Agriculture, Propoor Growth and Rural Development

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(No Transcript)
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Rural poverty and agriculture need support, but
spending falls short
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Donor attention to agriculture has deteriorated
while rural poverty rates have remained high
Rural poverty rate
of ODA to agriculture
Rural poverty rate
ODA to Ag as of total ODA
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WDR 2008 Main Message

• In the 21st century, agriculture will continue to
  be fundamental to meet the MDG and beyond.
• For this to happen, it must be restored to
  prominent place in public budgets and donor
  priorities.

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Agriculture fulfills multiple functions in
development

• Function 1. A trigger of growth
• To lead GDP growth at early stages of development
• To deliver food security
• Function 2. A source of livelihoods
• To help reduce poverty
• To help reduce rural-urban income disparities
• Function 3. A way of managing natural resources
  and the environment
• To reduce the environmental footprint
• To provide environmental services

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These functions differ across three worlds of
agriculture ag-based, transforming, urbanized
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Function 1 A trigger of growth in
agriculture-based countries and regions

• Important Agriculture the basis for growth in
  the agriculture-based countries (Sub-Saharan
  Africa, CA)
• A large sector in GDP
• Ag productivity key to low food prices, wage
  competitiveness
• Main source of comparative advantage
• Strong growth linkages with other sectors

Can succeed Agricultural growth has improved in
SS-Africa since 1994
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Function 2 A source of livelihoods Important
2.5 billion people and 900 million extreme poor
Can succeed GDP growth from agriculture benefits
the poorest half 2-3 times more than GDP growth
from non-agriculture
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Function 3 A way of managing natural resources
and the environment
Important Ag uses 80 of fresh water resources
and contributes to runoff pollution ag
contributes to global warming (21) and suffers
from climate change
Can succeed Sustainable farming systems
environmental services
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But agriculture has been under- and mis-used in
many countries
Public spending on Ag/Ag GDP
Ag GDP/GDP
Under-investment in agriculture where it matters
most, and mis-investment (75 to private
subsidies in India, 54 LAC)
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There are new opportunities for agriculture

• Better incentives
• Reduced taxation of agriculture
• Progress with bilateral and regional trade
  agreements
• New market opportunities
• High value agriculture, biofuels, emerging
  countries, regional food markets
• Many types of innovations
• Institutionalrisk, finance, decentralization,
  collective action
• Technologicalbiotech and IT
• New actors and ways of doing business
• Value chains, producer organizations,
  public-private partnerships

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But there are also challenges

• Challenge of continued global (OECD) and national
  (ag-based) trade distortions
• Lack of progress with Doha and incomplete support
  to reforms
• Challenge to pro-poor growth
• Competitiveness of smallholders in new markets
• Catching up of lagging regions
• Rural labor markets that provide pathways out of
  poverty
• Environmental challenges to growth
• Acute resource scarcitywater and land
• Resource degradation that undermines productivity
  gains
• Negative impacts of climate change in the tropics
  and mountains
• Implementation challenges
• Lags in adapting governance to the new functions
  of the state
• Political economy bottlenecks to reforms

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Global trade distortions remain pervasive
Trade share losses to developing countries due to
current global trade policies ( point loss to
developing country trade shares)
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• An agriculture-for-development agenda
• Agriculture-based countries Promote a
  smallholder based productivity revolution
  (SS-Africa, CA)
• Highly diverse farming systems decentralized
  approaches, gender roles
• Multisectoral approach (different from Asian
  green revolution)
• Transforming countries (Asia) Pursue a
  comprehensive rural development approach to
  reduce disparities
• High value revolution in smallholder farming
• Remunerative rural labor markets in ag and the
  rural non-farm economy
• Massive investment in rural human capital for
  migration
• Urbanized countries (LAC) Support social
  incorporation
• Smallholders competitiveness in modern food
  markets
• Territorial development for rural jobs

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WDR positions on current topics

• Doha must progress
• Emphasis on cotton subsidies that hurt the poor
• Complementary policies for smallholder supply
  response
• Protection and subsidies can be used but with
  caution
• Protection of food staples is generally
  inequitable as most poor are net buyers
• Market-smartsubsidies can work
• GMOs have unrealized potential for the poor
• They need public RD (or private incentives) and
  efficient regulatory frameworks
• Biofuels will be important, but require prudence
• Improve efficiency, and recognize tradeoffs with
  food prices and the environment
• Climate change requires urgent attention
• Extend carbon financing to provide incentives to
  agriculture
• Urgency of funding adaptation for poor countries
• High food prices Require social assistance for
  poor net buyers, and support to smallholder
  farmers to seize market opportunities

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Looking forward WDR 2008 as an on-going process

• Report developed in a broadly participatory
  fashion
• Follow up with the participatory development of
  regional and country agendas
• Seek broad commitment to agriculture for
  development
• http//www.worldbank.org/wdr2008