Recent knowledge about how to make less-favored lands more productive has also lowered the costs of agricultural production there, making investment more attractive economically. Government and donor agencies could, of course, try to increase incomes in less-favored areas by promoting nonagricultural or postharvest activities, instead of agriculture. But in most rural areas, the generation of significant nonfarm income depends critically on having a dynamic agriculture sector. If regional agriculture stagnates, the local economy has no engine to drive nonfarm activities. In Africa, for example, less-favored areas are often isolated from the rest of the economy.
Low incomes limit demand.
Opportunities to diversify production of agricultural and nonagricultural goods and services, including microenterprises and agroprocessing, open up. Of course, less-favored areas are highly diverse, and climatic, biological, or geographical constraints sometimes hinder agricultural production so that no agricultural investment is worthwhile. No one is recommending irrigating the Sahara, for example. Yet the possibilities for sustainable agricultural intensification in less-favored areas, even when soils are degraded, are much greater than previously thought. The key is to improve the productivity of the natural resources and people there with the right investments, technologies, policies, and institutions.