Sell the farm: agriculture and poverty reduction

Click to see the book on OECD iLibrary

In 1972, French film maker Louis Malle spent several days interviewing people he met in a large square in Paris. The resulting documentary, Place de la République, provides a snapshot of a country undergoing profound changes as a result of the postwar boom. Then, as now, a significant number of Parisians were not born in the city but “came up” from the provinces.

One of them was a road mender. Malle asks him what it’s like to do such a tiring, dirty, dangerous job. He agrees that it’s hard, but, he points out, it’s much better than working on a farm. He describes his life as a farmboy back in Normandy in the 1940s – the endless chores, the poverty, the lack of opportunity. He left as soon as he could, and never regretted it.

Across the world, millions would do the same in the search for a better life, and the process is continuing. It can be surprising to see how keen people are to quit farming and life in the country for the city. Author Fred Pearce interviewed women working in sweatshops in Bangladesh. Like Louis Malle’s road mender, they had no illusions about their present jobs, but they still preferred having some money and better prospects for their children than the alternative in rural villages. Nazma Akter, a campaigner for garment workers’ rights told Pearce that, poor as they were, “women are becoming an economic force here. This is the first time they have had jobs. They are independent now. They can come and go; nobody stops them. Don’t take that away from them.”

Today, it may be more difficult for unskilled farm labour in poor agriculture-dependent economies to be absorbed by other sectors than it was for, say, European farmers to move into industrial jobs a century earlier. But once the change starts – and, crucially, once people have the relevant skills – the pace is invariably more rapid than in the past. In Korea, agriculture’s share of employment fell from 40% to 16% in just 14 years – a transition which took 53 years in the US and 68 years in the UK.

One way of looking at this process and what governments can do to help is outlined in a new OECD publication  Agricultural Policies for Poverty Reduction, edited by Jonathan Brooks. Change can be seen as a four-phase process for the agricultural sector.

In the early stages of development, agriculture dominates output and employment, and the priority is to “get agriculture moving”.

The subsequent generation of a surplus within agriculture leads to a second period in which agriculture makes a key contribution to growth both directly and via a variety of linkages to other sectors. These linkages range from small-scale local arrangements such as farm households having another source of income off the farm, to participation in global value chains through selling produce to international food processors.

In the third phase, agriculture’s share of national income declines and agricultural incomes fall behind those in other sectors, so the priority lies in helping the adjustment to succeed.

The fourth and final phase is one in which the agricultural sector, including agricultural labour markets, is integrated into the rest of the economy.

Policy requirements vary at each stage, and many of the policies required to improve farmers’ opportunities are not agricultural. Education and health for example may be better investments for rural populations than spending on agriculture.

A number of poor countries, mostly in Africa, are at the first two stages of this development process, and agriculture can account for up to half of GDP and 80% of employment. The book argues that while there may be plausible reasons for governments to intervene in agricultural markets in poorer economies, any short-term benefits from these expenditures should be balanced against those from investments to support long-term agricultural development.

If this development is successful, it will lead to many farmers quitting the sector, so a strategy for strengthening rural incomes should emphasise three development pathways for farm households: improving competitiveness within agriculture; diversifying income sources among farm household members; and, finally, leaving the sector for a better paid job.

This approach is relevant for countries at all stages of development, even if the opportunities vary. Smallholder farming dominates agriculture in most poor countries, and while some smallholders will be able to establish commercially viable operations, others won’t. Every country that has made the transition to a modern economy has seen agriculture’s share of GDP and employment shrink, not because agriculture has become poorer (on the contrary, farmers have become richer), but because other sectors offer far greater prospects. Agriculture can contribute to development and the fight against poverty, but there is no evidence that it can win on its own.

There may be a price to pay in terms of traditional lifestyles and culture, but not all aspects of these traditions are positive. This is one reason why the experience of Louis Malle’s road mender in France or the garment workers in Bangladesh suggests that given the chance, many people living in poor rural areas will leave the farm.

Useful links

OECD work on agriculture

OECD work on poverty reduction

Patrick Love

2 comments to “Sell the farm: agriculture and poverty reduction”

You can leave a reply or Trackback this post.
  1. Nicolas SERGE - 16/03/2012 Reply

    Dear Patrick Love!
    You’re putting emphasis on one important challenge of globalization: ” poverty reduction”.
    Well, i totally agree with you when you said that we need to increase the human capital of the unskilled labor force (farmers). This initiative will increase the productivity of the farmers at one hand and the productivity of the natural capital at the second hand.
    I think that in this context of dramatic reduction of the economic dynamism life cycle, it has become relevant to put emphasis on the social cohesion and justice implications of the structural change. That needs to be the main concerned of the green and city diplomacies. Because, this current context of knowledge based economy and Electric Vehicule Revolution mainly sustained by the urbanization process and the green and creative economies will tend to reduce the stock of unskilled labor force in our western countries and increase the one of the creative class (skilled labor force).
    In this context of dramatic reduction of society and radical innovation life cycle, diversification will become the cornerstone of local and global economic development. We’ve an empirical evidence of this tendency with the spatial dispersion of the US creative industries which could be considered as model.
    I don’t think that agriculture will become obsolete. Meanwhile, we’ll appreciate its overwhelming importance throughout the increasing importance of natural capitalism and green and creative economies.
    Nicolas SERGE,

Leave a Reply to Nicolas SERGE Cancel reply