Rethinking Agriculture and Transforming the Lives of the Poor

Many of the poorest people in the world are farmers—with farming accounting for 64 percent of the labor force of sub-Saharan Africa. While small farmers in East Asia have managed to achieve high yields and improved incomes, not least through the use of new technologies like seeds and fertilizers, productivity of small farmers in Africa lags far behind. This productivity gap provides both an opportunity and a challenge. Boosting the productivity of small farmers in sub-Saharan Africa has the potential to dramatically improve the lives of many of the poorest people in the world with better incomes, nutrition, and health. Many African countries also have the potential to move from net importers of food to net exporters. The fact that the take up of new technologies in Africa is so low means that there is substantial potential for improvements in productivity.

The challenges, however, are as substantial as the opportunities—there are reasons why African farmers have not adopted new technologies at the same rate as those in East and South Asia. The multitude of microclimates means that new crops have to be adapted to local conditions and how technologies should be used to be most profitable may vary substantially by area. Investment in new technology to meet local conditions is tiny in most African countries compared to Asia. Transportation infrastructure is very weak driving up the costs of inputs and reducing farmers’ access to markets. Access to financial instruments and information about new technologies are also major barriers to adoption.

However, there are signs that governments in Africa and donors are refocusing attention on agriculture as they recognize its central importance in the fight against poverty. Technologies to improve not only agricultural productivity of small farmers but also to reduce wastage of agricultural produce during storage and the nutritional value of produce are all likely to be part of the solution.

Suggested solutions

1. Invest more in agricultural technologies for the poor.

Whether it is new seeds or new farming practices, research and development of new technologies to promote the productivity of poor farmers is a global public good and as a result there is too little investment. This is particularly true for technologies specifically designed for countries with weak intellectual property rights. This type of R&D should be funded directly—as the Bill & Melinda Gates Foundation, Rockefeller Foundation, and some donors are doing, or through Advanced Market Commitments (along the lines of those being undertaken to promote vaccines for diseases for developing countries).

2. Cost effective strategies to promote technology adoption by the poorest

Many existing technologies that have the potential to improve productivity have surprisingly low adoption rates amongst poor farmers. There are many potential reasons, ranging from lack of credit, to lack of information, to distorted prices, to poor transport infrastructure that raises the price of inputs. We need cost-effective scalable solutions to help promote those agricultural technologies that can improve the lives of poor farmers particularly in Africa. These strategies to promote adoption need to be rigorously tested through randomized evaluations (just as the technologies are) so that the international community and governments around the world know which strategies are the best buy.

3. Learning from psychology about how to promote technology adoption

All of us fail to do things that are good for us (from exercising to saving). The new field of behavioral economics is studying this phenomenon rigorously and a range of studies are using insights from behavioral economics to make better policy from the Philippines to the US. Resent research suggests that behavioral economics can be used to promote technology adoption in Africa by small farmers. The study (by Duflo, Kremer, and Robinson) found that farmers make an average of 70% returns when they use inorganic fertilizer on their maize crops. Only about a quarter fraction of farmers used fertilizer even though fertilizer is readily available, farmers know it is highly profitable, and most claim they want to use it. In line with behavioral models they hypothesized that farmers plan to use fertilizer but are tempted to spend the money on other goods. By the time fertilizer is needed they do not have money left. A simple commitment savings devise with a deadline close to harvest time allows farmers to lock in their commitment to fertilizer and dramatically increases technology adoption (about the same amount as a 50% reduction in the price of fertilizer at the time of purchase). Many have assumed that credit is the answer to promoting productive investments by poor farmers but the world is littered with failed or failing agricultural banks and microfinance with its short repayment periods is not well designed for the agricultural cycle. These results suggest that savings vehicles (that learn from psychology) may be a better answer.