quantity of Labour
The Lewis model of development of a two -sector economy can be illustrated as follows:
In the figure, the quantity of labour is ensured along the horizontal axis and real wage
is measured along the vertical axis. OA is the average rural income and OW is the urban
quantity of labour industrial wage rate.

It assumed that OW is at least 30% higher than OA. D;DI, D,D; and D;D, are the demand
curve for labour in the industrial sector. SL is the supply curve of labour to the modern
industrial sector. According to Lewis, there is surplus labour in the traditional sector, in the
 77

sense that marginal productivity of labour is zero and rural read wage is determined by the
average product.
Initially the demand curve for labour in the modern sector is DDwhich is also the
marginal product curve of labour. The modern profit-maximizing sector, initially hires OL,
1.e. to point were their marginal product is equal to real wage. In figure, demand curve for
labour D,D, intersects the labour supply curve at point E, corresponding to which the total
modern sector employment is equal to OL|. The total output of modern Sector would be
given by the OD,EL|: The total wage bill would be OWEL,. The total profits of the capitalist
would be equal to the area WD E. The capitalist would rcinvest the entire profits. The
reinvestment of profits by the capitalists would increase the total stock of capital and this
would shift the demand curve for labour to D,D,. Anew equilibrium will be achieved at
point F will OL,workers employed. As a result, the total output rises to OD,FLz. The total
wages and profits increase to OWFL, and WD,F respectively. The capitalist will reinvest the
entire profits which further increases the stock of capital and shifts the labour demand curve
to D;D;. The result is that there is further increase in employment and income in modern
industrial sector. The new equilibrium takes place at point G at which the level of
employment is OL, and total income is OD,GL,. The wages and profits increases to OWGL3
and WD;G. The reinvestment of this profit by the capitalist leads to further expansion of
output and employment and promote development of a dual economy.
The above process of growth of modern industrial sector and employment expansion
will continue until all surplus labour from the traditional sector is absorbed in the industrial
sector. After the exhaustion of surplus labour, additional workers can be withdrawn from the
agricultural sector only at a higher wage rate. The supply curve of labour will become
positively sloped and wages and employment in modern sector will go hand in hand. The
structural transformation of the economy will have taken place by this time.

3.2.1 Criticism of the Lewis model

Although the Lewis theory is very interesting as it has explained the process of
development of a labour surplus economy in a simple and attractive way, the theory suffers
from certain drawbacks.

1. Labour saving capital accumulation: The theory assumes that the capitalists will
reinvest their profits which head to expansion of output and employment in the
modern sector. But if the capitalist reinvest their profits in more sophisticated labour
saving capital equipment or technology, it would not lead to expansion of
 3.3
According transformation
reality.output.profits It conceptual 3.2.2
the Conclusion
manufacturing explains 2.
Jorgenson' subsistence 5. 4. 3.
D. productivity
countries.
Despite productivity a
Marginal temporary canSkilled willprofits would within subsistence
powerful
Capital employment.
capitalists
profits.If
from industrialUrban
But by long
W. capitalists how portrayal be not
to the time given
Labour takeabroad lead the wage
him,
sectorJorgenson s of these Flight:
Model theory capitallabour sector But
productivity bottleneck. domestic sector
may and place to sector.
which of training This
and an to of as
expansion workers
union. rate
accumulation criticisms, labour high not The
underdeveloped needs surplusmodern the beT.W. a is kind
inform This
the presented help development low cost a the economy. constant not this
Schultz is However,Temporary and theory
traditional certain but domestic of isconstant: is of
underdeveloped in industrial zero of to
capital of unrealistic rcinvestment
the
growth the not train skill output assumed
a can does labour
in case,
theory modifications So until
take Lewis zero.subsistence the skill can
agricultural
economy of process Bottleneck:
economy. flight and the the
sector. not unskilled be as the The 78
the place not formation theory that
of theory agree formed. employment.
then urban whole of
development economy countries through zero: supplytheory
It the profits
in sector the argued
consists in such has with workers. capitalist wage thcory
sector. is The poses So Lewis expansion
assumptions explained asSumes
of will
the Lewis of
and an in extremely he continues labour breaks
overpopulatedtheory asassumes But that lcad
The of of expansion economy very a transfer considered
serious would
development two a and of if the that to
dual clear the assumes output
reinvestmentthe is down. rise
and valuable
of opined to
sectors- with processsurplus problem that capitalists reinvest exhausted
rise
wage
economy and labour from in
analysis of skilled
employment
reinvestmentsimple underdeveloped unskilled and due only
that that rate
of the of as and employment their to
labour tend of output
economy in to structural an marginal marginal pressure from in
modern manner. it labour profitsprofits
1961. fit takes urban
early their the and
the and of as
 function:
Agricultural
is at production Sector follows: Assumptions wage
between may sector only growth is traditional depends
the x
agricultural
8. 7. 6. 5. 4. 3. 2. 1. more
share rate First Technical manufacturing Thereare
differential demand grows when
Since Where, Y= The Given
these Manufacturing
The AgriculturalOutputOutput Landsector.) the depends
than
in on
of the of economy is two higher agricultural sector sector the
landlabour, etNL'-F production of atsufficient
time Y all, of offixed e a on
represents changes the the two thdetermines sectors rate rate
(N) the
assumptions, model supply to to
t. manufacturing
is production agricultural in sectors wage
is L N model production
a supply which of
modernmodern of
assumed is is behavior closed are which rate surplus investment
the
quantity the of
agricultural ---(1) explains in the is food sector
total neutral in population.
is sector the terms is the equal issector.However,
to the one. is
subject proportional per
belabour of of subject sector economy- positive. depends
the process and of modern to capita. in
fixed land; agricultural is manufacturing
production take trade the
in output; to is a Labour
this B diminishingto function
a The 79
in is of place constant function th e between sector. growth So, on
supply, sector. the et development to agricultural
traditional the supplyagricultural is
share is sector of Sorate the
function some t free
equation the returnsreturns ofland the wage there supply scctor
of
technical capital tw o of
labour for
is constant and
landlords of agricultural the surplussurplus,
given of to sectors.
rate may employment
() agricultural dual scale. scale. to and labour. agricultural of and
in be force
can change economy rate. labour. the some exists In labourtransfer
in by to this
be the sector modern
the
written sector. wagesurplus. the inwhenmodel, form of
output which is manufacturingmodern
Cobb-Dougles
explained and sector.
differential
as and
takes population
food traditionallabour
; /modern Labour
(1-ß) place sectorsupply from
The
as
 reproduction rate.
net
Wherea Now, Log Log Log Now L,
hand, the the Agricultural efforts
technical relative
per sector and
/y=
tradition level capital Y
Y Y taking weThe Y=
if is differentiating = = =
If Where, Agriculturalshould share The the a- have Where
C=N
the progress equal at at Log average
the perof equation rate + +0 log etC.
agricultural
agricultural surplus be output of to BE---- B et+ on
agricultural capita Ó landlord of Log
is made the + both
output LI-p
the is with (-B)Log Log
output
cansurplus important willdifference (3) technical L Eepsilon
to sides,
surplus agricultural y-y be reduce be in sows respect C per ---(2)
sectorsurplus represented total
at will positive that progress
(3) LLog + we man
in for which net to output between to have
zero, is arise the time, L can
reproduction develop
employment positive, netsurplus only relative is, extC.L-Y=
B be
asonly and the we obtaincd
all reproduction B Or, 80
labour per backward
whengrowth rate is get eC.L1-p
then when growth the L
capita, rate. a of
will inonly rate
>technical share by
the per B rate dividing
remain rate y agricultural E. of
capita of of
manufacturinglabour is is
average The
workforce. landlord
progress per both
on maximum. force equation
output capita
land sector. sides
output in
and can The and output
output of
sector. be
per wil (3)
At relative the
the cquation
transferred man constantly the states product in and
system On
same growthagricultural E
the and that (2)
wil of in
other from y* rise. time, the by
be the of the
is
 81

in low level cquilibrium trap. According to this model, agrieultural surplus must be positive
for development ofa dual economy.

Manufacturing sector
When the agricultural sector,intereststo generate agricultural surplus, then the labour
force get transferred to the manufacturing sector. This lends to increase in production and
capital accumulation in the manufacturing sector. Now, the production function in the
manufacturing sector can be explained as follows:
X= f(K, M) -- (4)
Where, X is the output, K is the capital stock ad M is the labour force.
The above function can be written in CobbDouglas production function as -
X= K°M1-o ---(5)
Where is the technical progress, g is the share of capitalist and 1o is the relative
share of labour.

The average output per man in manufacturing sector is given by -

X eðtKOM1-a
M M

or x = e'tK°M-o

Or, x =

or x = etKo (6)
This is the technical progress function which shows that output per man in
manufacturing sector is a function of capital per man.
According to Jorgenson, the rate of capital accumulation depends on the rate of
investment by capitalists. He assumes that industrial workers do not save and capitalists do
not consume out of their property income so the consumption of manufacturing goods in both
sectors is equal to the share of labour in the output of the manufacturing sector. the remain
share of output goes to the capitalists which are fully invested for further expansion and
growth. The wage rate in the manufacturing sector is determined by the marginal productivity
of labour.

Given,
X= eK°M1-o
Marginal productivity of labour is equal to
 82

oX >etroOMl-o
oM OX
= eK°(1 - o)M-o

=e(K/,)°(1 -o)
=e°tK°(1- o)
Substituting
x= eK° from equation 6,
We have

=x(1-o) = w----(7)
OM

sector. The
Where x is the per capita output and W is the wage rate in manufacturing
necessary condition for profit maximization is that the rate should be equal to the marginal
product of labour.
the wage differential between the two sectors is denoted by u.
y/w
Or, y = .w
Thus, the total wage bill in the economy will be
WM + u.w.L=(1- o) XM + u.w L
Or, wM+u.w L = (1-o)M+p.wl
Or, wM + L.w L=(1-6) X + qY
Where qY is the value of agricultural output measured in terms of manufactured
goods. The variable q is the terms of trade between agriculture and industry.
Jorgenson defines capital accumulation as investment less depreciation. Depreciation
is considered to be a constant fraction of capital stock. The rate of change in capital stock is
defined as -
K=I-nK
I=K+nk --- (8)
Where n is the rate of depreciation, I is gross investment and K is the capital stock.
The total output of manufacturing sector is equal to the sum of consumption and
investment

X=(1- o)X +I --- (9)

Now, substituting equation (8) in equation (9) we get
 83

X -(1- o) X+ K+ nK
Or, X-X- oX + K +nk
Or, oX = K + nk ---- (10)
In equation (10) X represents saving and K + nK represents gross investment.
By using production function to replace X, we get
oeotK°Mi-o = K +nk --- (11)
This is the fundamental equation for the development of a dual economy. It shows
that growth of the economy is determined by the rte of savings and capital accumulation.

3.3.1 Criticisms

The model has been criticized on the following grounds:

1. Rules out capital accumulation in agriculture sector: The model rules out the
possibility of capital accumulation in agriculture sector. This is unrealistic as there are
many studies which have shown rapid increase in labour productivity and farm
production due to capital accumulation in agriculture.
2. Supply of land not fixed: the model assumes the supply of land as fixed in
agricultural production. This is not acceptable as the supply of land can be increased
through land reforms and land reclamation.
3. Neglects Demand side factors: The model emphasizes only on the role of supply
side factors such as labour, capital and technical progress and neglects the demand
side factors.

4. Ignores service sector: The model also ignores the service sector which also play
important role in the process of development of a dual economy. In fact, it is te
service sector which has which has been growing rapidly and propelling development
in contemporary period.

3.3.2 Conclusion

The model has put forwarded the conditions necessary for growth and development of
a dual economy. It states that there is a need to have positive and growing agricultural surplus
then only labour force will be face for employment in the manufacturing sector. The
conditions necessary for sustained growth of output is that technical progress should be
positive and there should be higher rte capital accumulation.
 ,34
can does
yet which 3.4.1 following
agriculture. he1964, development made Therefore,
important changes.of thatperiodwanted
3.4.2 cultivation traditional definition
i. it discusses Theories
characterizes be not can a
Characteristics is Definition
The
has significant
Schultz, The
condition
efficient fofactors
r will resources
know, Perfect After and that traditional
take bestatic given heads. suggested many
development
allocate
characteristics eventually agriculture definition of
defining even traditional
place.
Schultz's some of
are by
allocation and of in economists
agriculture Agricultural
hypothesis. long in if by contribution.
his
traditional capital Traditional
equal traditional the non-dynamic.
In other importantvarious books
perfect resources
experience, the of arrive in of theory
of
Traditional
is art that of
to traditional
of intensive not character,economists. traditional agriculture
traditional of ways have
inDevelopnent:
This
allocation their and resources: agriculture. necessarily
at cultivation sense, ofTransforming
agriculture. the Agriculture aspects underdeveloped
agricultural and developed
hypothesis respectivefactors about agriculture
equilibrium evenAgriculture
agriculture
Agriculture if means
agriculture agriculture
its According is
of the the of important
up According The adoes art 84
resources. The various Schultzian
returns
to backward agriculture of can to
theTraditional
states marginal
static
agriculture
the in where can not cultivation transformationproblemdevelop countries.
which be togiven for
that point to art to his assume change theories
This the and capital
Schultz,
the various Schultz,
of are own of traditional
agriculture
over-allTheory
costs where will by of In
conclusion cultivation as art
traditional and
labour developed is
farmers ways, remain of intensive Schultz suggesting
his
i.e. factors follows: become static traditional can
transformation tdevelopment
the there
(MR Schultz
cultivation intensive
and agriculture.
be which regard,
in marginal is countries is
traditional leads = of
enables traditional character
discussed ways
production. perfect stagnant. further asdifferent
well
M discusses agriculture was T.W
to C)returns
. comesagriculture.
as of In and of
the like
development published
the allocation until in To productive traditional
under theory,his
Schultz means an
agriculture Thi s farmers from cconomy.
poor of So the to the Schultz America
the along is
but the
isthese they
two art halt He one the the in has for
to of
 85

are generally poor because of stagnation of agriculture but due to long experience
with the same art of cultivation, they are able to allocate resources efficiently.
ii.
No zero value labour: Many economists have argued that in traditional agriculture
marginalproductivity of labour is zero. However, Schultz is of the vicw that there is
no zero value labour in traditional agriculture. According to him, marginal
productivity of labour in traditional agriculture may be low but not zero. To him, any
withdrawal of labour from the traditional agriculture will lead to reduction in total
output. He provided evidence to prove his argument. He cited examples from Latin
American countries Peru and Brazil where labour was withdrawn from agricultu4re
for engaging in construction activity. Schultz found that in both the countries
withdrawal of labour from agriculture resulted to decline in agricultural production.
Thus, Schultz concludes that marginal productivity of labour in traditional
agriculture
is positive and not zero.

3.4.3 Schultz's Suggestions for Transforming Agriculture

Traditional agriculture, according to Schultz, is in equilibrium with static art of
cultivation. The traditional agriculture can be transformed by introducing new factors which
are more productive than the existing ones. According to him there is a need to create
new
investment opportunities in agriculture and the art of cultivation should be changed. It implies
that agricultural transformation can be achieved only with a etymological transformation
which constitutes new factors of production, new methods and new skills.

Schultz's suggestions are described as follows:

1. Policy approach: According to Schultz, there are two policy approaches which can
be adopted to faster the use of new factors by the farmers. These are: market approach
and command approach. In the market approach farmers are given freedom to decide
about the adoption of new inputs, They are allowed to take decision based on
profitability of new factors. The role of government is confined to development and
distribution of new inputs, development of skills, publicity, provisions of cheap credit
etc. In this approach, farmers are not forced to adopt new inputs. They enjoy freedom
tochoose whether to adopt new inputs or not. Example, Mexico.
On the other hand, under the command approach the farmers not free to decide
regarding the useof new inputs. Everything is decided by the State. The State supplies
the new inputs and directs the farmers to use them. The farmners have nochoice, they
 86

have to adopt the new inputs supplied by the state and in return, they have to give a
portion of the output to the state example Russia.

2. Transformation process: The processes of transformation depend on the demand and

supply of new factors production. The new factors should be more productive than the
traditional factors and should available in the market at the same tíme: farmers should

be willing to use such factors in their field.

discusses those
There are certain problems in supply of new factors, Schultz
problems and makes suggestions which are as follows:
factors in
Supply of new factors: There is a need to ensure supply of new
sufficient quantity and that too at reasonable prices. These are important for
their effective use and ensure profitability.
According to Schultz, three steps are involved in the process of supply
of newinputs which are as follows:
a) Research and development
b) Distribution of new inputs to farmers and

c) Extension services to disseminate knowledge for use of new inputs.

According to Schultz, the research and development of new inputs
should be done by the state because the private agencies may not have
sufficient resources to undertake such activities. A private firm may not be
willing to take up research and development as the benefits of such
research cannot be retained and is likely to flow to other firms. So the
rescarch and development of new inputs should becarried out by the state
or non-profit making agencies.
Distribution of new inputs: Once the new inputs have been developed, the
next step is to build up necessary infrastructure for their distribution to
farmers; Schultz suggests that in the initial stage there may be some
difficulties in the distribution of new inputs. These difficulties include
limited demand, high cost, resistance from the supplies of traditional inputs
etc. Therefore, we suggest that in the initial stage the distribution of new
inputs should be undertaken by the State or nonprofit making agencies.
Development of Extension services: a well developed extension services is
needed to import knowledge to farmers about the method for using new
 87

inputs. Schultz argues that the cxtension work may be carricd out by the state
as it involves high cost.
iv. Demand for new inputs: Supply of new inputs alonc is not sufficient for
agricultural transformation. The new inputs must also bc demanded by the
farmers for use in their field. In other words, there is need to generate demand
for new inputs.
According to Schultz, the demand for new inputs willdepend on the
profitability. The profitability, in turn, depends upon two factors
a) supply price of new inputs and
b) Prospective yield.
Schultz opines that in order to encourage the use of new inputs their
supply price should be low. He suggests that in the initial stage, the
government should supply new inputs at subsidized rates.

Apart from the supply price, the profitability of new inputs also
depends on prospective yields. Since the inputs are new the farmers are
uncertain about the yields from them. Therefore, the prospective yields of the
new inputs should be high so as to convince the farmers to use them.

3. Importance of skills in Agricultural Transformation: Skins and knowledge are

also important for the use of new inputs and agricultural transformation. Therefore,
the farmers should be imported required knowledge about the use of new inputs.
According to Schultz, skills can be formed in three ways -
1. trial and error method
ii. on the job training and short term and vocational courses
iii. schooling
To Schultz, schooling which impart the general education is the best form of
investment and ways to build up human capital and form skills. He cited the example
of Holland and Denmark where the rapid growth of agriculture in the last quarter of
the19th century was associated with a large investment in schooling.

3.4.4 Criticisms

Schultz suggestions to transform traditional agriculture are, undoubtedly good and

realistic. However, his theory suffers from certain infirmities.
 iv. ii. i. i.
agriculture.
mod,n was 3.5 based Despite
policies Conclusions
transformation V.

Traditional
agriculture
3. 2. 1. published Mellor's the withoutMarket challenged Definition
agriculture
on act
barriers differences
in
Neglect andamonglgnores Ignores the economies
The
Technologically
Te According W.J. the for these
as process initial
hnologically
main Mellortheory agricultural
social criticisms, barriers
the administrative
in of transformationlike differences the institutional
state, assessing
approach: by
features traditional non-economic which poor of markets given of
to 1966 in and religious manytraditional
Mellor, his of for transformation state
dynamic
dynamic suggested economies it adoption economies
he by
of
Agricultural
book development. can may are theconomists.
did
efficiency among e He
agriculture agriculture belief, reforms: poorly Schultz
entitled
agriculture. be of
barriers: not have economicfavours agriculture
agriculture-
agriculture- ways conditions concluded of
traditional consider. with poor of
conservatism
new to is
development
The
etc.regard traditionalSchultz organized
undertake
in of and However, His inputs. Schultz economies: not
these an The realitymarket 88
High low economy Economics means prevailing analysis that agriculture. to has pragmatic not
and
phases and has use factoragriculture.
pragmatic:
capitalcapital his Schultz ignored and suffer approach of
to will paid of Schultz
suggestions fatalistic control
underdeveloped
are passes transform of in endowments,
technology the certainly has attention
He new the from and
describedtechnology Agricultural made has for
through given attitude has inputs role
activities. its The
also imperfections. agricultural
traditional be neglected only of implications definition
and poor will important
as helpful of extent
is institutional
ignored
follows: three Development'
economy. have to countries.
farmers economic affected
of
phases:agriculture suggestions
to in non-economic the transformation
Therefore, of
be
monetization have
formulating which difference reforms
by n
traditional
adopted factors been
which these such
into for can in in
 89

3.5.1 Traditional Agriculture

Mellor defines traditional agriculture in apragmatic way. According to him traditional
agriculture is one which is backward, labour intensive agriculture with low productivity.
Most of the farms in traditional agriculture are peasant farms in which bulk of labour
force, management and capital are supplicd by the same household. The farms are
generally small in size and productivity production and net income tend to below. But
there is a perfect allocation resource in such agriculture.

The principle inputs used in traditional agriculture are land and labour. The use of
additional labour is the only source of increasing production and income. But the use of
more labour on a given farm heads to diminishing marginal productivity.

Mellor pointed out that in traditional agriculture some non-traditional inputs like
fertilizers may be used but their impact on total production will be negligible because of
non-use of other complementary inputs like good seeds, pesticides etc. He viewed that
both technological changes and institutional reforms are needed to transform traditional
agriculture.

3.5.2 Characteristics of traditional agriculture

1. Under-employment: According to Mellor, there is under-employment in traditional

agriculture. This is mainly due to inequality in the distribution of land. The farmers
having bigger farms have the option to choose between leisure and work because of
higher income. This lends to under-employment. But the armers operating on small
farms may have to use their labour up to the point where its marginal productivity
becomes zero.
According to Mellor, there are three types of income levels; these are as
follows:
1. Biologically subsistence level of income: It is the level of income which

ensures only the biological subsistence, i.e., food, clothing, shelter and other
essentials for maintaining human life.
ii. Culturally defined subsistence level of income.
ii. Income for a dynamic society
The farms in traditional agriculture can be broadly of two types:
 productivity
marginal
subsistence be given for to of labour farmers
the use fall labours
valueHowever, which
remaining character
to of to to new
complementary economy.
will curvedue prizes whenlabour a aimed friendly
use friendly
and the zero in fertilizers,
labour is more then result the
income
defincd for supply
This high reached output.
exists traditional
which the
on are are
encourages
of curve
sloping.
The use size, effect will in
use and inputs
inputs are
of culturally total and priceis theretotal policy place
changes. agriculture technology
productivity inputs
level its levelpossibility pointsubstitution its
the new
subsistence till equilibrium
backwardleisure to
due backward.
that the
of
sheda new
inputs new
dominant
labour.
Mellor, a reduce
argued
formulate
the
used Thus, income not The
the prices increases the
production reduce capital such of the
maximum,be to is
positive
effects).
from will marginal productivities.
Someof the cheap
when slopes generally
not capita
biological will the According
agriculture agriculture
to of Some occupies of
to income
their will labour has Low
labour farms, labour
farmers the curve per high use them. availability
the income withdrawal them.
90 the neutralizes government
of is of in The
agriculture
the at of Curve: and It increasetraditional
withdrawal with replace still
farms, traditional
of
provide
provide typepoint use encourage
when(negativefall
labour: their
agriculture. replace
inputs agriculture
the
of second tangency Supply fully its raising
on
But
to of labour. The changes.
technological
bring not not to
starts of and Dynamic
new due
can can types curves. in effects withdrawalany because that do do
produce produces less effect
substitution). undisturbed.
in traditional used
whichwhich the Sloping production agriculture
that less viewed phase, inputs
by and and phase,
first the utility work used
In income income is of
believed Technologically inputs inputspower. not
seeds
and
FarmsFarms the zero.by
1ncome. This use Mellor this this is
determined
and
is agricultural
Backward agricultural
to are
In becomes tendnegative of in the
output. left In labour traditional
traditional Machinery
negative (positive total Impact Mellor causes is
In
a) b) farm
labour
will and it
in if to
2. 3.
 this not new non mechanical
place.industrial
of increasethese He of agricultural
the on emphasis
are government of land
of is form factor process
uses the pragmatic. in on
progress it takes follow unemployment
but and main labour
and when to the
used accumulation
smooth intensivelabour-savingagriculture
in agriculture should
morethe
agriculture, favours the
labour. Technologycomes agriculture more
production. istechnology as in
agriculture
people. to agriculture labour disguised He inputs
using
for capital is
complementary stage from fromn agriculture. Mellor that facilities.
necessary capital
trainnew Capital This create peoplein labour uses otherby
agricultural highly place of
from of increased
by and no
to development, which sufficient development is transformation
credit and
are institutions
system oriented. of talkesreplacethe givenbackward
withdrawn
High become movement there
are in labour
is
following inputsservice existence left marlketing
inputs Agriculture-
output
91 communication sector, investment
inputs
Theory
agriculture that
capital
agriculture is a
improved educational
agriculture which the progress. is is insist of
agriculture. agriculture,
the research
of to
Encouragement new to
agricultural new whichlabour for role
institutions into due
heavily that Mellor's
reforms,
Mellor, Institutional headythe labour traditional not suggestions
reforms and The Dynamic increases on the
come out smooth
of of of oriented. the phase, as if does
new Establishment phase, phase, the pointed agriculture
that landof on traditional
to of Development phase is this of
Evaluation he development
According of up whichsector also
Technologically this of its
productivity of But His like emphasises
Supply In for definitionargues
Lifting this capital this this
innovations.
farm In Mellor fall. changes
technology
agriculture phases the
In In In machinery. traditional sector.
He will
heavily of sector. for In
phase. three Critical Mellordevelopment.
Size the The production. intervention
institutional
agriculture
production
1. 11. i11. 1V. V. V1
defines
3.5.3