Resource information
This study identifies several factors
that inhibit efficiency improvements in the farming sector,
both in themselves and through the dynamics of their mutual
interaction. The study observes that incentives faced in the
labor market have important implications for the land
structure and, and in many ways, are at the heart of the
problem of low labor productivity in agriculture. The study
finds that, while rural households are increasingly
diversifying their income sources out of farming, they have
not moved away from rural areas because of the incentives to
hold onto small agriculture plots and because of the high
costs of formal employment outside agriculture. Instead,
households have increasingly relied on so-called unearned
income (pension benefits and other social transfers) and
settled for informal employment in rural areas. This has
done little to advance the social condition of rural
households, or to improve agricultural productivity. This
incentive to hold onto small agricultural plots, as well as
other factors limiting the availability of land for
commercial farming, has lead to an increasingly polarized
land structure, with small farms becoming smaller, and large
farms consolidating, albeit slowly.
