The document discusses the essential role of agriculture in economic development, highlighting various sectors such as farming, fisheries, livestock, and forestry. It emphasizes the traditional and non-traditional contributions of agriculture to livelihoods, food security, and poverty reduction, supported by economic theories and models. Additionally, it explores intersectoral linkages among agriculture, industry, and services, particularly in the context of emerging economies like the BRICS nations.

1. Role of Agriculture in Economic
Development
Cherry Evangelista Garcia
Social Studies Teacher

2. Agriculture
• The term ”Agriculture” is derived from the
Latin word “ager’or “agri” meaning “soil” and
“cultura” meaning cultivation. So, Agriculture
means the cultivation of the soil.
• The science, art, or practice of cultivating the
soil, producing crops, and raising livestock
and in varying degrees the preparation and
marketing of the resulting products.
(www.Merriam-webster.com)

3. Definition of Agriculture by Monteith’s(1958):
• “Agriculture is an exploitation of solar energy
made possible by an adequate supply
of water and nutrients to maintain plant
growth.”
• The word agriculture thus may be expanded
as- “Activities on the Ground for Raising
Integrated Crops for Uplifting Livelihood
Through the Use of Rechargeable Energies.”

4. Sectors of Agriculture
Farming Fisheries
Livestock Forestry

5. Farming
Horticulture
• Deals with the
production of fruits,
vegetables,
flowers, ornamental
plants, spices,
condiments and
beverages.
Agronomy
• Deals with the
production of various
crops which includes
food crops, fodder
crops, fibre crops,
sugar, oilseeds, etc.
• The aim is to have
better food production
and how to control the
diseases.

6. Animal Husbandry
• Deals with agricultural practice of breeding and
raising livestock in order to provide food for
humans and to provide power (draught) and
manure for crops.

7. Fishery Science
• Deals with practice of breeding and rearing
fishes including marine and inland fishes,
shrimps, prawns etc. in order to provide
food, feed and manure.

8. Fisheries
• The fisheries sector is divided into 3 sub-
sectors: commercial, municipal,
and aquaculture (cultivation of the natural
produce of bodies of water). In 1995, the
Philippines contributed 2.2 million tons, or 2
percent of total world catch, ranking it twelfth
among the top 80 fish-producing countries.
In the same year, the country also earned
the distinction of being the fourth biggest
producer of seaweed and ninth biggest
producer of world aquaculture products.

9. Forestry
• Deals with production of large scale
cultivation of perennial trees for
supplying wood, timber, rubber, etc.
and also raw materials for industries.

10. Traditional Farming
• Technically and technologically primitive. The land is
farmed to provide sustenance; everything that is
produced is needed for survival (subsistence). ...
• The study found that farmers are happy to
follow traditional farming methods to produce their food
crops.
• Extensive farming with simple tools and crops.
Traditional farming tools such as the axe, hoe, stick
and animal traction are the main implements used to
prepare land. ... Kraal manure is the main soil fertility
strategy followed by farmers.

11. The Lewis-Ranis-Fei model
The Lewis (1954) theory of dualistic economic development provides the
seminal contribution to theories of economic development particularly for
labour-surplus and resource-poor developing countries. In the Lewis
theory, the economy is assumed to comprise the agricultural and non-
agricultural sectors. The agricultural sector is assumed to have vast
amounts of surplus labour that result in an extremely low, close to zero,
marginal productivity of labour. The agricultural wage rate is presumed to
follow the sharing rule and be equal to average productivity, which is also
known as the institutional wage. The non-agricultural sector has an
abundance capital and resources relative to labour. It pursues profit and
employs labour at a wage rate higher than the agricultural institutional
wage by approximately 30 percent (Lewis, 1954, p.150). The non-
agricultural sector accumulates capital by drawing surplus labour out of
the agricultural sector. The expansion of the non-agricultural sector takes
advantage of the infinitely elastic supply of labour from the agricultural
sector due to its labour surplus. When the surplus labour is exhausted,
the labour supply curve in the non-agricultural sector becomes upward-
sloping.

12. The Lewis-Ranis-Fei model
Ranis and Fei (1961) formalised Lewis’s theory by combining it
with Rostow’s (1956) three “linear-stages-of-growth” theory. They
disassembled Lewis’s two-stage economic development into three
phases, defined by the marginal productivity of agricultural labour.
They assume the economy to be stagnant in its pre-conditioning
stage. The breakout point marks the creation of an infant non-
agricultural sector and the entry into phase one. Agricultural labour
starts to be reallocated to the non-agricultural sector. Due to the
abundance of surplus agricultural labour, its marginal productivity
is extremely low and average labour productivity defines the
agricultural institutional wage. When the redundant agricultural
labour force has been reallocated, the agricultural marginal
productivity of labour starts to rise but is still lower than the
institutional wage. This marks the shortage point at which the
economy enters phase 7 two of development. During phase two
the remaining agricultural unemployment is gradually absorbed. At
the end of this process the economy reaches the
commercialisation point and enters phase three where the
agricultural labour market is fully commercialised.

14. Non-Traditional Farming
• Modern agriculture is an evolving approach
to agricultural innovations and farming practices
that helps farmers increase efficiency and reduce
the amount of natural resources—water, land, and
energy—necessary to meet the world's food, fuel,
and fiber needs.
• Modern agriculture is driven by continuous
improvements in digital tools and data, as well as
collaborations among farmers and researchers
across the public and private sectors.

16. Role of Agriculture In Economic
Development- Traditional Approach
• The traditional and earlier approaches proposed by
development economists like Lewis, Fie and Ranis, and so
on highlighted the important roles of agriculture sector in the
economic development of any country (Vogel, 1994). A fast
track development of this sector is crucial for other sectors as
well. Only a strong and efficient agricultural sector can feed
the growing population of a country, provide employment,
play vital role in the foreign trade and earning of foreign
exchange and give a strong base to the industries. Because
of these multifaceted functions of agriculture, it has got a
multiplier effect on any country's socio-economic and
industrial scenario. Thus according to the traditional analysis
the role of the agricultural sector is confined to the source of
food, source of livelihood, role in foreign trade,
capital/savings transfers and its role in industrial
development (Stringer, 2001).

17. Types of inter-sectoral linkages that highlight agriculture's
role in economic growth. These forward and
backward linkages, operating through both production and
consumption, include:
• 1. Providing food for domestic consumption,
• 2. Releasing labour for industrial
employment,
• 3. Enlarging the market for domestic
industrial output,
• 4. Increasing the supply of domestic savings,
• 5. Earning foreign exchange.
• Recent empirical work on the regional level

18. Agriculture’s traditional role:
•provide food,
•Create jobs,
•earn export income,
•generate savings and funds for
investment
•produce primary commodities for
expanding industries.

19. But the role of agriculture often goes beyond these direct,
market-mediated contributions. Agriculture plays also an
important role in providing indirect non-commodity
contributions that are public goods, social service benefits
and environmental services not captured by markets.
Agriculture thus contributes to:
• (i) environmental services such as soil
conservation,
watershed services, biodiversity, and carbon
sequestration;
• (ii) poverty reduction;
• (iii) food security;
• (iv) agriculture as a social safety net or buffer in
times of crisis, and
• (v) social viability

20. How Important Are the
‘Non-Traditional' Roles of
Agriculture in
Development?

21. Sustainability and Competitiveness of Farms
through OrganicAgriculture
The agricultural sector plays an important role
in the sustainable development of any
economy. It supports the development of other
sectors and contributes to modernizing an
economy, in particular through the
interdependence between agriculture and
industry. Development of organic farming can
be combined with expanding production of
renewable energy, thereby generating positive
effects in economic terms, but especially in
terms of developing a green economy

22. Sustainability and Competitiveness of Romanian
Farms through OrganicAgriculture
With increasing interest in the development of
organic agriculture in Romania, green
marketing can play an increasingly important
role in promoting the benefits of consuming
organic products, thus contributing to
business development of organic products as
well as to the development of Romanian
agriculture. Promoting organic agriculture
through the use of green marketing
techniques is useful for improving human,
environmental and economic health, in the
context of sustainable development.

23. Intersectoral Linkages in the BRICS
Gemmell et al., (2000) showed that a significant
proportion of manufacturing sector in developing
world is either related or depended on
agriculture. Stringer (2001) argued that with increased
specialism and automation, we expect employment in
agricultural sector to decrease as it sheds it load
processing, storing, mechanizing, transporting and
others with development of manufacturing and service
sectors. Development of processing industries may
provide forward linkages to agriculture while
development of services sector will lead to backward
linkages to the agricultural sector.

24. Intersectoral Linkages in the BRICS
The paper examines the interlinkages among the three sectors
(agriculture, industry and services) of the leading emerging
economies of the World – BRICS (Brazil, Russia, India, China
and South Africa) for the period 1991 to 2013. Methodology used
in the study includes panel unit root, panel cointegration,
Granger causality test, OLS, FMOLS and DOLS. Findings show
that all the three variables are cointegrated and that agricultural
sector output and services sector output causes industrial sector
output in the long run. Findings reveal that agricultural sector
output and industrial sector output causes services sector output
in the long run. Additionally short run bidirectional Granger
causality is observed between services sector output and
industrial sector output as well as between agricultural sector
output and services sector output. Short run unidirectional
causality is also observed from agricultural sector output to
industrial sector output. The study concludes that there is a
strong intersectoral linkages in the BRICS which will be helpful in
building awareness of each other's economic potential, business
environment, legal frameworks and facilitate mutual trade and
better sectorial integration.

25. There are several facts related to the
poverty and agriculture sector
(1) most of poor population in rural livelihood is dominated
by agriculture sector,
(2) experience during the monetary crisis in 1998 showed
that the Agricultural sector is one of the few sectors
that remained survive to the crisis,
(3) agriculture produces food and raw materials for
industrial and service sectors,
(4) Employment in the agricultural sector is very flexible,
so that agriculture can serve as a safety net (survival
sector) in an emergency (Stringer, 2001;Hafizrianda,
2007;Bautista, 2000;Maipita et al, 2010;Maipita, 2011).
The study conducted by Suselo and Tarsidin (2008)
state that agriculture, plantations, and fisheries are
sectors which possess the highest poverty rates and
poverty elasticity to the highest economic growth

26. REDUCINGPOVERTYTHROUGH SUBSIDIES: SIMULATION OF
FUELSUBSIDY DIVERSIONTO NON-FOOD CROPS
This paper analyzes the impact of fuel subsidy diversion to
Non-Food Crops sector on income
levels, using AGEFIS; a Computable General Equilibrium
model. Then we proceed to apply the Foster-
Greer-Thorbecke (FGT) index to measure the indicators of
poverty (head count index, poverty gap index
and poverty severity index). The simulation result shows
the fuel subsidy diversion to Non-Food Crops
sector provides a positive impact on increasing household
incomes and poverty reduction. Furthermore,
the fuel subsidy diversion to Non-Food Crops sector
reduces the poverty of rural household, larger than
the urban household

27. The impact of diverting fuel subsidy to Agricultural
Sector on Income Distribution and Poverty
• He found that agricultural sector was able to maintain
inflation rate, provide raw materials for agro-based
industry, provide job opportunities for the growth in non-
agricultural industry through the transfer of labor force,
accelerate the capital formation, improve the balance of
payment, and widen the domestic market. Gemmell's
study was supported by another study by Stringer
(2001) that found even bigger contribution of the
agricultural sector to the economy, either directly or
indirectly. The linkage of the agricultural sector to the
economy can be seen as traditional role of this sector in
development-as the contribution toward labor, food,
export, market and capital transfer

28. The Impact of Diverting Fuel Subsidy toAgricultural
Sector on Income Distribution and Poverty
The government has been implemented various policies and programs to promote growth
and at the same time to alleviate poverty. However, there is a problem of budget deficit as a
result of a big expenditure on subsidy, especially the subsidy on fuel. Thus, the government
tries to staggeredly reduce fuel subsidy and at the same time compensate poor households
in the form of direct cash aid. It is found that this policy has a negative impact on macro-
economic performance and an increase in poverty level, income disparity, and the depth of
poverty. As an alternative to disbursement of direct cash aid to the poor in lieu to a
reduction in fuel subsidy, our study tries to analyze if the government diverts fuel subsidy to
the agricultural sector. Thus, the objective of this study is to analyze the impact of diverting
fuel subsidy to food crops agricultural sector on income distribution and poverty using the
Computable General Equilibrium (CGE) analysis. To evaluate the disparity in income
distribution, this study employs the beta distribution function developed by Decaluwe, et al.
(1999). To analyze poverty incidence for each household group, we follow the Foster, Greer
and Thorbecke (FGT) method. Households are grouped into four categories, urban non-
poor, urban poor, rural non-poor, and rural poor households. This study conducts three
simulations based the percentage of reduction in fuel subsidy. Our simulation results reveal
that diverting of fuel subsidy by 43.2 percent to food crops sub-sector resulting in an
increase in income of the urban non-poor, rural poor and rural non-poor. Also, these
simulation shows that diverting of subsidy is able to reduce head count index of the poor
households in rural area.
The Impact of Diverting Fuel Subsidy to Agricultural Sector on Income Distribution and
Poverty |

29. Agricultural Development in Nepal: Contribution to
Economic Growth, Food Security and Poverty
In addition to this direct transfer of resources
away from agriculture, output growth in
agriculture is also likely to result in a decrease in
the price of food, which is a wage good, and
hence induces economic growth ( Tiffin and Irz,
2006). Similarly, Stringer (2001) argues that the
agricultural sector performs important social
welfare functions in developing nations. For
example, during an economic downturn or an
external income shock or financial crisis,
agriculture can act "as a buffer, safety net, and as
an economic stabilizer

30. Economic development and the role of
agriculture technology
Between agriculture and the growth of the rest of the
economy. One can think of these new links as
representing non-traditional roles for agriculture.
Timmer (1995) argues that agriculture plays a
significant role in reducing poverty by stimulating the
development of agribusiness activities as well as
stimulating the demand for manufactured
inputs. Stringer (2001) argues that the agricultural
sector performs important social welfare functions in
developing nations. ...

31. Economic development and the role of
agriculture technology
In earlier debates on economic development, the agricultural
sector's role was somewhat controversial. While dualistic models
highlighted the importance of agriculture, the mainstream
literature placed a greater emphasis on the creation of a modern
industrial sector. Soon agriculture disappeared from the
mainstream development literature to re-emerge recently with a
variety of multiple-sector growth models emphasizing the key
role of agriculture and specifically technology in agriculture. This
article is an empirical cross-country analysis of agricultural
technology's role in economic development. Specifically, the
hypothesis being tested is whether improvements in agricultural
technology have a significant impact on long-run economic
growth. The results indicate that agricultural modernization has a
positive effect on both measures of economic growth and human
development. Copyright 2007 International Association of
Agricultural Economists.

32. Economic Development and Convergence
Revisited: the Role of Agricultural Modernization
• Agriculture plays a significant role in reducing poverty.
The bulk of the poor reside in rural areas so an increase
in growth in agriculture has a significant potential for
reducing such poverty. In addition, agricultural growth
stimulates the development of agribusiness activities as
well as stimulating the demand for manufactured
inputs. Stringer (2001) further argues that the agricultural
sector performs important social welfare functions in
developing nations. For example, during an economic
downturn or an external income shock or financial crisis,
agriculture can act " as a buffer, safety net, and as an
economic stabilizer "

33. Does agricultural growth
contribute to reducing the
poverty of small-holder
farmers?

34. Agricultural growth does contribute to
poverty reduction, in several ways.
• Identify effects of agricultural growth on farm economy,
rural economy and national economy. The effect on farm
economy is achieved through higher incomes for
farmers, including smallholders who constitute a large
share of the rural poor, especially in Sub-Saharan Africa.
• It is also achieved through more employment as on-farm
labour demand rises per hectare because the area
cultivated increases or frequency of cropping increases.
• Positive effects on the rural economy are achieved by
creation of more jobs in agriculture and the food chain.
These include production links both “upstream” from the
farm in demand for inputs and services for agriculture

35. Views on the Agriculture’s
Economic contribution to
Alleviating Poverty

36. Does agricultural growth contribute to reducing the
poverty of small-holder farmers? It seems that
agricultural growth does contribute to poverty
reduction, in several ways.
• There are also consumption links as farmers and farm
labourers spend their increased incomes on goods and
services in the local (rural) economy.
• Finally, on a national level, an increase in agricultural
output tends to decrease food prices and benefiting
consumers and net purchasers of food (which may
include farmers). Since the poor, both urban and rural
spend a greater proportion of their incomes on food they
benefit relatively more.

37. References:
• EKONOMIKS 10 Araling Panlipunan – Modyul para
sa Mag-aaral Unang Edisyon 2015
• Chua, Johannes L., Panahon, Kasaysayan at
Lipunan (Ekonomiks) Ikalawang Edisyon, DIWA
Publishing House
• De Leon, Zenaida M. et. al. (2004), Ekonomiks
Pagsulong at Pag-unlad, VPHI
• Mateo, Grace Estela C. et. al., Ekonomiks Mga
Konsepto at Aplikasyon (2012), VPHI
• Nolasco, Libertty I. et. Al. , Ekonomiks: Mga
Konsepto, Applikasyon at Isyu, VPHI