Land institutions and land markets

In agrarian societies land serves as the main means not only for generating a livelihood but often also for accumulating wealth and transferring it between generations. How land rights are assigned therefore determines households'ability to generate subsistence and income, their social and economic status (and in many cases their collective identity), their incentive to exert nonobservable effort and make investments, and often their ability to access financial markets or to make arrangements for smoothing consumption and income. With imperfections in other markets, the institutions governing the allocation of land rights and the functioning of land markets will have implications for overall efficiency as well as equity. The authors examine how property rights in land evolve from a situation of land abundance. They discuss factors affecting the costs and benefits of individual land rights and highlight the implications of tenure security for investment incentives. They also review factors affecting participation in land sales and rental markets, particularly the characteristics of the agricultural production process, labor supervision cost, credit access, the risk characteristics of an individual's asset portfolio, and the transaction costs associated with market participation. These factors will affect land sales and rental markets differently. Removing obstacles to the smooth functioning of land rental markets and taking measures to enhance potential tenants'endowments and bargaining power can significantly increase both the welfare of the poor and the overall efficiency of resource allocation. Drawing on their conceptual discussion, the authors draw policy conclusions about the transition from communal to individual and more formal land rights, steps that might be taken to improve the functioning of land sales and rental markets, and the scope for redistributive land reform.Banks&Banking Reform,Environmental Economics&Policies,Labor Policies,Municipal Housing and Land,Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Municipal Housing and Land,Economic Theory&Research,Real Estate Development

The role of groups and credit cooperatives in rural lending

Processing and collection costs of loans made to small farmers are high relative to the amount lent. Lending groups and credit cooperatives have been ascribed the potential to reach small farmers with affordable credit because the processing of one large loan rather than numerous small loans may allow for savings in administrative costs. These arrangements entail joint liability and reduce the risk of loan default. Some of the factors crucial for successful group lending are: (a) homogeneous borrowing groups that are jointly liable and assume some managerial and supervisory responsibilities; (b) establishing a common bond other than credit to enhance loan repayment as well as introduce savings mobilization; and (c) denying access to future credit to all group members in the case of default by any member. Important factors for succesful outcomes of credit cooperatives include: (a) bottom-up institutional development and training at the grass roots as well as at management levels; (b) savings mobilization by credit cooperatives rendering them financially less dependent on outside sources and enhancing borrowers incentives to repay; and (c) credit cooperatives not rushing to expand their activities beyond financial intermediation.Banks&Banking Reform,Strategic Debt Management,Financial Intermediation,International Terrorism&Counterterrorism,Economic Theory&Research

The role of opinion leaders in the diffusion of new knowledge : the case of integrated pest management

The paper reviews the literature on the characteristics and impact of opinion leaders on the diffusion of new knowledge, concluding that there is no clear evidence on whether opinion leaders are more effective if they are similar in socioeconomic attributes to the other farmers rather than superior to would be followers. A multivariate analysis of the changes in integrated pest management knowledge in Indonesia among follower farmers over the period 1991-98 indicates that opinion leaders who are superior to followers, but not excessively so, are more effective in transmitting knowledge. Excessive socioeconomic distance is shown to reduce the effectiveness of diffusion. The paper then derives operational implications of the empirical results.Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems,Primary Education,ICT Policy and Strategies,Education For All

Rural extension services

The authors analyze the considerations that lead policymakers to undertake extension investments as a key public responsibility, as well as the complex set of factors and intra-agency incentives that explain why different extension systems'performance vary. The authors provide a conceptual framework outlining farmers'demand for information, the welfare economic characterizations of extension services, and the organizational and political attributes that govern the performance of extension systems. They use the conceptual framework to examine several extension modalities and to analyze their likely and actual effectiveness. Specifically, the modalities reviewed include"training and visit"extension, decentralized systems,"fee-for-service"and privatized extension, and farmer-field-schools. The authors also discuss methodological issues pertaining to the assessment of extension outcomes and review the empirical literature on extension impact. They emphasize the efficiency gains that can come from locally decentralized delivery systems with incentive structures based largely on private provision that in most poorer countries is still publicly-funded. In wealthier countries, and for particular higher income farmer groups, extension systems will likely evolve into fee-for-service organizations.Decentralization,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,ICT Policy and Strategies,Health Economics&Finance,Agricultural Knowledge&Information Systems,ICT Policy and Strategies,Environmental Economics&Policies,Health Economics&Finance,Knowledge Economy

Agricultural extension - generic challenges and the ingredients for solutions

Is agricultural extension in developing countries up to the task of providing the information, ideas, and organization needed to meet food needs? What role should governments play in implementing or facilitating extension services? Roughly 80 percent of the world's extension is publicly funded and delivered by civil servants, providing a range of services to the farming population, commercial producers, and disadvantaged target groups. Budgetary constraints and concerns about performance create pressure to show the payoff on investment in extension and to explore alternatives to publicly providing it. The authors analyze the challenges facing policymakers who must decide what role governments should play in implementing or facilitating extension services. Focusing on developing country experience, they identify generic challenges that make it difficult to organize extension: a) The magnitude of the task. b) Dependence on wider policy and other agency functions. c) Problems in identifying the cause and effect needed to enable accountability and to get political support and funding. d) Liability for public service functions beyond the transfer of agricultural knowledge and information. e) Fiscal sustainability. f) Inadequate interaction with knowledge generators. The authors show how various extension approaches were developed in attempts to overcome the challenges of extension: 1) Improving extension management. 2) Decentralizing. 3) Focusing on single commodities. 4) Providing free-for-service public extension services. 5) Establishing institutional pluralism. 6) Empowering people by using participatory approaches. 7) Using appropriate media. Each of the approaches has weaknesses and strengths, and in their analysis the authors identify the ingredients that show promise. Rural people know when something is relevant and effective. The aspects of agricultural extension services that tend to be inherently low cost and build reciprocal, mutually trusting relationships are those most likely to produce commitment, accountability, political support, fiscal sustainability, and the kinds of effective interaction that generate knowledge.ICT Policy and Strategies,Decentralization,Enterprise Development&Reform,Agricultural Knowledge&Information Systems,Agricultural Research,Environmental Economics&Policies,Health Monitoring&Evaluation,Agricultural Knowledge&Information Systems,ICT Policy and Strategies,Agricultural Research

The rise and fall of training and visit extension : an Asian mini-drama with an African epilogue

The paper reviews the origins and evolution of the Training and Visit (T&V) extension system, which was promoted by the World Bank in 1975-98 in over 50 developing countries. The discussion seeks to clarify the context within which the approach was implemented, and to analyze the causes for its lack of sustainability and its ultimate abandonment. The paper identifies some of the challenges faced by the T&V approach as being typical of a large public extension system, where issues of scale, interaction with the agricultural research systems, inability to attribute benefits, weak accountability, and lack of political support tend to lead to incentive problems among staff and managers of extension, and limited budgetary resources. The different incentives and outlook of domestic stakeholders and external donor agencies are also reviewed. The main cause of the T&V system's disappearance is attributed to the incompatibility of its high recurrent costs with the limited budgets available domestically, leading to fiscal unsustainability. The paper concludes with some lessons that apply to donor-driven public extension initiatives, and more generally to rural development fads. The role of timely, independent, and rigorous evaluative studiesis specifically highlighted.Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems,Rural Poverty Reduction,ICT Policy and Strategies,Banks&Banking Reform

The determinants of farm investment and residential construction in post-reform China

The objective of this paper is to clarify, on the basis of detailed farm level data derived from recent surveys,the importance of factors related to tenure security, farm size and credit availability in constraining farmers'agricultural investment. In particular, a direct measure of farmers'perceptions regarding tenure security will be utilized, as well as information on transactions in the credit market. The next section provides a description of the study areas. It is followed by a discussion of factors affecting farm investment and a description of investment patterns in the study areas. A formal model of farmers'consumption and investment decisions, and an econometric analysis are then presented and results are interpreted. The last section summarizes the paper.Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,International Terrorism&Counterterrorism,Agricultural Knowledge&Information Systems

Promises and realities of community-based agricultural extension

In view of the market failures and the state failures inherent in providing agricultural extension, community-based approaches, which involve farmers‘ groups, have gained increasing importance in recent years as a third way to provide this service. The paper discusses the conceptual underpinnings of community-based extension approaches, highlights theoretical and practical challenges inherent in their design, and assesses the evidence available so far on their performance. The paper reviews both quantitative and qualitative studies, focusing on three examples that contain important elements of community-based extension: the National Agricultural Advisory Services program of Uganda, the agricultural technology management agency model of India, and the farmer field school approach. The review finds that in the rather few cases where performance has been relatively carefully studied, elite capture was identified as a major constraint. Other challenges that empirical studies found include a limited availability of competent service providers, deep-seated cultural attitudes that prevent an effective empowerment of farmers, and difficulties in implementing farmers‘ control of service providers‘ contracts. The paper concludes that, just as for the state and the market, communities can also fail in extension delivery. Hence, the challenge for innovative approaches in agricultural extension is to identify systems that use the potential of the state, the market, and communities to create checks and balances to overcome the failures inherent in all of them.agricultural extension, Agricultural technology, community-based development, empowerment of farmers, innovative approaches, market failures, National Agricultural Advisory Services program,

Credit's effect on productivity in Chinese agriculture : a microeconomic model of disequilibrium

Many government programs want to provide more credit to the farm sector to increase agricultural productivity. If the marginal effect on productivity is small, those resources might be put to better use elsewhere. The authors conducted an econometric analysis of the effect of credit on output supply which recognizies that credit markets are not necessarily at equilibrium - so that credit rationing and nonborrowing are both possible. Only about 37 percent of the farmers in the study area were constrained by inadequate formal credit. Informal credit sources provided funds for specific non-agricultural activities that were not fungible. The results indicate that one additional yuan of liquidity yielded 0.235 yuan of additional gross value of output. These results suggest that for the area of China covered in the study, a good part of the short-term credit may actually be used for consumption and investment. Two conclusions are suggested for evaluating the probable effect of expanding agricultural credit. First, not all farmers, and sometimes only a minority, are constrained in their farming operations by inadequate credit. And second, greater supplies of formal credit will be diverted in part to consumption, so the likely effect on output will be smaller than what one might expect if all funds are assumed to be used productively.Banks&Banking Reform,Financial Intermediation,International Terrorism&Counterterrorism,Economic Theory&Research,Environmental Economics&Policies