The agricultural sector continues to play a crucial role for development, especially in low-income countries where the sector is large both in terms of aggregate income and total labor force. Having been a key preoccupation of developing country governments, donors and the international community during the 1960s and 1970s, agriculture disappeared from the development agenda in the 1980s and 1990s, only to reappear in the first decade of the 21st century because of neglect and underinvestment (see Fig. 1). There is renewed interest in the problems of the sector—not to a small extent thanks to the World Development Report 2008, Agriculture for Development (World Bank, 2007) and Agriculture at a Crossroads (IAASTD, 2009), both of which came from global consultative processes of scientists, decision makers and donor agencies. Donor countries have pledged large sums for investment in agriculture—for example, the G8 countries promised $22 billion during their meeting in Aquila, Italy in 2009. These pledges were made in the aftermath of three simultaneous global crises—food crisis, climate crisis, and financial crisis— and their aftermath. Food prices have spiked twice in a period of 4 years: the United Nations Food and Agriculture Organization (FAO) food price index peaked in June 2008, then hit another record high in March 2011. Drought, fires, and monsoon floods have destroyed harvests in many countries from Russia to Pakistan. In poor countries, this has led to hunger, worsening food insecurity, and vulnerability to poverty. ...
There are two challenges related to agriculture. The first is the need to increase food productivity and production in developing countries, especially in Sub-Saharan Africa and with smallholder farmers. To achieve this, a number of problems need to be addressed: property rights, R&D for seeds and inputs, irrigation, fertilizer, agricultural extension, credit, rural infrastructure, storage, and connection to markets. The second problem is the volatility of food prices, often because of events outside the control of poor countries. An interconnected combination of steps could help ensure that the most vulnerable countries and people get the nutrition they need.1 The modest ambition of this paper is to review the economic literature on agriculture, focusing on the issues that are critical for agricultural productivity and poverty reduction.
In the first section of the paper, we discuss the role played by agriculture in the development process and the interactions between agriculture and other economic sectors. Agriculture contributes to both income growth and poverty reduction in developing countries—by generating income and employment in rural areas and providing food at reasonable prices in urban areas. The sector matters greatly in low-income countries, where about 60 percent of the labor force is employed in agriculture: it accounts for 25 percent of GDP (but only 9 percent in middle-income and 1 percent in high-income countries). Of the 5.5 billion people who live in developing countries, 3 billion live in rural areas Agriculture is the main source of livelihood for 86 percent of these rural households. Some 75 percent of poor people still live in rural areas and derive the major part of their income from the agricultural sector and related activities. Agriculture provides food, income, and jobs, and hence can be an engine of growth in agriculture-based developing countries and an effective tool to reduce poverty in transforming countries.2 Balancing agriculture and industry is an important—although difficult— dimension of development policy. Recently ‘‘agro-pessimist’’ views—based on the observation that agriculture in developing countries is often the least productive sector—have been voiced in the literature.3 In the second section, we look back on the determinants of the Green Revolution and discuss the foundations of agricultural growth. In developing countries that have experienced sustained increases in yields, the mode of agriculture has been intensive and has involved the adoption of new varieties by farmers, irrigation, and massive use of fertilizer (with predictable environmental consequences), which presupposes good institutions. In the coming decades, massive productivity increases in SubSaharan Africa will be necessary if the subcontinent is to catch up with the rest of the world. The challenge is thus of a different nature. Further cropland expansion (which was the basis for the slow yield increases that took place in the past), with few exceptions, will not be possible. New seeds that are resistant to climate risks and adapted to local conditions will need to be developed and sustainable irrigation systems expanded. The most difficult challenges are institutional and economic. Often smallholders cannot internalize the benefit of their efficiency (compared with large farms) because of missing markets for insurance and credit, low education levels, limited market access and market information, and insecure property and usage rights. Hence, although new advances in R&D— such as genetically modified organisms and extension services—are important for future growth and poverty reduction, getting fundamental institutions right is a prerequisite for growth and a priority on the agricultural development agenda. In the third section, we broaden our focus and look at the rural sector as a whole, examining why rural households diversify their income and reviewing various approaches to rural development. Nonfarm employment is an important income source for the poor and an effective way out of poverty for rural households, as well as a means to cope with missing insurance and credit markets. However, although the rural non-farm sector is a source of additional employment opportunities and an instrument to reduce poverty, diversification of income by farmers does not necessarily guarantee upward mobility. In order for this to happen, proper education and information about and access to non-farm jobs are necessary. As a consequence, rural development programs have to incorporate such needs into their strategies. Past experiences have shown that private provision of certain goods and services can easily fail and therefore it is important to have an ‘‘enabling state’’ to orchestrate and initiate these activities without being their sole purveyor. Their implementation should take advantage of private sector initiatives and local civil society expertise. New approaches, such as community-driven development, can be successful in managing common resources and local projects. But the lesson from the past is the importance of egalitarian preferences and social capital among community members. Balancing centralization and decentralization of program implementation hence is the key for successful rural development. In the fourth section, we review trade policy and food security concerns in light of the deadlock in the Doha round and today’s volatility in food prices. The 2008 World Development Report establishes a typology of countries (World Bank, 2007). In agriculture-based economies, agriculture contributes on average 32 percent to overall economic growth and the majority of the poor live in rural areas. In transforming countries, agriculture contributes on average 7 percent to overall growth but poverty is still mostly rural. In urbanized countries, agriculture accounts for only 5 percent of economic growth and urban poverty is higher than poverty in rural areas. Of course, at the early stages of development, agricultural growth is an important source of overall economic growth and a major driver behind structural transformation of the economy. While accepting this fact, observe that linkages between agriculture and industry are less important for overall growth in open economies (in which goods from productive sectors, including agriculture, are traded) than in more closed economies. Their main argument is that, in an open economy, importing food and focusing efforts on other sectors might be more beneficial to a country’s development if it is difficult to increase the productivity of agriculture. The role of agriculture in development Read more

Developing economies have generally been described as dual economies with a traditional agricultural sector and a modern capitalist sector.4 Productivity is assumed to be lower in agriculture than in the modern sector. The canonical model was put forward by Lewis (1954) and subsequently extended by Ranis and Fei (1961). Lewis’ model rests on the idea of surplus labor in the agricultural sector. With lower productivity in agriculture, wages will be higher in the modern sector, which induces labor to move from agriculture to the modern sector, which in turn generates economic growth. Other precursors, such as Schultz (1964), also point out the importance of food supply by the agricultural sector. In Schultz’s view, agriculture is important for economic growth in the sense that it guarantees subsistence for society, without which growth is not possible. This early view on the role of agriculture in economics matched Kuznets’ (1966) empirical observation that the importance of the agricultural sector declines with economic development. In this view, the role of agriculture in economic development is to supply cheap food and low wage labor to the modern sector. Otherwise, both sectors have few interconnections. ... Growth and higher productivity in the agricultural sector can contribute to overall economic growth by releasing labor as well as capital to other sectors in the economy. However, industrialization is seen as the ultimate driving force behind a country’s development and agriculture as a traditional low-productivity sector. Building on the Lewis model, Johnston and Mellor (1961) account explicitly for agriculture as an active sector in the economy. In addition to providing labor and food supply, agriculture plays an active role in economic growth through production and consumption linkages. For instance, agriculture can provide raw materials to nonagricultural production or demand inputs from the modern sector. On the consumption side, higher productivity in agriculture can increase the income of the rural population, thereby creating demand for domestically produced industrial output. Such linkage effects can increase employment opportunities in the rural non-farm sector, thereby indirectly generating rural income. Moreover, agricultural goods can be exported to earn foreign exchange in order to import capital goods. The importance of such linkages was further stressed by Singer (1979) and explicitly embodied in Adelman’s general equilibrium idea of ‘‘agricultural demand-led industrialization’’ (ADLI), according to which, because of production and consumption linkages, a country’s development strategy should be agriculture-driven rather than export-driven and increased agricultural productivity would be the initiator of industrialization. Moreover, emphasis should be placed on small-to-medium-size farmers because they are more likely to use domestically produced intermediate goods, as opposed to largescale producers who might import machinery and other inputs, which would weaken the linkages between agriculture and other sectors (Adelman, 1984). The fact that there are important linkages between the traditional and modern sectors in developing countries makes agricultural growth an important instrument for decreasing poverty. The contribution to poverty reduction takes place directly, through the effects of agricultural growth on farm employment and profitability, and indirectly because increases in agricultural output induce job creation in upstream and downstream non- farm sectors as a response to higher domestic demand. Potentially lower food prices increase the purchasing power of poor consumers. The magnitude of these effects for poverty reduction depends on the specific circumstances of an economy. For example, if technological progress in the agricultural sector is labor-saving, farm employment might not necessarily increase (Irz et al., 2001). Although most of the literature views agriculture as an active and dynamic economic sector, some authors reach quite different conclusions. Gollin (2010) notes that the large share of agriculture in many developing economies does not immediately imply that overall growth has to be based on an ADLI-type strategy. Matsuyama (1992) suggests that the relation between agricultural growth and overall economic growth depends on the openness of a country to international trade. Whereas agricultural growth goes hand in hand with economic growth in small, closed economies—where gains in agricultural productivity will lead to the linkage effect described above—the relation might be reversed in the case of an open economy. If the country has a comparative advantage in agriculture, openness to trade will draw resources away from the modern sector into agriculture, which might be less productive than industry. The importance of the degree of openness of a country was pointed out early on by proponents of ‘‘agriculture-first’’ approaches to development. For instance, Ranis and Fei (1961) acknowledge that imports could potentially substitute for domestic agricultural products. Adelman (1984) suggests that ADLI would work best for low-income countries that are not yet export driven; and Foster and Rosenzweig (2003) stress that the tradability of rural non- farm sector goods can have different implications. In a general equilibrium perspective, productivity gains in the agricultural sector have a negative impact on the tradable non-farm sector. This is because agricultural products as well as rural non-farm non-tradable have a relatively inelastic demand for labor, whereas tradable goods have more elastic labor demand. If wages increase due to greater agricultural productivity, factories producing tradable goods, which are assumed to be operated by external producers, will move to escape the higher wages. There is a vast literature, ranging from critical contributions that do not support ‘‘agriculture first’’ approaches to more recent ‘‘agro-pessimism’’ views. The latter are based on the observation that agriculture in developing countries might be the least productive sector in the economy. Dercon (2009) derives this conclusion from a two-sector model elaborated by Eswaran and Kotwal (1993). He explains that, in an open economy, in which both agricultural and modern-sector goods can be traded, linkages between the two sectors become less important for overall growth. As a result, there is less necessity to increase agricultural productivity to induce overall growth and reduce poverty. Both sectors can contribute to growth. But if agriculture is less productive than other sectors, importing food and focusing efforts on other sectors might be more beneficial to a country’s development. Both Dercon and Gollin admit that, under certain circumstances, the agricultural sector can be crucial for economic growth. If countries are landlocked and closed to international trade, agriculture can be a main driver behind overall growth and should be supported actively. Although various theoretical models suggest opposing roles for agriculture in development, they do not necessarily contradict each other. The models are derived under different economic assumptions (e.g., openness to trade). Therefore, it is not surprising that they derive different policy implications. Because developing countries differ with respect to their economic environments, the role of agriculture for development might be re- evaluated in each specific case. This is in line with the 2008 World Development Report (World Bank, 2007), which suggests that in agriculture- based economies, agriculture can be the main engine of growth, whereas in transforming countries, agriculture is already less important as an economic activity but still a major instrument to reduce rural poverty. In urban countries, by contrast, agriculture plays the same role as other tradable sectors and subsectors with a comparative advantage and can help to generate economic growth. So far our discussion has mostly considered theoretical models. We now turn to empirical investigations of the relation between the agricultural sector and economic growth. Early contributions by Kuznets, Chenery, and others focused on sector changes accompanying economic development. Kuznets (1966) observed that as economies develop, the share of agriculture in output and employment diminishes, which later empirical data have reconfirmed. Other important early contributions include Chenery and Syrquin (1975), who combined cross-section and time-series data over 1950–1970. Timmer (2002) uses a panel of 65 developing countries over 1960–1985 to show a positive correlation between growth in agricultural GDP and its lagged values and nonagricultural GDP growth. He suggests that this correlation can be explained by ‘‘first-order’’ effects of agricultural growth on lower food prices, labor migration, and capital flows from agriculture, as well as ‘‘second order’’ effects, such as improved nutritional intake, which improves workers’ productivity. Similarly, Self and Grabowski (2007) establish a positive relation between different measures of agricultural productivity and average growth of real GDP per capita over 1960–1995 for a cross-section of countries. However, on the basis of panel data from 52 developing countries during 1980–2001, Gardner (2005) concludes that agriculture does not seem to be a primary force behind growth in national GDP per capita. Recent empirical literature considers that the effect of agricultural progress on poverty alleviation is highly positive. Mellor (2001) argues that it is not economic growth in general that reduces poverty in developing countries, but the direct and indirect effects of growth in agriculture. In their study of poverty in India over a 35-year period, Datt and Ravallion (1996, 1998) find that higher farm productivity reduces both absolute as well as relative poverty. This is partly due to a direct channel of higher household income operating in the short run and partly due to indirect channels, such as higher wages and lower food prices, in the longer run. Other empirical studies also suggest that these are the main channels and not labor migration from agriculture into other sectors. This strengthens the argument for supporting agricultural growth.5 Similarly, Loayza and Raddatz (2010) show for a crosssection of developing countries that growth in more labor-intensive sectors, such as agriculture, has a larger impact on poverty reduction than less labor-intensive activities. Christiaensen and Demery (2007) estimate that 1 percent per capita agricultural growth reduces poverty 1.6 times more than the same growth in industry and three times more than growth in the service sector. Case studies confirm these cross-country findings. For example, Dercon and Christiaensen (2005) estimate that among 15 villages in Ethiopia, consumption per adult equivalent is 8.5 percentage points higher if households use fertilizers, i.e., inputs to increase farm productivity. Another channel through which agricultural growth can reduce poverty is employment generation in the nonagricultural sector. Mellor (2001) finds that this effect is mostly driven by increased consumption demand and not so much by production linkages. In addition, the effect of agricultural growth on poverty might differ along the income distribution. Christiaensen et al. (2010) cross-country regression analysis supports the lager poverty-reducing effect of agriculture compared with other sectors; the difference is greatest among the extremely poor. Among those living on less than $1 a day, agricultural growth leads to a reduction in poverty that is 3 to 4 times larger than growth in nonagricultural sectors. The difference is considerably less for individuals living on $2 a day. Income inequality decreases the poverty-reducing effect of growth, and the decrease is greater for growth in the agricultural sector. Overall, however, agricultural growth is a central instrument in helping the poor in developing countries. Although these empirical investigations establish a correlation between agriculture and GDP growth, they do not imply causation in either direction. The correlation observed could be spurious if both sectors have been growing independently of each other or as a result of a common third factor. As a result, some authors criticize studies that argue that there is a causal effect of agricultural growth on economic growth. To address this issue of endogeneity in empirical work, Tiffin and Irz (2006) use Granger causality tests to establish that agricultural value added per worker has a Read more

Probably the agricultural sector’s most important contribution to development in poor countries in the past has been to provide savings, i.e., surplus—extracted through various means—over and above what was required for the reproduction of agricultural producers, which allowed industrialization to take place. The literature has extensively discussed the tax and price policies that are necessary to bring about surplus extraction (see Sah and Stiglitz, 1984; Carter, 1986). These policies became famous by the discussions between Preobazhensky and Bukharin about the so-called ‘‘primitive’’ forms of socialist accumulation in the Soviet Union where farmers faced artificially low prices for their output and punitive taxation throughout the 1920s and 1930s (Conquest, 1987). Consistent with these early models of agriculture as generating a surplus that could be extracted for the benefit of industry, in the recent past, governments in developing countries have imposed a heavy burden on agriculture by implementing urban-biased policies. Krueger et al. (1991) multi-country study provides empirical support for the view that price policy, trade policy, and exchange rate policy in virtually all developing countries have discriminated against agriculture. ... The discrimination has been direct, through food subsidies or taxes on agricultural exports, or indirect, through manufacturing protection and exchange rate overvaluation. During 1960–1984, these policies extracted an average of 46 percent of agricultural GDP from the sector in 18 developing countries (Krueger et al., 1991). This massive study confirmed the hypothesis of Schultz (1964), who argued that peasants in poor countries are not backward and ‘‘traditional’’, but, on the contrary, rational decision makers who maximize the returns from their resources. Their apparent unwillingness to innovate, he argued, was rational because governments of developing countries often set artificially low prices on their crops and taxed them heavily. In other words, peasants respond to incentives. Anderson (2009) updated the Krueger Schiff, and Valde` s study, reaching similar conclusions but showing that, since the mid-1980s, the inter-sector bias against agriculture and the anti-trade bias have been substantially reduced. Many developing countries have undertaken a great deal of policy reform and opened to trade and benefited proportionately more (relative to GDP) than high-income economies from those trade- related policy reforms. Developing countries would gain nearly twice as much as richer economies by completing the reform process—with 72 percent of the prospective gains to developing countries coming from agricultural and food policy reform. In developing countries, net farm income (agricultural value added) is estimated to have been 5 percent higher in 2004 than it would have been without the reforms since the mid-1980s. If policies remaining in 2004 were removed, net farm income would rise by another 6 percent (far more than the proportional gain to J.-J. Dethier, A. Effenberger / Economic Systems xxx (2012) xxx–xxx 7 G Models ECOSYS- 380; No. of Pages 31 Please cite this article in press as: Dethier, J.-J., Effenberger, A., Agriculture and development: A brief review of the literature. Econ. Syst. (2012), doi:10.1016/j.ecosys.2011.09.003 nonagricultural households). These reforms could further alleviate global inequality and poverty, since three-quarters of the world’s extreme poor are in farm households in developing countries. One way to look at policy changes over the past 25 years would be to say that developing countries follow the example of higher-income countries in moving from anti to pro-farmer policies as they develop. The Anderson study shows that import-competing farmers in developing countries are being increasingly protected over time Agricultural production has been directly supported by subsidies to farm inputs such as fertilizers and irrigation in many developing countries, such as India. These policies generally benefit large farmers more than smallholders , that public policies that actively support agriculture, such as pricing or support to agricultural research and extension, are a necessary prerequisite for agricultural growth, and that agricultural market liberalization has not benefited small farmers due to market failures and distortions. Asia’s Green Revolution was supported by government interventions sustained for long periods, such as fertilizer subsidies that reduced prices to 25 percent of their world market price. For example, the 5 percent annual growth in Indonesia’s rice production over 1970–1988 was mainly achieved by government pricing, research, and investments in the rice sector (Gonzales et al., 1993). But such large-scale public interventions put a heavy burden on government budgets, are not a good use of public funds and not sustainable over time. They also have other detrimental effects. For instance, the subsidization of fertilizer in Asia has led to misuse and soil degradation. Hence, although urban bias seems to be detrimental for agricultural growth because it fosters industry, agricultural market interventions are costly and may lead to mismanagement of resources.6 At least that was the conventional wisdom among economists and policymakers in the 1980s and 1990s. They thought that agricultural market interventions increased fiscal spending and could create macroeconomic problems. However, in recent years, there has been a resurgence of interest in these subsidies in Africa, together with the emergence of ‘‘smart subsidies’’, which are delivery systems intended to reduce the common problems facing subsidy programs. The most famous example is the Malawi Government Agricultural Inputs Subsidy Program, a voucher system. It is seen as an effective way of rationing and targeting access to subsidies to increase agricultural productivity; it provides opportunities for innovative public–private partnerships to develop input supply and demand systems; and it may lead to economic and social welfare gains. But the program is fraught with many practical and political problems and may lead to patronage and fraud. Moreover, the program is vulnerable to factors outside government control, including variations in international fertilizer and maize prices and weather (Dorward et al., 2008). These programs have to be market smart and require an environment with strong institutions for decentralized targeting of input vouchers. Otherwise, the capture of the program by rural elites is almost certain. This is confirmed by the experience of the 2008 input voucher pilot program in Kilimanjaro, Tanzania, in which elected village officials received about 60 percent of the vouchers, reducing the targeting performance of the program, especially in more unequal and remote communities (Pan and Christiaensen, 2011). The foundations of agricultural growth this section looks at the performance of the agricultural sector in different regions of the world, the foundations of agricultural growth, and the challenges faced by farmers in developing countries that might diminish the returns to agricultural technologies. These include the structure of agricultural production, environmental factors, and barriers to technology adoption. Read more

The Green Revolution, meaning the adoption of high-yielding varieties, was largely made possible by investments in fertilizer and irrigation. The massive use of fertilizers—without the help of which high-yielding varieties cannot grow successfully—changed agricultural practices forever. Irrigation. The liberalization of the market for agricultural outputs does not impose a bias on either sector but it can affect the competitiveness of smallholders. Agriculture and development: A brief review of the literature. Econ. Syst. (2012), doi:10.1016/j.ecosys.2011.09.003 thanks to which water can be stored and sent to dry areas, putting more land into agricultural production—also increased production. The Green Revolution exponentially increased the amount of food production worldwide and sharply reduced the incidence of famine, especially in Asia and Africa. ... There have been major downsides, however. First, since only a few species of high-yield varieties of rice or wheat were grown, tens (if not hundreds) of thousands of seed varieties that existed prior to the Green Revolution are no longer being used. Increased crop homogeneity implies that seeds are more prone to disease and pests because there are not enough varieties to fight them. In order to protect these few varieties, pesticide use grew, with major negative environmental externalities. Second, at least if one adopts a Malthusian view of development, the increased amount of food production available worldwide has been an important cause of overpopulation. Between 1980 and 2004, the agricultural sector grew at an average rate of 2.6 percent worldwide, with two-thirds of this growth contributed by Asian economies. Agricultural yields in Asia increased at an average rate of 2.8 percent between 1961 and 2004. In Sub-Saharan Africa, the average rate of agricultural growth was 3 percent over the same period but growth per capita of the agricultural population (a broad measure of agricultural income) was 0.9 percent, less than half the growth rate in other regions. Moreover, whereas agricultural growth during the Green Revolution in Asia was driven by intensification, agriculture in Sub-Saharan Africa has been growing mostly as a response to land expansion and yields have been stagnant. Since the potential for land expansion will soon be exhausted, further agricultural growth will have to come from increased yields. Read more

Consensus about the need for a Green Revolution in Africa is universal but the characteristics of the African continent call for a different approach. In comparison with Asia, Africa is heterogeneous in terms of agro-ecological conditions, farming systems, and types of crops planted. The FAO considers that there are 14 main farming systems in Sub-Saharan Africa (Staatz and Dembele, 2007). They depend rather weakly on rice or wheat, which have been the drivers of the Asian Green Revolution. Moreover, most agriculture in Africa is rain-fed (de Janvry and Sadoulet, 2009a), whereas the Green Revolution in Asia was partly driven by intensive irrigation. In fact, only 4 percent of crop area in Africa is irrigated, versus 34 percent in Asia. Another factor that makes the Sub-Saharan African context different is the underdevelopment of infrastructure, which hinders market access and leads to high transportation costs. ... As a consequence, several geographically separate revolutions will have to take place across Sub-Saharan Africa (Staatz and Dembele, 2007). The source of agricultural growth also matters for its impact on poverty reduction. Agricultural growth in East Asia has been achieved with technologies increasing labor productivity and has led to large reductions in poverty. By contrast, in Africa, where labor productivity gains in agriculture have been small and most growth has come from land expansion, poverty reduction has also been low. In order to understand past developments in agriculture and predict future ones, the mechanisms behind agricultural development and growth must be identified.8 According to Schultz (1964), many farmers remain poor not because they are ‘‘backward’’ but because their government provides them with few technical and economic possibilities. Schultz stressed the importance of making inputs available to farmers (and increasing the capacity of industry to supply these inputs), generating new locally specific knowledge, and improving education about new seeds and technologies via extension services. Schultz’s model did not specify which institutions could influence this process and facilitate the adoption of new technologies by farmers. This shortcoming was addressed by Hayami and Ruttan (1971), who developed a model of induced innovation to explain the factor bias of technological change. The causal sequence begins with changes in relative factor scarcities leading to changes in relative factor prices (under the assumption that markets actually exist and work). Prices, in turn, guide technological advances toward saving on the factors that become relatively more expensive. Since agricultural research is largely a public good, the government needs to respond to market signals and factor endowments by allocating funds to alternative research programs. This occurs partly in response to producer demands for technologies that allow them to save on the factors that are becoming relatively more expensive and partly as a response to changing resource constraints, such as environmental challenges (de Janvry and Dethier, 1985). In comparing the long-run history of technological change in Japanese and U.S. agriculture, for instance, Hayami and Ruttan find that, in labor-abundant but land-scarce Japan, technology has been mainly land-saving, allowing for a rapid increase in the productivity of land. In the United States, where land was abundant and labor scarce, technology has been mainly labor-saving, allowing rapid increases in the productivity of labor. Read more

Identifying the characteristics of agriculture in Africa does not explain why yields are low. There are two broad problems. The first is lack of appropriate technology and the second is lack of adoption. Whereas the former calls for better targeting of research to African countries and their conditions, the latter demands a reduction in the barriers to technology adoption. Of course, the problem of low yields may also be a combination of both inappropriate technology and barriers to adoption. Agricultural R&D and its capacity to produce more productive technologies are at the heart of long run agricultural growth. Such new technologies triggered the Green Revolution in Asia, and in light of the limited potential for land expansion in Sub-Saharan Africa such inventions are also strongly needed for African farmers.... Due to the heterogeneity of the countries and differences with, say, Asian countries, crops that have been planted in other regions might not be appropriate for Africa. Technological spillovers from high-income countries to low-income African countries are unlikely. Moreover, regional differences are large within the continent and prevent technology spillovers among African countries (Pardey et al., 2007; Binswanger-Mkhize and McCalla, 2010). These differences call for more regional specific orientations in agricultural research, which take local conditions and constraints into account. In Africa, this has been addressed by both national as well as international research organizations. In 2006, for example, the CGIAR spent 48 percent of its total budget on activities directly related to Sub-Saharan Africa. But the contribution of CGIAR research to total yield growth has been much smaller in Sub-Saharan Africa than in other regions (BinswangerMkhize and McCalla, 2010). At the regional level, new institutions have been developed, such as national agricultural research systems (NARS) and the New Partnership for Africa’s Development (NEPAD). NEPAD, for example, has set a target of 6 percent agricultural growth in order to encourage public spending in this sector. Nevertheless, only a few African countries have reached that goal, whereas public spending in general has been low (during the past 30 years, 5–7 percent of the total national budget) and has fallen short of equivalent spending in other parts of the world (Fan et al., 2009). This is in stark contrast to potential returns to such expenditures. As reported by Fan et al. (2009), in some African countries, recent expenditures have been very successful in increasing agricultural productivity: one local currency unit spent on agricultural R&D has increased agricultural productivity by about 12 local currency units in Uganda and Tanzania. For Sub-Saharan Africa in general, the return to agricultural R&D and extension is estimated to be around 35 percent (IEG, 2011). Future research will need to have a regional focus and target specific needs. Regional initiatives— such as NEPAD—are an important part of such a regional strategy. However, the mode of research is also a vital factor. Engaging farmers in such efforts, for example through participatory plant breeding, can provide valuable information to the research process. According to Ceccarelli and Grando (2007), this approach is different from normal plant breeding in three ways: the testing and selection of seeds take place on the farm, the farmers are involved in the decision making, and it can be implemented at many different locations. The participation of farmers is expected to increase the rate of adoption of new seeds. An important agricultural R&D question is what recent biotechnology advances can do for African agriculture and whether they are the route to the continent’s Green Revolution. Poor farmers might benefit especially from transgenic food crops because they are particularly disease-resistant. Estimations by Edmeades and Smale (2006) show that transgenic bananas would mostly be adopted by poor, subsistence-oriented farmers and are therefore a ‘‘pro-poor’’ variety. So far, however, transgenic crops are grown commercially only in South Africa (Eicher et al., 2006), where in 2006 transgenic white maize covered 44 percent of the total white maize area (World Bank, 2007). Read more