WIDER Annual Lecture 18
Managing Structural Transformation
18 December 2014
At the UN headquarters in New York on 18 November 2014, Peter Timmer, emeritus professor from Harvard, showed how the three transformations (structural, agricultural, and dietary) relate to development. He commented on the challenges of food security in Asia and Africa and the impact of climate change on the issue.
Peter Timmer gave us the benefit of his experience in the analysis of food systems and security, and how they are crucial for structural transformation to take place in the wider economy. As part of the process of structural transformation, labour moves from low- to high-productivity sectors and occupations. Timmer argues that for this to be possible an agricultural and dietary transformation is crucial.
Figure 1: Drivers of structural transformation: five key components of the agri-foods system
Recent decades have seen rapid economic growth in Asia. Hundreds of millions of people have been lifted out of poverty and hunger as the ‘three transformations’ occurred. However, when structural transformation fails, as it often has in Africa, it is almost always associated particularly with a failure of agricultural transformation. Labour is pushed out of agriculture into urban slums and the informal sector, rather than being pulled into high-productivity urban jobs in sectors such as manufacturing. If the surplus labour is not needed on farms, but there are only few jobs in manufacturing or other high-productivity employment, people are forced into low-productivity service sector work—not a promising prospect for overall development.
If the new wave of the technological revolution based on information technology does not provide many jobs, it is unclear what work people will do as fewer workers will be required in agriculture. The price of a failed structural transformation is likely to be an uncertain existence in precarious and poorly paid work, with living conditions at subsistence level (at best) and a state stagnating on the development ladder.
The trend towards greater productivity of land and agricultural labour as structural transformation takes place is clearly shown in Figure 2. The more labour-intensive farming of China, Asia and sub-Saharan Africa appears to the left of the chart. The large farm size, mechanization and associated higher productivity of North America, Australia and New Zealand appear to the right. The setbacks from the break-up of the socialist system of the Soviet Union and Eastern Europe are represented as a sharp kink backwards in the depiction of their trajectories.
Figure 2: Agricultural transformation: global land and labour productivity 1961-2010
Timmer stressed that increases in land productivity will have to continue to meet food demand if the Sustainable Development Goals (SDGs) currently being negotiated for 2015-30 are to be achieved. Dramatic increases in the area of land under cultivation would mean extensive deforestation, which would clearly not be desirable from the perspective of climate change nor sustainable development.
The agricultural transformation has consequences for the types of food produced and consumed. As this transition occurs and traditional diets are eroded or replaced, overweight and obesity take over from hunger and malnutrition as the main ‘food-related’ problems. This is particularly the case when the Western fast food diet—with the toxic and addictive mix of sugar, fat, and salt—makes inroads into urban lifestyles.
Timmer laid out what the dietary transformation has looked like for South East Asia over the past fifty years. Caloric intake has increased by about 50% per capita since 1961 (1,800 kc per day in 1961, to over 2,600 kc per day in 2009). The percentage of starchy staples in the diet has fallen. Intake of animal protein has increased, requiring a modern feed industry to support large-scale livestock production. Wheat imports have also risen significantly. This illustrates how far the process of transformation and integration into the global food market has gone.
Price stability and food production: Asian and African experience contrasted
While the agricultural price index has shown a consistently downward trend (Figure 3) there has been considerable price volatility. Insights of behavioural economics are particularly pertinent in food security, not least because of herd behaviour which manifests itself in times of food price rises, exacerbating the initial problem. East Asian governments have recently been more successful in co-ordinating policies to avoid such problems. Stable food prices remain an important policy objective for governments.
Figure 3: Price levels and price volatility
In a separate interview, Timmer explained to me why it is so much harder to achieve a ‘green revolution’ in Africa than in Asia. In Indonesia, for example, with flat terrain and good irrigation, the massive gains achieved through high-yielding varieties of rice produced an immediate boost to supplies of the key staple food. African farms are much more likely to have inadequate water supply, more varied terrain, worse access to markets and a much more diversified pattern of crops. Unlike the ‘rice culture’ of Asia, Africa has multi-staple food systems. So the challenge is fragmented into a number of pieces, all of which need to be ‘got right’.
Climate change and food security
During the ‘question and answer’ session, Timmer provided some insights on climate change. Commenting on biofuels, he said emphatically that food which could be valuable for human intake should not be used as fuel for rich people’s vehicles. He has reached the conclusion that we now cannot stop climate change. The question now is of adaptation. Extreme heat in central India or sub- Saharan Africa could have very severe consequences. We know, for example, much less about how to cope with the dangers of extreme heat to rice than how to build resilience in cold conditions. The higher the level of global warming, the more serious and unpredictable the results for food security—with the threat that the benefits of the ‘three transformations’ could be undone.
How to go deeper into the subject
The WIDER Annual Lecture serves as a showcase for an authoritative statement by a major development thinker. It often provides an overview of a lifetime’s work. This year’s lecture with Peter Timmer was no exception. He is a learned, modest, and convincing exponent. In short, a great guide to the subject. But where do WIDERAngle readers go next if they want to follow up on the lecture? Checking out the Annual Lecture 18 website for Timmer’s presentation and other material (obviously) and placing an advance order for his forthcoming book Food Security and Scarcity: Why Ending Hunger is so Hard is likely to consolidate your understanding and push you into new areas of inquiry.
Timmer’s overview article in the revised Encyclopedia of Agriculture and Food Systems (2nd edition) provides an excellent overview, even if the full five-volume set is intimidating, unless you are a professional in the field!
Roger Williamson is a non-resident Senior Fellow at UNU-WIDER.