5 Consequences for Agricultural Development Theory

'Agriculture' is the cultivation of soil in order to produce food and raw materials useful for human beings.

This production takes place in technical-organizational units we call farms or agricultural holdings. Depending on natural and socioeconomic circumstances, we have a great variety of types of farms. But the most widespread one in the past and, so to speak, the prototype in 'agriculture' is the family farm. Characteristic of this family farm is that the family members use their labour capacity on the farm and live off the products of the farm. This family farm has proven a great ability to adjust to the changing relations between labour and land. Renting land or leasing it out, enlargement or reduction of livestock, intensification or extensiftcation of cropping are strategies of adjustment. Since ALBRECHT THAER, every student of agricultural economics learns that the highest profit is the goal of the farmer. This proves true for large farms but as well for family farms, only that here some other goals play a role, too, like self-sufficiency, risk aversion, etc.

If one remembers the different socioeconomic types of holdings mentioned above, then one must say that the notion of the farm, on which the cultivator's family applies its labour and lives off the farm product does not hold true as prototype of agriculture.

Rather, in most cases the farm family members work on a variety of jobs, whatever seems profitable to them, and the family lives on the total income from agricultural and non-agricultural sources. Chayanov in his theory of peasant economy was the first to emphasize this difference. From family to family (depending on age), from place to place (depending on economic location), from farm to farm (depending on size and productivity) and from time to time, the combination of incomes may vary widely. The smaller the farm, the larger usually is the share of non-agricultural income.

It appears that farm management went the wrong way or, at least, has generalized its results too much. Farm management originated and developed in north-western Europe and in the United States, i.e. in regions with relatively large farms and indeed these larger farms are technical-economic units, for whom socioeconomic aspects can be neglected. For the large number of small holdings in southern Europe, as well as in most of the Tnird' World, the situation is quite different. Here, the household is the centre, and the household members try by optimal input of available resources to assure their survival and to improve their livelihood.

This is possible in several ways, and most often by combining several forms:

  • by cultivation of the available land,
  • by labouring for other farmers,
  • by taking up non-agricultural work,
  • by assuming commercial activities,
  • by avoiding expenses through production and services within the household or on an exchange basis with the neighbours.

This combination can be achieved by one person or by generations living together and may change during lifetime.

It appears that households with sufficient land, good marketing facilities and irrigation try to compensate for the reduction in farm size due to the inheritance custom by intensifying agriculture.

If the farm size is too small, or soil quality, irrigation facilities and access to markets are bad, then using the manpower outside agriculture usually brings higher incomes, even if it takes some time and considerable expenses to find a job.

In time, this has consequences for the small holding. The owner family may

  • extensify in order to adjust to the reduced labour capacity,
  • rent out part of the land,
  • avoid investments as preparation for retiring later from cultivation,
  • change the cropping pattern with the goal of least labour input,
  • concentrate on crops with labour peaks for which relatives are called.

As a result of all these considerations. I suggest that a change in paradigma is necessary in order to make agricultural and rural development policy more effective.

The current general theory of agriculture assumes that a farm is cultivated by a family applying all of its labour on the farm and living off the proceeds of this farm. The goal of the farmer is a high net profit which will improve his living and that of his family. The smaller the farm is, the more other goals like self-sufficiency, risk aversion, etc. become important side-conditions.
This theory of agriculture is all right for larger and medium-size farms, and perhaps some highly intensive small farms near the cities and with good irrigation facilities. But remember: only 8% of all Pakistani farms are larger than 10 ha.

For the remaining 90% approximately, I suggest another theory, which explains their circumstances perhaps more closely.: Here we have a household, whose members, in order to assure their survival and improve their livelihood, use all the available resources - land and labour - wherever they get an optimum return. This may be in agriculture, or in non-agricultural activities, and may change in time. They select those fields, which give them the highest total income, for applying their efforts. I suggest that using these two theories of agriculture - whenever they apply - may lead to a better understanding of the reality in rural areas and, thus, to a more effective mix of policy measures. I mentioned already the consequences of this separation for politics. Forty years have changed agriculture in Pakistan and elsewhere considerably. We have to ask ourselves: What is agriculture today? Perhaps this paper gives some hints towards an answer.

The agrarian sector in Pakistan's development process
- Historial evidence and implications for policy and theory.
in: the Pakistan Development Review ; 28, H. 4, 1989,
S. 509-528.