COMMENTS ONHARVESTING PROSPERITY: TECHNOLOGY & PRODUCTIVITY GROWTH IN AGRICULTURE

Aya Suzuki (U Tokyo)December 9 (Mon), 2019WB Tokyo Office

OVERALLGreat overview of agricultural growth, productivity, what are impeding technology adoption, and means to improve, based on recent research & data.

Particularly illuminating to know No definitive advantages for small nor large farms. Not much difference in labor productivity between ag & non-ag sectors, particularly for marginal productivity. Various policy prescriptions to enhance technology adoption. Forms of modern value chain innovations and when these are likely to occur.

Four points to comment on: Ag/Non-ag labor productivity gap Reducing risks - Role of processing sector Controlling & rewarding high quality Importance of R&D

1. AG & NON-AG LABOR PRODUCTIVITY GAP NOT VERY LARGE

Shows labor productivity not very different between ag & non-ag sectors if measured per hour

Explains why farmers stay in ag sector

(Fuglie, Gautam, Goyal, & Maloney 2019)

Suzuki, Mano, & Abebe (2018) compared workers in cut flower sector & in other sectors (incl. ag).

Yearly income higher for cut flower workers relative to workers in other sectors.

Within cut flower sector, those farms with higher turnover rates are paying higher wages.

Cut flower workers are happy abut income level, stability, and future prospect of their current jobs, but not necessarily happy about the type of work that they do.

Indicates that labor markets in these countries are functioning.

Given that industrial sectors decide to locate if wage is low enough to be competitive internationally, it is natural to think that these firms pay wages which are comparable to the locally available wage.

To receive higher returns to labor, workers need to step up to obtain higher skills/ education.c.f.) Supervisors in cut flower sector earn much higher wage.

2. REDUCING RISKS – ROLE OF PROCESSING SECTORMajor risks: production risks & market risks (Fuglie, Gautam, Goyal, & Maloney 2019)

Insurance often considered as a measure to reduce risks, but take-ups often low (Carter et al. 2017).

Another important aspect of reducing risks is developing a processing sectorand supporting industry (Suzuki & Nam 2019).

Particularly important for high-value crops, which are perishables.

Important to look beyond agriculture sector

PINEAPPLE SECTOR IN GHANA & THAILAND

Major difference: Depth of the processing sector

Ghana: Export & local variety different, so once export pineapple is not sold to exporters, farmers face a huge loss.

Thailand: Farmers can sell all fruits any time. If quality is not met, traders peel pineapples & sell to other markets, such as juice, jam, or even to an animal feed market.None is wasted, all is sold.

Ghana Thailand

Major form Fresh fruit Canned fruit

Market Export (EU) Export & Domestic

Who produces

Large plantation owned by exporters + Smallholders (partial vertical integration)

Major producer: Smallholders

Processing sector

Under-developed Very well developed

(Suzuki & Nam 2019)

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3. CONTROLLING & REWARDING HIGH-QUALITY

Signaling: Labelling (Organic, GLOBALGAP, etc.) helps to distinguish quality and offer higher prices for farmers.However, costs of getting these labels high for farmers (inviting auditors, annual renewal, etc.). (Jaffee & Henson 2004, UNIDO-

IDE 2013)

Building Reputation:Quality inspection & monitoring by governments (Arimoto 2017) Input supply chain control Incentivize extension workersAccess to timely informationMeans to visualize quality

Quality matters a lot for high-value ag produce.

Assuring quality important to avoid “race to the bottom”

SHRIMP SECTOR IN THAILAND

Requires shrimp farmer registration (ID) Use of public labs, receive subsidized probiotics, selling to collectors

“Movement Documents” From hatchery to processors, finally to Department of Fisheries Signed by buyers & sellers at each stage “Aquatic Animal Movement Document” “Aquatic Animal Fry Movement Document”

Frequent exchange of farming information Local shrimp club meetings held frequently FB groups including farmers, academia, & private sector

Access to public laboratories to test shrimps15

(Suzuki & Nam 2016)

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4. IMPORTANCE OF R&D

R&D often refer to scientific agricultural research

However, “the most binding constraints” are also often not well understood, even locally While we know a list of constraints, we often do not know which is the most important

Need for more socio-economic research for specific cases What kind of policies are necessary under what kind of conditions/ sectors/ levels of development

Thank you very much.

(Fuglie, Gautam, Goyal, & Maloney 2019)