Structural transformation of agriculture typically involves a gradual increase of mean farm sizes and a reallocation of labor from agriculture to other sectors. Such structural transformation is often fostered through innovations in agriculture and newly emerging opportunities in manufacturing and services. Here, we use panel data from farm households in Indonesia to test and support the hypothesis that the recent oil palm boom contributes to structural transformation. Oil palm is capital-intensive but requires much less labor per hectare than traditional crops. Farmers who adopted oil palm increase their cropping area, meaning that some of the labor saved per hectare is used for expanding the farm. Average farm sizes increased in recent years. In addition, we observe a positive association between oil palm adoption and off-farm income, suggesting that some of the labor saved per hectare is also reallocated to non-agricultural activities. Oil palm adoption significantly increases the likelihood of households pursuing own non-farm businesses. However, oil palm adoption does not increase the likelihood of being employed in manufacturing or services, which is probably due to the limited non-farm labor demand in the local setting. Equitable and sustainable agricultural transformation requires new lucrative non-agricultural employment opportunities in rural areas.
Recent research has analyzed whether higher levels of farm production diversity contribute to improved diets in smallholder farm households. We add to this literature by using and comparing different indicators, thus helping to better understand some of the underlying linkages....
Labor saving innovations are essential to increase agricultural productivity, but they might also increase inequality through displacing labor. Empirical evidence on such labor displacements is limited. This study uses representative data at local and national scales to analyze labor market...
Asian agriculture is faced with major new challenges as a result of globalisation, urbanisation and environmental problems such as climate change. To meet these challenges, Asian agriculture needs to become more knowledge intensive and innovation oriented. This article frames the...
The tools of biotechnology present an opportunity to infuse a new round of technology into Indian agriculture, which has been going through "technology fatigue" in recent period. These technologies follow from the conventional plant breeding techniques and complement them in...
Rising global demand for vegetable oil during the last few decades has led to a drastic increase in the land area under oil palm. Especially in South- east Asia, the oil palm boom has contributed to economic growth, but it...
