er 5

ap t Agriculture
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Chapter Objectives:

After completing the chapter, the students should be able to:

1. Understand productivity in agriculture, agricultural development, and the

efficiency of traditional agriculture.
2. Understand the microeconomic and macroeconomic aspects of agriculture.
3. Understand mechanization and demand for labor.
4. Explain technological transfer, growth and equity.
5. Understand Genetic Engineering, and Zero Tillage.
 er 5
ap t Agriculture
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Agriculture & Economic Growth

Agricultural Transformation in Asia
Microeconomics of Agriculture
Macroeconomics of Agriculture
Policy Issues in Modernizing Agriculture
 Agriculture and Economic Growth
The Role of Agriculture in Economic Growth
 Agricultural Transformation in Asia

Sectoral Distribution of GDP Employment of Labor Force

Sector 1955 1960 1965 1970 1975 1980 1985 1990 1995 1998
         
Agriculture 53.6 50.2 46.5 36.7 30.4 19.5 17.5 12.8 10.5 8.8
Industry 18.0 20.5 22.3 28.0 34.9 42.5 41.6 40.8 38.7 37.9
Services 28.4 29.3 31.2 35.3 34.7 38.0 41.0 46.3 50.7 53.2
Taiwan, 1955-1998
Taiwan Statistical Data Book, various years.
Share of Income by Sector (Percent)

Country Agriculture     Industry     Services    

  1970 1980 2001 2007 1970 1980 2001 2007 1970 1980 2001 2007
                         
China 42.2 25.6 11.3 9.7 44.6 51.7 64.6 59.0 13.2 22.7 24.0 31.4
Hong Kong na 0.8 0.1 0.1 na 31.7 14.3 8.2 na 67.5 85.6 91.7
Korea 29.8 14.2 5.1 3.6 23.8 37.8 44.0 44.4 46.4 48.1 50.9 52.0
Taiwan 17.3 8.4 2.4 1.3 32.3 42.8 32.1 31.4 50.4 48.8 65.5 67.2
Indonesia 35.0 24.4 16.2 13.8 28.0 41.3 36.0 43.0 37.0 34.3 47.8 43.1
Malaysia na 22.9 8.2 7.4 na 35.8 43.1 40.5 na 41.3 48.7 52.1
Philippines 28.2 23.5 20.1 18.4 33.7 40.5 34.0 32.5 38.1 36.0 46.0 49.1
Singapore 2.2 1.1 0.1 0.1 36.4 38.8 30.7 31.8 61.4 60.0 69.2 68.1
Thailand 30.2 20.2 8.0 8.7 25.7 30.1 44.0 47.5 44.1 49.7 48.0 43.8
Bangladesh na 56.7 49.4 21.4 na 12.2 5.0 42.9 na 31.1 45.6 49.2
India 44.5 38.1 24.3 17.8 23.9 25.9 26.8 26.5 31.6 36.0 49.0 55.7
Pakistan 40.1 30.6 24.7 21.8 19.6 25.6 25.1 26.1 40.3 43.8 50.3 52.1
Sri Lanka 30.7 26.6 20.4 11.9 27.1 27.2 27.2 28.5 42.2 46.2 52.1 59.6
Southeast Asia and East Asia had higher
agricultural and GDP Growth.

South Asia had lower agricultural and GDP growth.

Southeast Asia and
East Asia had
higher agricultural
and GDP Growth.
East Asia
South Asia
 Productivity in Agriculture

Productivity in agriculture is generally higher than that of

the industry at the beginning of the process (Timmer, 1991).

Surplus from the increase in profitability of agriculture fueled

the beginning of industrialization.
 Growth of Agriculture and GDP in the 70’s

Growth Countries
   
China, Indonesia, Korea, Malaysia, Philippines,
Agriculture: Above 3% Thailand, Columbia, Dominican Republic, Tunisia,
GDP: 5% Turkey, Yemen, Cameroon
   
Bangladesh, India, Pakistan, Sri Lanka, Central
Agriculture: Bet. 1%-3% African Republic, El Salvador, Haiti, Honduras,
GDP: Bet. 3%-5% Upper Volta.
 Annual Labor Productivity Growth Rates
1960-1980

Country Agriculture Manufacturing

Korea 4% 8%
Philippines 3% 4%
India 1% 2%
Japan 5% 6%
 Efficiency of Traditional Agriculture

Traditional agriculture is based on

treating the soil and plants with products
that are more likely than not noxious, and
more likely than not synthetically
produced
in a laboratory. These products are used to
prevent disease or pests from blighting the
plant.
 Efficiency of Traditional Agriculture

. √ Refined methods of cultivation

√ Crop rotation
√ Water use
√ Farm animals in soil fertility
√ Varieties in weather factor
√ Availability and quality of traditional
seeds and other varieties.
 Why Do Farmers Resist Innovation and
Objective is to
Modernization?
Maximize family’s
Chances of survival,
Not to maximize profit. √ Cultural value of the traditional
farming system.
Subsistence farming. √ Uncertainties of change
2 square meals instead of 3
Children might stop schooling.
Serve the landlords as servants.
√ Inadequate insurance and credit to
serve as fall back mechanism in the
event of crop failure.
Landlords secured Gov’t. guaranteed
all the gains price was not paid
Disincentives
to Increasing
Productivity
Lenders captured Complementary inputs
all the profits were not made available
Microeconomics of Agriculture

s o n
p u t
ep end Land size
In pu t D
u t Soil Fertility
O
Weather
Land Flooding
Labor Drought
Fertilizer Harvest
Disasters
irrigation Land Tenure
Technology
Storage &
Marketing
What Really Worked?

Phenomenon created by the

Development of higher-yielding
Green Revolution Variety of rice at the Int’l Research
Institute in Los Banos.

Fertilizer

Irrigation
 Green Revolution

Percentage of Total Increased Production Fertilizer, Pesticide

              & Herbicides
 
Irrigation
Attributed to Attributed
    Land Area     to Yield    
Country Year Annual Irrigated Rain-Fed Total Fertilizer Others Total
    Growth Land and Upland        
                 
India 1965-70 3.2 19.2 5.8 25 47.3 27.7 75
Indonesia 1965-72 4.8 46.4 -6.8 39.6 25.2 35.2 60.4
Myanmar 1965-73 0.8 35.8 -23.3 12.5 47.8 39.7 87.5
Philippines 1965-73 3.4 33.1 -7.7 25.4 44.5 30.1 74.6
Sri-Lanka 1660-68 4.8 37.7 11.1 45.8 31.9 22.3 54.2
Thailand 1965-72 2.1 10.8 82.2 93 13.6 -6.6 7
 Really Did not help Much?

There is an inverse relationship

between farm size and overall
Farm Size farm productivity.

Inverse relationship disappears

with the use of farming
Intensity, land quality, use
Changes in Land of irrigation and technology.
Tenure
Land distribution is an issue so that
programs on land redistribution is
advocated on equity grounds.
 Macroeconomic Aspects of
Agriculture

Agriculture in Asia is an intensive sector

√ Adopt a labor and capital-intensive technology.
√ Keep undervalued exchange to maintain
appropriate trading terms and promote appropriate
labor-intensive production technology.
 Modernizing Agriculture

√ Mechanization and demand for labor.

√ Technological transfer, growth, and equity.
√ Genetic Engineering.
√ Zero tillage.
√ Research and development.
√ Food prices and linkages to energy.
√ International trade and resource transfer.
√ Shifts out of primary grain production.