POLICY IMPLICATIONS OF PRICE DYNAMICS AND THE WAY FORWARD - Food Security, Food Prices and Climate Variability - page 191

poorest segment of the agriculture sector. These people have the least access to resources and
the poorest ability to access markets and increase profits even when there is opportunity to do
so. Significantly increasing productivity for smallholders may result in raising the living stand-
ards of those who have the most resources without reducing overall food insecurity. Few
smallholders will be able to accumulate enough expertise, connections and resources to profit
from a transforming agricultural system. Far more likely is the failure of the poorest smallhold-
ers with a significant migration into marginal urban areas to take on other livelihood strat-
egies. This trend has already been seen in many rapidly developing countries, such as China
(Qin, 2010).
Agricultural and economic development
Development and modernization includes a transformation of the rural economy, as well as
increasing the productivity of the agriculture sector through industrialization. It may be that
this industrialization will include the conversion or abandonment of smallholder farms as
farms aggregate into larger, more efficient enterprises that can compete in the international
commodity market. Whether this transformation will occur or even that it should occur in
remote regions where food security is currently a problem is very unclear, given the enor-
mous challenges of governance, population density, education, transportation and the need
for significant capital investment.
The vision of agricultural development is often highly contested, where some feel that
there is only a need for increased investment to increase agricultural productivity and to create
jobs for poor populations in rural areas of Africa and South Asia. Jeffery Sachs, the founder of
the Millennium Villages Project, has focused on geography as the cause of poverty - location,
climate and environmental conditions - without regard to governance, history or culture
(Rosen, 2013). Although Sachs has done a lot to keep development on the international
agenda, he does not focus on institutions or political transformation, that are essential to
ensure continuous and sustained investment required to reduce poverty and improve living
conditions for both rural and urban populations. Setting aside the broader and extremely
complicated issues of economic development, there are some examples of what possible new
technological and information products can be brought to bear on improving agricultural
productivity, reducing vulnerability of the poor to problems of food access and improving the
government's ability to respond when things go wrong.
Approaches to improve market functioning that have been mentioned in the literature
include:
• Reducedirectinvolvementofgovernmentsinfoodmarkets.Interventionincreasesthe
unpredictable behavior of markets and reduces the response of traders to arbitrage oppor-
tunities (Minot, 2012).
• Increasetheavailabilityofcreditforagriculturalinputssuchasimprovedseedvarieties,
fertilizer and pesticides, and strengthen financial institutions that provide consistent credit
markets (Kherallah et al ., 2000a).
• Developalegalstructureformarkettransactions.Althoughenormouslyexpensiveto
implement, in the long term increased clarity in property rights, contract enforcement,
ensuring market conduct and establishing rules of market conduct will reduce risk for all
market participants (Fafchamps, 2004).