Agriculture as Economic Development

Editor’s Note: As part of our new blog series, The Next Generation, the Chicago Council on Global Affairs is inviting a diverse group of experts to explore topics related to youth employement and agriculture in advance of  the 2018 Global Food and Security Symposium.  Join the discussion using #GlobalAg, and tune in to the symposium live stream on March 21 and 22.
By Dr. David Zilberman
The emergence of agriculture marked the beginning of human civilization as we know it. For millennia, agriculture employed most of humanity, as there was a very low rate of technological change. But since the 19th century, society went through a science-based revolution introducing mechanical, chemical, and biological innovation, increasing the amount of food grown per farmer, and allowing humanity to shift to industrial activities, with the rapid expansion of urban areas. Agriculture has provided the feedstock for the earliest industries, which processed and preserved food, and provided fiber. Through fermentation humans were able to preserve food and produce alcohol, and through various processes produce other food products that enhanced health, and improved quality of life. 
The progress of agriculture in the US and around the world wouldn’t have been possible without the establishment of supportive infrastructure and policy. This includes the land grant colleges, agricultural experiment stations, and cooperative extension that discovered new knowledge, developed cutting edge technologies, and built the capacity of farmers to utilize the technologies. More recently, we have seen the emergence of the educational-industrial complex, where the results of university research are developed by industry and result in new products that increase the productivity of farmers, improve product and food safety, and enhance environmental conditions and quality of life of consumers. The implementation of agricultural innovation benefited from an environment of increasingly open international trade and required innovative development of supply chains. Agribusiness executives have been challenged to design supply chains to implement innovations taking account of economies of scale, differences in capacity across locations, and they continue to adapt their supply chain and business models, as technology and economic conditions evolve.

Agriculture is Vital in the Modern Age

In the current age, agriculture employs fewer people, but remains a crucial source of raw materials that are necessary for the large agrifood sector that is so paramount for quality of life. The discovery of DNA and new developments in information and nanotechnology provide the foundation for a new agricultural revolution that will enhance productivity and reduce, or even eliminate, some of the negative side effects of agricultural production. Furthermore, they provide the foundation for a new bioeconomy that will expand the range of products derived from agricultural and natural resource sectors to provide feedstock for fuel, fiber, and fine chemicals. A major challenge of our generation is to move to a sustainable system and to mitigate emissions and adapt to climate change. The new bioeconomy can provide the tools to help meet these challenges by revolutionizing the agrifood sector, moving towards a renewable economy while replacing our dependence on non-renewables like fossil fuels with new renewable feedstocks. The notion of sustainable development that would allow improvement of human welfare globally, while sustaining and improving environmental quality of our planet depends on a progressive and advanced agrifood sector and an effective and efficient bioeconomy.
However, the gap between high income and lower income regions persists. Many developing countries are facing the challenge of eliminating poverty and improving the quality of life, and much of it can be done via the modernization of agriculture. Yield per unit of land is much higher in the developed countries. Europe and the United States, for example, are producing five to ten times more corn per unit of land than low- and middle-income countries. Even doubling or tripling the yield in these regions will allow the elimination of malnourishment, may reduce the footprint of agriculture, and reduce deforestation. Development of agriculture and agribusiness is key strategy for development. Agricultural transformation will provide the foundation for societal development in general, as it will lead to an expanded agrifood sector that provide consumers with nutritious, convenient, flavorful, and quality food. It will provide more jobs in rural areas, enhancing quality of life in these areas and reducing the need for farmers to move to urban areas in search of livelihoods.

Building Transformative Economies

However, transformation of agriculture in many developing countries is constrained by limited human capital, lack of investment in research and education, regulation that impedes adoption of innovation, and restrictions on trade. Investment by governments and donors has already improved educational obtainment globally and established networks of international and national agricultural research organizations. Despite this progress, much needs to be done. Modernization of agriculture requires investing in and expanding educational systems to improve the capabilities of consumers and farmers. There is a growing commitment to significant and sustainable investment in research, extension, technology transfer, and expansion of the model of educational-industrial complex around the world. While developing regions are likely to be the major beneficiary of new discoveries with agricultural biotechnology, they haven’t gained much from this new capability because of restrictive regulations. Science-based regulations that balance benefits with risks will lead to adoption of and development of new agricultural capabilities and allow developing countries to better address their resource challenges.
There is a need to develop economic systems that are transparent, with minimal barriers to trade and low transaction costs, and to develop an environment that encourages individuals to be entrepreneurial and innovate new businesses and supply chains that will lead to the build-up of the bioeconomy. There is growing evidence of the entrepreneurial capacity of the agrifood sector in developing regions, and the gains from evolving supply chains, especially in exporting flowers (in Kenya) and creating new aquaculture systems (in Bangladesh and Myanmar). But these emergent examples should be expanded and the scientific, educational and financial capabilities need to be expanded to allow for further development of similar systems and expansion of the bioeconomy to new activities in developing countries.
Practitioners in industry, policymakers in government, and activists in NGOs must be aware of the changing agrifood sector, the great potential of modern agriculture as an engine for growth, and how to take advantage of it. Importantly, these groups need to work together to create an agrifood sector that works for all.

Supply Chain Innovation

Facilitating conversation and shared understanding around these priorities is the goal of the agrifood supply chains workshop that we are now organizing for the third year. This year’s workshop theme is “Innovations in Agrifood Supply Chains: People-Planet-Profitability”. We decided to focus on the interconnected area of people, which includes consumers and producers, planet, which is of course our environment, and profit, which still has to be the main matrix of any successful business. We realized that the global food and agriculture industry is having to deal with not only the resource related issues, such as water and energy, but also consumers’ growing desire to be more responsible with their purchasing decision and demanding more from the producers and manufactures to be more ethical than ever. At the same time, businesses will still have to continue to maximize their profit. We are hoping to shed light on practices that supports all three in our workshop this year.
What makes this program unique is the collaboration with Solidaridad Network and the interests of other academic institutions. Solidaridad is an international non-profit organization with over 45 years of experience and it is unique in its understanding of the importance of business and building business relationships and supply chains spanning developed and developing countries.
We collaborate with other academic institutions, such as UC Davis, Michigan State, and Guelph, and we have been partnering with Mars and have strong relationships with Costco and Bank of America. We are also participating in workshops in Peru and Germany, and are the nexus of an emerging global consortium.
With an increasing world population, with the need for food growing unabated, natural resources under pressure and the need for food that is healthy and responsibly produced, the agrifood industry has to transform, from the focus solely on making profits to aiming to achieve other goals that were traditionally advocated by non-profits in the past. This is a paradigm shift that the agrifood industry is having to embrace, along with recognizing their role as partners in sustainable development as well.

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