Agricultural commercialization and diversification: processes and policies

Abstract

Agricultural commercialization and diversification involve the gradual replacement of integrated farming systems by specialized enterprises for crop, livestock, poultry and aquaculture products. Changes in product mix and input uses are determined largely by the market forces during this transition. Commercialization of agricultural production is an endogenous process and is accompanied by economic growth, urbanization and withdrawal of labor from the agricultural sector. This paper provides a selective overview and synthesis of the issues involved in the commercialization and diversification process of agriculture, drawing in significant part from the papers in this volume. Based on an assessment of the process observed in selected countries, we show that the commercialization process should not be expected to be a frictionless process, and significant equity and environmental consequences may occur, at least in the short to medium term, particularly when inappropriate policies are followed. However, we highlight that appropriate government policies including investment in rural infrastructure and crop improvement research and extension, establishment of secure rights to land and water, and development and liberalization of capital markets, can help alleviate many of the possible adverse transitional consequences.