The agricultural productivity gap: A global vision

ABSTRACT

Productivity in agriculture tends to grow slower than in other sectors. This is a stylized fact that has resulted in a persistent productivity gap, generalized over time and across countries. This paper explores the evolution of this gap from an international perspective, identifying patterns in both developed and developing countries. Empirical regularities are discussed in the light of a literature review on the causes of the gap and its socio-economic effects. Reflections on the nature of the productivity gap often merge with considerations on its social implications and on the policies that should be implemented to deal with it. We refer to this wider political economy issue as the ‘farm problem’, and argue that it has not been given a satisfactory solution, neither in rich nor in developing countries. Although in some industrialized countries the discharging of the countryside has acted as a major source of convergence, there has not been a general reduction in the productivity gap between agriculture and the rest of the economy worldwide, nor are there compelling reasons to assume that this will happen in the future.

KEYWORDS:

• Farm problem
• structural change
• agricultural policies
• agricultural gap

JEL CODES:

• N50
• O13
• Q18
• J43

Acknowledgments

We thank Professor Vicente Pinilla for his comments on a preliminary version of this paper. We are also very grateful to the anonymous reviewers of Economic History of Developing Regions, as their comments have greatly helped us to improve the paper. Of course, we are solely responsible for any errors or shortcomings it may contain.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 After two decades of absence from World Bank reports and studies, agriculture returned to the agenda of international organizations with the publication of the Agriculture for Development Report (World Bank 2008). Although agriculture was regarded as a way out of poverty in developing countries and ‘small farmers’ were devoted special attention, it has been argued that the report fails to escape the logics and expectations of modernization theory (Murray Li 2009; Oya 2009; Veltmeyer 2009).

2 According to Clark (1940), data was obtained by taking the figures of average income per head in primary production (measured in the currency of each country) and comparing them with the general average income per head. Clark (1940) also points out that this ‘can only act as a measure of the relative productivity of these industries in different countries so far as the terms of exchange between their products are the same in each country’ (Clark 1940, 342).

3 Koning (2002) argued that the rise in wages that accompanied the development of large industrial capitalism in the last decades of the nineteenth century squeezed agricultural profits and rents. While large farms could not defend themselves against the profit squeeze, family farms were ‘prepared to sacrifice income and sweat to preserve their holdings’ (Koning 2002, 26). Thus, family farms consolidated themselves as the most widespread production unit and large farms declined. It should be noted, however, that the evolution of farm structures has differed between countries depending on factors such the availability of cheap migrant labour (Koning 2017). Moreover, the overall rise of self-employed farmers should not be confounded with a growing autonomy of agricultural producers: the post-war decades were characterized by a growing dependence of family farms on government agencies and agro-industry (Koning 2017). In fact, the modernization of holdings of self-employed farmers (the so-called ‘rationalization’ of farms) came to involve ‘the displacement of small full-time farmers who lacked the resources for continuing to run on the technical treadmill’ (Koning 2017, 127).

4 The English translation comes from Perthel (1975).

5 See also Magnan (2012) and Bernstein (2016).

6 For instance, Bloom and Sachs (1998) argued that being located in the tropics leads to lower physical productivity in agriculture.

7 According to Friedmann (1993), this institutional framework was a defining feature of the so-called second food regime: a ‘rule-governed structure of production and consumption of food on a global-scale’ that originated with the signing of the GATT in 1947 (Friedmann 1993, 30). Although the height of the second food regime was roughly 1947 to 1973, it has frequently been argued that certain institutional elements of the regime have endured to this day (Pritchard 2009; Magnan 2012; González-Esteban 2018).

8 Of course, these demands will adapt to changing national circumstances and are likely to be embedded in broader discourses on sustainable development and other rural concerns (depopulation, unequal access to public services …): see Collantes and Pinilla (2011).

9 The sample incorporates both developed and developing countries. See Table A1 in the Appendix for detailed information on the countries included.

10 This is true despite the well-established fact that output per unit of land tends to be greater in small farms than in large farms. In this regard, see Berry and Cline (1979)

11 The term ‘Lewis’ refers to William Arthur Lewis. Much of this author’s notoriety is due to a 1954 paper in which he modelled structural change in a dual economy with unlimited supplies of labour (Lewis 1954).

12 One must be cautious in drawing conclusions from these trends, since they depend heavily on the starting point of LIR (i.e. in this study, its value in 1980). Figure 9 shows that there is a significant number of high-income countries that have entered a ‘farmer-excluding path’. Yet, this does not necessarily mean that farmers from these countries are relatively less productive than those from countries that have embarked into a ‘farmer-developing path’ or a ‘Lewis path’ over the last 35 years. It only means that the agricultural gap in those countries has increased over the studied period.

13 Although not explicitly stated, this idea also seems to underlie the World Bank Development Report (2008): for instance, see pages 38–39.

14 The empirical finding that the countries with the fewest farmers (in relative terms) are precisely those that protect them the most has been referred to as the ‘paradox of development’ (Swinnen 2018). There is a whole field of political-economy studies on this subject, carried out by political scientists such as Olson (1990) and Sheingate (2001), and by historians such as Knudsen (2009). A good summary can be found in Collantes (2020).

15 See Collantes (2020) for a recent assessment of the Common Agricultural Policy.

Additional information

Funding

This work was supported by the Spanish Ministry of Science and Innovation: [Grant Number PGC2018-095529-B-I00].