Technological Change in Agriculture and Poverty

The challenge for developing country agriculture in the next 25 years is enormous, particularly if it is not only to satisfy the growing effective demand for food, but also help reduce poverty and malnutrition, and do it in an environmentally sustainable fashion. Due to population growth and rising incomes, demand in the developing countries is predicted to increase by 59% for cereals, 60% for roots and tubers, and 120% for meat over this period (Pinstrup-Andersen, Pandya-Lorch, and Rosengrant, 1997). This increased supply cannot come from area expansion since that has already become a minimal source of output growth at a world scale, and a negative source in Asia and Latin America. Neither can it come from any significant expansion in irrigated area due to competition for water with urban demand and rising environmental problems associated with chemical run-offs. While it will thus need to come from growth in yields, the growth rate in cereal yields in developing countries has been declining from an annual rate of 2.9% in 1967-82 to 1.8% in 1982-94, which is the rate needed to satisfy the predicted 59% increase in cereals over the next 25 years. The growth in yields cannot consequently be let to fall below this rate in developing countries without increasing the share of food consumption that is imported. With 1.3 billion people in absolute poverty (earning less than $1 per day) and 800 million underfed in the developing countries (World Bank, 1997), agriculture should also have a major role to play in poverty reduction, particularly since three quarters of these poor and underfed live in the rural areas where they derive part if not all of their livelihoods from agriculture as producers or as workers in agriculture and related industries. The real income of poor consumers also importantly depends on the price of food.