Productivity Growth in World Agriculture: Sources and Constraints
Agriculture in Development Thought
Transition to Sustainability
Prior to the beginning of the twentieth century, almost all increases in crop and animal production occurred as a result of increases in the area cultivated. By the end of the century, almost all increases were coming from increases in land productivity — in output per acre or per hectare. This was an exceedingly short period in which to make a transition from a natural resource-based to a science-based system of agricultural production. In the presently developed countries, the beginning of tills transition began in the latter hall of the nineteenth century. In most developing countries, the transition did not begin until well into the second half of the twentieth century. For some of the poorest countries in the world, the transition has not yet begun.
During the second half of the twentieth century, world population more than doubled — from approximately 2. 5 billion in 1950 to 6. 0 billion in 2000. The demands placed on global agricultural production arising out of population and income growth almost tripled. By 2050, world population is projected to grow to between 9 and 10 billion people. Most of the growth is expected to occur in poorcountries, when the income elasticity of demand for food remains high. Even moderately high income growth, combined with projected population growth, could result in close to doubling the demands plated on the world’s farmer’s by 2050 (Johnson, 2000; United Nations, 2001).
The most difficult challenges will occur during the next two or three decades as both population and income in many of the world's poorest countries continue to grow rapidly. But rapid decline in the rate of population growth in such populous countries as India and China lends credence to the United Nations projections that by midcentury, the global rate of population growth will slow substantially. The demand for food ansing out of income growth is also expected to slow as incomes rise and the income elaslicity of demand for food declines. In the interim, very substantial increase in scientific and technical effort will be required, particularly in the world's poorest countries, if growth in food production is to keep pace with growth in demand.
Agriculture in Development Thought
Economic understanding of the process of agricultural development has made substantial advances over the last half-century. In the early post-World War II literature, agriculture, along with other natural resource-based industries, was viewed as a sector from which resources could be extracted to fund development in the industrial sector (Lewis, 1954, p. 139; Rostow, 1956; Ranis and Fei, 1961).
Growth in agricultural production was viewed as an essential condition, or even a precondition, for growth in the rest of the economy. But the process by which agricultural growth was generated remained outside the concern of most development economists.
By the early 1960s, a new perspective, more fully informed by both agricultural science and economics, was beginning to emerge. It had become increasingly clear that much of agricultural technology was "location specific. " Techniques developed in advanced countries were not generally directly transferable to less developed countries with different climates and resource endowments. Evidence had also accumulated that only limited productivity gains were to be had by the reallocation of resources within traditional peasant agriculture.
In an iconoclastic book, Transforming Traditional Agriculture, Theodore W. Schultz (1964) insisted that peasants in traditional agrarian societies are rational allocators of available resources and that they remained poor because most poor countries provided them with only limited technical and economic opportunities to which they could respond — that is, they were "poor but efficient. " Schultz (1964, pp. 145-147) wrote:
The principle sources of high productivity in modern agriculture are reproducible sources. They consist of particular material inputs and of skills and other capabilities required to use such inputs successfully.... But these modern inputs are seldom ready made.... In general what is available is a body of knowledge, which has made it possible for the advanced countries to produce for their own use factors that are technically superior to those employed elsewhere. Tins body of knowledge can be used to develop similar, and as a rule superior, new factors appropriate to the biological and other conditions that are specific to the agriculture of poor countries.
This thesis implies three types of relatively high payoff investments for agricultural development: 1) the capacity of agricultural research institutions to generate new location-specific technical knowledge; 2) the capacity of the technology supply industries to develop, produce and market new technical inputs; and 3) the schooling and nonformal (extension) education of rural people to enable them to use me new knowledge and technology effectively. The enthusiasm with which this high-payoff input model was accepted and transformed into doctrine was due at least as much to the success of plant breeders and agronomists in developing fertilizer and management responsive "green revolution" crop varieties for the tropics as to the power of Schultz's ideas.
To my opinion, the Schultz "high-payoff input model" remained incomplete, however, even as a model of technical change in agriculture. It did not attempt to explain how economic conditions induce; in efficient path of technical change for the agricultural sector of a particular society. Nor does the high-payoff input model attempt to explain how economic conditions induce the development of new institutions, such as public sector agricultural experiment stations, that become the suppliers of location-specific new knowledge and technology.
Beginning in the early 1970s, Hayami and Ruttan (1971, 1985) and Binswanger and Ruttan (1978) formulated a model of induced technical change in which the development and application of new technology is endogenous to the economic system. Building on the Hicksian model of factor-saving technical change, and their own experience in southeast Asia, they proposed a model in which the direction of technical change in agriculture was induced by changes (or differences) in relative resource endowments and factor prices. In this model, alternative agricultural technologies are developed to facilitate the substitution of relatively abundant (hence, cheap) factors for relatively scarce (hence, expensive) factors.
Advances in mechanical technology in agriculture have been intimately associated with the industrial revolution. But the mechanization of agriculture cannot be treated as simply the adaptation of industrial methods of production to agriculture. The spatial dimension of crop production requires that the machines suitable for agricultural mechanization must be mobile — they must move across or through materials mat are immobile (Brewster, 1950). The seasonal characteristic of agricultural production requires a series of specialized machines — for land preparation, planting, pest and pathogen control and harvesting —designed for sequential operations, each of which is carried out for only a few days or weeks in each season. One result is that a fully mechanized agriculture is typically very capital intensive.
Advances in biological technology in crop production involve one or more of the following three elements: land and water resource development to provide a more favorable environment for plant growth; me addition of organic and inorganic sources of plant nutrition to the soil to stimulate plant growth and the use of biological and chemical means to protect plants from pests and pathogens; and selection and breeding of new biologically efficient crop varieties specifically adapted to respond to those elements in the environment that are subject to management. Advances in mechanical technology are a primary source of growth in labor productivity; advances in biological technology are a primary source of growth in land productivity. There are, of course, exceptions to this analytical distinction. For example, in Japan, horse plowing was developed as a technology to cultivate more deeply to enhance yield (Hayami and Ruttan, 1985, p. 75). In the United States, the replacement of horses by tractors released land from animal feed to food production (White, 2000; Olmstead and Rhode, 2001). At the most sophisticated level, technical change often involves complementary advances in both mechanical and biological technology. For most countries, the research resource allocation issue is the relative emphasis that should be given to advancing biological and mechanical technology.
The model of induced technical change has important implications for resource allocation in agricultural research. In labor abundant and land constrained developing countries, like China and India, research resources are most productively directed to advancing yield-enhancing biological technology. In contrast, land abundant Brazil has realized very high returns from research directed to releasing the productivity constraints on its problem soils. Discovery of the yield-enhancing effects of heavy lime application on acidic aluminum containing soils has opened its Campos Cerrado (great plains) region to extensive mechanized production of maize and soybeans.
Growth in total factor productivity in agriculture, arising out of technical change and improvements in efficiency, has made an exceedingly important contribution to economic growth. Within rural areas, growth of land and labor productivity has led to substantial poverty reduction. Productivity growth has also released substantial resources to the rest of the economy and contributed to reductions in the price of food in both rural and urban areas (Shane, Roe and Gopinath, 1998; Irz et al., 2001). The decline in the price of food, which in main park of the world is the single most important factor determining the buying power of wages, has been particularly important in reducing the cost of industrial development in a number of important emerging economies. These price declines have also meant that, in countries or regions that have not experienced such gains in agricultural productivity, farmers have lost competitive advantage in world markets and consumers have failed to share fully in the gains from economic growth. But what about the future?
Resource and Environmental Constraints
The leading resource and environmental constraints faced by the world's farmers include soil loss and degradation; water logging and salinity; the coevolution of pests, pathogens and hosts; and the impact of climate change. Part of my concern is with the feedback of the environmental impacts of agricultural intensification on agricultural production itself (Tilman et al., 2001).
Soil. Soil degradation and erosion have been widely regarded as major threats to sustainable growth in agricultural production in both developed and developing countries. It has been suggested, for example, that by 2050, it may be necessary to feed "twice as many people with half as much topsoil" (Harris, 1990, p. 115). However, attempts to assess the implications of soil erosion and degradation confront serious difficulties. Water and wind erosion estimates are measures of the amount of soil moved from one place to another rather than the soil actually lost. Relatively few studies provide the information necessary to estimate yield loss from erosion and degradation. Studies in the United States by the Natural Resources Conservation Service have been interpreted to indicate that if 1992 erosion rates continued for 100 years, the yield loss at the end of the period would amount to only 2 to 3 percent (Crosson, 1995a). An exceedingly careful review of the long-term relationship among soil erosion, degradation and crop productivity in China and Indonesia concludes that there has been little loss of organic matter or mineral nutrients and that use of fertilizer has been able to compensate for loss of nitrogen (Lindent, 2000). A careful renew of the international literature suggests that yield losses at the global level might be roughly double the rates estimated for the United States (Crosson, 1995b).
At the global level, soil loss and degradation are not likely to represent a serious constraint on agricultural production over the next half-century. But soil loss and degradation could become a serious constraint at the local or regional level in some fragile resource areas. For example, yield constraints due to soil erosion and degradation seem especially severe in the arid and semiarid regions of sub-Saharan Africa. A slowing of agricultural productivity growth in robust resource areas could also lead to intensification or expansion of crop and animal production that would put pressure on soil in fragile resource areas — like tropical rain forests, arid and semiarid regions and high mountain areas. In some such areas, the possibility of sustainable growth in production can be enhanced by irrigation, terracing, careful soil management and changes in commodity mix and farming systems (Lal, 1995; Smil, 2000; Niemeijer and Mazzucato, 2000).
Water. During the last half-century, water has become a resource of high and increasing value in many countries. In the arid and semiarid areas of the world, water scarcity is becoming an increasingly serious constraint on growth of agricultural production (Seckler, Molden and Barker, 1999; Raskin et al., 1998: Gleick, 2000). During the last half-century, irrigated area in developing countries more than doubled, from less than 100 million hectares to more than 200 million hectares. About half of developing country grain production is grown on irrigated land. The International Water Management Institute had projected that by 2025, most regions or countries in a broad sweep from north China across east Asia to north Africa and northern sub-Saharan. Africa will experience either absolute or severe water scarcity.
Irrigation systems can be a double-edged answer to water scarcity, since they may have substantial spillover effects or externalities that affect agricultural production directly. Common problems of surface water irrigation systems include water logging and salinity resulting from excessive water use and poorly designed drainage systems (Murgai, Ali and Byerlee, 2001). In the Aral Sea basin in central Asia, the effects of excessive water withdrawal for cotton and rice production, combined with inadequate drainage facilities, has resulted in such extensive water logging and salinity, as well as contraction of the Aral Sea. that the economic viability of the entire region is threatened (Glazovsky, 1995). Another common externality results from the extraction of water from underground aquifers in excess of the rate at which the aquifers are naturally recharged, resulting in a falling groundwater level and rising pumping costs. In some countries, like Pakistan and India, these spillover effects have in some cases been sufficient to offset the contribution of expansion of irrigated area to agricultural production.
However, the lack of water resources is unlikely to become a severe constraint on global agricultural production in the next half-century. The scientific and technical efforts devoted to improvement in water productivity have been much more limited than efforts to enhance land productivity (Molden, Amarasinghe and Hussain, 2004), so significant productivity improvements in water use are surely possible. Institutional innovations will be required to create incentives to enhance water productivity (Saleth and Dinar, 2006). But in 50 to 60 of the world's most arid countries, plus major regions in several other countries, competition from household, industrial and environmental demands will reallocate water away from agricultural irrigation. In many of these countries, increases in water productivity and changes in farming systems will permit continued increases in agricultural production. In other countries, the reduction in irrigated area will cause a significant constraint on agricultural production. Since these countries are among the world's poorest, some will have great difficulty in meeting food security needs from either domestic production or food imports.
Pests. Pest control has become an increasingly serious constraint on agricultural production in spite of dramatic advances in pest control technology. In the United States, pesticides, have been the most rapidly growing input in agricultural production over the last half-century. Major pests include pathogens, insects and weeds. For much of the post-World War II era, pest control has meant application of chemicals. Pesticidal activity of Dichlorodiphenyl-trichloroethane (DDT) was discovered in the late 1930s. It was used in World War II to protect American troops against typhus and malaria. Early tests found DDT to be effective against almost all insect species and relatively harmless to humans, animals and plants. It was relatively inexpensive and effective at low application levels. Chemical companies rapidly introduced a series of other synthetic organic pesticides in the 1950s (Rutlan, 1982; Palladino, 1996). The initial effectiveness of DDT and other synthetic organic chemicals for crop and animal pest control after World War II led to the neglect of other pest control strategies.