essay on agriculture economy

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Home / Blog

Why Is Agriculture Important? Benefits and Its Role

July 12, 2022 

Tables of Contents

What Is Agriculture?

Why is agriculture important, how is agriculture important, importance of agriculture in everyday life, how does agriculture affect the economy, importance of agricultural biodiversity, why is agriculture important for the future.

When people think of agriculture, they often envision crop farming: soil and land preparation and sowing, fertilizing, irrigating, and harvesting different types of plants and vegetation.

However, according to the U.S. Census Bureau’s North American Industry Classification System (NAICS) , crop farming is just one element of the Agriculture, Forestry, Fishing, and Hunting sector. Agriculture also encompasses raising livestock; industrial forestry and fishing; and agricultural support services, such as agricultural equipment repair and trucking operations.

Why is agriculture important? It helps sustain life by providing the food we need to survive. It also contributes $7 trillion to the U.S. economy. Despite agriculture’s importance, the Economic Policy Institute reports that farmworkers are among the lowest-paid workers in the U.S.

However, agriculture also provides opportunities for economic equity and helps people prosper around the world. For example, since 2000, the agricultural growth rate in Sub-Saharan Africa has surpassed that of any other region in the world (approximately 4.3% annually), contributing to the region’s economic gains, according to the United States Agency for International Development (USAID). While there’s been a global decline in agricultural jobs — from 1 billion in 2000 to 883 million in 2019, according to employment indicators from the Food and Agriculture Organization of the United Nations — agriculture remains the second-highest source of employment (26.7% of total work).

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Agriculture is the practice of cultivating natural resources to sustain human life and provide economic gain. It combines the creativity, imagination, and skill involved in planting crops and raising animals with modern production methods and new technologies.

Agriculture is also a business that provides the global economy with commodities: basic goods used in commerce, such as grain, livestock, dairy, fiber, and raw materials for fuel. For example, fiber is a top crop in U.S. agricultural production , according to The Balance Small Business, and a necessary commodity for the clothing sector.

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Agriculture impacts society in many ways, including: supporting livelihoods through food, habitat, and jobs; providing raw materials for food and other products; and building strong economies through trade. Source: The Balance Small Business.

A key to why agriculture is important to business and society is its output — from producing raw materials to contributing to the global supply chain and economic development.

Providing Raw Materials

Raw materials are a core building block of the global economy. Without access to raw materials, manufacturers can’t make products. Nonagricultural raw materials include steel, minerals, and coal. However, many raw materials derive from agriculture — from lumber for construction materials to herbs for adding flavor to food. Corn, for example, is used to produce foods and serves as a foundation for ethanol, a type of fuel. Another example is resins : plant products used in various industrial applications, such as adhesives, coatings, and paints used in construction.

Creating a Strong Supply Chain

Importing and exporting goods such as agricultural products requires shipping methods such as ocean freight, rail, and trucking. Delays in shipping agricultural products from a Los Angeles port can create problems in China, and vice versa, impacting the global supply chain.

For example, sales of soybean crops from Iowa skyrocketed in 2021 due to various factors including delays in South American crop shipments, according to the Iowa Soybean Association. In this example, Iowa benefited from a competitive standpoint. However, delays in shipping crops could also be detrimental to regions expecting shipment, limiting availability of products on store shelves and affecting livelihoods.

Encouraging Economic Development

Agriculture impacts global trade because it’s tied to other sectors of the economy, supporting job creation and encouraging economic development. Countries with strong agricultural sectors experience employment growth in other sectors, according to USAID. Countries with agricultural productivity growth and robust agriculture infrastructure also have higher per capita incomes, since producers in these countries innovate through technology and farm management practices to boost agricultural productivity and profitability.

Resources on the Importance of Agriculture

The following resources provide information about the importance of agriculture as a source of raw materials and its impact on transportation and contribution to economic development:

• American Farm Bureau Federation, Fast Facts About Agriculture & Food : Provides various statistics demonstrating why agriculture is important.
• The Western Producer, “Suddenly Agriculture Is Important ”: Highlights agriculture’s role as a stable commodity provider even amid disruption.
• LinkedIn, “What Is Agriculture and Its Importance? ”: Discusses the importance of agriculture in 10 areas.

When global supply chains are disrupted , considerable attention is given to the technology sector. For example, the lack of computer chips — made from silicon, a nonagricultural raw material — limits a manufacturer’s ability to make computers, cars, and other products. This impacts many areas of society and business.

Agriculture also plays a central role in meeting consumer and business market demand in a world with interconnected economies. Here are different types of products derived from agriculture.

Fruits and Vegetables

Fruits and vegetables are essential sources of fiber, proteins, and carbohydrates in human diets. Vitamins, such as A, C, and E, and minerals, such as magnesium, zinc, and phosphorus, are naturally occurring in many fruits and vegetables. In addition to health benefits, fruits and vegetables add flavors to the human palette.

Animal Feed

Some fruits and vegetables are grown to provide feed for animals, from poultry to livestock. The American Industry Feed Association reports that about 900 animal feed ingredients are approved by law in the U.S. These include ingredients that come from agricultural production, including hay, straw, oils, sprouted grains, and legumes.

Natural Rubber Production

The number of vehicles in the world  is more than 1.4 billion, according to Hedges & Company market research. Every single one runs on rubber tires. According to GEP, the top rubber-producing countries are Thailand, Indonesia, and Malaysia — collectively representing approximately 70% of  global natural rubber production  — and about 90% of suppliers are small-scale farmers.

Cotton for Clothing

From cotton to clothes, the journey starts with agricultural production. Cotton is grown, harvested, and then processed, spun, and woven into fabric before it becomes a piece of clothing. Cotton production encompasses an expansive global supply chain, and according to Forum for the Future , it’s a leading commodity, making up approximately 31% of all textile fibers globally.

The U.S. Environmental Protection Agency (EPA) reports favorable economics of biofuels , produced from biomass sources including agricultural products such as corn, soybeans, sugarcane, and algae. The benefits include reduced greenhouse gas and pollutant emissions and the potential for increased incomes for farmers. However, biodiesel production requires the use of land and water resources that can affect food costs.

Industrial Products

Bio-based chemistry involves using raw materials derived from biomass to develop industrial products. Different industrial products derived from bio-based chemicals include bioplastics, plant oils, biolubricants, inks, dyes, detergents, and fertilizers. Bio-based chemicals and products offer an alternative to conventional products derived from petroleum products. Bio-based chemistry is considered a type of green chemistry because it promotes the reduction of environmental impacts in industrial production.

Pharmaceutical Products

For thousands of years, humans have turned to plants to help treat what ails them. For example, ginger, a plant root typically consumed in tea, can help aid digestion. Substances derived from plants and herbs can also help in healthcare. For example, extracted chemicals from the foxglove plant are used for digoxin, a drug used for heart failure. Another example is polylactic acid (PLA), a chemical produced when glucose is fermented into lactic acid in green plants. PLA has applications in tissue engineering, cardiovascular implants, orthopedic interventions, cancer therapy, and fabrication of surgical implants, according to a study published in Engineered Regeneration .

Agricultural products provide essential resources for daily activities, such as: getting ready for work in the morning, thanks to coffee and clothes; washing hands with soap; fueling vehicles to travel; preparing and eating food; and minding health through medicines and treatments. Sources: Commodity.com, the U.S. Environmental Protection Agency, ThoughtCo, and the U.S. Department of Agriculture.

For thousands of years, agriculture has played an important role in everyday life. Before agriculture, hunting and gathering enabled humans to survive. It wasn’t until the transition to the planned sowing and harvesting of crops that humans began to thrive. Humans developed tools and practices to improve agricultural output with more efficient means of sustaining themselves. From there, innovations that created industries led to the modern era.

Today, the importance of agriculture in everyday life can’t be minimized. Without the agriculture sector, activities such as getting dressed for work and cleaning the home wouldn’t be possible. Here are examples of the agricultural products we use in our everyday lives:

• Shelter . Wood and plant-based materials, such as bamboo, can be used for indoor décor and construction materials.
• Morning routine.  Mint is often an ingredient in toothpaste, adding flavor while brushing your teeth, and the caffeine in coffee that keeps you awake is derived from the coffee bean.
• Dressing up.  In addition to cotton, clothing can be manufactured from hemp, ramie, and flax. Bio-based materials can be used to produce grooming products such as skin creams and shampoos.
• Cleaning.  Two types of chemicals used in detergents, cleaning products, and bath or hand soap — surfactants and solvents — can be produced from biomass.
• Driving to work.  Plants make it possible to get to and from work. Think of rubber (sourced from rubber trees) and biodiesel fuel, which often includes ethanol (sourced from corn).
• Entertainment.  Paper from trees enables you to write, and some musical instruments, such as reed instruments, require materials made from plants.
• Education.  From pencils (still often made of wood) to paper textbooks, students rely on agricultural products every day.

Agriculture can have a significant effect on the economy. The U.S. Department of Agriculture (USDA) Economic Research Service reports that  agricultural and food sectors  provided 10% of all U.S. employment in 2020 — nearly 20 million full- and part-time jobs. Additionally, the USDA reported that  cash receipts from crops  totaled nearly $198 billion in 2020.  Animal and animal product receipts  weren’t far behind in 2020, totaling $165 billion.

The interdependence of the  food and agriculture sector  with other sectors, including water and wastewater systems, transportation systems, energy, and chemical, makes it a critical engine for economic activity, according to the Cybersecurity and Infrastructure Security Agency (CISA).

Agriculture also impacts economic development by contributing to the overall U.S. gross domestic product (GDP), directly and indirectly. It does so through farm production, forestry, fishing activities, textile mills and products, apparel and food and beverage sales, and service and manufacturing.

• Farm production.  The latest USDA data on  farming and farming income  report the U.S. had a little over 2 million farms, encompassing 897 million acres, in 2020. Farm production includes producing fruits, vegetables, plants, and varieties of crops to meet demand for agricultural products throughout the country and abroad.
• Forestry and fishing activities.  Agricultural activities include forestry and harvesting fish in water farms or in their natural habitat.  Agroforestry is focused on “establishing, managing, using, and conserving forests, trees and associated resources in a sustainable manner to meet desired goals, needs, and values,” according to the USDA. A form of fishing activity known as  aquaculture  involves the production of fish and other sea animals under controlled conditions to provide food.
• Textile mills and products.  The  S. cotton industry  produces $21 billion in products and services annually, according to the USDA. The industry has created various employment roles, such as growers, ginners, and buyers working on farms and in textile mills, cotton gins, offices, and warehouses.
• Apparel and food and beverage sales.  Since agriculture is a business, selling products made from agricultural production is essential. A key aspect of the sales component in agriculture is to help growers build capacity and understand the market dynamics to meet the needs of customers, many of whom care deeply about Food services and eating and drinking places accounted for 10.5 million jobs in 2020, the largest share among all categories within the agriculture and food sectors, according to the USDA.
• Manufacturing.  Agricultural products contribute to the manufacturing of a huge variety of goods, including food and beverage products, textiles, cleaning and personal products, construction materials, fuels, and more. According to the USDA, food and beverage manufacturing companies employ about 1.7 million people in the U.S.

Here’s how agriculture directly and indirectly contributes to the U.S. gross domestic product: farm production, forestry and fishing activities, textile mills and products, apparel and food and beverage sales, and service and manufacturing. Sources: American Farm Bureau Federation, the Bureau of Economic Analysis, and the USDA.

Here are ways agriculture and related industries impact economic development:

Agribusiness

Agribusiness  consists of the companies that perform the commercial activities involved in getting agricultural goods to market. It includes all types of businesses in the food sector, from small family farms to global agricultural conglomerates. In the U.S., farms contributed about $136 billion to GDP (about 0.6% of total GDP) in 2019, according to the USDA.

However, farms are just one component of agribusiness. Agribusiness also includes businesses involved in manufacturing agricultural equipment (such as tractors) and chemical-based products (like fertilizers) and companies involved in the production and refinement of biofuels. USDA data reports that in total, farms and related industries contributed more than $1.1 trillion to GDP, a little over 5% of the GDP, in 2019.

The  economics of agribusiness  also entails building production systems and supply chains that help maintain a country’s economic and social stability. Through the development of organizational and technological knowledge, agribusiness plays a vital role in protecting the environment and biodiversity near farms and using natural resources sustainably.

Food Security

Food security  is central to the agricultural industry:  Sustainable agriculture  is a key to fulfilling the United Nations’s Sustainable Development Goals (SDGs), including  SDG 2 :  Zero Hunger . In addition to food security, the agricultural sector raises the incomes among the poorest communities  up to four times more effectively  than other sectors, according to the World Bank.

Job Creation

Throughout the world, agriculture plays an important role in job creation. For example, agriculture accounts for 25% of exports in developing countries in Latin America, about 5% of their regional GDP, according to a report about  the importance of agribusiness  from BBVA, a corporate and investment bank. This activity is a source of economic activity and jobs in these countries. In the U.S., agriculture and related industries provide 19.7 million full- and part-time jobs, about 10.3% of all employment.

Resources on the Economic Impact of Agriculture

The following resources highlight agriculture’s impact on the economy, from how disruption affects the business and the benefits of the sector to people’s livelihoods:

• Economic Research Service, Farming and Farm Income : Provides an overview of trends in farming and economic development statistics.
• American Journal of Agricultural Economics, “The Importance of Agriculture in the Economy: Impacts from COVID-19” : Highlights why agriculture is important based on the impact of COVID-19’s disruptions to the sector.
• Canadian Journal of Agricultural Economics, “Agriculture, Transportation, and the COVID-19 Crisis” : Discusses how transportation services that COVID-19 has disrupted can impact agricultural supply chains.

Advanced farming equipment and the increased use of fertilizers and pesticides have resulted in higher crop yields. At the same time, they’ve impacted the environment, contributing to soil and water pollution and climate change. NASA projects a 24% decline in corn crop yields by 2030, thanks to climate change. However, ensuring a healthy biodiversity can help mitigate the impact. Here are some factors to consider:

• Sustainable agriculture.  Through  sustainable agricultural practices , farmers and ranchers help ensure the profitability of their land while improving soil fertility, helping promote sound environmental practices, and minimizing environmental impacts through  climate action .
• Climate change regulation.  The agricultural sector produced about 10% of U.S.  greenhouse gas emissions  in 2019, according to the EPA. Regulation and policy changes can help promote sustainable practices in the sector and provide guidance on agricultural adaptation to address the challenges that climate change poses.
• Agriculture technology and innovation.  From temperature- and moisture-sensing devices to GPS technologies for land surveys to robots,  agriculture technology  can result in higher crop yields, less chemical runoff, and lower impact on natural resources.

Agricultural Biodiversity Resources

Find information about agricultural biodiversity and its impacts in the following resources:

• Our World in Data, “Environmental Impacts of Food Production” : Discusses how sustainable agriculture offers a path to addressing food and nutrition issues.
• IBM, “The Benefits of Sustainable Agriculture and How We Get There” : Addresses how artificial intelligence (AI) and analytics technologies help farmers maximize food production and minimize their environmental impact.
• S. Environmental Protection Agency, The Sources and Solutions: Agriculture : Explains how agriculture can contribute to reducing nutrient pollution.
• FoodPrint, Biodiversity and Agriculture : Provides answers to what it will take to preserve the health of the planet to safeguard our own food supply.
• Brookings, “What Is the Future of Work in Agri-Food? ”: Discusses the future of agricultural automation and its impact on work.

Agriculture offers an opportunity to improve the lives of millions of food-insecure people and help countries develop economies that create jobs and raise incomes. Today’s agriculture also impacts future generations. To ensure the long-term success of the global agricultural sector, building a more sustainable economic system aligned with the U.N.’s Sustainable Development Goals is a crucial imperative to help create a more equitable society.

Infographic Sources

American Farm Bureau Federation, “Farm Contribution to Agricultural GDP at Record Low”

Bureau of Economic Analysis, “Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Second Quarter 2021”

Commodity.com, “Learn All About Agricultural Commodities and Market Trends”

Environmental Protection Agency, Commonly Consumed Food Commodities

The Balance Small Business, “What Is Agricultural Production?”

ThoughtCo, “List of Medicines Made From Plants”

USDA, Ag and Food Sectors and the Economy

USDA National Agricultural Library, Industrial, Energy, and Non-food Crops

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Essay on Agriculture for Students and Children

500+ words essay on agriculture.

Agriculture is one of the major sectors of the Indian economy. It is present in the country for thousands of years. Over the years it has developed and the use of new technologies and equipment replaced almost all the traditional methods of farming. Besides, in India, there are still some small farmers that use the old traditional methods of agriculture because they lack the resources to use modern methods. Furthermore, this is the only sector that contributed to the growth of not only itself but also of the other sector of the country.

Growth and Development of the Agriculture Sector

India largely depends on the agriculture sector. Besides, agriculture is not just a mean of livelihood but a way of living life in India. Moreover, the government is continuously making efforts to develop this sector as the whole nation depends on it for food.

For thousands of years, we are practicing agriculture but still, it remained underdeveloped for a long time. Moreover, after independence, we use to import food grains from other countries to fulfill our demand. But, after the green revolution, we become self-sufficient and started exporting our surplus to other countries.

Besides, these earlier we use to depend completely on monsoon for the cultivation of food grains but now we have constructed dams, canals, tube-wells, and pump-sets. Also, we now have a better variety of fertilizers, pesticides, and seeds, which help us to grow more food in comparison to what we produce during old times.

With the advancement of technology, advanced equipment, better irrigation facility and the specialized knowledge of agriculture started improving.

Furthermore, our agriculture sector has grown stronger than many countries and we are the largest exporter of many food grains.

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Significance of Agriculture

It is not wrong to say that the food we eat is the gift of agriculture activities and Indian farmers who work their sweat to provide us this food.

In addition, the agricultural sector is one of the major contributors to Gross Domestic Product (GDP) and national income of the country.

Also, it requires a large labor force and employees around 80% of the total employed people. The agriculture sector not only employees directly but also indirectly.

Moreover, agriculture forms around 70% of our total exports. The main export items are tea, cotton, textiles, tobacco, sugar, jute products, spices, rice, and many other items.

Negative Impacts of Agriculture

Although agriculture is very beneficial for the economy and the people there are some negative impacts too. These impacts are harmful to both environments as the people involved in this sector.

Deforestation is the first negative impact of agriculture as many forests have been cut downed to turn them into agricultural land. Also, the use of river water for irrigation causes many small rivers and ponds to dry off which disturb the natural habitat.

Moreover, most of the chemical fertilizers and pesticides contaminate the land as well as water bodies nearby. Ultimately it leads to topsoil depletion and contamination of groundwater.

In conclusion, Agriculture has given so much to society. But it has its own pros and cons that we can’t overlook. Furthermore, the government is doing his every bit to help in the growth and development of agriculture; still, it needs to do something for the negative impacts of agriculture. To save the environment and the people involved in it.

FAQs about Essay on Agriculture

Q.1 Name the four types of agriculture? A.1 The four types of agriculture are nomadic herding, shifting cultivation, commercial plantation, and intensive subsistence farming.

Q.2 What are the components of the agriculture revolution? A.2 The agriculture revolution has five components namely, machinery, land under cultivation, fertilizers, and pesticides, irrigation, and high-yielding variety of seeds.

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37.1: Introduction to the Agriculture Economics

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The Agricultural Market Landscape

The agricultural market landscape is the economic system that produces, distributes, and consumes agricultural products and services.

learning objectives

• Outline the evolution of the agriculture market over time

Agriculture, in many ways, has been the fundamental economic industry throughout history. The production and exchange of food laid the groundwork for all bartering, making it likely to be the oldest market in history. The production of food in modern times in developed nations is oddly taken for granted, as surpluses tend to define the market in pursuit of providing options.

Developing nations view agriculture quite differently, where famines and low yield years can dramatically affect the overall food supply in a given region. Due to the critical importance of food production, the agricultural market landscape is one of the most studied and evolved economic segments.

The History of Agriculture

The history of agriculture is complex, spanning back thousands of years across a wide variety of different geographic regions, climates, cultures, and technological approaches. Over 10,000 years ago, tribes began executing forest gardening. This evolved in the Fertile Crescent region into the domestication of animals (i.e. cattle, sheep, goats, pigs), growing of wheat and barley in Jordan Valley and the growth of cereal in Syria (all still about 10,000 years ago).

As population expanded dramatically over time (see ), so did the efficiency of agriculture economics. This began with agricultural improvements such as the hoe and the plow (2500 B.C.), irrigation via canals, and biological pest control as early as the bronze and iron ages. This evolved further in the middle ages with the advent of fertilizers, three field techniques, draft horses, and improved international exchange. Indeed, until the Industrial Revolution (18th and 19th centuries) the vast majority of the human population labored long hard days to generate enough food to feed the masses.

Human Population Growth : This chart illustrates the way in which human population growth evolved over time, underlining the difficulty in maintaining supplies to fill the needs of such a large population.

The modern era of farming is increasingly defined by selective breeding, crop rotation, economies of scale, electronic machinery, genetic modification, pesticides, and a host of other solutions that have rapidly expanded the overall potential capacity in farming.

Agricultural Economics

This rapid expansion coupled with the essential role of food in our society has generated a field of economics solely dedicated to observing and predicting trends within the agriculture market landscape. Basic macro and micro-economic principles apply to farming, as do the existence of externalities such as climate change and nutritional health. Agricultural economics is defined as the economic system that produces, distributes, and consumes agricultural products and services. This represents a large interconnected supply chain on a global scale.

Interesting trends in the agricultural market pertain to the decrease in cost for the actual farming aspects and an increase in costs for the distribution and sales system (particularly in the U.S.). This is largely a result of technological progress greatly reducing the need for human labor in the production of agricultural goods, weighting the costs more heavily on the human resources side of the equation.

The politics and economics of agriculture are also relevant issues on the global scale. US agricultural subsidies have had a large impact on international trade flows. The subsidies make US agricultural products artificially cheap, too cheap for developing nations to compete with. Developing nations, which may rely more heavily on agriculture in their economy than developed nations, argue that the US should reduce its agriculture subsidies. This tension is perhaps the biggest cause of the failure of the Doha Round, a World Trade Organization push for more open global trade, to make any progress since its initiation in 2001.

Subsidies and Income Supports

An agricultural subsidy is a government grant paid to incumbents in the industry to reduce costs and influence the supply of commodities.

• Analyze the positive and negative affects of subsidies on agricultural economics.

When governments want to ensure their citizens have access to healthy foods at reasonable prices, a variety of governmental supports are provided to the industry to ensure it maintains low costs of production and high output. This is generally in the form of subsidy and income supports, which alleviate some competitive dynamics and operating expenses to maintain reasonable price points in the market economically.

An agricultural subsidy is defined as a government grant paid to farmers to supplement income and influence the overall cost and supply of certain commodities. In this industry, subsidized goods generally include wheat, corn, barley, oats, sorghum, milk, rice, peanuts, tobacco, soybean, cotton, lamb, beef, chicken and pork. illustrates the governmental priorities, based upon subsidies provided, for specific agricultural goods in the United States. These subsidies play a large role in enabling higher supply at lower price points, supporting the domestic agricultural industry.

Agriculture Subsidies in the U.S. (2005) : This chart illustrates the governmental priorities, based upon subsidies provided, for specific agriculture goods in the United States.

Another, less direct, form of subsidy is in the taxing system for consumers. Consumers are not charged tax on food goods and clothes, which are considered necessities and thus should be provided at the lowest costs possible. These consumer-based subsidies are another governmental attempt to enable citizens in the country to purchase basic food stuffs required to survive. Food stamps are a similar concept, used to empower low income individuals and ensure they have access to these basic foods as well (food stamps are often limited to milk, eggs, bread and other core foods).

Impacts of Subsidies

While these subsidies above are designed to have a positive effect on consumers looking to purchase foods, there are externalities to this process that can have a damaging affect on other groups:

• Global Effects: While domestic subsidies are good for driving up production domestically, it suppresses competition in the context of international trade. Government assistance in an industry is argued to provide an unfair competitive advantage for those companies, artificially lowering their costs of production, sometimes below the feasible level for countries (especially developing nations) not receiving these supports.
• Developing Nations: A complement to the above discussion is the effect on poverty and developing nations without the infrastructure to provide subsidies for their own farmers. The International Food Policy Research Institute has estimated a total loss of economic growth in developing nations at $24 billion in 2003, all of which translate to lost income for individuals who desperately need it.
• Nutrition: Another interesting side effect of subsidies and the artificially reduced price of food is obesity and overeating. Some argue that these low prices provide the incentive to buy more food than is necessary, and this over consumption has resulted in a highly unhealthy culture (particularly in the U.S.).
• Environmental Implications: As food prices reduce distribution increases, thus driving an environmental externality which already existed even further. The cost, environmentally, of transporting a high quantity of agricultural goods across the globe has resulted in high degrees of pollution and waste.

Overall, while subsidies are largely a good thing and enable individuals to buy the necessities, there are clear cut downsides to subsidies as well. Politics must find a way to mitigate the negative consequences while increasing the positive effects, allowing for balanced and healthy consumption across all demographics.

Price Supports

Price supports are subsidies or price controls used by the government to artificially increase or decrease prices in the agriculture market.

• Assess the way in which price controls affect supply, demand, and equilibrium pricing in agricultural economics.

The agriculture industry is a critical component of any national economy because it represents both a substantial portion of gross domestic product and it is a core necessity for citizens within the system. Due to the fact that these goods are necessities, it is also important to keep in mind the way in which supply and demand would operate if there was a limited supply (required for survival, and thus potential demand upsides could be boundless). Due to these factors, governments enact a variety of price controls on the agriculture business, both in the U.S. and abroad.

Defining Price Supports

Price supports are defined as subsidies or price controls that are leveraged by the government to artificially increase or decrease prices, and thus alter the supply consumed/quantity demanded by individuals within the system. Understanding the effects of subsidies and price controls is critical in industries with a high degree of government involvement, and agriculture is one of the most affected industries.

is simply a supply and demand curve that demonstrates the consumer surplus and producer surplus opportunities in basic supply and demand chart. In this scenario, without external governmental intervention, the price equilibrium will remain in the center of the graph. However, the government may implement price supports that artificially consume some of the consumer surplus (in, this is 200 units). This drives the price upwards to $6 per unit despite the fact that the consumer is not gaining additional quantity (it is artificial quantity, as purchased by the government).

Consumer Surplus with Price Support : This graph is a complement to the first graph. It demonstrates the effect of implementing a price support on a basic supply and demand chart. The overall consumption will decrease as the government buys up consumer surplus. This demonstrates a price control on behalf of the government.

Consumer Surplus : This chart, in conjunction with the one below, illustrates the way in which price supports can alter supply and overall consumption. It demonstrates the consumer surplus and producer surplus opportunities on a basic supply and demand chart.

This can happen in reverse as well in the form of subsidies. Subsidies are the reduction of costs for producers, generally in the form of governmental grants provided to suppliers. In this scenario, prices are artificially reduced, allowing for an outward shift of the supply curve along the demand line, which creates a higher amount of consumption by consumers as a result of the reduced price. This is illustrated in, where the governmental subsidy allows for increased consumption power on behalf of the consumers in that market.

Subsidies and Supply : This chart shows how subsidies and price controls affect supply and demand. A subsidy, as illustrated here, will reduce the price and extend the overall supply demanded and consumed by individuals within the system. This is the most relevant chart to agricultural economics specifically.

Applying Price Supports to Agricultural Economics

The United States currently pays out around $20 billion annually to farmers and producers in agriculture in the form of subsidies via farm bills in order to artificially reduce prices and shift the supply curve outward to ensure the overall supply in the market is high enough to satisfy all prospective consumers. It is important to note how dramatically the recipients of farming subsidies have changed over time in the United States. In 1925, there were around 6,000,000 small farms of which 25% of the nation resided. By 1997, 72% of farm sales come from 157,000 large farms and only 2% of the U.S. population resides there. This is an interesting economic factor in farm subsidies, as these subsidies are largely going to corporations of substantial size, as opposed to small farmers.

The subsidies provide a price floor (or a minimum price in which farmers can be reimbursed for certain products). This is a significant economic policy of price control to ensure farmers have proper incentive and revenues to continue to produce at the level of goods desired by the U.S. government. Agricultural economics is a highly complicated market as a result of these price supports and controls, particularly from the perspective of subsidization and price control.

Supply Reduction

Agricultural aggregate supply can be reduced through external capacity potential or governmental interventions.

• Identify factors resulting in global reductions in agricultural supply levels.

Agricultural economics is largely bound by concepts of climate and overall world food producing capacity (i.e. farmlands and infrastructure), while simultaneously being enabled by government policy, technological advances, and the continued growth of developing nations. Understanding the reductions in aggregate supply in this industry, as a result of governmental policy or economic limits, is a critical component in understanding agricultural economics. We will look at both the governmental components and the climatic/aggregate demand components contributing to overall supply in this industry.

Governmental Policy

Government policy has a large impact on the agriculture market. Both subsidies and price ceilings are common and affect the overall supply and demand equilibrium points in the market. Governmental policy to reduce supply also exists and is executed often from a global trade perspective. One of the largest risks in this industry, due to the high degree of subsidization, is ‘ dumping. ‘ Dumping is the process of selling undervalued goods in another market, upsetting price points and equilibrium. In this scenario, government policies may set quotas, or import limits, to reduce supply.

A second reduction in supply that is quite common in developed nations is utilizing surplus for foreign aid. Many developing nations lack the requisites to generate the appropriate supply of agriculture to feed the population. In this scenario, the leveraging of the surplus in one country can benefit the other country via aid, and in turn correct the supply/demand equilibrium in the donating country to the desired level.

Climate Change

Environmental concerns have also been widely cited as a reductive influence on the agriculture market. Global warming has been slowly increasing temperatures as the ozone layer erodes due to a variety of pollutants, altering the ecosystem averages outside of the evolutionary environment in which many agricultural products historically grew. Climate changes means a different growing environment for plants, which are not used to it. illustrates the reduction in yield as a result of altering climatic environments. Shifts in climate drastically reduce aggregate supply.

Climate Change Affecting Agriculture : This chart illustrates the reduction in yield as a result of altering climatic environments. Essentially, deviations outside of the normal temperature ranges drastically reduce aggregate supply.

Other concerns revolve around dramatic soil damage due to short-term yield increasing strategies, growing immunity to pesticides, loss of rural space for farming (due to urbanization), and availability of clean water for irrigation. All of these factors may reduce the aggregate supply and thus drive up prices. demonstrates rising food prices, perhaps from a number of the supply reduction factors discussed in this atom (or potentially unidentified factors). Controlling supply is a critical component of ensuring everyone has access to affordable food, and maintaining our ecosystem will clearly play a critical role in the years ahead.

Food Price Increases Over Time : Food prices over time, particularly in recent years, are demonstrating a trend upwards that may reflect a reduction in overall efficiency of agricultural production or reductions in supply.

Evaluating Policies

Agriculture requires a vast support system and a great deal of oversight, addressing industry threats and utilizing policy-based tools.

• Evaluate the economics of agriculture policies.

The political frame of the agriculture market is hugely complex, with a wide range of critical concerns that need to be addressed both domestically and internationally. Agricultural policy differs from nation to nation, but has a number of key questions and considerations that occur across the board. The purpose of this atom is to outline the various trends in agricultural economic policy, and how these governmental policies can be evaluated for efficacy in their respective markets.

Policy Concerns

Agriculture requires a vast support system and a great deal of oversight, as the consumption of grown foods poses a huge safety threat alongside a critical need for the health and survival of a civilization. Below is a list of core questions to keep in mind when evaluating agricultural policy:

• Biosecurity: The ability of a country to consistently provide enough food for its citizens is a major concern. Pests and diseases are a significant threat to yield rates and must be closely observed and regulated.
• International Trading Environment: Global agricultural trade is a complex issue, with quality control, pricing (dumping), and import/export tariffs. The dangers of biosecurity, or lack thereof, in particular are quite stringent.
• Infrastructure: Transporting goods, irrigation facilities, land utilization, and a variety of other logistics concerns are required by the government to enable effective economic trade (domestically and internationally).
• Technology: This is a critical driving force in increasing yield and lowering costs in the agriculture business. Enabling technological progress is a critical investment and something governments must provide incentives for.
• Water: Access to clean, potable water is a basic necessity to which not everyone has access.Effective sewage systems for irrigation and effective water treatment for sanitation are a required input, and must be provided via governmental centralized infrastructure.
• Resource Access: Ensuring access to land and biodiversity is another important component to a successful agricultural industry. Protection of environmental land and the overall ecosystem is an important policy consideration.

Policy Tools

With the above concerns in mind, it is also useful to understand some of the tools leveraged by governments to enable this industry:

• Subsidies: The government can utilize subsidies to reduce price points and increase the overall supply within a system. The use of subsidies in developed nations has been a major point of international contention, since they may force developing nations out of the global agriculture market.
• Price Floors/Ceilings: Price floors provide a minimum price point for a given product while price ceilings create a maximum price point. These are used to ensure appropriate pricing in a given industry (see ), and are often used in agriculture to control price points.
• Import Quotas: Policy makers often implement quotas in agriculture to retain more control over prices and protect domestic incumbents. Quotas, like other forms of trade protection, benefit the local industry.
• Aid: When aggregate supply is too high in a home country or there is a crisis in another, governments can provide their surplus to nations in need of food. This is both a way to provide utilitarian value while reducing aggregate supply.

Combining the issues above with tools provided, the agricultural business can change dramatically as a result of the concerns and activities of the respective government in a given economy. This is useful in controlling food prices, reducing waste, enabling efficiency and avoiding biosecurity issues.

• The history of agriculture is complex, spanning back thousands of years across a wide variety of different geographic regions, climates, cultures, and technological approaches.
• The roots of agriculture are derived over 10,000 years ago, with tribes executing forest gardening alongside the domestication of animals in the Fertile Crescent region.
• As population expanded dramatically over time (see, so did the efficiency of agriculture economics. This began with agricultural improvements such as the hoe and is represented today with genetic engineering, robotics, irrigatiion, etc.
• This rapid expansion coupled with the essential role of food in our society has generated a field of economics solely dedicated to observing and predicting trends within the agriculture market landscape.
• Interesting trends in the agricultural market pertain to the decrease in cost for the actual farming aspects and an increase in costs for the distribution and sales system (particularly in the U.S.). This is largely a result of technological progress.
• Subsidized goods generally include wheat, corn, barley, oats, sorghum, milk, rice, peanuts, tobacco, soybean, cotton, lamb, beef, chicken and pork.
• Another, less direct, form of subsidy is in the taxing system for consumers. Consumers are not charged tax on food goods and clothes, which are considered necessities and thus should be provided at the lowest costs possible.
• In the context of international trade, government assistance in industry provides an unfair competitive advantage for those companies receiving the support.
• Overall, while subsidies are largely a good thing and enable individuals to buy the necessities, there are clear cut downsides to subsidies as well.
• Overall, while subsidies are largely a good thing and enable individuals to buy the necessities, there are clear cut downsides to subsidies as well. Politics must find a way to mitigate the negative externalities.
• Governments enact a variety of price controls on the agriculture business, both in the U.S. and abroad, to ensure desired supply and prices for specific necessities.
• Price supports are defined as subsidies or price controls that are leveraged by the government to artificially increase or decrease prices, and alter the supply consumed/quantity demanded by individuals within the system.
• The government may artificially increase prices through purchasing a portion of the consumer surplus or artificially increase quantity through offering subsidies to producers. This allows the government control over the established equilibrium in agriculture.
• The United States currently pays out around $20 billion annually to farmers and producers in agriculture in the form of subsidies via farm bills in order to artificially reduce prices and shift the supply curve.
• The subsidies provide a price floor (or a minimum price in which farmers can be reimbursed for certain products). This is a significant economic policy of price control to ensure farmers have proper incentive and revenues to continue to produce.
• Government policy has a large impact on the agriculture market, usually in the form of subsidies and price ceilings, by controlling the overall supply and demand equilibrium points in the market.
• Governments may reduce supply through utilizing quotas (limiting imports ) or providing foreign aid (actively reducing domestic demand).
• Environmental concerns have also been widely cited as a reductive influence on the agriculture market. Global warming (increased average temperatures) has demonstrated a negative effect on overall plant yield for certain products.
• Other concerns reducing supply revolve around dramatic soil damage due to short-term yield increasing strategies, growing immunity to pesticides, loss of rural space for farming (due to urbanization), and availability of clean water for irrigation.
• The political frame of the agriculture market is complex, with a wide range of critical concerns that need to be addressed both domestically and internationally.
• Concerns to keep in mind revolve around the international markets, bio-security, infrastructure, technology, water, and resource allocation to enable effective agricultural markets.
• Governments can use import quotas, subsidies, price floors, price ceilings, and aid to control their domestic market supply, demand, and equilibrium price point.
• Combining the issues above with tools provided, the agricultural business can change dramatically as a result of the concerns and activities of the respective government in a given economy.
• Agricultural Economics : The study of the production, distribution, and consumption of goods and services related to food.
• subsidy : Government assistance to a business or economic sector.
• externalities : Impacts, positive or negative, on any party not involved in a given economic transaction or act.
• Price support : A subsidy or a price control with the intended effect of keeping the market price of a good higher or the quantity consumer higher within a market.
• Subsidies : Financial support or assistance, such as a grant.
• Dumping : Selling goods at less than their normal price, especially in the export market as a means of securing a monopoly.
• Quotas : A restriction on the import of a good to a specific quantity.
• infrastructure : The basic facilities, services, and installations needed for the functioning of a community or society.
• Biosecurity : The protection of plants and animals against harm from disease or from human exploitation.

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Agriculture Development in Economic Development Essay

Introduction.

Agriculture refers to the art of cultivating crops and rearing animals, with the aim of sustaining life. Sustaining life is both direct as in food crops and domestic animals and indirectly as in the case of trees, wild animals and other forms of life that aid in man’s wellbeing.

Chayanov (1996) says that, the rural areas are dominated by peasant economic practices. The mode of production for this practice is characterized by:

• 1 st , Production is basically for household use. The size of the household is what determines how much is produced. After household consumption, the little that remains is then used for commercial purposes as savings or investment.
• 2 nd , a majority of household income is derived from agriculture. This is therefore the major source of income for the households.
• 3 rd , because the households depend almost solely on agriculture, they are adamant to change and tend to be conservative in order to protect their survival.

Peasant household are more concerned with their families’ satisfaction rather than maximization of profit.

Agricultural Policy

In the world today, agriculture remains to be the most practiced economic activity in the rural areas, especially in the developing countries that are not as industrialized as the developed countries.

There is need therefore, for agricultural policies to be well articulated so that agricultural output from these areas is high enough to counter theimport deficit of these countries, as a measure of economic development.

Todaro and Smith (2009) say that economic development is the role of both the policy makers (government) and the communities. Economic development is largely a process of policy intervention, and therefore the government has a big role to play in formulating and implementing these policies

The governmentis responsible for macro objectives such as commodity price regulation, provision of goods and services like farm inputs, vaccinations, implementation of monetary and fiscal policies, regulation of financial institutions like the banks ’interest rates, trade and tax policies, infrastructure and security.

Failure of Policy

Neo classical writers have consistently argued that agricultural policy has failed to improve the livelihoods of the farmers in the developing world. This is manifested in a number of cases and for a number of reasons:

Failure to tax all land that produces rent is one of the reasons for poor development in developing world. Due to ineffective measures to regulate taxation, many property owners are able to escape the tax hook, some bribe their way out.

Revenue raised from the few taxed is small, this forces the government to increase tax rates upon the few and this raises the cost of production or doing business driving away investors.

Despite the increase in productivity in most parts of the world due to industrialization, the working class has remained poor and their living conditions deteriorated by the day.

This they attribute to the division of labour, where the workers that perform the basic, manual jobs that demand a lot of strength are the least paid, while those that perform the lightest and sophisticated jobs are the highest paid, The widening markets, alienating the producer further from his product and rapid the urbanization, that leave the poor in the rural areas depreciating more increasing the dependency of the working poor.

Another failure of policy is the breach of justice. The rich are favoured in the legal systems than the poor. This is because of rampant corruption in the legal system in the developing world where money can buy one freedom. This inhibits development and widens the gaps of inequality between the haves and have-nots.

Another failure is unemployment and underemployment. This means that resources are underutilized, or not utilized at all. The private sector in these countries is exploitative in nature and this is facilitated by the large work force available due to a big, unemployed and unskilled population.

The government is ineffective in driving high-cost projects, and when it does, it prefers to import labour from the industrialized countries (brain drain).

Economic Development

Mansell and wehn (1998) state that this process encompasses economic growth and an overall attainment of a standard of living that is comparable to that of developed countries.

Ranis, Stewart, and Ramirez (2000) say that ideally, economic growth should be paralleled with economic development. Income from the sales should improve expenditure which leads to a growth in human development.

Dependency theories(these state that 3 rd world countries are created out of their dependency on the developed countries; they are thus the creation of the developed countries.) argue that in developing countries, there can be economic growth, without economic development, especially in cases where these countries provide raw materials to the developed ones.

This happens mostly in situations where the producers are not in direct control of their products, but rather go through a chain of cartels for the products to get to the final buyers. The trickle-effect hardly reaches the producers.

The Role of Markets in Rural Development

Agricultural marketing involves a number of activities that take place in moving the product from the producer to the consumer. These include production, harvesting, transport, storage, distribution, advertising andsale. Marketing is customer-oriented and has to provide all the involved parties with some profit.

For a marketing system to function well, it needs a private sector that is strong enough and backed up by the government in terms of effective policies and legislations and support services like market infrastructure andagricultural extension services to offer advice to farmers to boost their production, training of all parties involved in the marketing system.

The agricultural system in developing countries, is however faced with the problem hostility towards the private sector; one of the key components in the marketing system and the role of middle men in the process. This is because the middlemen tend to control the products, increasing prices at their own regards and determining who gets what. Some extort “gifts” form the buyers and sellers for their services.

The markets, if well run, have the potential of tremendously improving the lives of the people in rural areas and generally leading to a development of the rural areas.

Advisory Services

Some governments in developing countries provide advisory services for the farmers in the rural areas.These services play a big role in enhancing the ability of the rural poor, enabling them to benefit from the agricultural markets.

It also helps them adapt to factors that impact on the marketing systems, enabling them to manipulate these factors for their own benefits, for instance which crops to plant in dry areas, cost effective farming processes

Market Infrastructure

In order to minimize losses after harvest and health risks, efficient market infrastructure is required. These include storage facilities, roads and other forms of transport, and upgraded farm equipment.

These if well provided for by the government, will increase profits from trade of farm produce that can be used to improve the standards of living of the people in rural areas.

Market Structures

Markets play a great role in rural development, income generation and food security. Planners, knowing this, should therefore, develop markets that fulfill a community’s social and economic needs. This will guide them in choosing a site that coincides with these demands.

More attention needs to be paid on how the market will be managed and operated such that a market does not become un-operational. These act as assembly and gathering areas for producers to meet with trades to exhibit their products for sale.

These are usually occasional, like daily, weekly. These markets need to be regulated, hygiene measures, rules of tax collection and security need to be enforced.

With these measures in place, more trade is encouraged in the community, farmers make more profits to improve their lives, and the government gets more revenue from taxes that are used to develop the community.

Market Information

This has positive benefits for both the sellers andconsumers. Information on pricesand location for certain commodities helps the negotiation process between the buyer and seller and ensures that all products are accessed. Most governments have tried but failed to provide these services to the markets.

When they succeed, the information is insufficient and not up-to-date to allow trades to make informed decisions.

Marketing Training

Farmers mostly in the developing economies are unable to identify solutions to their many problems such as poor prices and high cost of production.They need to learn new skills that can help them counter these problems.

Some governments, NGOs and companies, as social corporate responsibilities or a way of promoting their products, offer free or at nominal fee training services to the target groups like farmers of a particular crop. This training equips them with necessary skills that help them improve their yields, increasing their incomes and generally their standards of living

Marketing Cooperatives

Markets in the rural areas encourage people to come together and form cooperatives. This is because their economic strength is weak, consideringthat rural agriculture is largely peasant.

Through cooperatives, they are able to raise their purchasing power through loans and savings, workers integrate and improve their bargaining power for better working conditions, they are able to put up social structures for their welfare like communal schools, health centers, cattle dips and many more. This goes a long way in improving and developing the rural areas.

Use and Re-Use through Markets

In the rural areas, just like in the urban world, there is waste of materials thatan individual has no use for, or does not know its use even if it is not waste. It is through markets that people get to see a diversity of goods, and learn how various materials can be put to alternative use.

What was no longer useful is put to use and this reduces waste and encourages recycling, saving the environment from dumping and depletion due to over use. Natural resources are key to the development process, when they are well preserved and carefully used; a community is bound to develop.

Conducive Environments

Agricultural marketing should be conducted in aconduciveenvironment of policy, legal, institutions and infrastructure. Inappropriate law can distort the market operations and or increase the cost of doing business. Poor support services like the extension services, poor roads and corruption can ground market operations.

Market operations can therefore necessitate the formulation of appropriate policies among institutions within which the market operates. These will aid in improving the rural conditions, putting it in way for development.

Emerging Trends in Agriculture

With the many problems facing agricultural practices today, it is inevitable that the policy makers, support agencies and the people have to adjust and make some changes to the practice. The concept of agribusiness is a growing trend in developing countries.

The work of the farmer is not only to produce, but also to sell. Supermarkets now are becoming among the biggest sellers of horticulture and day products. They are stacked with vegetables, flower and fruits for easy access for the consumer.

Having discovered the negative impact of the middle men, many companies and NGOs now support direct transaction with the farmers.

The cane industry for instance encourages farmers to personally deliver their sugar cane to the factories and to open direct accounts with them. The tea industry does the same, where farmers deal directly with the tea agencies.

Another emerging trend is that of contract farming. This is more so in places where farmers own large tracks of land, but their financial status cannot allow them to fully utilize the land.

Therefore,instead of leaving the land bare, a company or people who are more capable can lease the land from the owner for a period of time for a fee and put the land in use. This has increased output from agriculture.

While we have tried to analyze the case of rural development and its inclination to agriculture as its main vehicle to development, we have to agree that there are wide disparities between these rural areas. What may be termed as rural in the USA may be urban in sub-Saharan Africa.

Besides, the plight of people in these two regions can be quite varied.The developing countries are characterized by governments that are insufficient, unwilling or too corrupt to offer effective guidance and support for rural agriculture.

We cannot therefore have universal market principles, to some extent not even national ones. The areas and conditions are too diversified for this, each addressing unique social-political and economic aspects.

Reference List

Chayanov, A.V., 1966. The Theory of Peasant Economy . Homewood. IL: Irwin.

Mansell, R., and Wehn, U., 1998. Knowledge Societies: Information Technology for Sustainable Development. New York: Oxford University Press.

Ranis, G., Stewart, F., and Ramirez, A., 2000. Economic Growth and Human Development. World Development, 28(2), 197-219.

Todaro, M. P., and Smith, S. C., 2009. Economic Development. Pearson: Harlow.

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The Role of Agriculture in Economic Development

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• Emelie Rohne Till 2  

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The book’s main research focus is the role of the agricultural sector in economic development. This chapter discusses the main theoretical underpinnings of this role based on the extensive body of literature on this subject. The chapter covers both the role of agriculture for economic development and the development of the agricultural sector itself with a focus on the macro-level drivers of agricultural development.

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• Agriculture for development
• Agricultural development

The book’s core research focus is to understand the role that the agricultural sector can play in economic development as well as the role of the agricultural transformation in the broader processes of economic and structural transformation. These processes involve the sectoral shift of output and employment away from low-productive agriculture into more productive activities. They are generally accompanied by a greater diversification of livelihoods both on- and off-farm, stronger rural and urban interaction, and the creation of more employment and investment opportunities outside the agricultural sector (Mellor, 1976 ; Timmer, 1988 ; Jayne et al., 2018 ).

Agriculture for Development

Agricultural and development economics both emerged as sub-fields in the middle of the twentieth century (Arndt, 1987 ; Barrett et al., 2010 ). Since then, the view of the role that agriculture can play in economic development has shifted over time. Early perspectives in the 1950s and 1960s emphasize a largely passive role of the agricultural sector (Lewis, 1954 ; Hirschman, 1958 ; Ranis & Fei, 1961 ; Jorgenson, 1961 ). In this view, agriculture’s contribution to development is to reallocate labor and indirectly contribute to much-needed savings and investments in the modern sector; the sector was mainly regarded as a reservoir of labor and transferable surplus. This was followed by research that further downplayed the role of agriculture in economic development based on the core concept of the Prebisch–Singer thesis, suggesting deteriorating terms of trade for primary products in relation to industrial goods (Singer, 1950 ; Prebisch, 1959 ; Preobrazhensky, 1965 ).

The mid-1960s saw a shift toward viewing agriculture as a potential engine of growth. This change in perspective followed the contributions of Johnston and Mellor ( 1961 ) on how agriculture can contribute to growth in the overall economy through various linkages (labor, food, foreign exchange, market, and domestic savings). In the 1980s, the view shifted again, this time toward an industrial focus. This tendency was followed by several studies in the 1990s and early 2000s, arguing that agricultural growth stems from, rather than leads to, overall growth (Estudillo & Otsuka, 1999 ; Gardner, 2000 ; Mundlak et al., 2004 ). However, since around 2005, the view that agricultural growth can drive overall growth has resurfaced. This perspective is exemplified by the 2008 World Development Report on agriculture (World Bank, 2007 ) and the signing of the Maputo Declaration in 2003, in which all African leaders of state committed to dedicating at least 10% of public spending to agriculture (AGRA, 2018 ).

Four main theoretical schools of thought can be identified as having influenced the shifting debate outlined above (see Andersson & Rohne Till, 2018 for an elaborated discussion). First, according to the “fifth wheel” school, agriculture is not by itself seen to stimulate economic development, although it might stifle the process if neglected (Lewis, 1954 ; Ranis & Fei, 1961 ; Jorgenson, 1961 ). Second, the Chicago school emphasizes rationality and anti-distortions, led by the work of Schultz ( 1964 ) and his followers (e.g., Krueger et al., 1988 , 1991 ; Anderson, 2009a , 2009b ). The third main school of thought focuses on the role of agriculture in trade; agriculture is seen as either a break (Prebisch, 1959 ) or an injection (Myint, 1958 ). The fourth school of thought views agriculture as a potential driver of growth. One strand of this diverse school of thought has its roots in structural change analysis, understanding the relative decline of agriculture in the process of long-term economic growth (Clark, 1940 ; Kuznets, 1961 , 1966 ; Chenery & Syrquin, 1975 ). A related strand emphasizes agricultural growth’s potential to strengthen the domestic market, thereby stimulating aggregate growth. Adelman ( 1984 ) explicitly theorizes this mechanism in her development of the concept of agricultural demand-led industrialization (ADLI).

The agriculture-for-development view has been a prominent perspective on the role of agriculture in economic growth since around 2005. While agriculture’s role in stimulating growth and reducing poverty has also been questioned during this time (Ashley & Maxwell, 2001 ; Hasan & Quibria, 2004 ; Ellis, 2004 ; Collier & Dercon, 2009 ), agriculture’s contribution to economic growth has much support in the economic history of today’s high-income countries in Europe and East Asia (Ohkawa & Rosovsky, 1960 ; Bairoch, 1973 ; Johnston & Kilby, 1975 ; Timmer, 1988 ; Lains & Pinilla, 2009 ). A core assumption of the agriculture-for-development perspective is that farmers in low-income countries, often working small plots, can be efficient producers capable of generating a surplus that can benefit the wider economy (Mellor, 1976 ; Lipton, 2005 ; World Bank, 2007 ; Diao et al., 2010 ). As such, increasing the productivity of these small farmers is a key concern. In addition to increases in agricultural productivity among farmers, a thriving rural nonfarm sector and diversification toward higher-productivity crops are also important elements of success. However, while the rural nonfarm sector can be a productive outlet, it is also a very diverse sector, including petty and under-capitalized activities with very low returns to labor and also productive activities that are better rewarded. The nature of the sector is likely linked to the dynamism of agriculture and the general economy (Wiggins et al., 2018 ).

The concept of ADLI is of special importance for the current research, given the connection between Adelman’s academic concept of ADLI and Ethiopia’s implementation of ADLI. Drawing on Singer ( 1979 ), Adelman ( 1984 ) developed ADLI as a development strategy emphasizing the importance of agricultural growth in stimulating overall production and growth. Under ADLI, agricultural growth arising from increased agricultural productivity (stemming, in turn, from increased rural investment and technological innovation) stimulates aggregate growth; agricultural growth increases farmers’ incomes, which generates demand for locally produced non-tradable products. This farm demand for domestic non-tradables is the main link between agricultural growth (raising farmers’ incomes) and nonagricultural growth.

Empirically, ADLI was first tested in Adelman’s ( 1984 ) seminal paper, in which she simulated growth scenarios comparing an export-led (in essence, manufacturing-led) industrialization strategy and ADLI, for South Korea in 1963. She found that while both strategies would generate growth, ADLI would lead to better overall development compared to export-led growth, as ADLI led to higher labor absorption, more equal distribution of income, less poverty, and a higher rate of per capita economic growth (Adelman, 1984 , p. 939). These results mainly stemmed from the linkages generated by the agricultural sector that were stronger than those generated outside of agriculture, as farm households demanded more goods and services from domestic food and nonfood industries than other households. In the simulations, the same amount of investment was channeled into the export sector or the agricultural sector. This led Adelman to conclude that ADLI at some stages of development both generated better economic development and yielded a higher rate of return, and should therefore be prioritized. Other studies that have explicitly tested ADLI include Vogel ( 1994 ) and Bautista et al. ( 1999 ). Moreover, much of the work on calculating agricultural multipliers and linkages (as summarized by Haggblade et al., 2007 ) shares a similar rationale as Adelman’s study. Overall, this literature finds that an ADLI strategy can contribute considerably to overall economic growth.

Adelman’s ADLI strategy was intended to be an alternative development strategy for low-income countries. However, Adelman did not claim that ADLI was always the right choice for this type of countries. Instead, the strategy mainly targets countries that have (1) a potentially large domestic market and (2) an industrial base with established supply responsiveness. Adelman and Vogel ( 1991 ) explored the implications of these criteria for successful ADLI implementation in sub-Saharan Africa (SSA). They found that while agriculture has relatively strong linkages in SSA, most countries do not fulfill the second criteria of established supply responsiveness (because the manufacturing production capacity is quite limited, many types of consumer goods are not produced domestically, and most intermediates and machinery are imported). Therefore, they concluded that an ADLI strategy was unlikely to be successful in most SSA contexts. Thirty years later, it seems that the Ethiopian implementation of ADLI may be proving their pessimistic predictions wrong.

Agricultural Development

As the realization of agriculture for development depends on agricultural growth, this section provides a brief contextualization of the literature on agricultural development. The literature on the drivers and features of agricultural change is vast, and much important work has been done on the subject in the post-war era (Barrett et al., 2010 ). In general, the macro-level conditions needed for agricultural development are well-known: a reasonably stable macro-economic and political environment, effective technology transfer, and product and factor markets that are functional and accessible (Mosher, 1966 ; Tsakok, 2011 ). However, these insights do not allow for a specific understanding of how on-the-ground, micro-level change is engendered. Agriculture is, in essence, a private activity undertaken by millions of individual actors (Mellor, 2018 ). Therefore, village-level studies and analyses of localized production systems are needed to get closer to an understanding of what drives agricultural production and productivity increases (Wiggins, 2000 ; Andersson Djurfeldt & Djurfeldt, 2013 ).

However, while agriculture is a predominantly private activity taking place at the micro-level, the success of individual farmers is conditioned by public and macro-level forces. Agricultural growth—and its potential benefits—depends on favorable developments in the economic and political environment, technology transfer, and product and factor markets. The literature on what drives these conditions is large, and at least four major drivers are proposed in the literature: factor relations (Binswanger & Ruttan, 1978 ; Hayami & Ruttan, 1971 , 1985 ), population dynamics (Boserup, 1965 ), technology availability (Otsuka & Kijima, 2010 ; Estudillo & Otsuka, 2013 ; Otsuka & Muraoka, 2017 ), and the state (Djurfeldt et al., 2005 ; Hazell, 2009 ; Henley, 2012 ; Frankema, 2014 ). This book is particularly concerned with the strand of the literature on macro-level agricultural development concerning the role of the state, as elaborated on in Chap. 3 . However, this focus should not be seen as a quest to identify one single driver of agricultural growth. Such a quest would be futile, as the process is much too complex, and multiple factors both drive growth and affect each other. The macro-level forces of agricultural change are not substitutes; in any context of agricultural change, the state, factor and product markets, technology, and population dynamics are complements that act and react in the same environment.

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Rohne Till, E. (2022). The Role of Agriculture in Economic Development. In: Agriculture for Economic Development in Africa. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-07901-6_2

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Essays on Agricultural Productivity and Economic Development

A long stream of literature in macroeconomic growth and international development has focused on understanding the large income differences across countries. These income differences are much larger in the agricultural sector than in the non-agricultural sectors of the economy. And since poor countries allocate a large share of their economic resources to the agricultural sector, understanding the sources of low agricultural productivity in these countries is key to understanding underlying reasons for low agricultural incomes. In each chapter of this dissertation, I investigate a possible solution to the issue of large share of economic resources in the low productivity agricultural sector in developing countries. The first chapter studies how agricultural productivity can be increased by a more efficient allocation of resources. The second chapter focuses on improving productivity through increased fertilizer usage in poor countries and the last chapter studies how agricultural incomes can be increased through an open economy and increased trade.

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Essay on Agriculture and It’s Significance

Agriculture is the main occupation in India. Two-third of population is dependent on agriculture directly or indirectly.

It is not merely a source of livelihood but a way of life. It is the main source of food, fodder and fuel. It is the basic foundation of economic development.

Agriculture provides highest contribution to national income.

“Agriculture needed top most priority because the Govt. and the nation would both fail to succeed if agriculture could not be successful”

Literally speaking agriculture means the production of crops and live stock on a farm. Generally speaking, agriculture is cultivation of crops. In Economics, agriculture means cultivation of crops along with animal husbandry, poultry, dairy farming, fishing and even forestry.

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Agriculture is the back bone of our economy. Agriculture is important not only from economic point of view but has deep rooted influence on our social, political and cultural life. In the words of Jawahar Lal Nehru, “Agriculture needed top most priority because the Govt. and the nation would both fail to succeed if agriculture could not be successful”

The following points explain the significance of agriculture:

(i) Contribution to National Income:

Contribution to national income from agriculture, forests and other primary activities is 24%. In 1950-51 contribution of agricultural sector to national income was 59% and in 2004-05, it came down to 24.4%. Contribution of agricultural sector in national income is considerable. In rich countries the agriculture is quite developed but contribution is very little. In USA agriculture contributes only 2%. In under-developed countries like India, contribution of agriculture is national income was 27%.

(ii) Main source of Food:

Agriculture provides food for Nation. Before 1947, we had acute food shortage but after 1969 Green Revolution in agriculture has made us self sufficient in food production. In 2003-04, production of rice was 870 lakh metric tonnes and of wheat 721 lakh metric tonnes.

(iii) Agriculture and Industrial development:

For industrial development, agriculture plays active role. It provides essential raw materials to many industries like cotton textiles, jute, sugar, vegetables, oil, tinned food, Cigarettes and rubber etc.

(iv) Sources of Revenue:

Land revenue, excise duty on agro-based goods, taxes on production and sale of agricultural machinery forms a goods part of sources of Govt. Revenue.

(v) Source of Foreign trade:

Foreign trade is associated with agriculture. We export tea, tobacco, spices and coffee etc. Other agricultural exports include cotton, textiles, jute goods and sugar etc. So total share of agricultural exports becomes 70%.

(vi) Transport:

Means of transport are required for transporting food grains from farms to consumers and agricultural raw materials to markets and factories. Transport is also needed for taking chemical fertilizers, seeds, diesel and agricultural equipment from markets and factories to villages and farms.

(vii) Source of saving:

Green revolution has increased the production manifold and farmers become rich. The additional income earned by these farmers can be saved and invested in Banks.

(viii) Capital formation:

Agriculture also helps in capital formation. Surplus income from agriculture production can be invested in other sources like banks, shares etc. Use of tractors and harvesters increase capital formation.

(ix) International importance:

India ranks top position in production of groundnuts and sugarcane. It has second position in production of rice and staple cotton. It has third position in production of tobacco. Our agricultural universities are working as role model for other developing nations.

(x) Way of life:

Agriculture in India is not only a source of livelihood but has become a way life. Our fairs, festivals and customs are influenced by agriculture. In politics; too, agricultural community has say.

(xi) Effect on prices:

Sufficient production of food grains will bring stability in prices of food grains. This brings stability in cost of living and wages also. Agriculture influences the price level. So increased production of agriculture keeps the price stable.

(xii) Source of labour supply:

Agriculture is the main occupation in India. Majority of people live in villages. So labour force in various sectors like police, defence and industries is provided by villages disguised unemployment present in agricultural sector can be used as source of supply for other sectors.

(xiii) Economic development:

India is agricultural state. 71% people live in villages and most of these depend on agriculture. So development of agriculture gives boost is economy. Progress of industry, trade and transport is impossible without progress of agriculture. Stability of prices also depends on agriculture growth.

Related Articles:

• Importance of Agriculture in Indian Economy
• 8 Main Features of Indian Agriculture – Explained!
• 8 Main Features of Occupational Structure in India
• Agriculture and the Development of Indian Economy

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Essay on Agriculture: Short Essay, 100 and 250 Words

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• May 18, 2024

Agriculture is one of the major sectors in India that provide livelihood to the people. The majority of the Indian population depends on agriculture as it is the major source of income and contributes to around 18.3% of India’s GDP. It provides food, raw materials, and employment to billions of people across the world. As common people, most of us anticipate that agriculture is just the cultivation of crops.

However, it is much more than that, it includes fishery , livestock, forestry , and crop production . It is the backbone of the civilization. Read this blog and get to know how to write an essay on agriculture with the help of examples!

Table of Contents

• 1 Short Essay on Agriculture
• 2 Essay on Agriculture 100 Words
• 3.1 Significance of Agriculture
• 3.2 Challenges for Agriculture
• 3.3 Sustainable agriculture

Short Essay on Agriculture

India is also referred to as agricultural land because a major part of India is covered by agricultural activities. The entire world has been practising agriculture for thousands of years from the nomadic times to date. 

Agriculture started during the Neolithic Revolution for the production of food. Nowadays, the scenario has been completely changed with the application of AI tools and Machinery in the world of Agriculture. New technologies and equipment are being developed to replace the traditional methods of farming. Some of the AI technologies are integrated sensors, weathering forecasting, IoT-powered agriculture drones, smart spraying, etc. 

Millions of people across the world depend on agriculture, even animals are also dependent on agriculture for their fodder and habitat. Besides that, agriculture also plays a key role in the economic development of the country because 3/4th of the population depends on agriculture.

Also Read: Agriculture and Animal Husbandry 

Essay on Agriculture 100 Words

Agriculture is the main source of life on earth. Animals and humans depend on agriculture for a living. It is the oldest practice in the history of mankind. There has been tremendous growth and evolution in the field of agriculture.

The use of AI-based technology and modern techniques in farming is helping the sector to generate high yields with better quality. 

Now, our country is able to produce surplus food crops which is enough to satisfy domestic needs. It also helps to eradicate malnutrition and address hunger issues in various parts of the world. Thus, agriculture will always remain the cornerstone of human existence and continue to fulfil the demands of the changing world.

Also Read: Essay on Population Explosion

Essay on Agriculture 250 Words

Agriculture can be termed as the global powerhouse of the world. It is feeding billions of people across the world. Every individual directly or indirectly depends on agriculture.

Significance of Agriculture

The significance of agriculture is listed below:

• The food we consume is a gift of the agriculture sector. Farmers are working day and night to cultivate food crops for the entire human population.
• It also adds value to the Gross Domestic Product as well as the national income of the country.
• As it is one of the largest sectors, there is a huge need for a labor force and employees. Thus, it imparts employment to 80% of the people in this world.
• 70% of the total food crop production of India is used for the purpose of exports. Some of the main items of export are rice, spices, wheat, cotton, tea, tobacco, jute products, and many more.

Challenges for Agriculture

Every year, the agriculture sector has to face difficult challenges. It includes harsh weather conditions be it drought or flood or extreme heat waves and cold breezes. Soil degradation is also one of the major threats to agriculture due to soil erosion and soil pollution. All these conditions create the need to generate sustainable practices in the agriculture sector.

Sustainable agriculture

Advancement in technology helps to create sustainable agriculture. The use of technology in the field of agriculture like weather forecasts, automated sowing, drones, AI-driven sensors, pest control, etc. helps in developing sustainable agriculture.

Besides that, farmers are adopting new farming practices such as crop rotation reduced chemicals, organic farming, etc. for sustainable agriculture.

Also Read: Essay on Water Pollution

Agriculture is the process of cultivation of crops. Every individual is dependent on agriculture for food crops, and employment. The perfect essay on agriculture must include, what is agriculture, the importance, and the significance of agriculture.

Here are 5 main points about agriculture: Agriculture is the source of food and fodder for the world; It is one of the oldest human practices that date back thousands of years; Agriculture is essential for the breeding and raising of livestock; The incorporation of modern techniques in farming helped in the evolution of the agriculture sector; and Agriculture contributes to the economy of the nation.

Agriculture refers to the science, art, or practice of cultivating crops, raising livestock, and marketing the finished products for the use of human consumption while contributing to the economy of the country.

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Home » Agriculture » Role of Agriculture in Indian Economy

Role of Agriculture in Indian Economy

Agriculture plays a vital role in the Indian economy.  Over 70 per cent of the rural households depend on agriculture. Agriculture is an important sector of Indian economy as it contributes about 17% to the total GDP and provides employment to around 58% of the population. Indian agriculture has registered impressive growth over last few decades.  The foodgrains production has increased from 51 million tonnes (MT) in 1950-51 to 250MT during 2011-12 highest ever since independence

The share of agriculture in GDP increased to 19.9 per cent in 2020-21 from 17.8 per cent in 2019-20. The last time the contribution of the agriculture sector in GDP was at 20 per cent was in 2003-04.

• India is the biggest exporter of cotton in the world.
• India is the largest producer of ginger, okra, potatoes, onions, brinjal, etc., amongst vegetables.
• Sikkim is the first state in the world that claimed 100% organic farming.
• India ranks 2nd in the world in agriculture production.
• India’s world rank in services and industry sector is 9th and 5th respectively.
• Indian agricultural production has increased from 87 USD bn to 459 USD bn in the past 15 years (12% annual growth).

Globally India ranks 9th for the agricultural exports.

• Characteristics and features of Indian Agriculture
• Challenges of Indian Agriculture

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Celebrating World Trade Week - and U.S. Agriculture’s Trade Successes

May is World Trade Month and this is World Trade Week – a perfect opportunity to celebrate U.S. agriculture’s trade successes and highlight the importance of trade to the farm sector and to our nation as whole. After all, about 20 percent of all U.S. agricultural production is exported, providing a critical source of farm income, supporting more than a million jobs, and generating nearly $200 billion in additional economic activity each year in our rural communities and beyond.

Under the Biden-Harris Administration, U.S. agricultural exports have grown significantly, posting the three highest years in history in 2021-2023. And USDA remains committed to tapping more, new and better global market opportunities for our producers and agribusinesses through our trade policy and market development work.

Some of that work is behind the scenes, like our efforts to knock down trade barriers – including India’s tariffs on U.S. poultry and berries, which were reduced in March – and to ensure that our trading partners live up to their agriculture-related commitments under trade pacts such as the U.S.-Mexico-Canada Agreement.

And some of the work is more forward-facing, like our trade missions and trade shows, which put U.S. producers and exporters in direct contact potential customers. Over the past three years, 13 USDA agribusiness trade missions helped 227 companies to tap new opportunities in key markets worldwide. There are still four more missions to come yet this year – to Canada, Colombia, Vietnam, and Morrocco. We also give U.S. producers and companies a chance to showcase their products to potential foreign buyers numerous USDA-endorsed international trade shows each year.

In addition, USDA is building on the success of our longstanding market development programs by taking creative new approaches and allocating significant new resources to expanding foreign markets.

Earlier this week, Secretary Vilsack announced the first $300 million in awards, under the new $1.2 billion Regional Agricultural Promotion Program (RAPP) , to help 66 partner organizations expand export opportunities in diverse and dynamic new markets. And last week, we announced the first funding opportunities under the new Assisting Specialty Crop Exports (ASCE) initiative, an innovative partnership between USDA and the specialty crops sector to address the unique challenges that hinder U.S. exports of produce, tree nuts, horticultural crops, and related products.

The bottom line is that agricultural trade matters – to USDA, to the farm sector, to our nation, and to the world. So take a moment to celebrate this World Trade Week. Cheers! Prost! Kanpai! Cin cin! Santé! Salud!

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5 ways that free trade can boost sustainable agriculture in Africa

Unleashing the full potential of Africa's agricultural sector would have wide-ranging social, economic and environmental benefits. Image:  Reuters/Thomas Mukoya

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.chakra .wef-1nk5u5d{margin-top:16px;margin-bottom:16px;line-height:1.388;color:#2846F8;font-size:1.25rem;}@media screen and (min-width:56.5rem){.chakra .wef-1nk5u5d{font-size:1.125rem;}} Get involved .chakra .wef-9dduvl{margin-top:16px;margin-bottom:16px;line-height:1.388;font-size:1.25rem;}@media screen and (min-width:56.5rem){.chakra .wef-9dduvl{font-size:1.125rem;}} with our crowdsourced digital platform to deliver impact at scale

• Africa could become the world's powerhouse, particularly with the African Continent Free Trade Area (AfCFTA) seeking to remove trade barriers.
• AfCFTA is key to implementing the Agenda 2063 goals, which include healthy citizens and modern agriculture for increased productivity and production.
• Here are five focus areas to drive the Africa's agriculture and food production from potentiality to sustainability by leveraging the benefits of the AfCFTA.

Africa has the potential to become the world’s powerhouse in the coming years.

The continent is undergoing unprecedented changes, with the implementation of the African Continent Free Trade Area (AfCFTA) – which aims to eliminate trade barriers and boost intra-African trade – projected to represent a single market of 1.7 billion people and $6.7 trillion in consumer and business spending for the region by 2030.

AfCFTA is widely seen as a key step in implementing the Africa Union’s Agenda 2063 , which aspires to create a prosperous Africa based on inclusive growth and sustainable development. This includes specific goals such as creating a high standard of living for all citizens, a healthy and well-nourished populace and modern agriculture for increased productivity and production.

Have you read?

Afcfta: a new era for global business and investment in africa.

According to the African Development Bank (AfDB) the food and agriculture market alone has the potential to increase from $280 billion a year in 2023 to $1 trillion by 2030. Indeed, the agriculture sector in Africa already contributes to 35% of the continent’s gross domestic product (GDP) and employs more than half of the working population .

However, despite its crucial role in the African economy, most of the farming systems are not sustainable. It’s therefore important to unleash Africa’s agricultural capacity, especially that of smallholder farmers, in order to meet local and international demand for food, create more jobs, expand intra-Africa trade and make Africa a continent of infinite opportunities.

Here are five focus areas to drive the continent’s food production from potentiality to sustainability by leveraging the benefits of the AfCFTA.

1. Social impact

Farmers' livelihoods should be the first priority towards achieving sustainability, and smallholder farmers especially must have better living conditions in the future than today. In addition, farmers must have access to reliable farm inputs and be equipped with skills, financial resources and technology for sustainable food production.

One company working towards achieving these aims is Ghana’s Farmerline , which partners with local agribusiness and multinational firms to enhance supply chain resilience through data. Its Mergdata platform enables smallholder farmers to access educational resources, supplies and credit , and also assists companies in managing supply chains by predicting harvests and ensuring the sustainability and quality of their purchases.

Building a Resilient Tomorrow: Concrete Actions for Global Leaders

Impact investing should also be directed to women and youth, as studies have shown a huge improvement in productivity in every end-to-end value once women are in charge of agriculture.

After all, if farmers don't make their living sustainably, they will walk away from farming, with the biggest risk that the next generation of farmers don’t want to farm.

2. Economic impact

According to the African Development Bank (AfDB), Africa’s food and agriculture could be worth $1 trillion by the end of this decade . To pull off such prowess, it is imperative to make farmers more attractive to financial investment and make farming a more bankable business by de-risking investment in agriculture .

Achieving a sustainable economic impact implies investing more in initiatives that move farmers from conventional farming practices to regenerative ones – practices that result in an increase of productivity, and transformation to obtain value-added agriculture.

Freshafrika is an agritech company led by two African women using digital to bridge the gap between sustainably-produced nutritious African fruits and the rest of the world, in a bid to alleviate poverty, improve health and well-being and ensure responsible consumption and production.

An Action Plan to Accelerate Global Business and Investment in Africa

How the afcfta and wto can work towards sustainable investment in africa.

Affordability is therefore key in the AfCFTA single market of 1.7 billion people. Every consumer must have access to nutritious food with no additional cost. With such market size it is also important to leverage on the comparative and competitive advantages of the member states.

3. Environmental impact

Africa is endowed with a large diversity of soil, local crops and climatic conditions to which farm inputs must be adapted accordingly to deliver optimal crop yields and enhance farmers’ income.

Promoting low carbon initiatives in agriculture and nature positive practices, prioritizing soil health, avoiding extensive agriculture and deforestation, and embarking on the right type of fertiliser use, produced in a sustainable way adapted to African soil will all play a key role in building a sustainable food systems across the continent.

Farmers’ life revolves around the cycle of production which, in turn, is determined by weather becoming more and more unpredictable. It’s therefore crucial to empower farmers to better adapt to climate changes and their implementation of climate risk mitigation.

Virtual Irrigation Academy, or VIA, for example, has developed a suite of user-friendly, low-cost and accurate colour-based tools designed for smallholder farmers and irrigators to manage their water and fertilizer usage more effectively and sustainably and is currently being used in several African countries, including Malawi .

Other innovations are currently emerging and being implemented across Africa with the goal of producing more food with less land. It is truly a green revolution.

4. Technology innovation

Africa has been leaning towards technology innovation in food production these past years. An important way to unlock Africa’s agricultural potential, especially that of smallholder farmers, is to develop and deploy accessible and affordable digital agritech tools.

As highlighted above, technology enhances every stage of food production. Making great use of digital farming technologies and online environments improve sustainable use of resources and impact farmers livelihood.

The digitalization of trade processes throughout the African continent will exponentially multiply the AfCFTA potential and break every barrier to intra-African trade.

Impact investment must be directed toward digital technologies to improve farmers’ livelihood, to contribute to the economic impact of food production and to incentivize climate smart farming.

5. Collaboration between food systems stakeholders

The success of any goal would be impossible without cooperation between multiple public and private stakeholders from across the food value chain.

To produce food, farmers deal with many government divisions – land and water affairs, forestry and fisheries, environment and more – as well as many other stakeholders such as input suppliers, transport companies, commodity brokers etc.

This highlights the need for government cooperation considering the scale of investment for some of the infrastructure projects, as technology innovation is set to play a big role in food production and the movement of goods and services across the AfCFTA.

Food production is key to Africa’s sustainability

Africa’s food production sector is the main sector with huge potential to meet sustainable development goals. At the same time, Africa’s population is forecast to grow by one billion people by 2050 , making access to affordable and nutritious food the number one priority.

To tap into the infinite opportunities offered by leveraging the AfCFTA requires putting farmers, especially smallholder farmers' livelihoods, at the centre of every decision-making.

Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.

New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.

Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.

With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.

Learn more about Innovation with a Purpose's impact and contact us to see how you can get involved.

It is necessary for food production to be economically and environmentally impactful. Farmers and every other food stakeholder must have access to affordable technology innovation and cooperate to achieve the AfCFTA Agenda 2063 goals .

The full implementation of the AfCFTA agreement is projected to increase intra-African trade in agriculture by 574% by 2030 . However, the potential benefits to African countries will only be realized if governments eliminate tariff and non-tariff barriers to trade which will incentivize businesses to embrace and utilize the agreement.

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The Political Economy of Industrial Policy

We examine the ways in which political realities shape industrial policy through the lens of modern political economy. We consider two broad “governance constraints”: i) the political forces that shape how industrial policy is chosen and ii) the ways in which state capacity affects implementation. The framework of modern political economy suggests that government failure is not a necessary feature of industrial policy; rather, it is more likely to emerge when countries pursue industrial policies beyond their governance capacity constraints. As such, our political economy of industrial policy is not fatalist. Instead, it enables policymakers to constructively confront challenges.

We thank Bentley Allan, Heather Boushey, Cristina Caffarra, George Dibb, Claudio Ferraz, Mark Lane, Weijia Li, Jonas Meckling, Jonas Nahm, Dani Rodrik, Todd Tucker, and Eric Verhoogen for helpful comments and conversations. We thank Lottie Field, Mikhael Gaster, Saumya Joshi, Nancy Sun, and Esha Vaze for their excellent research assistance and input. We are indebted to Gian Aswin Chansrichawla for guiding our focus to Thailand as a candidate case study, and for helpful conversations and references about the Thai case. Funding from the Alfred P. Sloan Foundation is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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