Question

One theory argues that poor road infrastructure and distribution system that lead to
high transport costs are responsible for the low labor productivity in agriculture in poor
countries. Explain the mechanism of how high transport costs can impact agricultural labor
productivity.

Answer 1

Transportation and improved infrastructure played an important role in the productivity and production level of agriculture. The improved transportation will increase and encourage the farmers to work harder in most of the rural areas and this will raise the value of the products, reduction of spoilage and wastage. Efficient level of transports from rural to urban and international market will make the products more valuable in the markets. Rural environment, pattern of land tenure, performance of non farming services, pressure of population on agriculture etc are the other major factors which agriculture productivity. If the transportation cost increased in the agricultural market, the total factor productivity will become low. There is unavailability of the final inputs and new technologies like imported pesticides, chemical fertilizer and other intermediate inputs, processed seeds, fuel, energy etc. used in farming.
Most of the farmers in the developing countries were come under the low income group. This kind of increasing transportation cost will affect their production and leads to the pull out of them from these sectors. They cannot afford this high level of cost. They were unable to transfer their products to the market. The farmers tried to hoard their products for future market and this will affect the overall supply chain in the economy. This shows that this increasing transportation cost will lead to lower production and supply of agricultural goods across the nation and the international market also.