Agricultural growth and poverty pockets (AGROPOP)

Description

Several countries in Asia have experienced rapid growth and diversification of agricultural production due to combined demand from both the domestic and the global markets. The growth and diversification processes take place in agricultural growth regions, where state policies (infrastructural expansion, institutional strengthening, etc.) and private commercial activities (creation and development of agriculturally-based value chains) have favourably interacted. Interestingly, however, such agricultural growth regions often embed geographically concentrated areas (‘pockets’) where poverty prevails. The main objective of the project is to understand this co-existence of high agricultural growth and poverty pockets. The project aims to develop robust technical methods to identify and assess poverty pockets and to produce policy guidelines for alleviating the local poverty. The project is implemented in the Mekong River Delta (MRD) in Vietnam where production of rice has dominated for centuries but now is being supplemented by production of fruit and cocoa. The MRD has experienced high agricultural growth for a prolonged period resulting in an impressive poverty reduction. Even so, poverty rates vary greatly across the provinces and even within the provinces. This makes the MRD an ideal place to study the co-existence of local growth miracles and poverty pockets.

Outputs

Project completion report:

The Mekong River Delta is an example of industrialization via strategic coupling between global production networks and resource-rich regions. Especially the region’s rice and seafood industries have experienced remarkable growth due to the link with global markets.


Food safety and quality standards are widely integrated both at the production and
processing levels. The ability to upgrade in order to serve more profitable markets is key  component in the export boom. Resource-based industries benefit from producing generic products with many potential buyers and export destinations. These industries have therefore been able to navigate in the global market and redirect exports when specific markets have established barriers.

We have investigated what happens when local rice farmers are encouraged to adopt a new production model and internationally recognized “good agricultural practices” (GAPs) in order to become part of a global high-value rice production network. The key finding is that the conversion of production practices is not a simple case of local adaption to an international demand. Rather, it is a complex process of reconfiguration of societal and territorial embeddedness. The conversion of practices relies on local processes of negotiation, on the entrepreneurship of individuals, and on the willingness and ability of farmers to internalize new values.

For the sea-food industry we focus on pangasius. We have formulated an economic model explaining why poor farmers cannot apply food standards in the pangasius sector in the MRD. The model also aims at explaining why the relatively well-off farmers chose not to apply standards. By this, we show that food standards in the pangasius sector in the MRD is only beneficial for the middle-class farmers. The main driver for adoption of standards is thus global because it is the European consumer who require the standards. In contrast, the main driver of the exclusion of the poorest farmers is access to credit, which is a local driver. In addition to the adoption of standards, there is also new institutional developments in pangasius production. In an empirical study we find positive welfare effects from participation in contract farming, but not from employment on processor-owned estate farms in the pangasius sector in the MRD. The result imply that contract farming presents opportunities for economic growth. Still, additional effort is required to make the contracts more accessible to smallholders.

Finally, we have improved the knowledge about agro-industrial diversification and social differentiation by adapting the Global Production Network (GPN) approach to regional analysis and subsequently applying this elaborated GPN version to examine the resourcebased industrialization process in the MRD. In particular, the concept of strategic coupling has been expanded to encompass the multi-faceted nature of regional development that is left out in the ordinary GPN approach with its narrow focus on the relationship between firms and regional institutions. The theoretical ‘modularization’ is operationalized and adapted to empirical studies of settlement dynamics and household strategies in the Mekong River Delta as well as the regional industrial trajectory.