Traditional Agriculture

AAEC 3204 Dr. George Norton Agricultural and Applied Economics Virginia Tech Copyright 2009

Objectives

   1. Consider common characteristics of traditional agriculture 2. Identify the multiple roles of livestock on traditional farming systems 3. Implications of characteristics of traditional agriculture for agricultural development

Characteristics of Traditional Agriculture  Intermixing of farm and family decisions • Why? • Implications?

Characteristics of Traditional Agriculture  Small farms with family & hired labor

Characteristics of Traditional Agriculture  Low productivity but high efficiency • “poor but efficient”. Why? Implications?

Allocative (Price) Efficiency Qty. of output (e.g. rice) line whose slope is P(labor)/P(rice) Highest-profit point along the production function Qty. of input #1 (e.g. labor) Qty. of input (e.g. labor) Lowest-cost point along the isoquant line of slope P(machines)/P(labor) Qty. of input #2 (e.g. machinery)

Output efficiency, given the technology and resource base Quantity of corn per farm

Production Possibility Frontier (PPF) Revenue (and profits) are highest; where the iso-revenue line is tangent to the PPF Iso-revenue line P B /P C

Quantity of Beans per farm

Characteristics of Traditional Agriculture  Rational but risk adverse (conservative) • Joint & extended families, intercropping

Characteristics of Traditional Agriculture  Livestock important in most cases

Roles of livestock in traditional agriculture         Buffers and extenders (meat, milk, eggs) Fertilizer Fuel Hides and hair Power Transport Social and cultural Capital (savings bank)

Implications of Traditional Farms for Agricultural Development    Must increase their productivity to reduce poverty, especially in Africa Risks must be reduced through new institutional arrangements Even traditional farmers are integrated today in the market

Conclusions

• • Farmers are rational and relatively efficient Traditional farming systems are inevitably changing as many technical and institutional factors drive these changes