Presidential points

Customarily, the President of IAAE is supposed to set the tone of the conference through his maiden speech. The president usually is expected to summarise the events that shaped the sector over the years and provide his opinions in meeting the challenges. In the recently held conference that I am referring to, it was Dr Joachim von Braun, the German born ace economist in the arena of world agriculture and now the head of the International Food Policy Research Institute (IFPRI), who had to roll the ball first.

He picked up the topic: "Agricultural Economics and Distributional Effects", probably, to remind the researchers that "over the past seven decades, however, the representation of distributional effects at our conferences has been rather uneven and may be more a product of Zeitgeist than of the actual nature and scope of the issues." The raison detre for raising now the issue that was "out in the cold" could be gleaned from some of the shivering statistics that he drew upon to drive home the point. And allow me to submit some of those statistics and statements (at times paraphrased).

Trifling "trickle down"

It seems that the so-called "trickle down" effects -- a la Kuznet's curve -- could hardly have any ray of hope. After decades of economic growth in much of the world, the globe is alleged to have witnessed a dramatic splintering of income inequality both internationally and intra-nationally. Globally, the income of the world's richest 1 per cent of earners are equivalent to those of the poorest 57 per cent. The international inequality, which had remained rather stable with Gini coefficient at 0.46 between 1950 and 1985, has increased dramatically by 17 per cent to perk at 0.54 over the past decades. While the average income of the world was nine times the Sub-Sharan African average in the 1960s, disconcertingly the disparity doubled during the last decades. Growth thus appeared as a necessary but not sufficient condition to put poor people on an even keel.

Given these sordid statistics, the justification for a reexamination of the role of agriculture rests on the absence of appropriate policies, institutions and public investments and more importantly, on the heels of rapid global and regional changes in the characteristics of agriculture. The old agriculture has been giving way to the new.

New agriculture

The agriculture and food system is increasingly changing from a relatively large and distinct sector of the economy into a more pervasive, integrated system in which resource use and ecosystem functions are linked to consumers via extended food and service chains with multiple market and non-market institutions shaping the system. "Essentially, a development is underway from a linear relationship between farmers, markets, agro industry and consumers towards systems of interactions between and among these four, with policy making and institutional innovations cutting across the system in a more complex fashion. These developments proceed to a different extent and at different speeds in different parts of the world; and when technology and education investments are low, the transformation of agriculture proceeds slowly which is one reason for bifurcations."

Therefore, according to Joachim von Braun, we need not only to reexamine the role of agriculture but also at the same breath, reread economics of traditional and subsistence agriculture beyond the field level. In other words, agricultural economists should not delve into defining scope of works by a narrow statistical concept of agricultural sector production but should embrace the whole food and agricultural system.

Baneful bifurcations

At the moment, in the world at large, the number of people operating at a marginal level is reported to far outweigh the number at the dominant level. But the economic weight of the global agricultural systems depends more on the dominant minority. Ipso facto, agricultural economics may be driven unduly by economic weight rather than by relevant population shares. "The bulk of our profession's research efforts focus on the structures and actors in the dominant group (italics mine) -- the small subset made up of large farms, sustainable agro ecologies, users of advanced science, integrated markets, competitive industries and rich consumers -- and much less on the large subset made up of small farms, nonsuatainable agroecologies, users disconnected from science, fragmented markets, noncompetitive industries and poor consumers."

There is in evidence a hypothesis that access to land and natural resources is of decreasing importance for agricultural distribution effects due to growing technology and knowledge content of agricultural production process. However, the flipside of the hypothesis, suggests IAAE president, goes to reinforce the relevance of the access to such assets by the poor with little access to these technologies. The distribution of land still matters in a world where out of 460 million farmers, more than four-fifths farm smaller than two hectares of land and out of these small farms 90 per cent come from low income countries. Even places where land is not a major source of income, land reforms that provide at least homestead sites can be important for improving the security, status and bargaining power of the asset poor households.

But despite the empirical support to the contention of a positive land-income nexus, not much steps worthy of notes could be cited as land reforms continue to remain a function of the distribution of political power. However, notes Joachim von Braun, the institutions accompanying land and other resources seem to matter more for distribution outcomes than the mere distribution of the resources themselves. It seems that like growth, land reform could also emerge as a necessary but not sufficient condition for uplift of the poor.

Technological take-off

The introduction of new technology per se might not serve the purpose of the poor in terms of distribution. With the breakthroughs in information and communications technology and bio technology in the 1990s, the gap has widened again. The 'leapfrog'could not happen due to the digital divide. The president of the IAAE reminds us about the role of three 'c's in the case of ICTs' impact on the poor: connectivity, capability and content but admittedly connectivity matters the most for the poor given that it is a precondition for the others. Digital divide seems to be relatively pervasive in the poor developing countries. Whereas, empirical evidences suggest- for example in Bangladesh -- that the poor in rural areas tend to reap home better benefits from telephone that goes to lower transaction costs and enhances participation in land and labour market by at least 8 per cent.

Research for rich

No less important contribution to bifurcation, perhaps, comes from agricultural research investments. The benefits of agricultural research investment are large and undisputed, but their actual levels and distribution effects remain to be examined. There is an ever increasing gap between private and public research and between developing and developed countries. Developed countries spend about 47 per cent of the USD$22 billion spent globally on public agricultural research. In developing countries, only a few countries like Brazil, India, China dominate the scene. By and large, the growing private sector influence and the decline in the public sector research investments underscore the dramatic bifurcation in world agriculture. One of the challenges therefore is to identify the channels through which private sector researches could be transferred to the public sector.

Troubles with trade

Several sticky issues and adverse trends make it difficult for developing countries to capture benefits from agricultural trade including the failure of the industrialised countries to open up their markets for the developing countries. But the other side of the coin should not remain in the dark: developing countries themselves would benefit much from their own liberalization in the wake of high value added and processed food products growingly capturing the export list. The story of the agricultural trade and market policy vis-a- vis the distributional consequences is further foiled by increased demand for quality control and food safety standards. This constraints the access and thus increases the inequality. By and large, commercialisation and market integration of the millions of the small holder farms remains a central task in overcoming rural poverty and the bifurcations in agriculture.

Deadly dilemma

The IAAE president thus also brought to the fore the bifurcation in other aspects of agricultural issues: uses of water, preservation of environment and natural resources and others. He seems to foresee a huge dilemma -- the failure of the global integration of agriculture and related benefits for income distribution not marching up to the mark. The dilemma develops just on the eve of the 21st century that got off to a Millenium Development Goal of cutting undernutrition by half by 2015. According to him, the dilemma is getting deeper with agriculture gradually drifting into an ever more drastic bifurcation at a global level and within many countries.

However, solution is not out of sight. Correcting that bifurcation would require large investment in rural areas and rural people, in institutions and information and in biological technologies with the provisions of access by the small holder households. An underestimation of the societal risks of inaction would perpetuate inequality. Rural poverty until recently was little risks for world security but with virtually all the poor knowing the potential life styles elsewhere in the globe, relative deprivation becomes hard to be ignored anymore. The message seems to be that "urban-bias" policies of the past should be replaced by the "rural-bias" policies at present to contain any further deterioration in the distribution of income.

Clarion call

At the end, the president of the IAAE called upon his colleagues to rise with the tide of the time through common spirit of professional ethics and ambitions to contribute to people's well being with regard to agriculture, food and rural areas. "Agricultural economics is part of the solution, but may also be part of the problem our profession would merely observe and not sufficiently direct itself to research-based problem solving. We have a fair degree of freedom to make choices regarding our priorities in agricultural economics research. Creative choices remain essential for a sharp profile of our profession. This is even more important today than in the coming decades, as the profile of the agricultural sector becomes more and more diffused within the larger economy, as it grows more complex and bifurcated as discussed.... To day more than ever before, our research agendas are potentially more relevant for society, development, security and peace...a renewed focus on the distrbutional effects of agricultural policy is part of such services to society".

Abdul Bayes is Professor of Economics at Jahangirnagar University.