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

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

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

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

Characteristics of Traditional Agriculture Low productivity but high efficiency Low 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) Efficiency

Output efficiency, given the technology and resource base Quantity of Beans per farm Revenue (and profits) are highest; where the iso-revenue line is tangent to the PPF Iso-revenue line P B /P C Production Possibility Frontier (PPF) Quantity of corn per farm

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

Characteristics of Traditional Agriculture Livestock important in most cases Livestock important in most cases

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

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

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