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The Global Food Crisis: Will Investments in Agricultural Technology be enough?

Forhad Shilpi's picture

Contributed by Forhad Shilpi and Uwe Deichmann

Will investments in agricultural technology by themselves be sufficient to ensure long-term productivity growth in the farm sector and, more importantly, for rural poverty reduction?  As rapidly rising food prices threaten food security and the poverty gains made by developing countries, many have blamed declining funding for agricultural technology development for this state of affairs (for example, the New York Times).

This question is highly relevant for South Asia.  Shanta Devarajan has commented on the recent rice export ban by India and its implication for its neighbor, Bangladesh, which has become a net rice importer this year due to floods and cyclone impacts.  But Bangladesh also provides evidence that agricultural technology by itself is unlikely to lead to adequate growth in agricultural output if factors such as physical and economic geography and infrastructure needs are not considered.

In a recent study, we examine these issues for Bangladesh. During the early 1990s, Bangladesh experienced widespread diffusion of green revolution technology in rice, its main crop. As a result, rice production has more than doubled since the early 1970s. The spread of green revolution technology is usually expected to boost wages for farm workers.  But we found regional differences in rural wages that run counter to the traditional argument.

The North-West region of Bangladesh (Rajshahi Division) has some of the highest agroecological endowments in the country (Figure 1). 

Figure 1: Crop suitability index
(Source: Bangladesh Agricultural Research Council, BARC)

 

 

But, surprisingly, real agricultural wages were much lower in the Rajshahi Division (Figure 2).  Similarly, the probability of employment in the high-wage, non-farm sector was also lower in the North-West (Figure 3). This is puzzling in light of the traditional argument that productivity growth in agriculture raises agricultural wages and also boosts non-farm employment through various production, consumption and labor market linkages.  These linkages between the farm and non-farm sectors are assumed to create a virtuous cycle of growth and development in rural areas.

Figure 2:  Hourly Rate in Agriculture Farm Figure 3: Probability of employment in the high-wage farm sector

(Source: Average values for household clusters from teh Household Income and Expenditure Survey 2000) 

(Predicted and spatially interpolated values from HIES analysis; high wage means above the median agricultural wage of the region)

Our study found that access to large urban markets (as in Dhaka and Chittagong) is by far the most important determinant of high-return, non-farm activities: people are more likely to be employed in better paid wage employment and self employment in the non-farm sector if they are closer to urban centers. The impact of agricultural potential depends on how far the village is from the main urban centers: those who are further away from these centers are even less likely to be in well-paying non-farm jobs even if they are living in areas with greater agricultural potential.  This suggests that poor connectivity to major urban markets greatly weakens farm-non-farm linkages. And lack of expansion of better paid non-farm jobs in turn slows down the movement of workers from agriculture to other activities, depressing agricultural wages and impeding long-term growth in agricultural productivity itself. 

Greater investment in improving agricultural technology certainly needs to be part of the solution to meet the rising demand for food.  But if spatially connective infrastructure (roads and bridges in particular) and complementary services such as agricultural extension are ignored, these findings from Bangladesh suggest that few farmers in lagging but potentially productive regions will benefit, thwarting the goal of raising agricultural productivity.

Comments

Submitted by Lisa P on
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Submitted by Sumer Hasimoglu on
We have to be careful when we make food consumption and production predictions on Per Capita bases tha on the long run creates food crisis especially for the poor. PROPOSAL- “Organizing and bridging demographic structure, economics of nutrition related to food-science and reevaluation of consumption and production predictions by using developed Per Adult Human Unit Method (PAHU) versus Per Capita (PC) on developing and developed countries including USA and EU.” Responding to Global Food Needs or Policy-Economic Crisis Relation? What Follows? Last fifty-year world population is in a “demographic transition”. On the other hand USA and EU’s families and household dynamics are also rapidly changing. These demographic changes have implications for many facets of economic life: food and other goods consumption and services, work force structure, retirement etc. Findings indicate the consistency problems exist not only among EU states and its institutions also at international level that do not use the same definitions. This gives too much space for arbitrary decisions that will damage the comparability of the demographic statistical data. State of art of the proposal is implementing developed Per Adult Human Unit (PAHU) method (Copy-right, 1989) and new approaches to revaluation demographic structure, consumer potential of EU, food consumption and its safety (and efficacy) as needed. PAHU involves systematic attempts to look into longer- terms past and future of demographic trends, consumer and food consumption potentials on PAHU and error inherent Per Capita (PC) basis (19.4 percentage unit error) and their impact on society with a view of identifying the areas of scientific harmonization of quantitative and qualitative development including family and household evaluations, likely to influence the future demographic change of USA and EU, its expansion policies and economic strategies. As growth in USA and EU27 economy continues to outpace in the rest of the world, proposal’s potential outcomes in the footrace determination of real consumer potential, between demand and supply with particular emphasis on food, aiming, harmonizing of quantitative and qualitative development including family and household evaluations, likely to influence the future demographic change their expansion policies and economic strategies. PAHU is not offered for major reform, but in an effort to streamline the methodology further to turn this key issue into an opportunity and modernize the economic policy and aims to give a chance to see where the adjustments are needed and ensure the policy is fit for challenges in reduction errors

Submitted by vins on
Hello. "Will Investments in Agricultural Technology be enough?" Here is my opinion. I don't really know enough or not for helping global food crisis situation, but let see what we have. The FAO estimates that global food consumption will double over the next 30 years as the global population increases by 42 percent to over 9 billion. US Secretary of Agriculture promotes the use of biofuel and genetically modified crops and some countries are at the same position as US, but i think that good agricultural policy and investments can improve situation much better than genetic modification. Regards, vins

Submitted by Cristian on
The economical crisis has proven to be very positive for some people. I work as a fraud lawyer and since this issue with the economical crisis, the lawsuits regarding fraud have multiplied exponentially.

Submitted by Sandra on
When will this crisis end? Everything is messed up, the currency is off the scale for some countries and we're lacking the resources needed to survive.

Submitted by Visitor on
Countries should have the freedom to control imports in order to protect domestic food production.

Submitted by mike on
As food demand and supply fall out of balance, the sustaining power of globalization is breaking down. In a world interlinked as never before, the crisis spreads from country to country, sparking unrest and spiking hunger. we should do something about this.

Submitted by sarah on
Reasons for rising food prices are diverse and interrelated. The industrialization of China and India created a growing demand for oil drove up the prices of the most important components of agricultural products such as gasoline, engine oil, fertilizers and pesticides. Expensive fuel increases the cost of transporting food to markets. The increasing emission of gases in the atmosphere causes the greenhouse effect, which in turn leads to flooding, desertification of arable land and weather, causing enormous damage to crops. For example, the heavy rains killed tens of thousands of acres of fertile land in North Korea. The growing demand for oil pushed to re agribusiness lands under cultivation of ethanol production, while reducing the volume of grain delivered to the market, going to food for people and livestock. Finally, the growing standard of living in China and India leads to an increase in demand for food.

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