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Agriculture is a pillar of the economy in almost
all countries. In total, over one half of the earth's population
lives in rural areas, although only a little over 10% of the
Earth's surface is arable land.
However, the amount of the population employed
in farming varies enormously. In the US, farmers account for
less than 3% of the population. In some countries in Africa
and Asia, the figure is as high as 75%. Like many parts of
the world, Latin America has undergone a marked rural-urban
population shift in recent decades. According to Inter-American
Development Bank (IDB) statistics, the percentage of the Latin
American population living in urban areas grew from 64% in
1980 to 80% in 1999. Poverty and, in some countries, armed
conflicts accounted for this shift. The decline in the rural
population has placed an even greater burden on agricultural
producers to supply burgeoning urban centers.
Rural development in its broadest sense entails
bringing about an increase in productivity and therefore the
income of persons living in rural areas, mainly farm families
and farm workers. Raising the productivity of farm output
involves increasing the application of technology and capital
equipment (agriculture science). Technology usually takes
the form of improving water systems, fertilizers, farming
methods, seeds, insecticides and pesticides. Capital equipment
usually implies better tools and implements, and later, mechanized
farm equipment to decrease the time required and increase
the area covered by a farmer planting a given crop. It also
reduces the time spent on caring for beasts of burden. Both
technology and capital equipment, especially the latter, imply
capital investment.
Agricultural economics is the study of the allocation,
distribution and utilization of the resources used and commodities
produced by farming. Agricultural economists have wrestled
with ways to enhance productivity and thus raise the income
of the rural population in countries around the world. Agricultural
research and experimentation have played critical roles, as
well. New strains of disease-resistant seeds and greater productivity
have achieved great breakthroughs in rural income in many
countries. Credit to small and medium-sized farms has also
helped. However, there is no protection against fluctuating
market prices, differences in the motivations of individual
farmers, or cultural values that may not emphasize hard work,
increased income and capital accumulation.
In the developed countries, government assistance
to farmers has taken the form of direct technical assistance.
In the US, examples are the agricultural extension service
and the rural electrification program of the 1930s and '40s.
Credit guarantees and subsidized credit have also offered
incentives to farmers to modernize and increase their output,
to the point that huge surpluses of some agricultural products
have become a problem in developed countries (grain and dairy
in the US; wine, cheese and sugar in Europe). Often these
surpluses are a result of government price supports, which
grant subsidies to farmers by means of a minimum price guarantee
for their output. Other policies to aid farmers include direct
subsidies, production limits, tariffs and quotas. These programs
reflect the political influence of farmers more than any vital
need to raise output or incomes.
In communist countries, ownership of the
land is in the hands of the state and a system of collective
farms is often imposed. Apart from the lack of economic freedom
inherent in this system, the results have been inefficiency,
waste and low production.
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