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Agriculture Development in Economic Development Essay

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Updated: Aug 12th, 2019


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:

  • 1st, 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.
  • 2nd, a majority of household income is derived from agriculture. This is therefore the major source of income for the households.
  • 3rd, 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 3rd 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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