Agricultural Development

I've never been that interested in agriculture in relation to development. But I started reading about the history of agricultural extension on Wikipedia and the World Bank's website--it's surprisingly interesting. The page introduces a framework toward the end that is useful for organizing thoughts about any kind of technology transfer/behavior change.

That said, I'm still skeptical of claims like this (quote from this paper):

The role of agriculture in sustainable development and poverty reduction for the vast majority of developing countries cannot be overemphasized. Forty-five percent of the developing world's population lives in households involved in agriculture, and twenty-seven percent in smallholder households, and most depend on agriculture for their livelihoods. The agricultural sector generates on average twenty-nine percent of gross domestic product (GDP), employs sixty-five percent of the labor force in agriculture-based countries ...

It seems obvious, right. Most poor people are farmers, so the key to reducing poverty is generating more income on farms. The problem with that reasoning is that assumption that people can't shift what kind of work they do. In fact, people can and are very rapidly moving from agriculture to manufacturing all over the world. Most of the poverty reduction world-wide can be attributed to growth in China and (without looking up he statistics) I'm fairly certain very little of China's growth has been driven by agriculture. The fact that "industrialized" and "developed" are nearly synonymous is telling.

Another problem is the potential for immizerating growth. Say farmers in Africa expand the supply of cotton dramatically. That supply shift should lower the price for cotton (e.g. harm Ghana and Togo's terms of trade). If the price effect is large enough it could wipe out most, all, or more than the gains from increasing quantity.

That said, agriculture is still crucial to improving people's quality of life. Millions of kids around the world are malnourished and a bumper crop can be used for, among other things, free school lunches. And for small-scale projects, you don't need to worry about general equilibrium effects, thus agricultural investment will often be a good candidate for a "project."

Update: Nature weighs in with an editorial. It's interesting that they think growth and trade won't solve most of the problem. By 2050 the average American family will have an income close to $100,000 and poor countries like China and Mexico should have incomes comparable to Europe today. Do they really think there will be that many poor people to feed? (And what, beyond supply and demand, caused the crisis in 2008?)