Mellor`s model of agriculture development

Mellor`s model of agriculture development

1. Mellor`s Model of Agriculture Development Vaibhav

2. Mellor divides agriculture to fall in one of the three phases. 1 . Traditional Agriculture 2 . Technologically Dynamic Agriculture-Low Capital Technology 3 . Technologically Dynamic Agriculture-High Capital Technology.

3. Phase # 1. Traditional Agriculture: Mellor’s definition of traditional agriculture is much different from given by Schultz. He does not define agriculture in the sense of equilibrium. For him, traditional agriculture is a backward labour intensive agriculture which uses only crude form of capital . It is not simply a stagnant agriculture as is implied by Schultz’s definition . According to Mellor, farm organisations in traditional agriculture, though different in different countries because of difference in physical, economic and social factors

4. Common features of traditional agriculture For instance, most of the farms are cultivated by the farmers with their family labour . Even the capital is provided by the farmer from his own source. The farms are generally small in size and the work force per farm is higher on these farms. When compared with that in high income countries. These features result in low productivity and low income in these farms. So far as resource allocation on these farms is concerned Mellor follows Schultz. According , to him resources are optimally allocated on these farms . According to Mellor, land and labour constitute the major inputs on these farms. The capital is in a very crude form. It is direct embodiment of human labour and therefore, its productivity is quite low. Declining income and productivity per unit of an input is a common feature of this phase. Per capita productivity and income falls as more and more labour is used to produce more output

5. Law of diminishing returns to labour: The main input, applies in such agriculture. As land is limited and so is the capital, additional labour force is the only source of increasing income in such agriculture. However due to the application of law of diminishing returns to labour, Per capita productivity and income falls as more and more labour is used to produce more output Mellor does admit that in traditional agriculture, some non-traditional inputs like fertilizers have been used. But he points out that their use has not added significantly to the output mainly because other complementary inputs are not used along with the fertilizers. Mellor feels that while on the small farms, under employment (or disguised unemployment) may exist due to the existence of zero value labour, on larger farms, underemployment exists due to another reason. According to Mellor, the pattern of consumption in a traditional agricultural is rather rigid of a rigid. As, on larger farms, income is likely to be more than what is needed to meet the requirements of a rigid consumption pattern, the amount produced on such farms i.e. the amount of labour to be used is not to be disguised.

6. For proving this point Mellor uses the following analytical tools: 1. The Production Possibility Curve : As the law of diminishing returns starts applying to agricultural product from the very beginning this curve progressively becomes flat as the amount of labour use increases along x-axis. Ultimately, the curve becomes parallel to X axis at a point, where the marginal productivity of labour becomes equal to zero. A to G are production possibility curves. All of then start from the origin C in the direction of CO. Axis CO shows man-time at C, it is presumed that zero work is put in while leisure availed of is OC. At O, all man-time has been used and there is no leisure left.

7. The other tool that Mellor uses to show that labour is underemployed on larger farms is the iso -utility curve. It is just like an indifference curve (with O as the origin) a curve that shows at each point, the same amount of satisfaction from two commodities, one the goods and services and other the leisure (opposite to work as measured from. If a farmer wants more of goods and services, he will have to have so less of leisure, i.e., put in so much more work that he gets the same amount of satisfaction. A curve showing all such combinations of goods and services; on the one hand and leisure on the other which give him the same satisfaction is called Iso -utility curve. The rigid consumption pattern of the farmers affects the shape of the iso -utility curve as drawn with O as the origin.

8. 2. Iso Utility Map: Just as there is a set of indifference curves, there is also a set of iso utility curves, each higher curve indicating a higher level of satisfaction as compared with the one below it. If all such curves are drawn we get what is, called an iso -utility map. Curves T to Z in diagram I show a part of the Iso -utility map. This map is considered to the same for each farmer . ( i ) Three Types Income levels: E quilibrium of labour use on large farms we may refer to the three types of incomes levels as distinguished by Mellor. These are (a) level which ensures only the minimum food, clothing shelter and other essentials for maintaining human life. OYo in the diagram shows this level, (b) the culturally defined subsistence level. OY indicates this level in the diagram, (c) Income level beyond OY is deemed to be a non-traditional agriculture. It is a level which indicates changing standard of living found in dynamic, non-traditional agricultural societies.

9. (ii) Equilibrium Level of Labour use: According to Mellor equilibrium level of labour use on such small farms as ensure income level only upto OYo will be indicated by the point where marginal productivity of labour becomes equal to zero. This is because all efforts should be made by the farmers to get the maximum output from land. Between OYo and OY, the equilibrium level of labour use will be determined at the point where the satisfaction from output produced is the maximum. This will be obviously a point where the given production possibility of a farm is just tangent to one of the iso -utility curves.

10. Phase # 2. Technologically Dynamics Agriculture-Low Capital Technology: According to Mellor, only when agriculture moves into this phase from the traditional phase that it can provide resources to the non- farm sector to grow. This phase involves the use of new inputs with high marginal productivity . The new inputs do not involve the use of too much of capital, and are complementary rather than competitive with labour. The traditional inputs are also used in this phase . These inputs increase the productivity per acre. Fertilizers, new seeds, power are some of these inputs . “a complex of technological changes substantially increases the efficiency of agricultural processes and raises the rate of increase of agricultural production………. The critical characteristics of stage II, as compared with stage I is the constant generation and application of technology which is facilitated by a complex institutional framework…”

11. This phase according to Mellor has the following important features: (a) Agriculture still occupies the most important position in the economy in terms of income generation (b) Demand for agricultural products continues to grow due to increasing population. (c) Small Size of the farms due to slow growth of the non-farm sector and (d) Agriculture does not use machinery due to availability of cheap labour . Necessary steps to move traditional agriculture into 2nd phase Institutional changes Encouragement of research Supply of new and improved physical inputs Development of communication system Spread of Education

12. Once the agriculture of an economy has entered the 2nd stage its development, the objective state policy should be: (a) To see that the various inputs which are responsible for pushing agriculture in the second stage of development are progressively utilized by all farmers and also continue to be made available to the farmers at reasonable rates, (this will necessitate a large-scale import for these input from outside through the export of agricultural products and also industrial products after the industrial sector is developed or the setting up of industries producing these inputs in the country itself); (b) To popularize these inputs through demonstration, propaganda, etc. (c) Supply of credit to those agriculturists, e.g., small farmers, who do not have sufficient finances to purchase these inputs.

13. Phase # 3. Technological Dynamic Agriculture-High Capital Technology: When agriculture gets going in the 2nd phase, it will provide funds for the non-farm sector to develop. And After sometime both the sector start developing with mutual help and agriculture will automatically enter the Third phase of development. Mellor has not discussed this phase in detail as he was mainly interested, like Schultz in transformation of a backward agriculture. However, he point out that Here heavy machinery will be used in agriculture, labour will be available for absorption in developing non-farm sector. The heavy machinery will be developed in the expanding non-farm sector. Size of the farm will increase due to the transfer of tax from the farm sector to the non-farm sector High level of investment in machinery in agriculture becomes possible because of two factors (1) Capital formation in the developed agricultural sector grows further and (2) The developed non-farm sector begins to use its own savings for investment and therefore docs not need any capital from the agricultural sector.

14. Conclusion: One point may be noted with regard to all these three phases of development. Mellor is of the view that the three phases should be followed in the sequence, he has given. This will ensure optimum use of resources from the long term point of view. Historically too this pattern of development is more correct. Only the United States entered the third phase first and the 2nd phase later. This is because United States, agricultural machinery was developed earlier than the fertilisers were developed. However, as the present situations when both machinery and fertilisers are available the world order, it is desirable that the traditional agriculture of a country enter the 2nd phase and third phases of development in the order The fact of the matter is that the Government has to ensure that besides taking certain steps on priority basis in a particular stage of agricultural development , the achievements of the policy measures followed in an earlier stage are not all, lost.