Abimbola Akosile
6 November 2007
Lagos — The latest World Development Report calls for greater investment in agriculture in developing countries and warns that the sector must be placed at the center of the development agenda if the goals of halving extreme poverty and hunger by 2015 are to be realised.
Titled 'Agriculture for Development', the report says the agricultural and rural sectors have suffered from neglect and under-investment over the past 20 years. While 75 percent of the world's poor live in rural areas, a mere 4 percent of official development assistance goes to agriculture in developing countries.
In Sub-Saharan Africa, a region heavily reliant on agriculture for overall growth, public spending for farming is also only 4 percent of total government spending and the sector is still taxed at relatively high levels.
The World Bank Group is advocating a new 'agriculture for development' agenda. According to the WDR, for the poorest people, GDP growth originating in agriculture is about four times more effective in reducing poverty than GDP growth originating outside the sector.
"A dynamic 'agriculture for development' agenda can benefit the estimated 900 million rural people in the developing world who live on less than $1 a day, most of whom are engaged in agriculture," said Robert B. Zoellick, World Bank Group President.
To him, "we need to give agriculture more prominence across the board. At the global level, countries must deliver on vital reforms such as cutting distorting subsidies and opening markets, while civil society groups, especially farmer organisations, need more say in setting the agricultural agenda".
According to the report, agriculture can offer pathways out of poverty if efforts are made to increase productivity in the staple foods sector; connect smallholders to rapidly expanding high-value horticulture, poultry, aqua-culture, as well as dairy markets; and generate jobs in the rural non-farm economy.
"Agricultural growth has been highly successful in reducing rural poverty in East Asia over the past 15 years," said Francois Bourguignon, World Bank Chief Economist and Senior Vice President, Development Economics.
Bourguignon said the challenge is to sustain and expand agriculture's unique poverty-reducing power, especially in Sub-Saharan Africa and South Asia where the number of rural poor people is still rising and will continue to exceed the number of urban poor for at least another 30 years.
For its part, the Bank intends to continue increasing its support for agriculture and rural development, following a decline in lending in the 1980s and 1990s. Commitments in FY07 reached $3.1 billion, marking an increase for the fourth straight year.
Report of Findings
The report also warns global food supplies are under pressure from expanding demand for food, feed, and biofuels; the rising price of energy; and increasing land and water scarcity; as well as the effects of climate change. This in turn is contributing to uncertainty about future food prices.
Agriculture consumes 85 per cent of the world's utilised water and the sector contributes to deforestation, land degradation, and pollution. The report recommends measures to achieve more sustainable production systems and outlines incentives to protect the environment.
The report says in agriculture-based countries (home to 417 million rural people, 170 million of whom live on less than $1 a day) the agricultural sector is essential to overall growth, poverty reduction, and food security. Most of these countries are in Sub-Saharan Africa, where the sector employs 65 percent of the labor force and generates 32 percent of GDP growth.
For Sub-Saharan Africa's development, the report highlights issues to be urgently confronted: too little public spending on agriculture; donor support for emergency food aid with insufficient attention to income-raising investments; rich-country trade barriers and subsidies for key commodities such as cotton and oilseeds; and the under-recognised potential of millions of women who play a dominant role in farming.
In transforming countries such as China, India, and Morocco, agriculture contributes on average only 7 percent to GDP growth, but lagging rural incomes are a major source of political tensions.
Dynamism in the rural and agricultural sectors is needed to narrow the rural-urban income gap and reduce rural poverty for 600 million poor while avoiding falling into subsidy and protection traps that will stymie growth and tax poor consumers, the report said.
In urbanised countries, mainly in Latin America and the Caribbean and Eastern Europe and Central Asia, agriculture contributes just 5 percent of GDP growth on average. However, rural areas are still home to 45 percent of the poor, and agribusiness and food services account for as much as one third of GDP.
The report revealed that the broad goal is to link smallholders to modern food markets and provide remunerative jobs in rural areas.
It also says rich countries need to reform policies which harm the poor. For example, it is vital that the United States reduces cotton subsidies which depress prices for African smallholders. In the emerging area of biofuels, the problem is both restrictive tariffs and heavy subsidies in rich countries, which drive up food prices and limit export opportunities for efficient developing country producers.
The report also asserts that industrialised countries that were the major contributors to global warming urgently need to do more to help poor farmers adapt their production systems to climate change.
Productivity Growth in S'Saharan Africa
The World Development Report calls for greater investment in agriculture in Africa and says the need for action is especially urgent in Sub- Saharan Africa, where agricultural productivity growth has lagged behind other regions. Agriculture in Sub-Saharan Africa employs 65 percent of the labor force and generates 32 percent of GDP growth.
"In Sub-Saharan Africa, home to 229 million extremely poor rural people, agriculture is about much more than simple food security. A greater focus on agriculture will help boost overall economic growth and can offer multiple pathways out of poverty," said Zoellick.
According to the report, the share of official development assistance going to agriculture in developing countries is a mere 4 percent. This is also the same insufficient share that governments in Sub-Saharan Africa spend from their budgets on agriculture, far short of the 11-14 percent share of national budgets invested in agriculture that fueled the Asian green revolutions.
The report calls for an 'agriculture for development' agenda for Africa that will improve the investment climate as well as make optimal use of markets, technology, sustainable water and soil management, and institutional services.
In addition, member countries were enjoined to deliver on issues such as a level playing field for trade, while farmer organisations and other local groups were encouraged to have more say in setting relevant policies.
According to the WDR, for the poorest people, GDP growth originating in agriculture is about four times more effective in reducing poverty than GDP growth originating outside the sector.
It cites the example of smallholders successfully producing crops for export markets, such as coffee, cotton and green beans. With rapid population growth and urbanisation, it says demand for local food staples and livestock products is growing fast, offering expanding market opportunities.
"African agricultural growth increased from 2.3 percent in the 1980s, to 3.3 percent on average in the 1990s, to 3.8 percent annually from 2000 to 2005. Rural poverty rates have started to decline in 10 of the 13 countries for which data were analysed. Further accelerating and sustaining this growth is needed if key development goals are to be met," said Bourguignon, World Bank Senior Vice President, Development Economics.
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