Food and Fertilizer Technology Center - publications

Jun. 01, 2002

Multifunctionality of Agriculture

Traditionally, agriculture has been seen as a means of production. In the past, its value has been assessed in terms of the value of the farm products. However, there is a growing realization that agriculture has a greater value than this, in terms of the externalities it provides. These include food security, environmental protection, and the maintenance of rural traditions and communities.

With global free trade, Asian countries are under pressure to remove all barriers to food imports, and open their domestic markets to cheap imported food. Industrialized countries such as Japan have already done this to a great extent, and are importing more than half their food. If the externalities of agriculture are not taken fully into consideration, Asian countries may be forced to open up their domestic markets on grounds of `price' or economic efficiency criteria alone, while other important considerations are overlooked.

Imported food may be cheaper and more varied than food which is produced domestically, and equal in terms of nutrition. However, it is not equal in other ways. Domestic food production helps conserve the local environment, while imported food does not. Domestic food production provides jobs in rural areas and supports rural communities, while imported food damages them.

If agriculture is seen in this light, then free trade in agricultural products may be very costly to food importers, since a decline in domestic agriculture will mean a loss of these other functions. This international seminar served as a venue at which the various externalities of agriculture were discussed and their economic value assessed.

Food Security

Our perspective of future food security is significantly affected by changes in sustainability and the global environment, including resource degradation. Analytical dynamic models which predict food security must therefore include both qualitative and quantitative information. Food security cannot be achieved simply by increasing agricultural production. It also requires an improvement in income distribution and social welfare. New analytical frameworks are needed to improve our understanding of food security, including cost-benefit analyses that can handle the externality of the roles of agriculture.

For food security to exist at a global level, there is a need for more efficient food production. This is the only way to solve the problem of food shortages in future. There is also a need to consider sustainability, a concept closely related to multifunctionality. Agricultural resources must be conserved to ensure the food security of future generations.

The Environment

The value of agriculture in terms of its environmental protection has been studied in detail in a number of Asian countries. Rice paddies make an important contribution to flood prevention and water storage. Paddy fields receive and store heavy seasonal rains, which filter slowly through the soil to replenish groundwater supplies. Paddy fields also purify water of excess nitrogen and phosphate brought in from polluted water upstream. Instead of contaminating water supplies, these nutrients serve as a nutrient source for rice plants. In Korea, it has been observed that levels of nitrogen and potassium are lower in outlet water than in intake water.

The role of paddy fields in creating a beautiful traditional landscape is difficult to quantify economically, but is certainly very important to most Asian people. In some countries, consumers are beginning to prefer domestic products, in spite of their higher price, in order to preserve the environment, and the beauty and peace of the traditional rural landscape.

However, not all externalities are positive. Some agriculture has a negative effect on the environment, particularly upland cultivation of annual crops. The replacement of forest by agriculture in upland areas is usually accompanied by some negative externalities, in terms of erosion, faster run-off of surface water, loss of biodiversity, and impact on watersheds and downstream areas. The externalities should be carefully considered if land use is changing from forest to agriculture, or from agriculture to residential use.

Much of Asia's industrial and residential development has taken place in the lowlands, on what used to be productive, well-irrigated paddy land. This means the permanent loss of a valuable agricultural resource, and the waste of large investments made into irrigation systems.

The conservation role of paddy fields is not taken into account by policy makers and farmers when they decide to convert paddy fields to residential and industrial uses. Instead, decisions are made according to the current market value of each type of land use. A better understanding of the multifunctionality of agriculture might change our ideas about the net profits from different kinds of land use, and from paddy fields in particular.


Traditional agricultural land use often fostered biodiversity. Many of these features would benefit the environment if they could be incorporated into modern farming. For example, the traditional paddy system in Japan was an inter-connected aquatic network, which allowed aquatic creatures to move with the flow of water through paddy fields and aquatic waterways. Since rice paddies were originally built in wetlands, many paddy fields remained wet throughout the year. This allowed many aquatic species to overwinter in paddy fields, and also provided feeding grounds for many birds.

Modern society cannot return to the past. However, traditional agriculture, while different from natural ecosystems, still allowed a wide range of species to thrive. Whether these species continue to survive into the future will largely depend on modern agricultural management practices, and the extent to which these support biodiversity.

Farmers do not usually profit directly from biodiversity, and may even suffer some crop losses from it (for example, some wild species may damage crops). If society wants farmers to protect biodiversity, it must give them some kind of incentive.

Recycling of Resources

Recycling of resources is one of the basic principles of sustainable agriculture, and of sustainable development in general. However, recycling of resources is possible only on a regional or local scale, because of transport costs. Separating production and consumption on a global scale makes it impossible to recycle resources.

Regional recycling schemes are becoming increasingly common in Asia. The recycling of livestock manure and food processing wastes as organic fertilizer for crops is becoming more sophisticated and widespread with each passing year. There are also interesting new initiatives, such as the "Eco-pig" program of Tsuruoka City, Japan. Left-overs from school lunches are fed to pigs, which eventually are served up as pork in school lunches. In terms of nutrient recycling, global free trade tends to distort the food system. It provides large quantities of cheap food, but does nothing to absorb the resultant food wastes.

The Economic Value of Multifunctionality

Multifunctionality can be evaluated in several ways. One is the replacement cost method: what it would cost to provide the same goods and services on the open market. Another is the contingent valuation method. People are asked about their willingness to pay for environmental improvement or accept compensation for environmental degradation.

For a monetary value to be generally accepted, a broad consensus is needed on its methodology. However, even without it, this kind of valuation is effective in increasing our understanding of the wider role played by agriculture.

For example, in Korea and Japan, the estimated value for the multiple functions of rice production is higher than the total value of the rice itself. The market system cannot fully reflect all these positive externalities generated by rice farming. Appropriate policy measures are needed to correct the market failure and ensure the efficient allocation of resources.


All countries must pursue food security as a policy aim. For most Asian countries, food security involves maintaining a certain level of self-sufficiency in food production, as well as removing uncertainties from international trade with the help of institutional measures such as price stabilizing mechanisms, reserve stocks and fair trading rules. On a global level, it is also necessary to improve food production efficiency, and ensure that low-income farmers have access to food.

We are only beginning to measure the externalities of agriculture, and give them an economic value. However, there is a general trend in all Asian countries that rice paddies have a strong positive externalities. Those of upland crops may be lower or even negative, compared to forest. There is a need to compare the externalities of different types of land use, both within and between countries. There is also a need for a common methodology with which to do this, and more discussion on how to use the results, in terms of practical programs.

International FFTC Seminar on the Multifunctionality of Agriculture

Held at the Japan International Research Center for Agricultural Sciences (JIRCAS), Tsukuba, Japan, on October 17-19

No. of countries participating: 8 (Japan, Indonesia, Korea, Malaysia, Philippines, Taiwan ROC, Thailand, Vietnam)

No. of papers: 17

No. of participants: 39

Co-sponsors: Japan International Research Center for Agricultural Sciences (JIRCAS)

Policy Research Institute, Ministry of Agriculture. Forestry and Fisheries (PRIMAFF)

National Institute for Agro-Environmental Sciences (NIAES)

National Institute for Rural Engineering (NIRE), Japan

Index of Images

Figure 1 Farming Is Not Just an Economic Activity, It Is Also a Way of Life (1)

Figure 1 Farming Is Not Just an Economic Activity, It Is Also a Way of Life (1)

Figure 2 Farming Is Not Just an Economic Activity, It Is Also a Way of Life (2)

Figure 2 Farming Is Not Just an Economic Activity, It Is Also a Way of Life (2)

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