Agricultural Research, Innovation, Productivity, and Poverty

Transcription

1 Agricultural Research, Innovation, Productivity, and Poverty Julian M. Alston University of California, Davis OECD Global Forum on Agriculture November 2010 University of California Agricultural Issues Center Department of Agricultural and Resource Economics

2 M Rupees or 100,000 Yuan Impact of Agricultural R&D on Poverty Reduction Number of Persons Removed from Poverty for a Given Public Investment Effect of a 1% Increase in Yields on the Number of People Living on Less than $1 per Day India China Region Percentage in $1 per day poverty Reduction in number in $1 per day poverty (millions) R&D cost per person removed from poverty East Asia $ Ag R&D Roads Education Irrigation Rural Dev South Asia $179 Sub-Saharan Africa $144 Source: D. Byerlee and G. Alex (2002). Designing Investments in Agricultural R&F for Enhanced Poverty Impacts. World Bank Paper. Estimates taken from Fan, Zhang, and Zhang (2000) and Fan, Hazell, and Thorat (1999). Latin America $11,397 Total N/A Source: C. Thirtle, L. Lin and J. Piesse (2003). The Impact of Agricultural Productivity Growth on Poverty Reduction in Africa, Asia and Latin America. World Development.

3 Agricultural R&D as an Instrument of Social Policy The primary economic rationale for government involvement in agricultural R&D is market failure leading to underinvestment (in the sense that MSB >> MSC ) Very high marginal social returns to public and private agricultural R&D indicate persistent underinvestment (in spite of government intervention) BCRs in the range of 20:1 and higher; IRRs in the range of percent real Many propose to shift (or have shifted) priorities for agricultural R&D away from on-farm productivity enhancement to pursue other objectives public health (obesity) environmental sustainability (biofuels) income distribution (poverty reduction) Implicitly assumes agricultural productivity is no longer an issue Policy issues relate to the terms of the trade-offs and the comparative advantage of agricultural science policy as an instrument for pursuing these other objectives What types of agricultural R&D will have the greatest impacts on poverty reduction What is the opportunity cost of R&D projects that emphasize poverty impacts?

4 Direct and Indirect Effects of Innovation on Poverty... a naïve targeting of research resources on poor producers based only on direct benefits may produce quite misleading results on overall poverty alleviation effects. Byerlee (2000) Food Policy, p. 442 frequency poverty line Direct Effects benefits to poor farmers who adopt Indirect Effects: (a) Induced Output Price Changes benefits to consumers reduced benefits to farmers who adopt cost to farmers who do not adopt net benefits to farmer household depend on whether they adopt and whether the household is a net surplus or deficit producer Indirect Effects: (b) Employment and Wage Effects in agriculture in other sectors 0 (a) (b) annual income As the world population is becoming increasingly urbanized, the role of technological change in reducing aggregate poverty correspondingly evolves from direct to indirect effects. De Janvry and Sadoulet (2002) J. Dev. Stud., p the relative role of the direct and indirect effects of technological change in reducing poverty depends on the nature of technological change, the structure of poverty, the structure of the economy, and the policy-institutional context in which it is released.... Direct effects are important in reducing poverty in an economy that is as agrarian and rural as the African, but they are less so in Asia which has a large class of rural landless households and even less in Latin America where even the rural poor have highly diversified sources of income.... De Janvry and Sadoulet (2002) J. Dev. Stud., p. 21

5 Real U.S. Commodity Prices, (Deflator = CPI-U ) Index = 100 in 1924 Growth Rates, Percent per Year Rice Soy Wheat Maize Period Commodity Maize Wheat Rice Soybean percent decline since mid 1970s! What will commodity prices do over the next 40 years? A return to the rapid real declines of the 1970s and 1980s? A continuation of the recent pattern? 0 What are the key determinants? Alston, Beddow, and Pardey (2009). Mendel versus Malthus: Research, Productivity and Food Prices in the Long Run

6 Causes of Falling Prices Demand has grown, largely reflecting Increases in global population 1.65 billion in billion in billion in 2008 Increases in per capita income, global average (2005 prices) $1,958 in 1913 $5,321 in 1973 $9,062 in 2006 BUT supply has grown even faster reflecting Increases in land used for agriculture Increases in use of fertilizers and other modern inputs Reduced use of labor in agriculture in most places Increases in productivity from adoption of new technologies (and related adjustments) made possible by public and private investments in R&D

7 Value in 2007 of Agricultural Productivity Growth, Region or Country TFP in 2007 (TFP =100 in 1960) Agriculture, value added in 2007 (billion $) Total value in 2007 of TFP growth (billion $) Population (billion) Value of TFP growth per capita ($/capita) GDP ($/capita) World 159 1, ,994 South Asia LAC ,772 SSA China ,864 India Brazil ,291 United States ,072

8 A Slowdown in Agricultural Productivity Growth? Global Crop Yield Growth Rates, Maize Wheat Rice Group (percent per year) World Agricultural Land Productivity Growth Rates, Group Growth Rate (percent per year) World excl. China excl. China & USSR High Income Latin America Middle Income Low Income Asia excl. China China Africa Source: Alston, Beddow, and Pardey (2009) Mendel versus Malthus: Research, Productivity and Food Prices in the Long Run What about TFP???? A significant slowdown in many countries

9 percentage percent per year percentage Growth in Public Food and Agricultural Research Expenditures Food and Agricultural Research Intensity Ratios Panel a: Public Low and middle income countries High income countries 0.0 Low and middle income SSA High income Panel b: Public and Private s 1980s 1990s 2000s Low and middle income countries Source: Pardey, P.G. and J.M. Alston. U.S. Agricultural Research in a Global Food Security Setting. High income countries

10 A Trade-off of Equity and Efficiency Equity (V) IC 1 V** V max a d V* b BTC* IC 0 BTC R V min c 0 E min E* E** E max Efficiency (E)

11 Main Points Agricultural R&D has paid handsome dividends Favorable BCRs Increased availability of food and much lower prices Important engine for poverty reduction and growth Current concerns Slowdown in spending, especially in high-income countries Diversion of funds away from farm productivity enhancement Slowdown in agricultural productivity growth in many places Targeted research? (e.g., resource poor farmers on marginal lands) Will targeted research be effective? Will it yield (much) smaller total benefits? Will it yield larger or smaller impacts on poverty reduction? Is it the least-cost way of achieving the income distribution goal? Doing good by doing well?

12 Selected Sources Alston, J.M., M.A. Andersen, J.S. James, and P.G. Pardey. Persistence Pays: U.S. Agricultural Productivity Growth and the Benefits from Public R&D Spending. New York: Springer, January Alston, J.M., BA. Babcock and P.G. Pardey. The Shifting Patterns of Agricultural Production and Productivity Worldwide, CARD, Iowa State University, MATRIC e- book, April Byerlee, D. Targeting Poverty Alleviation in Priority Setting for Agricultural Research. Food Policy 25(2000): De Janvry, A. and E. Sadoulet. World Poverty and the Role of Agricultural Technology: Direct and Indirect Effects. The Journal of Development Studies 38(2002): Pardey, P.G. and J.M. Alston. U.S. Agricultural Research in a Global Food Security Setting. A Report of the CSIS Task Force on Food Security. Washington D.C.: Center for Strategic International Studies, January Scobie, G.M. and R. Posada T. The Impact of Technological Change on Income Distribution: The Case of Rice in Colombia. Amer. J. Agr. Econ. 60(1978):

13 Merci!