Modern agricultural technology and income distribution: The market price effect

Abstract

This article shows how the price effect influences the distribution of benefits from modern agricultural technology among groups in society. Quantitative estimation procedures and empirical evidence of the distributional effects are shown. Available empirical evidence shows that the distributional pattern is greatly affected by commodity selection and technology specification. In general, it appears that modern agricultural technology benefits the consumers, particularly those with low incomes, and better-off farmers while smaller farmers producing under adverse production conditions have been the most likely losers. It appears that social benefits from modern technology generally have been sufficient to compensate losers. However, compensation has not usually been made. It is suggested that modern technology be developed and introduced in close coordination with facilitating, corrective or compensatory public policy to fully exploit the potential of such technology in society's best interest. More country and/or project specific ex ante analyses are needed to guide such public policy and priority setting in research.