Agricultural Technology,
Productivity, and Poverty in
Madagascar
Bart Minten
Chris Barrett
February 2006
Presentation Outline
1.
2.
3.
4.
5.
6.
7.
8.
Introduction
Conceptual framework
Data and methodology
Descriptive statistics
Price and real wage effects
How to improve agricultural
performance?
Simulated impacts of alternative
policy interventions
Conclusions
1. Introduction





Most of the poor (in Madagascar) lives in rural areas
Most of the rural poor are employed in agriculture,
sometimes as farmers, sometimes as agricultural
laborers, sometimes both.
All the poor eat. So all are consumers. Many poor
producers are actually net buyers .
Because the poor are both consumers and (often)
producers, sometimes wage laborers, the effects of
agricultural technology adoption and productivity
improvements on the poor follow multiple pathways.
Need to trace out these various pathways.
2. Conceptual framework
Three sub-populations:
Net food sellers
Net food buyers
Unskilled workers
2. Conceptual framework
Three pathways through which exogenous changes in
agricultural productivity affect the poor:



Effects on prices. In isolation, price effects of
productivity improvements benefit only net food
buyers.
Effects on incomes through farm profits: if output
expands faster than prices fall, net food sellers
gain.
Effects on real wages through induced change in
labor demand and prices: if MRPL increases,
employment and wages increase, benefitting
unskilled workers.
3. Data and methodology
Data sources:
1.
2001 Commune census (Cornell/FOFIFA/INSTAT)
2.
2001 National household survey, EPM (INSTAT)
3.
1993 Population census (INSTAT)
4.
Secondary geographic data on climate, soils,
altitude (various Malagasy sources)
We take communes (N=1392) as unit of analysis and
rice as the focal crop.
Use regression analysis with Conley correction for
spatial autocorrelation and heteroskedasticity and
prospective endogeneity of key regressors.
4. Descriptive statistics
Net marketable rice surplus and poverty
Table 1: Net buyers and sellers of rice in Madagascar
Total
Poverty quintile*
Quintile 2
Quintile 3
Quintile 4
% of households
Quintile 1
Of the total rural population
Producers of rice
70
82
79
74
Net buyers of rice (in value terms)
67
67
64
67
Net sellers of rice (in value terms)
25
22
28
25
Of the rice producers
Hhs that both bought and sold rice during year
33
35
37
36
Net buyers of rice (in value terms)
55
61
58
56
Net sellers of rice (in value terms)
36
27
35
34
Source: Own calculations based on 2001 National Houshold Survey, INSTAT
* Quintile 1=poorest quintile; Quintile 5=richest quintile; poverty measures based on consumption expenditures
Quintile 5
69
64
30
44
74
20
29
49
42
23
48
42
The relationship between household marketable rice
surplus and poverty is weak because of occupational choice
(rich less likely to be rice farmers).
4. Descriptive statistics
Agricultural wage rates (FMG/day)
Province
Antananarivo
Fianarantsoa
Toamasina
Mahajanga
Toliary
Antsiranana
Total
Female
5765
4579
6605
8913
7449
13353
6817
Male
6440
5156
6819
9798
8244
14773
7551
There exists a strong inverse relation between wages and
poverty indicators within/between provinces in Madagascar.
4. Descriptive statistics
Percentage of
population
who are food
insecure
4. Descriptive statistics
Duration of
annual
soudure
5. Price and real wage effects
Determinants of poverty/food insecurity
Results :



Doubling rice yield lowers # food insecure by
38% and shortens lean period by 1.7 months
Presence of cash crops reduces poverty
indicators
Remoteness increases poverty: 1st-5th quintile
means 10% more food insecure and 0.7
months longer lean season
5. Price and real wage effects
Productivity and prices

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Rice yields: Yield elasticity of price =
31-45% (18-26%) in harvest (lean) periods
Remoteness reduces harvest period prices
and raises lean period prices (hurts both net
buyers and net sellers)
Seasonal harvest concentration reduces
prices, especially in lean season (30-50%)
Physical insecurity drives prices down,
especially in harvest period
Cash crop presence drives up rice prices
5. Price and real wage effects
Productivity and real wages

Rice yields: doubling rice yields,
increases real wages 65-89%.

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Coefficient estimates on prices and wages
imply induced labor demand during
growing season (difference between OLS
and IV estimates)
Cash crops: increase real wages
Remoteness: negative effect, especially
in harvest period
5. Price and real wage effects
Summary

Increasing rice yields has a strong, positive
effect on food security among all the poor:

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Rice prices fall 18-45%, benefitting net buyers
Output increases faster than prices fall, benefitting
net sellers (capture 10-60% of productivity gains)
Labor demand and real wages increase 65-89%,
benefitting unskilled workers.
Remoteness hurts everyone (lower harvest
period prices for net sellers, higher soudure
prices for net buyers, lower real wages)
Cash crops: ambiguous results: help unskilled
workers and net sellers but hurt net buyers
(i.e., small rice farmers)
6. How to improve agricultural performance?
Rudimentary production systems


Very low rates of adoption of chemical
fertilizer (6%), organic fertilizer (36%),
improved seed (10%), SRI, etc.
Given strong positive effect of these
agronomic enhancements on rice yields and
the positive role rice yields play in advancing
food security, key policy question is:

How to stimulate greater uptake and increase rice
yields?
6. How to improve agricultural performance?
Direct and indirect effects on rice yields


Strong, positive direct effects on rice yields
from fertilizer, improved seed, SRI, improved
NRM, agricultural equipment, livestock, and
irrigation.
Strong, positive indirect effects on rice yields
– via induced uptake of agricultural
intensification technologies – through
irrigation, access to markets, and literacy.
7. Simulated effects of alternative
policy interventions
%
Communes
Estimated changes
Rice price
Real wage
1. Increase rice yields 1 ton/hectare
100
-20%
+37%
2. Adopt flood resistant varieties
34
-9%
+11%
3. Adopt drought resistant varieties
30
-9%
+9%
4. Adopt high altitude varieties
21
-3%
+6%
5. Adopt short cycle varieties
41
-8%
+14%
6. Adopt rice flea resistant varieties
36
-7%
+15%
7. Bring all communes to least
remote quintile
89
+8%
+15%
7. Conclusions
Adoption of improved agricultural
technologies – so as to increase rice
yields and demand for unskilled
agricultural labor – aids all types of
the rural poor and food insecure:
1)
2)
3)
Net sellers
Net buyers
Unskilled workers
7. Conclusions
No magic bullet nor striking new
approach:
Stimulating agricultural productivity
improvements – and improving rural
market access – are familiar tasks with
high payoff in terms of broad-based
poverty reduction.
Need long-term commitment to rural and
agricultural development based on
technological change.
Thank you for your
comments and time!