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Agricultural Systems and Their Determinants

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

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  1. Agricultural Systems and Their Determinants Dr. George Norton Agricultural and Applied Economics Virginia Tech Copyright 2006

  2. 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

  3. Determinants of Farming Systems Anywhere

  4. Classification of Farming Systems

  5. Examples of farming systems

  6. Examples of farming systems

  7. Factors affecting change in agricultural systems over time • Population growth • Changes in relative endowments of land and labor • New technologies • Changes in political systems

  8. 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

  9. World Cereal Production • ≈ 2000 million metric tons currently • Will be ≈ 2700 million metric tons in 2020

  10. 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

  11. China is changing

  12. 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”

  13. 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

  14. 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

  15. Conclusions • 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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