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Agriculture for Development

Sixteenth Session of the UN Commission on Sustainable Development5 May 2008

Erick C.M. FernandesAdvisor, Land and Natural Resource ManagementAgriculture and Rural DevelopmentThe World Bank

2

World Development Report 2008

Outline

Key WDR findings and messagesImproved OpportunitiesChallenges to be addressedWhat can be done?WDR recommendations

3


75% of the world’s poor are rural and most are involved in farming.

In the 21st century agriculture remains fundamental for poverty reduction, economic growth and environmental sustainability.

4


Agriculture based countriesMainly SS-Africa

417 million rural people

Transforming countriesMainly Asia, MENA

2.2 billion rural people

Urbanized countriesMainly Latin America

255 million rural people

Agr

icul

ture

’s s

hare

in g

row

th 1

990-

2005

Rural poor/total poor, 2002

The three worlds of agriculture

0 100%

80%

0

50%

20%

Three Functions of Agriculture for Development

1.

Lead sector for growth

2.

Source of livelihoods

3.

A way of better managing natural resources (and benefiting from environmental services)

6


2.3

3.33.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1980-1990 1990-2000 2000-2005Ave

rage

ann

ual r

eal a

gric

ultu

ral g

row

th(%

)

Large sector for GDP growthAffordable food and wage competitivenessComparative advantage in tradeStrong growth linkages

1. A trigger for overall growth

Accelerating agricultural growth in AfricaAccelerating agricultural growth in Africa

Success:China, India, Vietnam

Success:China, India, Vietnam

7


2.5 billion people depend directly on agriculture

800 m smallholders

75% of poor are rural and the majority will be rural to about 2040

Global extreme poverty 2002, $1.08 a dayGlobal extreme poverty 2002, $1.08 a day

GlobalUrban poor

287 mill. South Asia rural 407 mill.

Sub-SaharanAfrica rural

229 mill.

East Asia rural

218 mill.LAC rural27 mill.

ECA rural5 mill.

MENA rural5 mill.

2. A source of livelihoods

8


Agriculture

Non-agriculture-2

0

2

4

6

8

Low est 2 3 4 5 6 7 8 9 Highest

Expenditure deciles

Expe

nditu

re g

ains

indu

ced

by 1

%

GD

P gr

owth

(%)

GDP growth from agriculture benefits the income of the poor 2-4 times more than

GDP growth from non- agriculture (43 countries)

GDP growth from agriculture benefits the income of the poor 2-4 times more than

GDP growth from non- agriculture (43 countries)

Growth from agriculture is especially effective for poverty reduction

9


Agricultural productivity growth has driven poverty reduction in Asia

3.4

3.6

3.8

4

4.2

1959 1963 1967 1971 1975 1979 1983 1987 1991Years

Log

of H

eadc

ount

inde

x (r

ural

are

as)

4

4.2

4.4

4.6

4.8

5

5.2

Log

of a

vera

ge f

arm

out

put

per

acre

Rural Po(left axis)

Yields(right axis)

2.4

2.9

3.4

3.9

4.4

1980 1983 1986 1989 1992 1995 1998 2001Years

Log

of H

eadc

ount

(ru

ral a

reas

)

4.6

4.7

4.8

4.9

5.0

5.1

5.2

5.3

Log

of a

vera

ge f

arm

out

put

per

acre

Rural P0(left axis)

Yields(right axis)

Headcount index and average farm yieldsRural India 1959-1994

Headcount index and average farm yieldsRural China 1980-2001

10


Ghana –

a story of poverty reduction

Urban

Rural Forest

Rural Savanah

0

10

20

30

40

50

60

70

80

1991/92 1998/99 2005/06

Pove

rty ra

te (%

)

Rural poverty halved with increased agricultural productivity, higher cocoa prices, reduced food prices, and income diversification

12


Important user of natural resources: 80% of fresh water resources40% of land area21+ % of greenhouse gas emissions

Contributions to greenhouse gas emissions

Developing country

agriculture & deforestation

21.4

Developing country

other sources

15.2

Industrialized countries

63.4

3. Managing natural resources and the environment

It can succeed:Sustainable farming systems

and environmental services (ecoagriculture, agroforestry)

It can succeed:Sustainable farming systems

and environmental services(ecoagriculture, agroforestry)

13


Agriculture continues to be “taxed”

in ag-based and transforming countries, but at much lower levels

-30

-25

-20

-15

-10

-5

0

5

10

15

Agriculture-based Transforming Urbanized

Aver

age

taxa

tion

%

1980-84 2000-04

Improved opportunities

14


Traditional exports

Meat

Horticulture

0

50

100

150

200

250

300

350

1980 1990 2000 2004

Val

ue o

f exp

orts

(198

0=10

0)

0

50

100

150

200

250

1981 1984 1987 1990 1993 1996 1999 2002

Kca

l con

sum

ptio

n/ca

pita

/day

(1

981=

100)

Changing diets ̶ a new agriculture of high value products and non-traditional exports

Developing country exports

Developing country consumption

Improved Opportunities

Meat

Cereals

Horticulture

15



Functional Foods: In addition to nutrients, added health benefits!

16


Technological innovations: conservation farming, agroforestry, new and improved varieties/breeds,

State of the art remote sensing and monitoring/verification

Information technology in financial, marketing and extension services

Institutional innovations - many at early stagesStronger producer organizations

Market-based, payments for environmental services (PES)

Public-private-CSO partnerships (Value chains, extension, rural finance)

Weather and price risk insurance (Malawi)

Improved opportunities

17



Fix degraded lands!!Fix Degraded Lands for Enhanced Productivity

& Environmental Services

18


Protein, micronutrients, fibre, vitamins

19


0

10

20

30

40

50

60

70

80

90

Dry

Wei

ght B

iom

ass

Mg

ha-1

Palm Fruit Timber-Pasture

20


India, UP Sodic Lands - Rehabilitation

21


Opportunities: Expanding sources of income in the rural non-farm economy

Mexico:Sources of income rural population

Bangladesh:Sources of income rural population

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 2002

Other

Transfers

NonAgIncome

AgWage

Farm

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 2002

22


UNTIL RECENTLY Real international commodity prices have been suppressed

by current global trade policies (% of price)

Trade share losses to developing countries due to current global trade policies

(% point loss to developing country trade shares)

Global trade distortions remain pervasive

-3

-4

-4

-5

-7

-12

-15

-21

Sugar

Rice

Processed meat

Wheat

Other grains

Dairy products

Oilseed

Cotton

But Major Challenges

-9

-2

-18

-21

-5

-7

-34

-27

Sugar

Rice

Processed meat

Wheat

Coarse grains

Dairy products

Oilseed

Cotton

23


Increasing land and water constraints

-

10

20

30

40

50

60

70

SSA SA EAP MENA ECA LAC

Perc

ent

(%)

% of population in absolute water scarcity

LACECA

MENA

EAP

SA

SSA

0

20

40

60

80

100

120

140

160

180

1961

1967

1973

1979

1985

1991

1997

2003

Inde

x of

cro

plan

d pe

r ag

popu

latio

n (1

961=

100)

Cropland per capita of agricultural population

Challenges

24

World Development Report 2008Challenges

Making growth pro-poor

Connecting smallholders to new markets

Improving assets of the poor, especially women

Implementation bottlenecks

Underinvestment in core public goods

Weaknesses in governance (new state roles, coordination, decentralization)

25


Agricultural-based countries spend too little on agriculture (and R&D)

Ag GDP/GDP

29

16

10

0

5

10

15

20

25

30

35

Agriculture-based Transforming Urbanized

perc

ent

0

2

4

6

8

10

12

14

Agriculture based Transforming Urbanized

perc

ent

Public Spending on Ag (% of Ag GDP)Spending on Ag R&D (% of Ag GDP)

Challenges

But quality of existing spending often poor

26


0

1

2

3

4

5

6

7

1975-79 1980-84 1985-89 1990-94 1995-99 2000-02

Per

cent

of A

g. G

DP

“Misinvestment”

is also pervasive

Subsidies

Public Investment

Challenges

27


Improving governance to implement agriculture-for-development agendas

Double weakness of governance as a hurdleState weakest in poor countries

Capacity weak in agriculture vs other sectors

Improving governance at national and global levelsNational and local: cross-sectoral coordination, capacity of MinAg, decentralization

Global--coordinate for complex and inter-related issues (trade restrictions, climate change, animal diseases, biodiversity, standards)

Challenges

28


-102030405060708090

100

1990 1992 1994 1996 1998 2000 2002 2004

% p

over

ty in

rur

al a

reas

0

2

4

6

8

10

12

14

% O

DA

to a

gric

ultu

re

Donor support to agriculture also declined despite MDG to halve poverty

% rural poverty

% ODA to Ag

Challenges

29


OFFICIAL DEVELOPMENT

ASSISTANCE

(12% in 1990)

PUBLIC SPENDING(Sub-Saharan Africa)

AGRICULTURE

4%

RURAL

75%

AGRICULTURE

4%

Reality vs Action

WORLD POOR

30

World Development Report 2008So, what?

Agriculture remains fundamental for development

1.

Accelerate smallholder productivity increases for agricultural growth and food security in Africa

2.

Follow a comprehensive approach to reduce sectoral disparities and poverty in transforming countries of Asia

3.

Enhance sustainability, market opportunities, and environmental services from agriculture

4.

Pursue multiple pathways out of poverty: smallholder farming, labor market, RNFE, migration

5. Improve the quality of governance in agriculture at local, national, and global levels

31


WDR recommendations on “hot topics”

Doha must progress – with attention to transitional issues in developing countries

Subsidies can be used – with attention to market development and equity

GMOs have unrealized potential for the poor – with special attention to bio-safety and IPRs

IPRs must be tailored to country and commodity specifics—with attention to humanitarian access

Biofuels will be important – but need trade-offs analyses, more productive and sustainable technologies

Climate change requires urgent attention–both adaptation and mitigation

32


An enabling environment for competitive supply chains

Agriculture as a ‘dual function’

sector that both supports growth and provides social safety nets

Alternative instruments of rural social policy that provide agriculture with an improved environment

Political “space”

for reform within the agriculture and water sectors

Address the existing political economies reliance on subsidies and overprotection

33


The World Food Price Crisis

Changing food demand (quantity and quality) in China, India, and other countries which are experiencing rapid economic development.Rising energy prices and their impacts on both the costs of agricultural production and the demand of grains for biofuels.Severe weather shocks and impacts on production, weather-related risks, and investment in agricultural production.Speculation in commodity markets

34


The World Food Price Crisis continued

The World Bank is doubling its lending for agriculture in Africa over the next year to $800 million, in order to raise supply.

35


WB & Gender

“Gender and women’s empowerment is at the core of what we need to do in the field of development, and gender equality is also smart economics,” R. Zoellick.

“Progress in the area of women’s economic empowerment is still far, far too slow. Whether it is the question of employment, opportunity, pay, or access to finance, there is a tremendous amount of work to do to level the playing field for women.”

So ?

36


WB & Gender 2

The World Bank Group (WBG) will increase its support to women entrepreneurs through the International Finance Corporation (IFC), which will channel at least US$100 million in credit lines at commercial banks for women entrepreneurs by 2012.By the end of 2010 at least half of all the Bank’s rural projects in Africa will include gender actions, such as equitable land titling programs like the one being implemented in Ethiopia.

37


38


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75% of the world’s poor are rural and most are involved in farming.

In the 21st century agriculture remains fundamental for poverty reduction, economic growth and environmental sustainability.

www.worldbank.org/ard , www.worldbank.org/wdr2008

http://www.worldbank.org/ard

http://www.worldbank.org/wdr2008

40


75% of the world’s poor are rural and most are involved in farming. In the 21st century agriculture remains fundamental for poverty reduction, economic growth and environmental sustainability. www.worldbank.org/ard

www.worldbank.org/wdr2008

http://www.worldbank.org/ard

http://www.worldbank.org/wdr2008

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