ISSUES OF RURAL POVERTY AND THE
FATE OF SMALLHOLDER AGRICULTURE
ISS-SID-MOFA, THE Hague 23 June, 2011
KEVIN CLEAVER
ASSOCIATE VICE PRESIDENT
IFAD
June 23, 2011
1
The need to expand investment in agriculture,
including through investment with smallholders
has been studied intensively in past 3 years
2
The case for expanded Donor and government
investment in developing country agriculture
• Rising food prices
• About 1 billion people hungry (FAO)
• Need to double food production by 2050 (FAO,
IFPRI)
• Environmental issues and climate change
• Agriculture and rural development effective for
poverty and hunger reduction (World Bank,
World Development Report and IFPRI)
3
Rising food prices primarily reflect global
imbalance between rapidly increasing demand
for food and slower growth in supplies
Source: Food prices, “The consequences of costly nosh”, The Economist, 22 January 2011
4
Why are food prices rising; and why greater
volatility?
• Due to rapidly rising global and local demand for food, at
about 2% per annum and rising (Chatham House)
– In turn caused by income growth, population growth,
dietary changes, bio-fuels
• Combined with a slowing of the increase in supply
5
Agricultural productivity growth highest in high-income
countries; almost stagnation in sub-Saharan Africa
Cereal Yield (kg per hectare)
6000
5000
4000
High income countries
Low income countries
3000
Sub-Saharan African
countries
2000
Source: WDI dataset, 2010
1000
0
1980
1990
2008
Agricultural productivity improvements have already been
below population growth
Least Developed Countries:
Agricultural productivity and population
900
800
700
Population, million
600
500
Agriculture value added per
worker (constant 2000 US$)
400
Cereal yield ( 10 kg per
hectare)
300
200
100
7
20
08
20
06
20
04
20
02
20
00
19
98
19
96
19
94
0
Source: WDI dataset 2010
Why is agriculture production growth in
developing countries increasingly problematic?
• Low investments in agricultural research: 0.42% of agricultural output in
Asia, 0.65% in Africa, 1.1% in Latin America
- Compared to over 5% in OECD countries
• Lack of agriculture investment and consequent reduction in productivity
growth
- Cereal yields increasing at 1-2% p.a. now, compared to 3-6% p.a. in the
1960s-1980s
• Transport, marketing and farm input price increases as oil prices increase
• Land degradation
• Substitution of bio-fuels for food (for maize)
• Government policy deficiencies, panic in food markets
• Climate change may be exacerbating the slow food production response
8
Agriculture growth has high economic pay-off and high poverty
reduction pay-off
• A 1% p.a. increase in agriculture growth, on average leads to a 2.7%
increase in income of the lowest 3 income deciles in developing
countries (World Bank World Development Report, 2007)
• Agriculture is 2.5 to 3 times more effective in increasing income of
the poor than is non-agriculture investment (World Development
Report, 2007)
• “Agriculture growth, as opposed to growth in general, is typically
found to be the primary source of poverty reduction (IFPRI, 2007)
• The contrary is also true; a decline in agriculture growth throws
many poor people into poverty, and explains some of the increase in
developing country poverty and hunger in the past two years.
Investment in developing country farming will:
• Help meet global and local food needs
• Contribute to environmental management and
adaptation to climate change
• Reduce rural poverty (to meet MDG-1 and half
global hunger by 2015)
10
What does investment in developing country
farming mean?
Improving basic foods and staples
Including cash crops:
exports are growing
Integrating livestock to match
rising demand
Developing private agroprocessing
and marketing
11
Peru: Management of Natural Resources in the
Southern Highlands Project – agriculture services
12
Guinea: Fouta Djallon Agricultural Rehabilitation
Project – farmer training
13
India: Tamil Nadu Women’s Development
Project – women’s groups
14
Senegal: Village Management and Development
Project – women’s training
15
Niger: Second Maradi Rural Development
Project – irrigation
16
Mauritania: Agricultural Rehabilitation
Programme II – reforestation
17
Ethiopia: Rehabilitation Programme for
Drought Affected Areas
18
Issue #1 - How to make agriculture projects in fragile
states more effective
• Focus more on institution building in fragile
states, and less on targeting
• Introduce longer term approach, with 10-15
year partnerships reflected in 2 to 3
consecutive projects
• Don’t shy away from involvement in fragile
states with poor governments
– Work through civil society, NGOs, private sector
19
Issue #2 – Governments and donors need to
modernize their instruments to deal with the
private sector
The market and the private sector are increasingly driving agriculture.
VALUE CHAIN APPROACH
Input
industry
Producers
Research
Extension
service
20
Food
process
industry
Food
retail
industry
Consumers
Supporting markets for smallholders
●Inputs
Storage●
●Processing
Marketing●
21
Issue # 3: Rural environmental issues and climate change have
larger impact on small farmers than previously thought
• Deforestation, groundwater depletion, salinization of irrigation areas,
destruction of rural biodiversity, soil loss (see UNEP Atlas of Africa)
• Agriculture both a cause and victim of environment problems
- 5 to 10 million hectares of agriculture land lost annually to severe land and
water degradation (WDR 2008)
- Agriculture uses 85% of fresh water withdrawals in developing
countries - water getting scarcer
• Agriculture contributes 13% of green house gases
• Rural environment problems to worsen due to climate change
(IPCC)
22
SOLUTIONS: Countries to better incorporate adaptation to
climate change and environmental concerns in investments
and policies
•
•
•
•
•
Drought resistant cultivars
Crop diversification
Alternative tillage and erosion control
Research for environmental services
Weather insurance
• Drought contingency and early warning systems
• Water management, including flood response
23
Issue # 4 Overcoming special constraints facing
rural women
• Rural women often have less access to assets
than do men
–
–
–
–
Educational
Land
Finance
Technical Advice
• Gender and age disaggregated project
components
l
24
Issue #5: Obtaining impact on a larger scale is urgent:
Most donor projects impact limited number of people
• About 1 billion hungry people in the world, relatively stable
since the 1990s
• 2 billion people live on less than $2 per day
• IFAD’s ongoing projects bringing about 36 million out of
poverty
• Donors and governments need to help scale up proven
solutions to impact more people
• Question: how to obtain significantly broader impact on
more people without a large expansion of donor
resources?
25
Scaling up for broader impact is the biggest
challenge for governments and donors
• Planning for operation and impact at scale to begin in Government
Agriculture plans and Strategies
• Each project design to plan for operating at scale
• Deepen country and local leadership in strategy, project design and
execution
• Donor-financed projects to use local systems; but build capacity for
self management
• Operating at scale requires institutional development at national and
local government, farmer organization and civil society
• Impact at scale requires enabling government policy and public
expenditure program, and measurement of impact
26
Innovative tools can break specific bottlenecks
along the value chain; need to be scaled up
Water user
associations
Farmers manage irrigation systems
BT cotton, India and
China
Insect-protected seed now planted on majority of cotton hectares,
significantly boosting both farmer profitability and overall production
Zero-tillage soy
cultivation, Argentina
Soil-conserving and emission-reducing process championed by
researchers and farmers that cultivates soy in narrow trenches rather
than tilled soil and retains biomatter on field
Effective
interventions often
build on:
Pradan, India
Technical livelihood training (farm and off-farm) and socio-behavioral
skill-building with rural womens’ organizations in poorest regions
• Links with research
institutions
Rentable solar
energy, Brazil
Home electricity systems leased monthly by Sistemas de Tecnologia
Adequada Agroeletro to rural households off the electricity grid,
drastically increasing rural incomes and reducing fossil fuel use
• Community
organizations
• Risk-sharing tools
Farm-based units which convert manure into biogas and provide lowcost energy to rural households, piloted with Nestle suppliers
• Telecom
Mobile banking,
Kenya
Safaricom service allows mobile-phone transfer of currency credits,
facilitating rural liquidity
• Local capacity
building
Micro-credit
revolution
Saving and loans for small-scale farming and enterprises throughout
the developing world
“Biogesters”, China
27
• Targeted regulations
Innovative tools … (cont’d)
Water harvesting
Concentrating rainwater through micro collectors to grow crops in arid
areas
Sustainable
beekeeping, Kenya
Advanced hives sold to farmers on a lease-to-own basis along with
extension and fair/immediate payment for harvest from Honey Care
Africa, mitigating producer risk and improving quality
Effective
interventions often
build on:
E-choupals, India
Private internet kiosks set up by ITC in villages to transmit relevant
data on markets, legislation, weather, and prices to local producers
• Links with research
institutions
Homestead gardens,
Bangladesh
Diversified gardens and nutrition training provided by Hellen Keller
International to female-headed households in order to address
malnutrition, micronutrient deficiencies
Door-to-door retail,
India
Hindustan Level Ltd outsources rural distribution to female
entrepreneurs who receive products by mail and sell them throughout
village
Flour fortification,
Egypt
Addition of iron and folic acid to wheat flour to address malnutrition
among children and the poor, led by GAIN, WFP, and the government
• Community
organizations
• Risk-sharing tools
• Telecom
• Targeted regulations
• Local capacity
building
Source: Realizing a new vision for agriculture: A roadmap for stakeholders, World Economic
Forum, 2010, and IFAD.
28
Conclusions
•
•
•
•
•
•
•
•
•
•
•
•
•
29
Smallholder agriculture in poor countries and poor regions of countries to
become central focus, including strong focus on farmers groups
Expanding to encompass the landless, who can be employed on-farm or in
non-farm rural enterprises
Treat farmers and small rural enterprises as business development, not as
objects of safety net or poverty alleviation; incorporating value chain
approaches
As a corollary, private sector development in rural areas
And more exploitation of rural-urban linkages
More focus to overcoming special constraints facing rural women
Aggressive conservation of natural resources and adaptation to climate
change
More work on land issues, and land rights of indigenous people
Policy advice and scaling up success to national level
Always working in partnerships with other institutions
International advocacy and participation in international debate and analysis
of agriculture issues
Facilitate South-South cooperation
Greater differentiation in donor supported projects and programs between
country types (fragile states, MICs, and other low income borrowers)
30
How much money should be put through donors
for agriculture and rural development?
Global estimates of investment
needs for developing country
agriculture to meet MDG-1
US$ billion
per annum
World Bank (2007)
IFPRI
FAO
L’Aquila
14
16
83
22
ODA for agriculture and rural
development
US$ billion
2002
2007
2010
4
6
8
Conclusions:
• Total requirements exceed ODA available for agriculture
and rural development
31
Business model has worked for project quality: Key
project performance indicators for IFAD’s development
results
100
% of projects
found
marginally
satisfaction or
better on the
indicators
90
80
70
60
IEE
ARRI 2010
50
PCRs 2009/ 2010
40
30
RMF t arget 2012
20
10
0
Rural povert y
Ef f ect iveness
Ef f iciency
IEE
100
67
45
55
40
40
ARRI 2010
97
77
57
86
95
65
PCRs 2009/ 2010
98
86
66
84
88
79
76
RMF t arget 2012
90
90
75
90
80
75
75
impact
Gender
IEE: Independent External Evaluation of IFAD, 2005
ARRI: Annual Report on Results and Impact (prepared by the Independent Office of Evaluation)
PCR: Project Completion Report
RMF – Results Measurement Framework
32
Innovat ion,
Relevance
learning/ scaling
Sust ainabilit y