Rural Poverty and

Agricultural Transformation
 Agriculture’s Role in Transforming the Economy

Agriculture contributes to economic growth through domestic and export surpluses

that can be tapped for industrial development through taxation, foreign exchange
abundance, outflows of capital and labor, and falling farm prices. As agricultural
product and factor markets become better integrated by links with the rest of the
economy, farm income expansion augments the market for industrial products.
 Major Rural Groups in Poverty
The widespread assumption among development
economists in the 1960s and 1970s that agrarian
societies are characterized by roughly uniform
poverty (Bruton 1965:100) is a myth. Rural society
is highly differentiated, comprising a complex
structure of rich landowners, peasants,
sharecroppers, tenants, and laborers, in addition to
artisans, traders, plantation workers, and those in
firms that service the rural population. In most
LDCs, it is the small landholders (with less than
three hectares or seven acres), the near-landless,
the landless, and the agricultural laborers who
comprise the poor.
 Rural and Agricultural Development
Rural development is not the same as agricultural development.
The agrarian community requires a full range of services such as
schools, shops, banks, machinery dealers, and so on. Often rural
areas use surplus agricultural labor, either seasonally or full-time,
in industry.
Incomes of farm households are highly correlated with the
amount of nonfarm income (urban wages, remittances, and so
forth), especially in Kenya and Nigeria. Indeed, household
nonfarm income (much earned during the off-season) is the key
to determining farm productivity and household incomes in
Kenya. Farm families receiving urban wages bought land, hired
farm labor, financed innovations, purchased farm inputs, and
increased farm income. Most farm families without a regularly
employed person earn no more than enough to satisfy the
necessities of life
Rural–Urban Differentials in
19th-Century Europe and
Present-Day LDCs
Discrepancies between urban and rural areas in income per person are
not so high as nonagricultural–agricultural differences indicate because

1. urban 3. rural worker

agriculturists have participation rates (which
a lower average include proportionally
income than more women and children)
others in urban are high.
areas

2. rural non agriculturists have a higher

average income than others in rural
areas;
 Agricultural Productivity in DCs and LDCs
• On the one hand is the highly efficient
agriculture of the affluent countries where
high levels of capital accumulation,
new biological- technical knowledge, and worker
chemical- productivity permit a small farm
mechanical The major factors population to feed entire nations .In
inputs in raising LDC contrast is the low-productive agriculture
production agricultural labor in most Asian and African countries that
productivity are barely sustains the population, including a
minority off the farm, at a subsistence
new technical and level.
organizational
knowledge from expanded markets for
greater specialization agricultural output (To mich,
Kilby, and Johnston:1995) as
transportation costs fall.
 The evolution of The Evolution of LDC
agricultural
production commonly Agriculture
occurs in three stages Land and labor are the key production factors, and
capital is small. Labor, except for multi cropping
1. Peasant farming, irrigated agriculture, is underutilized except for
where the major peak seasons, such as planting and harvest.
concern is survival;
Cultivators – small owners, tenants, or
2. Mixed farming; sharecroppers – farm only as much land as their
and families can work without hired labor. And as
indicated later when discussing land reform, the
small family farm is frequently the most highly
3. Commercial productive farm system.
farming
 Growth of Average
Food Production in Sub-
Saharan Africa, Other
LDCs, and DCs
 FOOD DEFICITS AND INSECURITY IN SUB-SAHARAN AFRICA
Africa’s food security index (FSI) is low (and falling since the
1960s) not only because of large food deficits but also because of
domestic output and foreign-exchange reserve fluctuations, as
well as foreign food-aid reductions. Cereal consumption per
capita has had a high coefficient of variation since 1965.
POOR AGRICULTURAL POLICIES AND INSTITUTIONAL
FAILURES IN SUB-SAHARAN AFRICA
Africa was plagued by poor resource endowment
and land quality, low density, increasing transport
and transactions costs (especially with land
locked ness), little specialization, few economies
of scale, a lack of competitive markets ,the
absence of credit markets, a short growing
season for rainfed farming, the high risk of
drought, and endemic live stock and human
diseases( malaria, tuberculosis , and ,more
recently , the AIDS epidemic).
Food Output and Demand Growth
Agriculturists, who agree on the rising
global trend in food grain output per
person from the early 1950s through
the 1980s, noticed a falling lobal
average grain production after 1990.
Total world food production, which
grew between the 1950s and the early
21st century, is expected to continue
growing during subsequent decades in
both LDCs and DCs. Meanwhile, food
demand per capita will continue to rise,
although not so rapidly as increases in
GNP.
Factors LACK OF RESOURCES AND TECHNOLOGY
Agricultural income and productivity in LDCs are low because of minimal capital
Contributing per worker and inadequate technology. Small farm owners receive limited credit
to Low and tenants, sharecroppers, and landless laborers receive almost none

Income and CONCENTRATION OF CAPITAL, LAND, AND TECHNOLOGY

Poverty in Agricultural technology and capital are often concentrated among large farmers,
who have more access to markets and inputs, outbidding many small cultivators,
Rural Areas who may be marginalized and sometimes compelled to work for a wage.

LOW EDUCATIONAL AND SKILL LEVELS

Average incomes in urban areas are higher than in rural areas, where skill levels
and demands are lower. Years of schooling, a major indicator of skill and
productivity (see Chapter 10), are fewer in rural than in urban areas.

RURAL–URBAN MIGRATION
Attracted by the prospect of better-paying jobs in urban areas, rural emigrants
tend to have education, skill, and income that are higher than average in the rural
areas. Poorer villagers are often at a disadvantage in migrating
 POLICIES OF URBAN BIAS
The British economist Michael Lipton argues that the most significant class conflicts
and income discrepancies are not between labor and capital, as Karl Marx
contended, but between rural and urban classes. Despite development plans that
proclaim agriculture as the highest priority sector, and political rhetoric that stresses
the needs of the poor rural masses, government allocates most of its resources to
cities, a policy of urban bias.

SEASONAL POVERTY AND HUNGER

Ironically, moderate undernourishment is higher in rural than in urban areas, as it is
more likely to result from inadequate income than food shortages. However, Food
and Agriculture Organization (FAO) studies of several LDCs indicate that, because of
greater access to subsistence food production, the percentage of the population
suffering severe malnourishment in rural areas is lower than in urban areas (FAO
1977:29–46).
VULNERABILITY OF THE RURAL POOR
Peasants and the rural poor, who face poor infrastructure, inequitable policies, high
disease rates, inadequate support systems, and market failure, are highly vulnerable.
Thus,theyare“highlyriskaverseandreluctanttoengageinthehigh-risk,high-return
activities that could lift them out of poverty. One slip could send them deeper into
poverty”(WorldBank2001i:138)
Thank You!!
GODBLESS