Central in the classical approach is that local and central government create conditions for rural economic growth. Public and private investment in agriculture is supposed to dovetail in this process. One could expect the emphasis in public investment in agriculture to focus on new varieties, technology and improved pest and disease control and maybe a bit of help in post-harvest, processing technology, product development and market access. These are exactly the main markets that the private sector may have difficulties in supplying, under conditions of locally thin demand, especially where thin demand induces subsidies, which may distort rural input markets in the longer run. Keeping this in mind, it is very interesting to note that in recent loans taken by Indonesia, Viet Nam and Pakistan, farmer empowerment seems to be the main binding concept. The central idea is that farmer organizations need to be strengthened. The approach is very similar to the local grant based community/rural development methodology. Typically local government and central government have resources available and local communities are induced to formulate their needs and wishes and if these are found to be viable, a local grant is given, and a bit of public local investment is realized, usually in small roads, electricity, buildings, etc.

The long time observer could conclude that this type of agriculture investment copies the current best practices in rural development. One could also say that the ideas of the 1950s have come back, with cash transfers as an optional throw-in. While there is nothing wrong with that, it is important that the hard core of increasing farm productivity is not neglected. It is well known that the public investment in research and development of agriculture has suffered in popularity because many evaluations found that only the related government institutions grew in size while the effect on increase of productivity remained difficult to measure. The point, however, is that when the bulk of the agricultural yield increase had taken place in many Asian countries in the 80s, the efforts needed to include secondary crops in productivity increases led to growth in public research, simply because the complexity of the task multiplied. Soybean, maize, cassava and many other crops of lesser national importance, but with local dominance in their respective producer centres are grown in many different agri-ecological zones with a comparative advantage.

Now it seems that there has been a substantial underinvestment. Long time gaps in investment in research are as bad as lags in investment in infrastructure; the consequences, stagnant productivity and farm incomes, creep in slowly and are difficult to turn around. In analytical work in the 80s and 90s it was generally assumed that time lags between investment in agriculture and result would be around five years. If systems are broken down, the time lags become longer. If we venture to look ahead for policy development in Asia, it is easy to observe that in Asia political entanglements are leading to long-term subsidies as in the US and Europe, and continue in a wide variety of trade regimes. Maybe cash transfers to the poor and/or farmers can provide the economic and political tools to create some more political room for rational policy regimes and healthy and sustainable input markets. But, to repeat the obvious, substantial investment in R&D is needed to regain momentum in productivity growth.

I believe that a continued or renewed concentration on empowerment, within the bigger envelope of rural investment, will not have a multiplier effect without addressing the sources of productivity growth: appropriate varieties, irrigation, good and stable supply of farm inputs, proper field technology and post-harvest practices.

Written by J.W.T. Bottema, Head of UNESCAP-CAPSA, Bogor, Indonesia.