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Why Agenda 2030's Sustainable Development Goals are not being met
Part 2


Hector McNeill
SEEL-Systems Engineering Economics Lab

In Part 1 of this article some of the reasons for Agenda 2030 failing on some specific items were identified and discussed.

Paradoxically amongst the 17 Sustainable Development Goals (SDGs) and over 230 indicators, the fundamental constraints of population size and growth and the general failure of macroeconomic policy to control inflation do not feature as significant topics. However, for low income countries these represent major impediments to meeting SDGs.

The article has been transformed into a series, at the request of the Agricultural Innovation editorial. Each Part will cover different components of the complex of factors that determine sustainability. Each Pat will identify the policy targets that macroeconomic policy instruments need to impact. The last Part of this series will review the policy instruments that can impact all of the factors reviewed in a way that provides incentives to move us towards sustainability.

This is Part 2 and it reviews the technical quantitative input-output relationships of relevant agricultural processes.



Resume of Part 1

In Part 1 reference was made to statements by Dr. Jean-Paul Moatti a member of the expert group charged by the UN with evaluating progress of Agenda 2030. He identified difficulties in the avhievement of objectives and in particular three problem areas requiring more effort. These include the reduction of inequalities (SDG 10), the limitation and adaptation to climate change (SDG 13) and the reduction of the environmental and ecological footprint of our modes of production and consumption (SDG 12). A significant additional point is that when economic growth occurs SDG appear to go backwards. Dr. Moatti emphasised the need to somehow decorrelate climate change efforts from economic growth.

In Part 1 I explained why conventional macroeconomic policy, based on the aggregate demand model (ADM) is, in general, inflationary and causes real incomes of those on fixed nominal incomes to fall. As purchasing power declines, the inability to purchase essential items impacts the lower income segments first and then progresses to impact those with marginally higher nominal incomes in a stepwise fashion over time.

As a result of this real income erosion treadmill, inequalities increase. The challenge, therefore, becomes how to create a situation where production can remain economically feasible while producing output at unit prices that are accessible to lower income groups. Paradoxically the preparatory work and design of many projects does not include realistic analyses and projections of inflation and the state of real incomes of target groups (beneficiaries). This can lead to output unit costs being too high and eroding any possibility of a positive return on the project investment. The risk then becomes that the low income target groups remain with their needs not being met while investors regain their return on investment by selling output to higher income market segments.

Population growth rates is an additinal factor that reduces the rate of growth in real incomes which is also often absent from project constraints assessments. The relationship between real incomes growth, population and inflation rates was provided as follows:

dR = dN dP - dI .. (i)
or
dR = dN (dP + dI) .. (ii)

Where:

dR is the growth in real income;
dN is the growth in nominal income;
dP is the population growth rate;
dI is the inflation rate or rise in average unit prices.
Production, Accessibility and Consumption Model in action

Unlike the conventional macroeconomic ADM (aggregate demand model) the Production, Accessibility and Consumption Model (PACM) is supply- or producer-side orientated. To illustrate how this works the best examples are to be found in high technology and electronics where the technology and technique of production make significant gains in the reduction of costs resulting in the ability of producers to sell units at constantly falling unit prices which augment the purchasing power and real incomes of consumers.

As is self-evident, this is a demonstration of the feasibility of associated pricing decisions being counter-inflationary helping promote a simultaneous rise in the real incomes of both producers and consumers. It should be emphasised that this process has continued unabated while monetary policy has gone through several cycles. It has occurred in spite of monetary policy.

The rise in real incomes of both producers and consumers can be visualised in the diagram below as an overall desirable movement from left to right.
Real income is the purchasing power of nominal income. Nominal income is the value of income measured in currency units. Real income is measured by dividing nominal income by the product of quantities of needed products and their unit prices. If unit prices rise, the purchasing power declines with real incomes. Therefore nominal incomes do not provide a reliable estimate of their value.

In the graph below there are two lines equivalent to a nominal income of 1 and another equivalent to a nominal income of 2.

Point "a" is a starting point where nominal income is 1 and unit prices are also 1 and the real income is 1. If average unit prices are reduced from 1 to 0.75 real incomes rise to point "b", a further decline down to 0.50 traverses point "c" to end up at point "d" where real income has risen to 2. In the case of inflation, for example unit prices rising by 50%, real income declines to point f. A doubling of unit prices halves real income.

The impact of population growth and inflation can be dramatic. For example a typical inflation rate in an East African country of 6% and natural population growth rate of 2.8 will result in a reduction of purchasing power of 8.8% each year which is equivalent to a decline in purchasing power of the currency of 37% in 5 years. For real incomes to rise over this period would require a rise in nominal incomes, over the same period of at least 37%, or an annual increase in excess of 8.8%. Under current international circumstances, most low income countries cannot attain such a high nominal growth rate. As a result the real incomes erosion treadmill continues to undermine sustainability.

Population size and growth rates

Population size and growth rates represents the primary physical pressure on the consumption of natural resources, reduction in biodiversity and exacerbation of climate change factors. There is therefore a need to encourage population control policies that encourage free access to the full range of knowledge, practical means and health services for people to manage the size of their families. There is a general tendency for family size to fall as income levels rise, however, the struggle to secure rises in real incomes amongst lower income segments remains a major challenge.

Inflation rates

There is a common misunderstanding of what causes inflation. Macroeconomists will often state that rises in money volumes and lower interest rates will encourage inflation. However, this sort of statement was made by leading monetary economists in the 1970s as their justification for tackling slumpflation with high interest rates. Since then, there have been several ecomnomic cycles and, now, after over 40 years, there has been no direct empirical evidence produced that demonstrated the mechanism of how interest rate and money volumes exercise control over inflation. Paradoxically, the actual mechanism that gives rise to inflation is not related directly to monetary policy. The mechanism remains completely under the control of production or supply side decisions on priving made by managers of economic units. The general microeconomic motivation of maximising profits provides a permanent incentive for managwr to raise unit prices where feasible. As a result, conventional macroeconomic policies which are founded on an aggregate demand model (ADM), creates a propensity for managers to raise unit prices rather than moderate them. Unit prices will often be raised in response to rises in input costs. Under extreme conditions, such as Brazil in the 1970s, inflation became an endemic phsychological condition where a trader would increase unit prices on a daily basis just to maintain real incomes in a market environment where suppliers were acting in the same way. This ends up as "run away inflation" or epidemic. This was caused by the significant rises in international price of petroleum, a major import at that time leading, to slumpflation which also affected the rest of the world.

In low income countries a sustantial proportion of consumers cannot afford high prices. On the other hand, there is a need for producers to be able to sell at a price which provides a compensatory margin.

The box on the right provides a practical example of a supply- or producer-side model, known as the Production, Accessibiliy and Consumption model (PACM) which provides an explanation on how inflation can be controlled in a transparent fashion purely by supply side decisions of manager of economic units.

A recent addition to this site, prepared by the APEurope Economics Unit, entitled "The Production, Accessibility & Consumption Model, Step by step", explains how population growth and inflation excerbates inequality by explaining the Accessibiity and Consumption aspects, "AC" in PACM.

I will be explaining the production aspects of this model - the "P" in PACM. This analysis opens up a wide range of policy options that can provide incentives for production units respond to the needs of consumers. There are, however, production units which themselves currently generate inadequate incomes or are outside the cash economy as subsistence producers. In these cases there is a need to address the need of this group through alternaive means with a view to bringing about an augmentation in their real incomes.

Towards solutions

To identify solutions to these issues it is necessary to review the project level indicators of contraints facing projects referred to in Part 1. These were listed as:
  1. human population size and growth rate
  2. general macroeconomic framework and policies to contain inflation
  3. technical quantitative input-output relationships of any process
  4. economic quantitative input-output relationships
  5. financial quantitative cash flow resulting from economic relationships over time
  6. financial return to economic units
  7. social and real income distribution and inequality status outcomes
  8. physical environmental impact status
  9. ecosystem impact status
The first two: 1. human population size and growth and, 2. the need to contain inflation were reviewed in Part 1 of this article. This articles is Part 2 of the series and it reviews item 3. which takes us into the realms of technologies, techniques, innovation and productivity, it will review the PHYSICAL facors of production.

The economic and financial issues under items 4, 5 and 6 will be covered in a subsequent article.

Physical factors of production

The phsycal factors of production include the various inputs such as labour, seeds and fetilizer or livestock and housing as well as the natural environment including rainfall, temperatures, soil structure and texture. This is an extensive topic. Therefore rather than extend the article covering all of this detail I have placed links to existing content on the relevant topics as they arise.

For those who have been working in this field for some time, most of what follows is well-known, but it is important in the context of the importance of this subject to the survival of so many under sustainable conditions, that an adequate converage of the principal factors is made. If the majority of projects were of such a quality that all factors are taken into account there would be no need for this sort of article. Unfortunately with an average 35% project failure rate and where agriculture makes up the larger proportion of the failed projects, such a stepwise approach is essential.
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Innovation

Amongst the 17 SDGs, some key topics appear to have a limited scope because they have been combined with other objectives into single SDGs. This has the effect of limiting the scope of national level indicators to predefined actions while ignoring the broader potential applications of the same. For example SDG 9 combines industry, innovation and infrastructure and associates these with a limited number of indicators. It would appear that a separation of these combined goals, as shown in the box on the right, would be a logical step to broaden and raise the potential of each in contributing to sustainability across a wider range of activities.

For example, innovation is a vital activity for all sectors and it would seem to have been associated solely, in terms of headline goal titles with industry or infrastructure.

Innovation is broadly defined as the occurrence of something being achieved in a different way in a specific location, for the first time. Most innovation is associated with enhanced productivity and occurs as a result of learning. A precursor to many innovations is research but this features in some of the SDGs along the conventional lines of investment and researcher counts. It is also referred to in the important areas of agricultural and medical research. One of the most rapid means of introducing meaningful rises in productivity is through disseminating information and encouraging the take-up of existing technologies through technology transfer. In this process, applied research and adaptive research are vital accompanying actvities to ensure that the benefits of technolgy transfer are secured through adaptation to local conditions. This important area is covered in the coverall SDG 17 in the form of technology banks and knowledge sharing.

The contribution of innovation to productivity has a major part to play in reducing the degree to which inflation contributes to inequality in rural communities.

Productivity and the learning curve

High technology firms have for many years made use of the learning curve to project their likely unit cost profiles providing an ability to penetrate markets with the products and services supported by their devices. By initiating this market penetration with lower margins, turnover rises as does learning based on perfecting the way, sometime mundane, repetitive tasks are undertaken. As a result, unit costs decline further resulting in rising margins and falling unit prices. The learning curve is a pervasive relationship between an individual's competence in carrying out a repetitive task and the number of times the task is repeated. People build up what is known as tacit knowledge which is an applied and practical "know how do" as a result of learning how to operate different processes. The learning curve measures the increasing individual performance or productivity in the execution of the task.

As a rule of thumb, the time and associated resources required to complete each task falls by a fixed amount for every doubling of historic throughput. Usually less time is taken to carry out a task and less errors are made and the "yield" of the process increases. The learning curve theory has been applied successfully for a wide range of industries involved in continuous processes.

The more labour-intensive a task, the greater is the rate of learning and the rate of increase in productivity, referred to as the Learning Curve Coefficient (LCC). The more mechanised a task becomes, the lower is the LCC (lower gain from learning) and in some automated tasks the LCC is very low.
Figure 1: Learning curve coefficient of 80% signifying
a 20% reduction in time with every doubling of historic throughput

Agriculture and LCCs

The agricultural sector, especially in low income countries, is labour-intensive and therefore has a high LCC. It also consists of multiple activities that are connected by supply chain links. The levels of productivity achieved and unit costs associated with at each supply chain activity are all subject to LCC gains over time. The actual combined levels of supply chain productivity depend upon the experience, the technology and techniques applied and access to resources by those carrying out the actvities concerned. The experience gained from working on specific tasks invariably results in changes in the way activities are performed and these usually result in a more efficient use of time and resources. This experience places people in a good position to identify ways and means of introducing changes, innovations, that can further advance effectiveness and efficiency.

State-of-the-art technologies and practice

At any point in time, there exists a range of state-of-the-art technologies and techniques associated with any process. Reviews of these ranges of methods some can be identified as the most effective and efficient in terms of physical productivity. Against the "productivity" benchmark or standard can be set conditions such as lowest cost, lowest environmenal impact and others. It is therefore, in the context of the subject matter of this article to always qualify "best practice" by the comparative results of options in terms of physical input-output as well as the conditional preferences or constraints imposed on the qualifying range of technologies.

Establishing priorities between research and technology transfer

Research groups develop a particularly intimate understanding of their topics as they probe alternative pathways towards a deeper understanding of factors that determine successful applicable results. In complex areas such as bio-medicine, the maintenance of momemtnum is of some importance since lack of support significantly slows down the necessary rate of advance of knowledge acquisition and developmen of useful results. However, in the context of Agenda 2030 timeline, major advances in productivity and human wellbing can be achieved within more predictable and relatvely short periods through selective technology transfer. There is therefore a fine balance to be struck between the prioritization of actions that support research and adaptive or applied research associated with technology transfer.

What is feasible?

Agricultural experimental plots can demonstrate that combinations of specific genotypes and level of fertilizer applications can result in a range of yields. This enables the specification of reference benchmarks of the potential yields attainable. In practice, on farm units, almost no one operates at these levels of physical productivity for many reasons including, farm size, access to relevant resources, market conditions, access to cash, the prevailing agro-ecological conditions, knowledge on technology, techniques, cultivars available, overall experience and skill, risk-aversion and many others. Therefore what might be eventually feasible within the sector, in terms of improvements in productivity and sustainability, cannot be implanted across a sector within a short period of time. No matter what aspects of current practice need to be improved, their introduction will take time and involve learning, and yes, the LCC. There is therefore, always, a performance gap to be made up which, depending on a producer's circmstances, which if closed, can represent a significant rise in productivity, improved sustainability, a possible lowering of unit costs and an ability to moderate unit prices. The measurement of performance gaps is based on benchmarks established from the range of observed and measured on-farm productivity achievements in a range of operational systems. It is therefore feasible to identify and calculate gaps defined as the difference between what is achievable and what is currently achieved.

However, the ability of any producer to raise performance depends upon the scale of production, the competence of the producer, access to information on state-of-the-art and the range of attainable performance. Performance is also dependent on the natural resources and agro-ecological circumstances, proximity to factor and produce markets, factor and produce market prices and the real incomes of consumers. Therefore the solution for any particular producer will vary from that of others.

Some environmental factors

The graph on the right is a set of curves that represent the "yield response curves" of a crop of barley to the input of Potassium. As can be observed there are 3 distinct curves that represent the responses in different years to exactly the same levels of input to the same genotype of barley. These significant differences in yield were caused by the different temperature and water regimes that prevailed in each of the years of this experiment.

This experiment was repeated in the years concerned in the same geographic location. The conclusion from this information is that yields not only depend upon genotypes and inputs selected by farmers, they also depend upon temperature and water regimes that are varied by "nature" according to the season. As can be observed from the experimental results the range in yields can be very significant. The significant message is that depending upon location the range of yields with seasons will vary. So in areas with higher average rainfall the range of yields will be different from zones with lower average rainfalls and the regions with higher average temperatures will have different yield ranges from those with lower average temperatures.

Locational state

The ranges of yields are dependent upon the locational state of a crop. Thus the state or yield depends upon how the environmental factors of temperature and water


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availability vary with geographic location (longitude, latitude and altitude) and location in time (year of production and age of plant or planting date). In short, bioclimate has an important impact of seasonal yields as a result of the locational-state relationships between geographic coordinates and the key production determinant regimes of temperature and water. Further information on some of these inter-relationships can be accessed by clicking on the "Bioclimate button on the left.

Farm structures

Farming is a sector where production units range from:
  • large corporate ventures
  • small commercial farms
  • smaller commercial family farms
  • small units which can be:
    • semi-subsistence and including some cash-earning production
    • subsistence operations - providing food for operators (families)
A challenge to policy is to provide incentives for all types of producer to thrive, or to gain a critical size and turnover so as to become self-sustaining within the cash-based economy. This transformation needs to be secured within a price regime that enables the maximum accessibility for the majority of consumers. Clearly the low income producers represent a major challenge for any policy that aims to create a "level playingfield", this applies to the take up of relevant technology, as it does to all other necessary factors. The discussion below will cover the range of production circumstances that exist.

Large corporate producers often have all of the necessary resources to manage their process of technological advance whereas smaller producers can benefit from services that provide necessary independent advice.

Enterprise combination, factor configuration and scale of production

This section covers details more commonly associated with commercial farms but the content is relevant to where we want to end up with regard to the operations of low income and small producers which are covered in a following section.

Based on the natural and market constraints facing a particular production location the key elements of analysis that establish productivity are the:

  • combination of enterprises
  • factor configurations
  • scale of production

In farm planning, an enterprise is a specific line of activity such as rice, cassava, corn or cattle for meat and milk. Depending on the areas of production of each enterprise, the gross income and profitability will vary according to the physical input and output relationships for each enterprise. Factor configurations apply to each enterprise and represent the menu of inputs in terms of quantities and qualities used by each enterprise. The scale of production is the total utilised area of a farm dedicated to enterprise production. Theoretically and empirically there exist specific factor input configurations that result in the highest physical yields but depending upon the individual input prices it is necessary to vary quantities to ensure that profits are maximised. This is because there are diminishing physical marginal responses in yield to constant physical increments of inputs. This results in their being input level beyond which no additional profit can be gained; raising inputs beyond this level might raise yields marginally but unit margins will be less. The basis of farm planning is gross margin analysis where gross margins are the difference between the revenue gained from the sale of output from one hectare of production (kg./ha. x farm gate unit price/kg.) minus the total variable costs (inputs). Varialble costs are input costs that vary in direct proportion to areas of production so, for example, if 1 ha. of production requires 45 kg. of an input, 5 ha. will require 5 x 45 kg. The total overhead costs are paid by the total gross margin from all enterprises, therefore the scale of production influences the overhead costs and the larger the scale of production the greater will be the reduction of overhead costs leading to an overall higher economic performance.

Supply chain LCCs

The performance of farm production creates a unit costs datum line for each enterprise and unit prices need to be set to secure a compensatory return. The unit price facing a consumer is adjusted upwards according to the value added at each stage in the supply chain. The distribution of value added to each activity in a supply chain is influenced by the physical input and output of each stage including the efficiency of the transport and storage logistic functions between each chain participant.
Infrastructure

Supply chains require a logistics infrastructure consisting of physical and information storage, transport and transmission Every logistic function onto and off transport and into and out of storage and all other chain activities, including telecommunications have an information and physical input and output relationship which in basic terms transforms inputs into a different1 output. The difference can relate to product age and location, packaging, yield of salable output, combinations with other products and final supply chain yield measure in terms of resulting quality and weight.

One of the trends has been towards central packing stations and "concentrators" who dominate local trading transactions.

However, an important constraint on low income segments is lack of opportunites and options to raise their purchasing power. There are, however, options which relate more to the organization of small producers into local associations and cooperatives to introduce local centres for grading and packing as well as monitoring transactions and processes to generate feedback to producers on preferences in the market for different products and product qualities. Part of this process is to establish infrastructures that support this type of organization. One of the gaps in SDGs is a stronger emphasis on rural communities. This is related to the fact that Agenda 2030 includes high and low income countries. However, something like 70% of the populations in lower income countries live in rural regions. Therefore it is logical to separate SDG 11 (Sustainable cities and communities) into urban and rural groups. The reasons for this is that quite often rural community and village infrastructures are lower cost and usually local labour can be used and paid to install required provisions. Since agriculture is essentially a way of life in the sense of being a
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dominant daily occupation the development of local village-based facilities for local producers can help them economise on travel to distant markets as well as store produce in pest-free, well-constructed silos and wareouses. Such central facilities would normally be managed by associations or cooperatives. Social centres have an important role in supporting the delivery of extension services to disseminate knowhow on crops and animal production as well as advice related to seasonal events requiring specific husbandry procedures.


Local marketing facilities managed by associations or cooperatives can help in the organization of supplies of food to the local community and organize the dispatch of any daily excess to other markets. In this way over reliance on the local market is reduced and normal seasonal gluts do not result in wastage or lower prices. Where a specific zone has particularly good agro-ecological conditions for the productiomn of a specific product, seasonal gluts can become a problem.
Constitutional economics

Laws, regulations and power can work to marginalise those who are unware of detail or who do not possess the means to secure informed advice and support. An important role of constitutional economics is that of safeguaring the interests of all constituents, irrespective of their circumstances.

The 2004 enlargement of the European Union admitted ten new countries: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. In the period leading up to this event there was intense illegal land-grab activities by groups from existing member states in buying up and consolidating land through local agents in Czech Republic, Hungary, Poland and Slovakia. Ill-informed small farmers with no notion of land prices sold their land at extremely low prices generating massive consolidated land holdings (see "Extent of Farmland Grabbing in the EU" ). In many cases politicians and political parties in the state joining the EU who advocated "land banks" to assist land owners used the very same provisions to gain their own rural estates.

Rural land tenure has been a sensitive and contentious issue worldwide. It has come to the fore during the last 50 years as a major emerging issue in low income countries. However, although it is a major issue affecting millions of low income families insufficient attention seems to be given to this important topic. The processes described above are almost always present and are often accompanied by violence and extortion as well as assassinations. This process is therfore disruptive to economic and social development and contrary to the declared spirit of Agenda 2030.

There is an urgent need for major improvements in legislation not only with regard to sustainability and climate change but there is also a fundamental need for more legal support provisions for small farmers and their families who possess titles as well as those who have used agricultural land for a considerable amount of time. These provisions should be directed towards a process of helping such people avoid making decisions based on lack of information or ignorance of their rights under the law as well as to assist them in becoming active beneficiaries of Agenda 2030 objectives.
Diversification or the installation of processing faciliies can help maintain market prices with excess entering the processed product chains. Processes for the preservation of food do not have to be industrial processes and these are various techniques including drying, smoking, salting and spice technqiues which can be organized with lower investment outlays and which help raise producer incomes.

Minimum critical farm sizes

One of the persistent problems in agriculture is the problem of an aging rural population with young people moving to urban centres in search of work. Even in the case where families stay together on small production areas, there are issues with the dimensions of the utilizable area of land facing a pressure of declining carrying capacity. This is related to the increasing size of families and to inflation in the prices of needed inputs. Because of the seasonal variations in output it is frequently the case that cash flow can be so low as to result in end of season situations where families run out of income and food. With time the minimum size of farms required to sustain families, always increases. Therefore small farms face the limits of carrying capacity more obviously and sooner than larger enterprises; they are the first to become economically and environmentally unsustainable.

This is a common development in low income rural sectors in low income countries as well as the recent member states of the European Union from Central and Southern Europe where the average size of farming units is around 1 ha. This is the result of an inheritance pattern where land is divided between family members when an operator dies. As a result what were large famrms a few generations ago, today are small unviable plots.

Land grabs

The pressures for transition in farming systems on smaller farmers is significant. One association with this phase of development is so-called "land grabs" where groups purchase small uneconomic plots at very low prices to consolidate the plots up to a scale of production that is profitable. Families in such a situation can only derive a low income and they tend to be unaware of the potential value of their land. Often, because even a low price can appear to be very useful in the circumstances, older individuals or families, on the decease of their relatives, sell off the land. However, this can mean that these individuals and people like them constitute a group who lose the opportunity of consolidating the land into larger more economic units themselves. This can be achieved through mutual support and land consolidation schemes developed on a cooperative basis. By merging plots with others, a mutual or cooperative can advance some cash to help production that is sold and on the demise of the individual provide their family members with the option of the cooperative purchasing the land or allowing them to become shareholders in the cooperative. Although such operations do have a social welfare function in easing the transition for elderly land owners, this type of organization is completely commercial of based on the profit motive. In this way the land can remain in the hands of the families as a shared asset with increasing value. This avoids families losing small plots at unfair prices while proactively reorganising the land structure to improve producivity and income.

Land title and rights of use

Naturally, this process depends upon the families having title to the land they cultivate, which includes the demarcation of the land area. There are situations where use of land resources arises from a "commons" approach developed over centuries where nomadic people tend cattle and move over large areas in any year following the seasonal cycles that change the amount of biomass and water available for consumption. The areas covered are so extensive that the notion of possessing a land title does not make much sense. Certificates of rights to use of commons would appear to be a simpler solution in these cases.

Many people use land on the basis of their families having used the land for many generations although not holding any proof of title. However in such cases the issuance of certificants of rights of use can help avoid social distress where those interested in land-grabs use the lack of title to be an excuse for forcibly removing the occupants and their families from land they have used for generations. Unformtunately, this is a common state of affairs. Purely in terms of cost-benefit it can often be more economically advantageous to a nation to combine rights of usage with the mutual arrangements for land consolidation as described above. This avoids the creation of a sub-class of economic refugees within their own nation and can reduce the flow of people to urban centres which generate the need for extensive investment in support services and utilities.

  • Rationalisation of activity assignment to different land classifications
  • Technological change
  • Mutual support and land consolidation schemes
  • Land tenure law and regulations
  • Macroeconomic framework in relation to monetary stability
Diminishing marginal fertility & yields

A common way of transferring virgin forest and ecosystems into agricultural production areas is deforestation and clearance of native species. This is more commonly referred to as "slash and burn" because fire is used to "clear" the dried vegetation.

Many subsistence families use this method to secure plots to produce their needs. If no husbandry methods are introduced but planted crops are simply produced on the virgin soil, the yields decline each year to roughly 30% of the first year's production after about 5-6 years. In the diagram below the virgin soil is indicated by the high fertility position and with each successive year, moving left to right, indicted as positions 1,2,3,4,5, 6 and 7 accompanied by falls in the levels of fertility and yields.

In order to survive families then repeat the process.

The outcome is destruction of forests and natural ecosystems, soil erosion resulting from loss of tree cover and loss of fertility. It is variously estimated that around 500 million people use this method. However the number of people underestimates the impact on the environment because the areas cleared can be large and are used inefficiently by the communities using this method of land clearance.

The need to repeat this process can be slowed down or eliminated through the introduction of nirogen-fixing schrubs and trees or rops within a rotation leading to an arrest of the process of nitrogen loss. However, the pressure of population growth in numbers creates a constant pressure to continue the process of land clearance to secure larger areas.



Rationalisation of activity assignment to different land classifications

The system of agro-ecological zoning provides indications of the suitability of land for different types of agricultural production. All general agro-ecologial zoning survey results require adaptation to local conditions to account for diffferences in soil conditions related to water holding capacity. Associated with each agro-ecological zone, soil structure and texture, the average attainable productivity of different crops can be established. Naturally these indications need to be confirmed through benchmarked observations in the field.
Diminishing marginal returns

The crop response curve shown at the beginning of this article consisted of three crop response curves distinguished by fact that their locations and associations with a range of yields, were a result of different prevailing weather conditions in each year of the experiments concerned. This curve is shown below as a generic response curve to illustrate the concept of diminishing marginal returns.

The curve shows the yield response (vertical axis) to inputs (horizontal axis). As can be observed, following the blue curve, a movement of inputs from 50 units to 100 units results in an increase in yield shown as a yellow bar "a". Increasing inputs by another 50 units 150 units increases the yield by the yellow bar "b". As can be observed this is smaller than "a". A further increase of 50 units to 200 units results in a small increase in yield indicated by the bar "c". As can be observed the response in yield to increasing equal increments of inputs declines and demonstrates "diminshing marginal returns". It is this effect that creates the curve on the response curve.




Technological change

Agriculture is an activity based on the reproduction and growth of living organisms in the form of liverstock and plants. On any given area of land, the relationship between inputs such as genotypes, nutrients, standards of husbandry and the immediate environmental factors such as temperature and availability of water all influence the production yields. The relationship of production to inputs is one of diminishing returns to the physical quantities of these inputs. The typical input-output relationship is shown on the right.

No technological change

In areas where forests are cleared for agricultural production there are significant differenecs in the technologies applied in the resulting areas. Slash and burn technique exercised by subsistence families will often result in no beneficial technologies being applied and a process of fertility decline occurs (see box on left).

Although there are techniques to slow down fertility declines and to arrive at a sustainable equilibrium yield by applying husbandy techniques incolving the use of nitrogen fixing plants, subsistence producers usually do not have access to the necessary information or to seedlings and cuttings of the required plants.

Larger commercial groups also apply slash and burn but tend to introduce production systems involving higher inputs "imported" to the production areas.

Extension services

Extension services have an important role in disseminating information and organizing demonstrations of ways and means for producers to improve their productivity. Access to further information on extension systems can be accessed by clicking on the "Extension" button on the right.


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The process of technology transfer is one of the most rapid ways to augment productivity. Adapative research is important in technology transfer to compare costs, quantities and qualities of required inputs and market conditions in the country or region of introduction. This can require adjustments to processes so as to secure an optimised configuration for the operational systems in terms of efficiency, effectiveness and sustainability.

The rationalization of physical technological input-output relations, in any particular location, requires economic and financial analysis concerning prices, inflation and interest rates that pertain to each location.