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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

University of Guelph: Agricultural Economics


AGEC 4210

An analysis of Rural Agriculture as a Poverty Alleviation


Strategy in Developing Countries

Student: James Mardall – 0285981

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

Poverty:

Measures of poverty around the world and especially in developing


countries traditionally use one measure, money, as a way to determine
what individual levels of poverty are. Local incomes are converted to a
commonly used international currency (usually the dollar) and this
becomes the basis for wealth comparison. However, it has become
widely accepted that monetary comparisons alone are a very poor
measure of poverty.

Amongst others, Amartya Sen’s “Entitlements and Livelihoods”


approach have led to attempts to measure poverty in ways that are
more insightful. The development of the HDI (Human Development
Index) by the UNDP (United Nations Development Program) (UNDP 1,
(2004)) is one example. However, when used at a country scale, the
HDI can disguise the fact that vast inequalities in entitlements and
livelihoods exist (as in the case of Chile, ranked 43rd out of 177
developing countries) (UNDP 2, (2004)). Subsequently, Chile is
considered by many in the development field to be a model of what
constitutes effective development.

This report does not seek to challenge measures of poverty, but rather
the notion that poverty alleviation measures and the development
business, inherently bias the development process. According to the
indigenous researcher, Linda Tuhiwai Smith, “Implicit in the notion of
development is the notion of progress… As societies develop they
become less primitive, more civilized, more rational, and their social
structures become more complex and beaurocratic” (Smith, L.T.
(1999). pp. 30). Taking cognizance of this bias can dramatically alter

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

the ways in which the development process plays out at the grass
roots level, namely the small-scale rural farmer in the developing
countries.

Recognizance:

To effectively assist the small-scale rural farmer, it is necessary that


the development field, honestly ask and answer, two very important
questions:

1. Does poverty implicitly mean that the poor are in fact poor and
does this affect the development objective?
2. Is development aid about assistance, or is it about business and
profit?

The reasons for asking these questions are quite simple, firstly, the
western development paradigm offers a starkly different world view
and organizes markets, economies, society, politics and spirituality
differently to the traditional indigenous development paradigm.
According to Smith, “Western philosophies (including economics) and
religions, place the individual as the basic building block of society.
The transition from feudal to capitalist modes of production simply
emphasized the role of the individual. Concepts of social development
were seen as the natural progression and replication of (Western)
human development.” (Smith, L.T. (1999). pp. 97)

This difference in development time scales and societal structures


creates the belief in the developed world that assistance is not only
urgent but also necessary. The truth for Smith is quite different

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

however, “… Indigenous peoples offer genuine alternatives to the


current dominant form of development. Indigenous peoples have
philosophies which connect humans to the environment and to each
other and which generate principles for living a life which is
sustainable, respectful and possible.” (Smith, L.T. (1999). pp. 105)

Accordingly, the epistemological connotation of poverty for individuals


from a western background, Automatically means that much of this
difference in culture and society translates into a belief that individuals
in developing countries are poor. In fact, the opposite may be quite
true, particularly if as suggested by Amartya Sen, attempts are made
to understand the entitlements, livelihoods and connections of
individuals and communities in developing countries. (Sen, A. (1985))

Thus, the answer to the first question would in effect shape the
development objective by using as a starting point an impoverished,
developed world perspective. This perspective would almost certainly
ignore the wealth of the indigenous perspective of the rural small-scale
farmer in a developing country. The danger of the developed world
development paradigm, is according to Amartya Sen quite dramatic,
“Instant Economics is highly deceptive and especially dangerous in this
field (the development field).” (Sen, A. (1985) pp. 240). In other
words, the need for speed is necessary in cases of famine, drought
and massive crop failure, but short-term solutions cannot be mistaken
for real long-term solutions.

Secondly, as in the Canadian International Development Agency


(CIDA) case, it is important to understand whether development aid is
about assistance, or about business and profit. For instance, does

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

CIDA espouse the following arguably somewhat altruistic core reasons


for offering aid to a developing country:

• “To help those in need:


Reflects values that all Canadians cherish: humanitarianism, social
justice, generosity, and peace.
• It’s in everyone's interest:
Problems of pollution, disease, and conflict do not respect national
borders. CIDA is working with Canadian partners, other countries,
and international organizations to meet the challenges we all share.
• To maintain a strong voice in international affairs:
The more actively we participate, the greater a voice we will have in
world affairs.
• We have a lot to gain from broadening our horizons:
Strong links with other countries enrich our culture, widen our
network of friends and professional contacts, and increase trade
and investment.

CIDA supports democratic development and economic liberalization: in


Eastern Europe and the former Soviet Union and supports international
efforts to reduce threats to international and Canadian security.” (CIDA
(3), (2004))

Or is the real reason for offering development aid, really just an


excuse to diversify and enrich the Canadian economy at the expense
of the developing countries resources, as in the following statement.

“CIDA works in partnership with all elements of Canadian society,


including the business community, non-governmental organizations

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

(NGOs), professional associations, co-operatives, educational


institutions and international agencies. Developing countries are also
essential partners. The benefits work both ways. Consider that:

• 70 cents of every official development assistance dollar is returned


to Canada through jobs and the purchase of our goods and
services.
• Our aid programs sustain the jobs of more than 30,000 Canadians.
• The 2,000 Canadian businesses receiving aid-related contracts are
making connections with some of the world's fastest-growing
markets.
• 50 Canadian universities and 60 colleges benefit from aid-related
contracts.

The return on investment, through the Industrial Cooperation Program


(managed by CIDA), is nearly 12 to 1 in the developing countries.”
(CIDA (1), (2004))

If for instance, development aid is about assistance. Then agencies


such as CIDA, should concentrate their efforts on altruistically
facilitating a developing countries own development needs and
requirements. In other words, direct assistance to those who are
considered to have the most needs, the small-scale rural farmer.
Assistance must be effected in a way that will improve the small scale
farmers access to entitlements and enhance their overall livelihoods.
In this case, CIDA must not bias the focus of their aid in a way that
concentrates 70% of the aid, on what is effectively mostly a
contribution toward developing Canada’s domestic economy.

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

If however, development aid is about business, then CIDA should


focus on facilitating and strengthening linkages between developed
and developing countries. This should be effected, as in the case of the
Chile – Canada, Bilateral and Multilateral agreements, the Vietnam –
Canada, Bilateral projects and the India – Canada, bilateral projects.
(CIDA (4), (2004))

Thus, the answer to this second question will directly impact on the
level and point of access between a developed country aid agency and
individuals in a developing country.

Assistance:

If the answer is assistance, then why not let small scale farmers in
developing countries establish their own domestic regional pareto
efficient agricultural product solutions. In other words stimulate the
production of agricultural products that are traditionally grown, for
example Cassava in Nigeria.

The contention should be that Agriculture can prevent wholesale rural


urban migration through provision of viable and diverse rural economic
markets that must be based on an agricultural foundation. This will
enable individuals that cannot access the labour market in urban areas
to avoid the urban poverty trap.

Subsequently there would be a natural product diversity which would


diversify the market for small-scale farmers naturally. This would
stimulate regional trade and keep agricultural product prices higher
than they would be if one homogenous product were produced in

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

surplus, which would stimulate a lack of demand and force prices


down.

The solution is not to view the developing countries as food poor and
on the edge of starvation, but agriculturally diverse and rich in market
diversity. According to Sen, just growing food is not enough, rural poor
also need to diversify out of the food sector and into the non food
sector for instance a local agro industrial or market sector to
guarantee a permanent source of income in order to purchase food in
times of food crises (Sen, A. (1985)). Otherwise development
assistance runs the risk of continually trying to avert a food crisis
which has to be met with a bulk supply of one homogenous staple
such as maize or wheat.

Business:

If the answer is business, then solutions to accelerate agricultural


sector growth and provide employment should take the form of
business partnerships that:-
• Increase Agricultural productivity using low cost (initial purchase
and running costs) technological enhancement.
• Stimulate agricultural Product and Market Diversity in rural areas
(i.e. Agro Industry based in rural locations)
• Avoids the food trap – if growing food is the only source of income
and there is market failure then the food grower will not be able to
sell their crop to purchase other foodstuffs.
• Encourage competition, in order to keep food prices low for those
not producing their own food and instead selling their labour to
industry.

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

• Provide institutional support, applied in a fair and judicious way, to


facilitate and strengthen domestic and international linkages for
rural agricultural products.

Assistance and Business:

If however the answer is to both assist and do business, then


development agencies must recognize the fact that their efforts will
result in dual economy effects. According to the development specialist
John Mellor, “Compared with the immense gains in our understanding
of the agricultural development process per se, the relationships
between agriculture and the rest of a developing economy remain less
fully explored... The empirical data underlying the relationships
asserted are much less complete than is the case with the
microeconomics of agriculture and hence the policies implied remain
more speculative.” (Mellor, J.W. (1986). pp.143)

Dualism comes close to attempting to address the fact that in many


developing countries it is postulated that there are dual economies, a
formal (developed) economy and an informal (developing, semi
subsistence) economy. The South African government led by Thabo
Mbeki (The President and an Economist) attempted to formalize this
notion during the 2003 state of the nation address and was widely
criticized by local economists for doing so (Henson, S. (2004)). But,
the recognition that this is a natural response by the local market to
supply a need is not that difficult an economic concept to recognize.
This is an attempt at self-development and by supporting the informal
economy without attempting to formalize and integrate it prematurely,
it offers a real alternative to instituted top down development.

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

Failures in agricultural development for rural small-scale farmers can


be attributed to a dualism in investment. Investments in social,
infrastructural and capital requirements for the most part are directed
at large scale capital-intensive production with low labour
requirements.

For agriculture in developing countries, this means that large-scale


farms and the agro industries and markets that they supply and
demand from, receive the direct benefits of investment. Whereas the
small scale rural farmer is left with very few linkages to the benefits of
investment, the market or the agro industries. In the case of
Zimbabwe and cotton production before the current crisis sparked off
by Robert Mugabe. These dualism linkages however small were
benefiting the small scale rural farmer by reducing the cost of inputs
and increasing access to markets which had developed to support the
large scale farms.

By the same token, small scale rural farmers in Chile and Vietnam are
able to take advantage of the market infrastructure developing around
the large scale agricultural producers. These dualist linkages represent
real and tangible strengths to the development of rural small-scale
agricultural producers. Rural small-scale producers should be
encouraged to produce specialty crops that offer high returns to labour
and are not economically viable for large-scale producers (such as
organically produced local specialty crops).

This would explain the nature of the changing strategies offered by the
development agencies over time. Is it possible that these changing

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

strategies are in and of themselves a reason for the lack of efficacy in


some developing countries? These effects are evident in those
countries that have turbulent and rapidly changing social and political
histories. The rapid and continuous changes in policies have had a
detrimental impact on rural economies in the past. The effects of these
vacillating policies can clearly be seen in the economic process of both
Chile and Nigeria during their periods of regime change.

Those countries that were able to apply an effective and sustained


strategy over time were able to produce real economic growth, as in
the case of Chile in the post Pinochet era and modern day Vietnam.
This would suggest that development strategies should not only
effectively target the issues of rural small-scale agricultural
development, but also apply a cohesive assistance and business
strategy on a sustained and long-term basis.

Agriculture and Industrialization:

There is no doubt that agriculture is an important contributor to the


livelihoods of the rural small-scale producer. Most development
specialists and agencies would agree with the following statement by
John Mellor, “Clearly, an agricultural emphasis strikes at one of the
root causes of poverty: inadequate food supplies.” (Mellor, JW. (1986)
pp.138)

The difficulty seems to be in attempting to unnaturally accelerate


agricultural development in developing countries. In order to achieve
what the economist Walt Rostow would call the boundary between the
“Transitional Stage” and “Take –Off”. (Henson, S. (2004), Tutor2u,

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

(2003)). Part of the reason for this as described by Mellor, is that


growth rates attributable to agricultural production alone are not
substantially high, 4-5% growth in the agricultural sector is considered
extremely high (Mellor, JW. (1986)).

However, the agricultural sector alone is limited in terms of the


employment it can provide and usually this extends to rural population
numbers and their growth exclusively. But by linking this to rural non-
farm employment and agro-industry, countries like Chile and Vietnam
have been able to develop strong agro linked industries (i.e. Stone
fruit, Salmon and Shrimp Fisheries, value adding and exports).

The benefits of agriculturally linked agro-industrial growth are


immense according to Mellor, “Accelerated agricultural growth also
provides a substantial direct increase in employment …(and)… spreads
economic activity beyond the megalopolis.” (Mellor, JW. (1986)
pp.138). Thus, the push pull effects that cause the rural small scale
farmer to migrate to urban slums in order to seek employment are
negated and development becomes a national imperative.

Trade:

Lastly, whether the development goals are to assist or to enable


business linkages, international trade is essential for developing
countries (as can be seen by the Canadian free trade agreement with
Chile). Trade must not be restricted through the unfair application of
protectionist strategies, but must be carefully controlled to protect the
developing country.

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

For instance, exports of surplus foodstuffs to a developing country


under the guise of aid, without attempting to integrate this surplus
into the small scale rural farm economy, can have the consequence
that it suppresses local agricultural product prices by reducing the cost
of food to levels that local producers cannot match.

Whereas those developing countries that are agriculturally self


sufficient such as Vietnam, Chile and Thailand were better able to
utilize international trade to their benefit. By operating positive
balances of trade and not having to ‘waste’ foreign exchange on
foodstuffs, these countries were able to invest in imported capital
equipment. This equipment was used to develop domestic agro
industry and industry in general that further improved and increased
the country’s ability to grow its own agricultural sector.

This benefits the small farmer in a rural area by creating stronger


domestic infrastructure and linkages to the dualist economy. At the
same time, members of the family are able to offer their labour to the
agro industrial sector in the rural areas and thereby diversify their
family livelihood strategies.

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An analysis of Rural Agriculture as a Poverty Alleviation Strategy in Developing Countries

Conclusion:

The answer to the statement, ‘The only way out of poverty for the
rural poor in developing countries is to get out of agriculture’. Is that
wholly abandoning agriculture is neither an economically nor a
developmentally viable option for the rural small-scale agriculturalist in
a developing country. Not only is agriculture a viable source of income
and an important source of nutrition in a diversified rural livelihood, as
Sen suggests, it is also an entitlement.

At the same time, agriculture is an important and integral sector of the


economy of any country, whether developed or developing. Agriculture
provides an important foundation for the industrial and service sectors,
which do not have the capacity to absorb the entire labour supply of
many developing countries. And if provided with the right linkages and
infrastructure, can provide a valuable source of foreign export earnings
for a developing country.

By recognizing and building on the strengths and linkages of the dual


economy, development agencies will avoid the trap of perceiving
developing countries as poor. Furthermore, by building on these
strengths with a consistent and sustained long-term focus,
development agencies will avoid the negative consequences of
vacillating policies. CIDA’s policy toward agriculture in developing
countries should therefore be, to promote long term agricultural sector
linkages with and between the developing countries and Canada in a
fair and equitable manner, that is respectful of an individual small
scale rural farmers access to entitlements and livelihood diversity.

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References:

CIDA (1), (2004), Canadian International Development Agency, What


we do, Our Partners in Development, http://www.acdi-cida.gc.ca/partnr-
e.htm, Site Accessed November 2004.

CIDA (2), (2003), Canadian International Development Agency,


Promoting Sustainable Rural Development through
Agriculture,http://www.acdicida.gc.ca/cida_ind.nsf/vall/ECE27220C9FA44AF8
5256C4D006A0B4D?OpenDocument, Site Accessed November 2004.

CIDA (3), (2004), Canadian International Development Agency, What


we do, What is International Development?,
http://www.acdicida.gc.ca/cida_ind.nsf/vall/ECE27220C9FA44AF85256C4D00
6A0B4D?OpenDocument, Site Accessed November 2004.

CIDA (4), (2004), Canadian International Development Agency,


Regions and Countries,
http://www.acdi-cida.gc.ca/cidaweb/webcountry.nsf/index.html, Site
Accessed November 2004.

Henson, S. (2004), AGEC 4210, World Agriculture and Economic


Development Course, Fall Semester 2004, University of Guelph.

Mellor, J.W. (1986), Agriculture on the Road to Industrialisation.


Chapter 8 in Eicher, CK. and Staatz, JM. (1998), International Agricultural
Development, Third Edition, The Johns Hopkins University Press, pp. 136-154.

Sen, A. (1985), Food, Economics and Entitlements. Chapter 15 in


Eicher, CK. and Staatz, JM. (1998), International Agricultural Development,
Third Edition, The Johns Hopkins University Press, pp. 240-256.

Smith, L.T. (1999), Decolonising Methodologies: Research and


Indigenous Peoples, University of Otago Press, Zed Books Ltd.

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Timmer, P.C. (1988), The Agricultural Transformation, Chapter 7 in


Eicher, CK. and Staatz, JM. (1998), International Agricultural Development,
Third Edition, The Johns Hopkins University Press, pp. 113-135.

Tutor2u, (2003), Development Models – Rostow,


http://www.tutor2u.net/economics/content/topics/development/development
_models_rostow.htm, Site Accessed November 2004.

UNDP 1, (2004), United Nations Development Program, Human


Development Reports, http://hdr.undp.org/, Site Accessed November 2004.

UNDP 2, (2004), United Nations Development Program, Human


Development Reports, Indicators, Chile,
http://hdr.undp.org/statistics/data/cty/cty_f_CHL.html, Site Accessed
November 2004.

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