Agriculture for Development:

New Paradigm and options for success

Alan de Janvery
2010 International Association for Agriculture Economics
Originally delivered as a lecture: 27th IAAE conference, 2009
Focus of the paper
The three paradigms of agriculture as instruments for development
Classical paradigm

Agriculture in crisis

New paradigm

And causes for shift from one model to another

The new paradigm

Continued underuse of agriculture for development ; moving forward in using agriculture:

Two options for success

Reconceptualization

Redesign

NOTE: Growth and poverty reduction were taken as the ultimate objectives: a model leading to this end was
considered the desired strategy
The classical paradigm
Agri growth engine for:
Industrial growth

Structural transformation of the economy

Aggregate growth
Western experience( Bairoch, 1973) : Linking agricultural revolutions to
industrial revolution

Asian Miracle : Redistributive land reforms and rapid productivity growth in

smallholder farming
The classical paradigm
Contributions of agriculture
Generation and transfer of investible surplus to industry ( Surplus in the form of):
Labour: Released from agri- productivity growth

Lower food prices allowing nominal wages for industrial employer

Foreign exchange: agri export

Tax levied on agri

Creation of effective demand for industry on domestic market

Agri income rises- higher demand for industrial goods ( Agricultural demand led industrialization)

Growth multiplier effect of agri-productivity growth due to inter-sectoral linkage

Structural transformation
Engels law ( Share of food in consumer expenditure declines as income rises)

Analogously, share of agri output in employment and GDP declines as GDP per capita rises

From above:
(i) Surplus

(ii) Linkage and market contributions of agri and

(iii) multiplier effects

Accelerated growth in economy higher than rate of growth of agriculture

Relative decline of agri in employment and GDP: Regarded as an accomplishment, indicating higher growth
Shift from the classical paradigm
Agriculture in crisis

From documentation to implementation

Under-emphasis on role of private sector in agribusiness

Over-estimation of the capacity of public sector to provide quality goods and services to farmers

Suppression of cooperative organizations:

Less market competitiveness

No voice in policymaking

Corrupt or ineffective public organizations in charge of farmer welfare, irrigation, subsidy

Excessive reliance of integrated rural development programs on state and coordinating agencies and on subsidies

Political agenda dominated by:

Idea of import substitution industrialization

Urban consumer interests

From emphasis on role of agriculture

Subsequent contradictions in implementation

Neglect of agriculture ( not deemed competitive for public investment)

Neglect of agriculture
Agriculture in crisis

Decline in public investment

Decline in overseas development assistance

Dismantlement of support agencies: Agricultural dev banks, Parstatal marketing agencies

Strategies for achieving growth and poverty reduction shifted:

Industrialization (Growth) :

Open economy strategies

Financial capital movements

Foreign Direct Investment

Transfer of technology

Poverty reduction:

Cash transfers

Workfare programs

Agriculture seen as a suspect for environmental damage

Complexity of agri-based development projects shift to industrial strategies : eg- duty free zones, food-for-work transfers
Costs of neglecting agriculture
The world in crisis
Rising food insecurity and hunger
High price and high price volatility, uncertainty in world food situation

Limited price transmission (between international- local markets)

Global financial crisis, loss of employment, declining economic activity in informal sector

Rising resource scarcity, diversion of land (urban construction, biofuels)

Continued stagnation in Sub-Saharan Africa

Agriculture stagnant relative to population growth

Scarcity of land

Low use of technology high yield gaps

World poverty overwhelmingly rural

58% of world poor is rural

Economic growth originating from agriculture as a source of income can be effective in poverty reduction

Diversifying production , subsistence farming- safety nets for the unemployed

Increasing rural-urban income disparities

Source of political tension

Economic efficiency problem

Agri and rural non-farm economy: reduce disparities in short and medium term

Increasing resource scarcity

Due to excessive use and misuse in agriculture

Under-provision of environmental services

Putting agriculture back on the development agenda
The new paradigm for development

Two major changes that require a new approach

Change in the objectives of development

From growth via industrialization to multidimensional growth (including GDP, Poverty and disparity

reduction, food security, environmental sustainability)

Note: World Bank changed its main objective from accelerating growth to achieving a world without

poverty

Change in the structural context

Agricultural growth is to occur including globalization of the food system, integration of food value chains,

emergence of institutional and technological changes, increasing resource scarcity and climate change,

conservation of envirionment

Agriculture is back on the development agenda, but, the above changes imply-

the way agriculture is used for development has to be readjusted to the new objectives and context (which

are different from those in the classical paradigm) hence, the need for a new paradigm
The new paradigm
Continued underuse of agriculture for development

After years of contradiction and neglect there was a case for agriculture in

the development agenda

However, there has been incomplete implementation of measures

Under-performance and under-use of agriculture

Two causes for lack of implementation of agriculture for development paradigm

(a) Insufficient reconceptualization of the role of agriculture to correspond

to the new objectives

(b) Insufficient redesign of approaches for effective implementation

The new paradigm
Moving forward in using agriculture: two options for success

1. Reconceptualization of the role of agriculture for development

Formalizing the complementarities and trade-offs in the multiple functions of agriculture for
development
globalization, integrated value chains, tech. and institutional innovations

Designing the process of agriculture growth

Proper allocation of property rights, pricing of resources, market incentives, institutionalized
market places

Redefining the role of the state in setting social priorities and overcoming market failures
In the classical paradigm, the state played a vital role; after its withdrawal the void was not filled
by the private sector; unclear role in the way of private sector investment and performance; need
for redefined role of state
The new paradigm
Moving forward in using agriculture: two options for success

2. Redesigning approaches for effective implementation

Experimenting with new approaches and internalizing lessons for scaling up success
Eg: Green revolution for Africa will be different than that of Asia, different agro-ecological conditions be
considered

Innovation, experimentation, evaluation to devise new approaches to use agri for development

Fixing the governance structure for the state to fulfill its new functions for agri
Addressing market failure; regulating competition in the private sector, PPPs; management of subsidies;
decentralization of agriculture; policy coordination of agriculture with that of other sectors; defining role
of civil society organizations, and state coordination

Committing the state and the international community to support the long-term role of
agriculture for development above price and political cycles
Crises have huge costs, particularly on the poor; avoidance of crises requires continued public investment
in agricultural R&D; protects resources from short term market signals and political cycles
Conclusion
The classical paradigm of agriculture as a pillar of industrialization (that prevailed in
1960s-70s) that changed to one of contradictions and neglect has again come to the
forefront

The new paradigm is different because of the change in objectives and contexts

Reconceptualization and redesign will lead to completing this new paradigm of agriculture
for development

Needs experimentation and consistent investment and coordination amongst public-

private sectors to fully integrate the system