Biotechnology may offer a significant potential for poverty reduction in smallholder agriculture. There are, however, four caveats to be considered. One is that potentially cheaper and faster sources of income gains than agricultural technology may not have been exhausted, particularly through greater access to land, improved property rights, investments in irrigation, higher levels of human capital, and access to nonagricultural sources of employment.
The second is that other technological advances than biotechnology may be more appropriate for enhancing smallholder incomes. This is the case for many products of traditional approaches to research that have never been targeted at smallholders. This includes improved farming systems, agro-ecological farming practices, and traditional breeding for the specific, and often highly particular, contexts where they are located. These approaches will often not be substitutes but complements to biotechnology.
The third is that, for any kind of technology to be adopted by smallholders, many market failures that affect the smallholders need to be eliminated, institutional gaps removed, complementary public goods provided, and policies that do not discriminate against the agricultural sector or poor farmers put into place. This includes in particular access to credit and to risk-coping instruments such as mutual insurance and safety nets, and low transactions costs in factor and product markets. Unless these con-ditions are in place, adoption will not happen.
Finally, for technology adoption to result in maximum poverty reduction, the other dimensions of welfare also need to be accessible. This includes in particular the components of basic needs (health, education) and the more qualitative dimensions of welfare such as empowerment and rights.
Hence, to be effectively used for poverty reduction, technology instruments need to be embedded within a comprehensive rural development and poverty reduction strategy for the region concerned that weighs technology against other instruments for income gains, carefully discriminates among alternative technological paths, makes the technological innovation adoptable by the farmers for whom it was intended, and complements income gains with access to the other dimensions of welfare.
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