Wages,Prices and Agriculture: How Can Indian Agriculture Cope with Rising Wages?

Rapid economic growth in India has resulted in rapidly rising rural wages. Using the framework of variable profit functions and household level data, we study econometrically the wage impacts on crop agriculture. Rising wages are associated with decreasing crop output, other things being equal. Crop prices would need to increase by 80% in the short run to offset the effect of an agricultural wage increase, or by 140% in the short run to offset rural non‐farm wage increases as well. However, because non‐land farm assets respond positively to the non‐farm wage, in the medium term this increase is reduced to 74%. During the period of 1999/00‐2007/08, growth in non‐land farm assets, the labour force, education and technology has easily compensated for the wage increase, and probably also for the accelerating wage growth. Focusing on growing these shifter variables is a much better policy option than raising prices that would come at the expense of consumers or taxpayers.     

Labour Migration and Gendered Agricultural Relations: The Feminization of Agriculture in the Ejidal Sector of Calakmul,Mexico

We examine the nature of the ‘feminization of agriculture’ in the semi‐subsistence, peasant production sector of southeastern Mexico, as associated with male labour out‐migration. Presenting findings from empirical work with smallholder producers, we discuss the impact of men's migration to the United States on women's participation in agriculture and gendered relations of agricultural production. In 2007, we conducted a survey of 155 semi‐subsistence, smallholder households in six ejidos. This survey was supplemented by ethnographic research in a single ejido. Our findings demonstrate the need to distinguish between farm labour and management in this sector, and the potentially significant (but focused) changes in the local relations of agricultural production wrought by gendered patterns of labour migration – specifically in tenure, land‐use decision‐making and the management of hired labour.     

Are There Glass-Ceiling and Sticky-Floor Effects in India? An Empirical Examination

In this paper, the gender-related wage differentials in the rural and urban sectors of the Indian economy are analysed. The hypotheses that there is a glass-ceiling effect—a greater wage gap at the top end of the wage-distribution range—and a sticky-floor effect—a wider wage gap at the bottom are examined. Findings show evidence of the glass-ceiling effect in the rural sector and evidence of the sticky-floor effect in the urban sector. Using a counterfactual decomposition method, the raw wage gap is decomposed to identify the contributions of characteristics and coefficients. The results reveal the presence of labour–market discrimination against women. Furthermore, women at the lower end of the wage-distribution spectrum face more discrimination than those at the higher end of the range.     

Demand for Seasonal Wage Labour in Agriculture: What Does Family Farming Hide?

This article draws on the agricultural household literature to understand the dynamics of wage labour on farms in a context of family farming. The recent evolution towards an increased use of seasonal wage labour motivates the original distinction of three types of labour: family labour, permanent‐wage labour and seasonal‐wage labour. Considering the two wage labour types and hiring cost for seasonal workers, our empirical results based on 2000 French data on fruit and vegetable farms suggest that the choice between hiring permanent or seasonal wage labour is not only determined by the seasonality of the activity. Indeed, the characteristics of the local labour market also affect the trade‐off between permanent and seasonal wage labour. This result provides insights on the substitutability of the two labour types, especially when the local labour market is tight. Moreover, the substitution of seasonal‐wage labour for permanent‐wage labour can occur in the agricultural sector as a mean of increasing flexibility as well as reducing costs and commitments. Finally, family labour is found to substitute for wage labour and more specifically for seasonal‐wage labour.     

Subsistence Agriculture in Transition Economies: Its Roles and Determinants

This paper discusses some beneficial effects of subsistence agriculture with emphasis on transition countries. Micro‐economic models of subsistence agriculture are reviewed and a two‐stage decision model, combining risk aversion and transaction costs explanations for subsistence is developed. The role of subsistence agriculture is addressed in a static comparison to a purely commercial agriculture. We argue that subsistence can play a stabilising role and have beneficial impacts on the agricultural sector when the resources it employs are unwanted by the commercial sector. The exact conditions under which the latter is true are analysed in a static general equilibrium framework. Employing the concept of the subsistence level of consumption, the paper demonstrates that these static effects can be valid in a dynamic perspective, provided additional conditions are met. Policy recommendations with regard to agricultural commercialisation are presented. These explicitly rely upon assumptions about the orientation of subsistence farmers. The lack of current research into this important behavioural feature of farmers in transition countries requires urgent action. There is urgent need for more research into the motivation, objectives and behaviour of subsistence farmers in rural economies of countries in transition.     

Poverty decline, agricultural wages, and nonfarm employment in rural India: 1983–2004

We analyze five rounds of National Sample Survey data covering 1983, 1987/1988, 1993/1994, 1999/2000, and 2004/2005 to explore the relationship between rural diversification and poverty. Poverty in rural India has declined at a modest rate during this time period. We provide region-level estimates that illustrate considerable geographic heterogeneity in this progress. Poverty estimates correlate well with region-level NSS data on changes in agricultural wage rates. Agricultural labor remains the preserve of the uneducated and also to a large extent of the scheduled castes and scheduled tribes. We show that while agricultural labor grew as a share of total economic activity over the first four rounds, it had fallen back to the levels observed at the beginning of our survey period by 2004. This all-India trajectory also masks widely varying trends across states. During this period, the rural nonfarm sector has grown modestly, mainly between the last two survey rounds. Regular nonfarm employment remains largely associated with education levels and social status that are rare among the poor. However, casual labor and self-employment in the nonfarm sector reveals greater involvement by disadvantaged groups in 2004 than in the preceding rounds. The implication of this for poverty is not immediately clear—the poor may be pushed into low-return casual nonfarm activities due to lack of opportunities in the agricultural sector rather than being pulled by high returns offered by the nonfarm sector. Econometric estimates reveal that expansion of the nonfarm sector is associated with falling poverty via two routes: a direct impact on poverty that is likely due to a pro-poor marginal incidence of nonfarm employment expansion; and an indirect impact attributable to the positive effect of nonfarm employment growth on agricultural wages. The analysis also confirms the important contribution to rural poverty reduction from agricultural productivity, availability of land, and consumption levels in proximate urban areas.     

Diversification economies and specialisation efficiencies in a mixed food and coffee smallholder farming system in Papua New Guinea

Smallholder farming systems in Papua New Guinea are characterised by an integrated set of cash cropping and subsistence food cropping activities. In the Highlands provinces, the subsistence food crop sub-system is dominated by sweet potato production. Coffee dominates the cash cropping sub-system, but a limited number of food crops are also grown for cash sale. The dynamics between sub-systems can influence the scope for complementarity between, and technical efficiency of, their operations, especially in light of the seasonality of demand for household labour and management inputs within the farming system. A crucial element of these dynamic processes is diversification into commercial agricultural production, which can influence factor productivity and the efficiency of crop production where smallholders maintain a strong production base in subsistence foods.
In this study we use survey data from households engaged in coffee and food crop production in the Benabena district of Eastern Highlands Province to derive technical efficiency indices for each household over two years. A stochastic input distance function approach is used to establish whether diversification economies exist and whether specialisation in coffee, subsistence food or cash food production significantly influences technical efficiency on the sampled smallholdings.
Diversification economies are weakly evident between subsistence food production and both coffee and cash food production, but diseconomies of diversification are discerned between coffee and cash food production. A number of factors are tested for their effects on technical efficiency. Significant technical efficiency gains are made from diversification among broad cropping enterprises.     

Causes of Changes in Agricultural Employment in Slovenia: Evidence from Micro‐data

This paper analyses labour adjustment in and out of agriculture during transition to a market economy. A multinomial logit model is used to determine the factors that affect these processes. The results show that elderly, less educated and full‐time employees on a farm are more likely to continue with farming. Inflow of labour into agriculture is largely associated with the unemployment and retirement of farm household members. Age, education and investment in human capital are the key factors that improve the quality, mobility and flexibility of labour, which is crucial for efficient labour adjustment at the micro‐level and sector level. Better‐educated individuals are more likely to enter into employment in non‐agricultural, particularly service, activities.     

Planning for Agricultural Change and Economic Transformation in Tanzania?

Recently, Tanzania witnessed a revival of economic planning that explicitly aimed to combine rapid economic growth with accelerated structural transformation of the economy. To achieve these planning targets would require a relatively modest drop in the share of agriculture in GDP, but a dramatic fall in its share in employment by 2025. Tanzanian planners assume that labour is locked in agriculture because agricultural productivity is low, from which they conclude that, to release labour to fuel the expansion of manufacturing, it is imperative to raise agricultural productivity by appropriate land policies, leveraging private investment and developing public–private partnerships. We argue that, analytically, this planning argument leaves out the possibility that causality may run the other way – from high labour retention in agriculture to low agricultural productivity – and that, empirically, the observed patterns inherent in actual processes of economic transformation in Tanzania do not tally well with the assumptions of planners. More specifically, in so far as labour flows out of agriculture, it flows towards informal‐sector activities, both rural and urban, rather than towards formal manufacturing.     

Trends in Agricultural Incomes: An Analysis at the Select Crop and State Levels in India

India's agricultural sector is at a crossroads, facing challenges of stagnation in crop yields, non‐remunerative prices, falling crop incomes and tardy responses from public service systems. There are reports of peasant suicides due to non‐profitability of farming. However, scant empirical evidence is available on changes in real income and wages in the Indian agricultural sector. The present study uses data from the National Accounts Statistics and Cost of Cultivation Surveys to analyse the changes in real income and discusses the underlying reasons. The study reveals that the purchasing power of farmers has remained low and has worsened over recent years. The value of crop output has increased, but a disproportionate rise in input costs has resulted in a fall in crop incomes in several states, with the agriculturally developed Punjab being an exception. Interestingly, real wage rates for agricultural labour have shown an increasing trend, indicating improvement in the welfare of labour.     

产业聚集和村镇居民点聚集与土地集约利用--以江苏省南通市为例

经济发达地区用地需求与土地供给之间的矛盾日益尖锐,因此必须深入研究在工业化、城镇化过程中如何有效地集约利用数量有限的土地资源。城镇化的实质是劳动力流、资本流、信息流、就业流和资源流等从农业向非农产业、从农村向城镇的转移。南通市的实践表明,产业聚集和村镇居民点聚集不仅有利于推动城镇化进程,而且通过提高土地集约利用水平,可为缓解用地矛盾找到一个突破口。     

Semi‐Subsistence Farming: An Elusive Concept Posing Thorny Policy Questions

The massive expansion of semi‐subsistence farming in the European Union after the Eastern enlargements poses a real challenge to rural development. The problems of semi‐subsistence farms are low cash incomes and incidence of poverty, sub‐optimal use of land and labour, a lack of capital and poor contribution to rural growth. However, they play an important welfare function in some rural areas in Europe; they manage more than 11 million ha of agricultural land and deliver ecosystem services. The Common Agricultural Policy will have to accommodate this now widespread production system, through existing or new policy packages. Particularly important is support for commercialisation to incentivise and smooth the transition to commercial agriculture, and agri‐environmental payments to compensate the semi‐subsistence farmers for the provision of ecosystem services.     

Government Expenditures,Health Outcomes and Marginal Productivity of Agricultural Inputs: The Case of Tanzania

This paper examines the impact of health expenditures on agricultural labour productivity in order to inform the necessary policy decisions about targeting scarce public resources towards their most effective uses. We link health sector expenditures in rural Tanzania to health outcomes and agricultural labour productivity using data from the 2008 Household Budget Survey (10,975 households) and the 2007/08 Agricultural Census (52,594 households) across 113 districts in Tanzania. The results indicate that the marginal productivity of labour as well as land and fertilisers respond significantly to health expenditures. However, the magnitude of the response varies across types of disease, categories of expenditures and agricultural inputs. These findings suggest both the need and scope for targeting public expenditures in the health sector to achieve better agricultural growth outcomes.     

Off‐farm labor market decisions and agricultural shocks among rural households in Kenya

Using household level data from rural Kenya, this article explores whether and how farm households respond to unfavorable agricultural production environments, including any ex post adjustments in off‐farm labor supply in response to unexpected weather shocks. While controlling for a wide range of educational, demographic, and other locational factors, we examine how long‐term weather conditions and specific rainfall shocks influence a household's decision to engage in, and their earnings from, the off‐farm labor market. We find that rural households engage in off‐farm work as a long‐term strategy to deal with the effects of anticipated weather conditions on their farming operations. The analysis does not reveal major short‐term adjustments in off‐farm engagement as a result of specific, unexpected rainfall shocks; these households do however rely on remittance income and petty agricultural wage labor under these circumstances. Holding other factors constant, and conditional on participation, households in areas with a more productive local agriculture tend to earn more from off‐farm work especially in the informal/business sector than their counterparts in regions with a less productive agriculture. As expected, a vibrant local economy in the form of public investment increases the probability of off‐farm participation.     

Chile's Neoliberal Agrarian Transformation and the Peasantry

In the mid–1970s, following the early shift to neoliberalism, the Chilean rural sector was restructured dramatically, becoming one of the most successful cases of non–traditional agricultural export (NTAE) growth. However, many analysts fail to discuss the problematic nature of Chile’s integration into the global market. Underpinning this rapid growth of NTAEs is the exploitation of cheap peasant labour, especially seasonal female wage workers. This article examines the elements of continuity and change in agrarian policy since the transition to democracy in 1990. In particular, it presents the policy debate on the future of the peasantry: capitalization or proletarianization? The dilemma that policy makers face over maintaining high rates of NTAE growth while at the same time attempting to reduce poverty and income inequalities are also highlighted. The Chilean case can be considered as paradigmatic insofar as it exhibits key characteristics of the classical capitalist transformation of agriculture: the emergence of a new class of dynamic agricultural entrepreneurs, renewed proletarianization and land concentration, and intensification of social differentiation.     

Structure of Public Support for National Agricultural Research Systems: A Political Economy Perspective

This paper initiates development of a set of stylized facts concerning the structure of public support for national agricultural research systems (NARS) within a neoclassical political economy framework. The aim is to place public funding of NARS in the broader context of the overall level of direct government assistance to agriculture. Using a newly constructed data set on NARS expenditures over the 1970-85 period, we observe a growing disparity in agricultural research intensity ratios, which measure the level of public support for NARS in relation to agricultural gross domestic production (Aggdp ) between low and high-income countries. This growing disparity appears to be driven by much larger increases in support for agricultural research by high-income countries, coupled with a significantly slower growth in the size of their agricultural sector, despite the propensity of low and middle-income countries to increase real support to agricultural research. As per-capita incomes rise the public agricultural expenditure ratio, which measures public expenditures on agriculture relative to the size of the agricultural sector, Aggdp , increases substantially. Public expenditures on agriculture were indexed on agricultural and non-agricultural populations to give a rough indication of the increasing incentives for rural 'distributional coalitions' to seek a redistribution of public expenditures in their favor. A relative research expenditure (rre ) ratio is developed, which measures the proportion of total public expenditure on agriculture spent on agricultural research. It provides an indication of the relative importance given to research on agriculture within the constraints imposed by overall public spending on agriculture. In contrast to the agricultural research intensity ratios, the rre ratios suggest that agricultural research appears to command as large a share of the public purse devoted to agriculture in low and middle-income countries as it does in high-income countries. Expectations derived from the neoclassical political economy literature that research may have fared relatively better in high compared with low-income countries were not supported by the data.     

Rural Banking and Landless Labour Households: Institutional Reform and Rural Credit Markets in India

Financial liberalization is a key component of programmes of orthodox structural adjustment. Financial reforms include, among other things, the removal of controls on interest rates and the abolition of programmes of directed credit. Here the effect of financial sector reform on rural banking and rural credit transactions in India is examined, with particular reference to landless labour households. First, the trends in selected indicators of rural banking at the national level over the last 30 years are reviewed. Secondly, longitudinal data for a village in Tamil Nadu are used to examine changes in patterns of indebtedness and credit transactions among landless labour households. It is argued that the exploitation of landless labour households in the credit market has intensified with the introduction of financial reforms. Lastly, the policy envisaged as an alternative to the formal credit sector in the countryside – the establishment of micro–credit projects – is examined critically.     

The impact of coffee price changes on rural households in Uganda

Employing household survey data covering the periods 1992–1993, 1995–1996, and 1999–2000, this article shows for the case of Uganda that a coffee market liberalization followed by a price boom was associated with substantial reductions in poverty, which could even be sustained when prices went down again. Coffee is not planted by the richest farmers and the gains from higher coffee prices accrued to poorer and richer coffee farmers alike. Nor were poorer farmers hurt disproportionately when prices fell. In addition, we find strong spillovers from coffee production to other agriculture, which tends to favor the poor, and to nonagricultural activities. These multiplier effects are concentrated in coffee regions. In an economic environment characterized by a booming agricultural sector, coffee farmers were able to accommodate the negative price shock, in particular through agricultural diversification. General agricultural growth also cushioned possible negative multiplier effects in coffee regions. Overall, the case of coffee in Uganda thus lends support to the view that agricultural trade liberalization is beneficial for the poor.     

An analysis of India's reform dynamics

One important area of development that needs urgent attention in developing countries is poverty alleviation. Urban poverty in India, as in some other countries, is a spillover of rural poverty and about 65% of the labour force is still working in the agricultural sector. To that extent, this paper, though it does not provide a numerical magnitude of poverty per se, advocates policies directly targeting the agricultural sector to reduce poverty. The policy conclusion is that promoting investment and technological progress, along with efficient use of technology in agriculture, are central to reducing poverty.     

Off‐farm Employment and Input Intensification among Smallholder Maize Farmers in Kenya

We derive input demand functions for fertiliser and hybrid seed, testing for the combined and separate effects of income from non‐farm sources and agricultural wage labour among smallholder maize farmers in Kenya. More income from off‐farm sources, and specifically non‐farm sources, competes with maize intensification, particularly in more productive areas where use rates are higher. In less productive areas, where households rely more on off‐farm income and input use in maize is extremely low, agricultural wage labour reduces the likelihood that fertiliser is applied, but when used, has a positive effect on quantities purchased of both seed and fertiliser.