The importance of smallholder agriculture in a balanced development strategy for most developing countries has been strongly emphasized by FAO. It is labour-intensive and a source of nutritional safety for hundreds of millions in the Third World; its rapid decline can greatly destabilize societies by accentuating income distribution inequalities, endangering nutritional standards and increasing the pace and cost of urbanization. Structural adjustment policies in many developing countries change, sometimes significantly, the macro-economic and sectoral environment in which rural households make their decisions. What are the likely consequences for smallholders?
This study by Jean-Marc Boussard speculates on possible answers to this question. In general, he claims, by reducing inflation, improving the efficiency of marketing systems and increasing the producer prices of export crops, structural adjustment policies should have a beneficial impact on smallholders. Conversely, mismanaged privatizations, increases in input prices and cuts in public expenditure may have detrimental effects.
The major thesis, however, is that if smallholders are responsive to average prices, they are even more responsive to price variability and, more generally, to changes in the degree of uncertainty of their environment. Consequently, the author concludes, the development of smallholder agriculture requires institutional innovations aimed at reducing this uncertainty. Such innovations could represent a new dimension in structural adjustment programmes and policies.
The paper, in its final chapter on directions for research, advocates a coordinated use of macro-economic and micro-economic modelling approaches and sketches possible case-studies.
T. Kelley White
Director
Policy Analysis Division
Acknowledgements
Thanks are due to Dr Apostolos Condos and Heinrich Becker, for their comments on an earlier draft of this paper; to Mrs Susan BrownRichaudeau and Mrs 1. Boussard for linguistic improvement; and to Ms Valérie Wallet for her patience and care in typing. All remaining errors are the author's responsibility.