Poor countries tend to have out one-tenth of the crop yield per hectare compared to the yield from rich countries. Farmers in rich countries are more productive than those in poor countries because they use better technology and infrastructure, and are subject to better government policies.
If all the world’s farmers extracted the maximum potential output from their fields, the gap in yields between rich and poor countries would vanish almost entirely.
So what would it take for the developing world to catch up?
1. Improving the mix of crops grown by farmers in poor countries, the authors reckon, would shrink the productivity gap by 20%.
2. Improving efficiency—by adopting modern technologies and eliminating wasteful government policies, for example—would cover the remaining 80%.
Such dramatic improvements have already been achieved in many places: according to the World Bank, today’s cereal-crop yields in lower-middle-income countries are three times higher than their historical level.
If farming practices were the same around the world then land quality would not be a constraint on farmers in poor countries. Instead we trace the problem to what crops are produced, where they are produced within the country, and most importantly how efficiently they are produced.
The analysis illustrates that there are large gaps between actual and potential yields in poor countries, much larger than in rich countries. The implication is that using existing technologies and improving allocations can increase agricultural productivity by 5-fold. These seem like sizeable unrealized gains in productivity. One possibility is that the technologies agronomists treat as easily localized (in the calculation of potential yields) cannot be profitably implemented everywhere in the developing world. The other possibility is that there are constraints that prevent the adoption of modern technologies and frictions that prevent markets from efficiently allocating resources in developing countries. More work is needed to understand the importance of each one of these explanations. While a large body of recent work has been studying the constraints and frictions that impact agricultural productivity, with mounting evidence of their importance, much less work has
been done on understanding the localization of agricultural technologies in developing countries.
Working Paper – Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data, by Tasso Adamopoulos, Diego Restuccia, NBER Working Paper No. 24532, Issued in April 2018 (44 pages)
Why is agricultural productivity so low in poor countries relative to the rest of the world? Is it due to geography or constrained economic choices? We assess the quantitative role of geography and land quality for agricultural productivity differences across countries using high-resolution micro-geography data and a spatial accounting framework. Our rich spatial data provide in each cell of land covering the entire globe actual yields of cultivated crops and potential yields for 18 crops, which measure the maximum attainable output for each crop given soil quality, climate conditions, terrain topography, and a level of cultivation inputs. While there is considerable heterogeneity in land quality across space, even within narrow geographic regions, we find that low agricultural productivity in poor countries is not due to poor land endowments. If countries produced current crops in each cell according to potential yields, the rich-poor agricultural yield gap would virtually disappear, from more than 200 percent to less than 5 percent. We also find evidence of additional productivity gains attainable through the spatial reallocation of production and changes in crop choices.
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