BY BENARD AYIEKO
Theodore William “Ted” Schultz, an American economist, Nobel Laureate and chairman of the Chicago School of Economics who rose to national prominence after winning the 1979 Nobel Memorial Prize in Economic Sciences began his acceptance speech for the Nobel Prize by observing that:
“Most of the people in the world are poor, so if we knew the economics of being poor we would know much of the economics that really matters. Most of the world’s poor people earn their living from agriculture, so if we knew the economics of agriculture we would know much of the economics of being poor” (Shultz, 1979).
Heavily talked about but least prioritized in the economy of developing countries, Agriculture remains a key pillar in solving the poverty conundrum. Understanding the nature of agriculture in poverty alleviation is fundamental to comprehending the overall development process within the economies of developing countries. It is widely believed that the problem of lack of income and its distribution or extremes of poverty within these countries is substantially a question of the rural poor who consider agriculture a great source of livelihood but whose ability to practice agribusiness is greatly hampered by lack of resources.
According to World Bank, as at 2014, 47% of the world population lives in rural areas. For the 70% of the world’s poor who live in rural areas, agriculture is their main source of income and employment. The focus on agriculture as a strategy for poverty is emphasized because two thirds of the world’s poorest people are located in the rural areas, which are dominated by agricultural activities. This effectively means that if development within the economies of developing countries is to be achieved and made self-sustaining, there is need to include rural areas and focus on agricultural sector as a way of reaching out to the rural population which is heavily affected by poverty.
Meaningful development in these economies needs to focus on strategies that aim at accelerating output growth, raising domestic demand for agricultural labour intensive rural development activities that directly and indirectly support the rural poverty-stricken communities.
According to the latest Economic Survey of 2016 by the Kenya National of Bureau of Statistics, the performance of the agricultural sector last year improved against a backdrop of good weather and abundant rainfall, hence Gross Value Added improved from 3.5% recorded in 2014 to 6.2% in 2015. This was largely achieved through improved crop and livestock production. The agricultural sector is majorly made up of maize, sugarcane, horticulture, coffee and tea farming. Maize production, largely practiced in Rift Valley and some parts of Western Kenya recorded an increased performance of 9% from 39 million in 2014 to 42.5 million bags in 2015. Sugar cane production, predominantly carried out in Western Kenya, increased by 4.6% from 6.5 million in 2014 to 6.8 million tonnes in 2015.
Except for tea and coffee that recorded declined performances, the aggregate crop earnings increased by 39.5% from Sh84.9 billion in 2014 to Sh118.4 billion in 2015. The widespread and inclusive nature of these agricultural activities in the Kenyan economy provides the best platform to tackle the problem of poverty in the country. The fact that coffee, tea, maize and sugar cane farming are practiced in various regions in the country offers policy makers an opportunity to come up with agricultural strategies that targets a wider geographical area in the economy. The agricultural income growth is more effective in reducing poverty than growth in other sectors. Agriculture improves the welfare of the people by providing food, which is a basic human need. The health of the nation lies in the good state of mind and body of her people who consume food produced by farmers – largely from the rural areas.
Agriculture is a source of employment and it could be the panacea for the high level of youth unemployment in developing countries. The sector also provides a major source of capital for modern economic growth which comes from invested savings and savings from income. Additionally, agriculture plays a key role in industrialization economies since it is a key source of raw materials, capital formation, income for purchasing industrial machinery and a source of foreign earnings. It is because of the role that agriculture plays in fighting poverty that development economists have concluded that the comparative advantage of developing countries in global trade lies with agricultural products.
These economies depend on the agricultural sector to provide foreign exchange with which they import capital equipment and intermediate goods that they cannot produce locally.
The only inclusive way that developing countries can deliver tangible results in their fight against poverty is to invest in agriculture and mobilize its own human and financial resources to empower farmers in both rural and urban areas for sustainable development.
The writer is an economist, consultant and a commentator on trade and investment.
