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Agricultural Systems and Their Determinants. Dr. George Norton Agricultural and Applied Economics Virginia Tech Copyright 2006. Objectives . Identify determinants of agricultural systems Explore various types of farming systems, including examples from China and India

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Agricultural systems and their determinants l.jpg
Agricultural Systems and Their Determinants

Dr. George Norton

Agricultural and Applied Economics

Virginia Tech

Copyright 2006


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Objectives

  • Identify determinants of agricultural systems

  • Explore various types of farming systems, including examples from China and India

  • Consider factors that cause changes in farming systems over time






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Factors affecting change in agricultural systems over time

  • Population growth

  • Changes in relative endowments of land and labor

  • New technologies

  • Changes in political systems


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Chinese Agriculture

  • ½ the cropland of the United States

  • ¾ acre per Chinese farmworker compared to 120 acres in the United States

  • 800 million farmers in China compared to about 7 million in the United States

  • United States uses substantially more machinery


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World Cereal Production

  • ≈ 2000 million metric tons currently

  • Will be ≈ 2700 million metric tons in 2020


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Estimated net imports of Grain (China)

a) Million Metric tons

b) Pop Growth = 1.3% in 1990’s, 0.7% 2010-2020

Per capita income growth = 3%

Ag. Research spending grows 3% annually



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Types of Chinese farms

  • Communes – Major reforms began in 1979: Households within communes were assigned individual pieces of land. These individual pieces often organized into cooperatives.

  • State farms (very small percent of total)

  • Individual farms (significant share of the farms with land leased from the government).

    All farms except state farms now run under a “contract responsibility system”


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Economies in transition: Effects on Farming systems

  • Why has China’s (much) slower political transition allowed agricultural productivity to increase more rapidly than the former Soviet Union’s more complete but rapid transition?

    • Property rights through contract responsibility system

    • Freeing up of markets and secure institutions


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What institutions are necessary for agricultural growth to occur?

  • Property rights

  • Rule of law – ability to enforce contracts and rules to maintain market mechanism

  • Financial

  • Insurance


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Conclusions occur?

  • Farmers are rational and relatively efficient

  • Traditional farming systems are inevitably changing

  • Many technical and institutional factors are driving these changes

  • As systems such as those in China and India change, the effects spill over to the rest of the world


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