National and Sectoral Objectives

The foregoing paragraphs discuss the why and what of agricultural policy. The question of for what must also be addressed. To what end is agricultural policy designed?

Agriculture is not an island in the economy. Its ultimate objective should be to support national development. In agriculture, as in other areas, economic policy responds to national imperatives and to a social and political vision. It is designed to promote the achievement of societal aims that are not exclusively economic in character. Therefore, the basis of a strategy, or set of policies, should be the enunciation of broad social, or societal, goals for agricultural and the rural sector. Fundamentally, they should be related to the promotion of human development. Specific objectives for the agricultural sector can be derived from this overarching goal.

In most economies, the ways in which agriculture can most effectively support human development are (a) ensuring that nutrition and other basic material needs are met in rural areas, and (b) contributing indirectly to the satisfaction of those needs in urban areas. In some transition economies, nutrition levels are high enough that they no longer are a general concern, but meeting other material needs is very much an issue, given the prevalence of poverty in rural areas. In many developing countries, nutrition levels are still deficient among a significant part of the rural population, although it is important to recognize that, for the world as a whole, the share of the population in poverty has dropped markedly over the past three decades.

What sub-objectives, if achieved, will best enable agriculture to meet these overall objectives? In many parts of the world, it has long been the practice to define the aim of agricultural development strategy as increasing production levels. Frequently, that objective has been stated in narrower terms, as increments in the production of staple food crops, usually grains and sometimes principal root crops. However, while producing more staple foods can be important, a physical target of that nature is not sufficient for promoting the goal of human development, or even the objective of raising levels of material well-being. Production alone is not necessarily the best indicator of the economic status of rural households. Income is a better indicator, for it takes into account the prices farmers receive and their costs of production. Even more relevant is real income, which adjusts net income levels for the rate of inflation, in order to measure the purchasing power of rural households.

Therefore, agriculture can make its most effective contribution to nutrition and other basic material needs by generating more real income for rural households. This contribution, in turn, depends on three factors, namely production, real farmgate prices,4 and non-farm employment in rural areas. Real prices are almost always beyond the control of farmers themselves but can be influenced by policies. Production is a function of the land area cultivated (including that in pastures) and productivity, or unit yields. As limits on the availability of cultivated land are being reached, and sometimes exceeded, in many places in the world, production increases in the future will increasingly depend on technology to deliver improvements in productivity.

Figure 2.1 illustrates this hierarchy of objectives and sub-objectives for the agricultural sector, including indirect contributions that the sector makes to development in urban areas, by providing foreign exchange earnings and creating demand for processed foods and other manufactured products.5

It should not be overlooked that the level of nutrition of a rural family can also depend on the degree of control over production exercised by women in the household. The discussions in Chapters 5-8 point to various ways in which rural women can be empowered.

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