Traditional AgricultureTraditional Agriculture

Dr. George NortonAgricultural and

Applied EconomicsVirginia Tech

Copyright 2009

AAEC 3204AAEC 3204

Objectives Objectives

1. Consider common characteristics 1. Consider common characteristics of traditional agricultureof traditional agriculture

2. Identify the multiple roles of 2. Identify the multiple roles of livestock on traditional farming livestock on traditional farming systemssystems

3. Implications of characteristics of 3. Implications of characteristics of traditional agriculture for agricultural traditional agriculture for agricultural developmentdevelopment

Characteristics of Traditional Characteristics of Traditional AgricultureAgriculture

Intermixing of farm and family Intermixing of farm and family decisionsdecisions• Why? Why?

• Implications?Implications?

Characteristics of Traditional Characteristics of Traditional AgricultureAgriculture

Small farms with family & hired laborSmall farms with family & hired labor

Characteristics of Traditional Characteristics of Traditional AgricultureAgriculture

Low productivity but high efficiencyLow productivity but high efficiency• ““poor but efficient”. Why? Implications?poor but efficient”. Why? Implications?

Qty. of input #2(e.g. machinery)

Qty. of output(e.g. rice)

Qty. of input (e.g. labor)

Qty. of input #1(e.g. labor)

Highest-profit point along the production function

line whose slope is P(labor)/P(rice)

line of slope - P(machines)/P(labor)

Lowest-cost point along the isoquant

Allocative (Price) EfficiencyAllocative (Price) Efficiency

Output efficiency, given the technology and Output efficiency, given the technology and resource baseresource base

Quantity of Beans per farm

Revenue (and profits) are highest; where the iso-revenue line is tangent to the PPF

Iso-revenue linePB/PC

Production PossibilityFrontier (PPF)

Quantity of corn per farm

Characteristics of Traditional Characteristics of Traditional AgricultureAgriculture

Rational but risk adverse Rational but risk adverse (conservative)(conservative)• Joint & extended families, intercroppingJoint & extended families, intercropping

Characteristics of Traditional Characteristics of Traditional AgricultureAgriculture

Livestock important in most casesLivestock important in most cases

Roles of livestock in traditional Roles of livestock in traditional agricultureagriculture

Buffers and extenders (meat, milk, eggs)Buffers and extenders (meat, milk, eggs) FertilizerFertilizer FuelFuel Hides and hairHides and hair PowerPower TransportTransport Social and culturalSocial and cultural Capital (savings bank)Capital (savings bank)

Implications of Traditional Farms for Implications of Traditional Farms for Agricultural DevelopmentAgricultural Development

Must increase their productivity to Must increase their productivity to reduce poverty, especially in Africareduce poverty, especially in Africa

Risks must be reduced through new Risks must be reduced through new institutional arrangementsinstitutional arrangements

Even traditional farmers are Even traditional farmers are integrated today in the marketintegrated today in the market

ConclusionsConclusions

• Farmers are rational and relatively Farmers are rational and relatively efficient efficient

• Traditional farming systems are Traditional farming systems are inevitably changing as many inevitably changing as many technical and institutional factors technical and institutional factors drive these changesdrive these changes