Towards a Strategy for Rural Development

1. Towards a Strategy for Rural Development Some Main Requirements

2. Principal Sources of Agricultural and Rural Progress • Technological Change and Innovation- no scope for improvement by moving into new land. Two major sources: • 1. “Mechanized” agriculture to replace human labor but mechanized equipment may not be suited to land and it displaces workers creating unemployment • 2. Inputs for Green Revolution: hybrid seeds, water control (irrigation), chemicals (fertilizers, pesticides, insecticides)

3. Principal Sources of Agricultural and Rural Progress • Appropriate Institutional and Government Economic Policies • Inputs are “scale neutral” useful at a variety of scales • But too often large landowners have better access to these inputs and low interest government loans while smallholders turn to moneylenders • Low prices for output provide no incentive for farmers to produce surplus • Must create incentives for small farmers—this often means less government intervention

4. Three Conditions for Rural Development • 1. Land reform- farm structures and land tenure patterns need to be adapted to : increasing food production and promoting benefits of agrarian progress • Highly unequal structure of land ownership probably single most important determinant in explaining inequitable distribution of income

5. Three Conditions for Rural Development • 2. Supportive Policies- need government policies that provide incentives and opportunities and access to needed inputs • Must be corresponding changes in rural institutions that control production (banks, moneylenders) • Must be corresponding changes in supporting government services (credit, education, rural transport and feeder roads)

6. Three Conditions for Rural Development • 3. Integrated Development Objectives • Simultaneous changes needed in income, employment, education, housing, health and nutrition • Lessening of rural-urban imbalances in income opportunities • Capacity of rural sector to sustain and accelerate these improvements over time

7. Land Reform • What is land reform? Reorganization of landholding and tenure structures • Accomplished in two ways: • A. Expropriation-with or without compensation of privately owned estates to benefit small scale peasantry and landless • B. Consolidation of excessively small or fragmented holdings • Agrarian reform- is closely related involving redistribution of land but also provision of roads, rural electricity, rural credit, extension services

8. Experiments in Land Reform • Zimbabwe- in 1980s state attempted to eliminate dualist structure where “white farmers” had major interests • Resettlement aimed to provide landless families displaced by war with land on former European farms • But by 1990s only 52 thousand families were moved; schemes fragmented • Mugabe government has expropriated European farms and the ‘backlash’ has been for these farmers to move to Zambia

9. Experiments in Land Reform • Indonesia- Transmigration Program • Dutch initiated in early 1900s where families were recruited in Java, Bali and Lombok and resettled to the Sumatra, Kalimantan and Sulawesi • Over 4 million people moved but results have been uneven: poor land, environmental damage, necessity to find off farm employment • Program was terminated in 2001

10. Experiments in Land Reform • Cuba- At end of Cuban Revolution in 1959 sugar companies controlled 20 percent of farmland • Staged expropriation of large farming units to state control • Enlargement of small scale private sector gave land ownership to all tenants, sharecroppers and squatters • Provided basis for socialist agricultural development and provision of health services and education • But has this system succeeded in bringing better livelihoods to Cuban families??

11. Vietnam -Economic Reform or Renovation:Doi Moi • Dismantling of economic communes or collectives • Reallocation of land use for family farms • Opening country to foreign direct investment- recognize value of market mechanism • Reform of banking sector • Establish real interest rates>>>Savings • Direct subsidies to State Owned Enterprises (SOEs) ended