Economics of World Agriculture

Lecture 3
Technology in Peasant Agriculture

Dr. Tim Lloyd

School of Economics
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Introduction
 Peasant agriculture often persists for millennia
 It is an equilibrium (stationary state)
 It occurs not because farmers lack optimising behaviour

 Previously, showed that subsistence agriculture:

 Efficient, but starved of technology
 ‘Undesirable’ but rational outcome

 Today, discover how peasants break out of poverty

 Technology is key to emergence of marketable surplus
 Marketable surplus heralds dawn of economic development
 However, development is a complex issue in reality
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Technology in the Peasant Model

 What happens when technology adopted?

 Assume farmers discover new HYV seed

 Higher output at all labour levels
 Raises productivity of labour (& land)

 Assume w is the wage rate for labourers

 Represents peasant farmers’ opportunity cost
 Corresponds to subsistence income
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 Total, Average & Marginal Products of Labour in Peasant Agriculture

Food Output Farmer adopts new HYV seeds

F2
TPL ( N , K ) 2

F1
TPL  N , K  1

Labour
L2 L1
Food Output

F2=APL2  L2

Optimising
Rule
W=MPL F1=APL1  L1

APL 2
w APL1
Labour 4 of 11
MPL 2 MPL1
Adoption of technology: Results
 Increases output
 Production function shifts TPL2 > TPL1

 Increases the productivity of labour,

 MPL2 > MPL1
 APL2 > APL1

 The optimising farmer now:

 has higher income (F2>F1)
 works less (L2 < L1)
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Adoption of Technology: Implications
 The peasant is more productive
 Produces more food, yet works less
 Generates a ‘marketable surplus’ of food

 Not everyone has to farm now

 Some produce other goods and services
 They trade G&S for (surplus) food
 G&S make farmers more productive
 Allowing more labour to leave the land
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What can we learn from this?

 Technology: Engine of Development

 Can it kick-start development?

 UK ‘agricultural revolution’ (1700-1850)

 Perhaps the process could be accelerated

in LDCs today . . .

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“Green Revolution”
 Scientific breakthrough began in 1960s

 Rockerfeller & Ford Foundations

 Created International Ag Research Centres
 Wheat CYMMT (Mexico); Rice IRRI (Philippines)

 Developed ‘Miracle seeds’

 HYVs of rice & wheat
 Responsive to fertilizer & irrigation

 Policy Goals well-intentioned

 Eradicate world hunger
 Accelerate development process in LDCs

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“Green Revolution”
 50% world’s farmers now use HYVs
 75% rice area in Asia
 60% wheat in Latin America and Asia
 50% wheat in Africa

 Green Revolution a success?

 11% more food/capita than in 1970
 16% drop in hungry people since 1970
 but . . .

 Simple solutions & complex problems

 World hunger not eradicated (20% still mal-norished)
 Greater inequality (Obesity kills more than mal-nutrition)
 Reliance on petro-chemicals
 Environment & Sustainability ignored 9 of 11
Summary
 Subsistence agriculture is a low output
system because it’s starved of technology

 Technology
 Increases the productivity of labour,
 Increases income
 Provides for a marketable surplus
 Allows fewer farmers to feed population

 Economic development has begun

 Economy diversifies
 Structural change must occur
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