Agriculture Progress in the agricultural sector is precondition for stimulating growth in the modern sector.

Hess and Ross 1997, 324. The evolution of the agricultural sector can be classified into three different stages (Weitz 1971). The first stage was primitive and self-subsistence, with low productivity on peasant farms. In this stage, as the output was almost exclusively for the farmers family, both production and tools were simple and traditional, capital investment was minimal; the two major factors of production were labor and land. The second stage was called diversified agriculture. In a diversified farm a proportion of the product was sold to the commercial sector and the remainder kept for family consumption. The third stage was modern farming. In this stage, advanced technology was normally employed, and the activity was directed towards specialized highly productive agriculture for the commercial market. These types of farms are very advanced and respond to other national or international areas. The classification of farmers does not mean that all farmers progress through these stages. All types exist in every country almost all the time. The common features of specialized farms are their focus on the production of one or only a few crop, labor-saving through capital-intensive activities, and their reliance or dependency on economies of scale. They are very similar to large industrial enterprises. In fact, many of these highly specialized farms, particularly in less developed countries, are owned and operated by large agribusiness multinational corporations (Todaro 1994, 310). It has been argued that present farming is suffering from many serious environmental problems (Pimentel 1999, 153). Improvement in agricultural productivity is suggested to have powerful second-round impact on the rural non-farm community (Islam 1984). Small manufacturing and service industries are more beneficial to the rural landless poor than the wealthy (Gibb 1974). The influence of agriculture is through consumption, production, and labor linkages. Meier (1971, 412) noted that agricultural output and productivity contribute to economic growth by: (i) (ii) Association of economic development with substantial increase in demand for agricultural products Reliability of agricultural export in foreign exchange earning

(iii) (iv) (v)

Contribution of agricultural labor surplus to manufacturing and other Provision of raw material to other industries, and capital for expansion Stimulation of industrial expansion through increases in rural expenditure.

expanding of

sectors of the economy secondary industry

Land reform is also suggested to be effective in improving agricultural productivity. This is related to the inverse relationship between farm size and productivity (Carter 1984). Some economists argue that large farms profitability has little to do with productivity, but originates from the price distortions caused by government policies and subsidies in favor of large farms (Lipton 1977).