12 FROM SUBSISTENCE TO PROFIT
agriculture into other sectors. Short-term rental or long- term leasing arrangements facilitate labor mobility and transfer land to more productive users. Restrictions on rental transactions—such as ceilings on rental rates or pro- hibitions on absentee landownership—should be relaxed to enable rental markets to expand. Further, policies that identify legitimate owners play an especially critical role in on- and off-farm development by enabling the efficiency- enhancing transfer of land (through either rental or sale) to more productive users. For instance, evidence from China shows that documenting formal land rights has a positive impact on both farm productivity and nonfarm labor sup- ply (Deininger and Jin 2005). Similarly, social protection and improved access to hous-
ing, health services, and education for rural migrants and their families in urban centers will help them give up their land to farmers who stayed behind, allowing these farmers to increase the size of their farms. As labor becomes more expensive and moves out of agriculture in transforming and transformed economies, policies are needed to reorient the economies away from labor-intensive agricultural practices toward a more knowledge-based and mechanized agricul- tural model (, Yang, and Wang 2010). For example, the rising wage rate and ensuing labor shortage in China’s agri- cultural sector are fueling a mechanization revolution. With the emergence of private mechanization service providers, machinery has replaced labor in land preparation and har- vesting—activities that were previously labor intensive. Te emergence of these service providers has been supported by pro-mechanization policies at the central and local levels, including subsidies for the purchase of agricultural machin- ery (Yang et al. 2013).
ESTABLISH PRODUCTIVE SOCIAL SAFETY NETS
Many smallholders will not be able to survive or transform themselves into profitable businesses in the agricultural sector. Tese farmers will need humanitarian assistance in the short run and viable exit strategies in long run. At the same time, many other smallholders have the potential to become profitable businesses with the support of targeted productive social-protection policies that offer opportuni- ties for them to escape poverty, diversify their outputs, and cushion livelihood shocks such as the recent food price increase. Potentially profitable smallholder farmers in
agriculture-based economies can benefit from the coupling of productivity-enhancing tools with social safety net sup- port. Tis linkage could help smallholders augment their incomes and deal with shocks while they acquire the skills to undertake more productive activities. Interventions along these lines would include conditional cash transfers that are tied to household participation in primary school- ing and health services, as seen in a number of Latin Ameri- can countries. Cross-sectoral social protection initiatives that support
a broad collection of productivity-enhancing investments have shown promising results. For example, Ethiopia’s Food Security Programme combines conditional and uncon- ditional income transfers with products and services that promote agricultural productivity and microenterprise development, including credit, extension, and technology. Te program has increased asset holdings and productivity- enhancing investments among beneficiary households in rural areas (Gilligan, Hoddinot, and Seyoum 2009). It has also been credited with making many farmers and herd- ers in Ethiopia more resilient to the drought-induced food security crisis that ravaged the Horn of Africa in 2011. Similarly, Bangladesh’s Vulnerable Group Development Programme combines food security and nutrition inter- ventions with income-generating activities that especially target women, increasing their per capita expenditure by a larger amount than the size of the transfer (Ahmed et al. 2009). To enhance productivity, social protection initiatives
could promote vocational training and other education schemes tailored to the technical needs of smallholder farmers and backed by national research and exten- sion systems that promote smallholder-friendly and smallholder-accessible technologies. At the same time, such interventions could be used to help smallholders without profit potential increase their access to nutritious foods in the short term and acquire nonfarm skills and employment in the long term.
IMPROVE RISK MITIGATION AND ADAPTATION STRATEGIES
Farmers, and in particular smallholders, urgently need beter access to risk-management tools and strategies to increase their resilience to myriad shocks, including price and weather. Such tools offer farmers added incentives to
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