IN 1971, professors Yujiro Hayami and Vernon Ruttan published a discussion paper, titled “Induced Innovation in Agricultural Development,” for the highly reputable Department of Economics, University Minnesota in the United States. There are two valuable theses they proffered in this article.
One is that agricultural development, even at the very beginning of mankind, only occurs whenever innovation is introduced. From the use of fire and stones for cultivation and cutting of objects by our ancestors, to the application of combine tractor in farming and the altering of genes to produce better seeds, these are all innovations that fostered progress in agricultural undertakings.
And two, if the state invests in the appropriate technology to improve agricultural productivity, then the agricultural development process in the country will be accelerated. It is for this reason why the term “induced” was utilized as a title in their paper.
After professor T.W. Schultz’s publication of his book, The Theory of Optimising Peasants by Yale University, which argued that the peasant (small cultivator) is a highly rational economic being (meaning profit-maximizing like a businessman), the work of Hayami and Ruttan inspired so many governments all over the world to extend a plethora of assistance and subsidies to their small farmers. If a small cultivator is a profit-maximizer and that agricultural development can be induced through technological innovation, then all one has to do is provide him with the proper support to incentivize increasing farm productivity and in the process engendering agricultural development.
However, the manner by which the technology is provided also matters as cautioned by Hayami and Ruttan. The technology must be appropriate to the prevailing situation or needs on the farm. Forcing them will only result in the wasteful use of scarce resources. As such, the quality of state intervention is as important as the technology being promoted for agricultural development.
Infrastructure and technology
A key factor in increasing the productivity of agriculture and lowering product costs is the provision of infrastructure facilities. For instance, the construction of irrigation enables farmers to cultivate land for palay (unmilled rice) production twice annually instead of only once a year if the farm is rainfed. Immediately, that results in higher productivity even assuming that the same yield is obtained per planting activity. Similarly, the provision of farm-to-market roads is critical in preserving the quality of agricultural products and in lowering their production cost. Studies have revealed that poor roads lead to higher post-harvest losses and enable traders to monopolize transport in areas with bad roads. Having a monopoly of transport, traders can then dictate the prices they pay for the farmers’ produce. Moreover, there is no doubt that the introduction of farm machinery lightens the workload of the farmer, speeds up cultivation, land preparation and harvesting activities.
However, the problem is that these infrastructure facilities, as warned by Hayami and Ruttan, are built not in the right places but in areas which primarily cater to the business interest of local politicians or powerful entrepreneurs. For example, a study by the World Bank (2008) showed that many of the farm-to-market roads constructed in the country are decided mainly based on political criteria, instead of economic criteria such as impact on poverty, growth potentials of the area and immediate economic gains for the public. As a result, our farm-to-market roads do not maximize the gains to the farming community, are of poor quality and worse, are not even connected to each other.
Also, various studies on irrigation showed that the bulk of it was constructed to serve only the rice sector. Unsurprisingly, other crops, which also badly need water, such as corn and a variety of high-value vegetable crops, do not have irrigation facilities. Consequently, low productivity is experienced in most of these crops. To cite an example, one can compare the large corn areas in Isabela province and Northern Mindanao, which exhibit lower productivity per hectare of land vis-à-vis the smaller areas cultivated in Central Luzon that obtain higher yield by virtue of the existence of irrigation facilities.
The 21st century further stressed the importance of technology in addressing the challenges confronting the agricultural sector. Among these challenges are soil degradation and the shrinking land for cultivation due to competing non-agriculture use, the aging workforce in agriculture, the ever-increasing global population and climate change. For these challenges to be adequately responded to, a new set of technological innovations will be needed. It is fitting that many of these innovations are anchored on the use of information and digital technology, which has triggered the advent of the Fourth Industrial Revolution.
In developed economies, soil testing kits are massively utilized to determine soil quality as a way of knowing which nutrients are lacking and hence should be replenished. Modern farm machines and the use of drone technology have lessened dependence on labor. Japanese farmers are aging but they are capable of efficiently working their lands because of modern farming equipment.
Higher productivity is attained despite limited land through the use of “smart farming” technology. This involves the construction of greenhouses where temperature and the supply of water combined with liquid fertilizer are controlled with the aid of computer technology.
More advanced is the use of satellite technology to predict weather, lessen possible losses due to destructive typhoons, monitor the growth of plant pests and diseases, and estimate damages caused by typhoons to immediately compensate farmer-victims so they can immediately start their cropping activity.
Private vs public
In the private sector, any expenses in acquiring such technologies are primarily seen as an investment as they will increase productivity and eventually, the profit of the company. In contrast, in the public sector, investments in such innovations are seen as a “risk” because they might overlap with the current but old technology being used by the bureaucracy, will just add to the burden of the bureaucrats who will receive the same compensation despite additional work, and worse, which might even lead to the layoffs of some personnel because they were made redundant by the technology.
This explains why despite government leaders singing hosannahs to the many virtues of adopting modern technologies, little and slow headway is made in achieving this objective. This, combined with the populist and Leftist sentiment that abhors the introduction of modern technology because they are labor-displacing, one should no longer wonder why most of our farms remain in a subsistence mode of production.