Agricultural transformation of middle-income Asian economies: diversification, farm size and mechanization

The agricultural sector of Asian middle-income countries is changing rapidly in line with an overall structural transformation of the economy brought on by economic growth. This paper discusses the changes in China, Indonesia, Malaysia, the Philippines, Thailand and Viet Nam related to mechanization, farm size and crop and product diversification. Mechanization appears to be proceeding quickly in many, but not all, of these countries, although there are not enough good data to indicate how rapidly it is proceeding. There are also data and conceptual issues with regards to farm size. Despite these issues, there appears to be little evidence to suggest that farm sizes are increasing rapidly, and indeed there are strong reasons to suspect that Asian farm sizes will remain quite small for the foreseeable future. Dietary diversification might seem to dictate crop diversification, but this is only correct at the global level ' at the national level, international trade can substitute for crop diversification in achieving dietary diversification. These six countries seem cognizant of their comparative advantage, with international trade expanding rapidly for commodities such as oilseeds and vegetable oils, fruits and vegetables, and dairy products. Thus, crop diversification is taking place in geographically diverse countries such as China, but not at all in smaller countries like Malaysia. Despite the lack of crop diversification in some countries, there has generally been strong product diversification into livestock and aquaculture, especially the latter. In the future, if these countries are to make sure that their farms are competitive and efficient and contribute to poverty alleviation among smallholders, it will be important for governments to provide key public goods and make difficult decisions regarding international trade and the appropriate degree of price and production support for farmers.