Why a WDR on Agriculture for Development?

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Why a WDR on Agriculture for Development?

1. Agriculture in a very large economic and social
   sector, and a major player in the environmental
   balance, that deserves more attention
2. Rapid changes in the world of agriculture
   require a new agenda
3. There are good reasons to invest in agriculture
   for development (theory)

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1. Agriculture is a very large economic and
social sector and a major player in the
environmental balance

• A large contributor to growth
• On average 26 of GDP in Sub-Saharan Africa
  countries
• Contributes 20 to 60 of GDP growth in these
  countries
• Extended agriculture increases the share of
  agriculture in GDP
• by 50 (Mexico) to 90 (Chile)
• A large contributor to well-being - a way of life
  for billions
• 3 billion rural people, 73 of LDC population
• 2.5 billion related to agriculture, 1.3 billion
  smallholders, more than half women
• 70 of the world poor live in rural areas, 3/4 of
  the world malnourished (803 million)
• A major contributor to the environmental balance
• Uses 85 of world water resources, 33 of land
• Contributes to global warming (20 CO2) and
  pollution
• An important source of environmental services

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2. Rapid changes in the world of agriculture
since WDR-1982 require a new agenda

• Globalization, structural adjustment, integrated
  supply chains, new technologies, institutional
  innovations, environmental pressures
• Create new opportunities for agricultural growth
  but also major challenges for the link between
  growth and development
• Rising divergences at the national, sub-national,
  and household levels
• Need typologies to guide the analysis and define
  differentiated policy recommendations

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3. There are four good reasons to invest in
agriculture for development (theory)

• Agricultural growth can be the engine of national
  economic growth (NT food sector)
• Traditional role of agriculture in low income
  countries based on strong growth linkages
  (surplus extraction, price transmission)
• Agricultural growth can be particularly effective
  for poverty reduction
• Also for equity (including gender) and creating
  effective demand (ADLI) as sources of future
  growth
• Some sub-sectors of agriculture have or can
  acquire strong comparative advantage (T sector)
• Smallholder participation and employment help
  reduce poverty
• Improved agricultural practices can reduce use of
  natural resources and provide environmental
  services.

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Pathways out of poverty framework
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Urbanization in developing countries
Figure 3
Billions of people
projected
4
3
Rural
2
1
Urban
0
1975
1985
2005
1965
1995
2015
2025
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S-side Growing bifurcations in agricultural
productivity
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Long-run Trend in Per capita AgGDP, Ethiopia,
1962-2005
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Typology of countries 3 categories according to
the share of agriculture in growth and of the
rural sector in poverty
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Donor Support Also DeclinedWorld Bank Lending
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Agricultures Share of Public Expenditures Fell
in the 90s
Source Fan and Rao
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Some Types of Public Investments are Especially
Pro-Poor
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Increasing Private Sector Role makes Public-
Private Partnerships Inevitable
Total Global Investment - 33.2 billion
10.2 billion
11.5 billion
Public
Public
Developing
Developed
Private
Private
0.7 billion
10.8 billion
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Growth spillovers and poverty reduction effects
of growth (China)
GDP growth originating in agriculture creates
spillovers and is more effective at poverty
reduction than growth originating in
non-agriculture
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Elasticity of poverty reduction with respect to
yield growth, India
Source Ravallion and Datt, 1998
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China. F-pathway Negative correlation between
yields and rural poverty
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India. F-pathway Negative correlation between
yields and rural poverty
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India. P-pathway Importance of food prices as a
transmission mechanism between productivity and
poverty
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Nominal rate of assistance, Uganda, 1961 to 2004
Source Anderson and Martin, 2006
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NRofAssist. for agric and manufacturing, India
Source Pursell, Gulati, and Gupta, 2006
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Share of AgGDP of Agricultural Public
Expenditures, India
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Expenditures on public goods and subsidies
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Decline in global commodity prices 1979-1999
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Price bifurcations Evolution of international
prices more favorable for non-traditional exports
(pineapple, tomatoes) than for traditional
exports (sugar) and staple foods (rice)
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Major changes in the structure of agricultural
exports toward high value
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Demand bifurcations Unequal share of
supermarkets in the retail food market Winners
are producers in countries with rapidly growing
demand for high value products and able to meet
supermarket quality standards and delivery
deadlines
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Changes in the structure of farm household incomes
Mexico, Bangladesh. L-pathway Rising importance
of pluriactivity as a factor in the survival of
smallholder agriculture. Role of territorial
development to increase the size of the local
multiplier of agricultural growth.
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M-pathway Manage population transitions out of
agriculture and rural areas. Prepare future
migrants and pace the decline in the number of
family farms (social agriculture)
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MDG 7 Sustainability Agriculture is the Major
User of Natural Resources
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(No Transcript)
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WDR 2008 Agriculture for Development Proposed
Messages
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Main message Need and opportunity to restore the
place of agriculture in the development agenda

• After decades of neglect and mis-management,
  agriculture deserves to be placed squarely back
  as a priority item on the development agenda
• to cancel the current huge economic, human, and
  environmental costs of under- and mis-investment
• to capture the full potential benefit of new
  opportunities in using agriculture-for-development
  arising from better understanding and from more
  favorable contexts
• (The world cannot afford to get it wrong this
  time)

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Specific messages 7 instruments to make
agriculture work for development (do what and do
how)

• 1. Rebalance the roles of the state, private
  sector (in ag and value chains), and civil
  society (rural producer organizations) in
  agriculture-for-development
• Make markets work and attract private sector
  investment
• 2. Exploit fully the new sources of growth
  available to agriculture on both the demand and
  the supply sides
• New expanded markets institutional,
  technological, and NRM innovations
• 3. Make agricultural and rural growth more
  pro-poor, capitalizing on the multiple pathways
  out of poverty for rural populations
• A (assets), F (smallholder farming), L
  (employment), M (migration), and P (food prices)
  pathways
• 4. Make agriculture more sustainable and a source
  of environmental services
• Incentives, property rights, community capacity,
  technology, and PES
• 5. Reduce risk in agriculture and the
  vulnerability of rural populations
• Risk management and risk coping instruments
  safety nets (food aid and cash)
• 6. Promote agriculture-for-development coalitions
  in the political economy of policy
• Agricultural lobbies (ag-based), and median voter
  interests (other)
• 7. Collaborate on a global agenda in support of
  agriculture-for-development
• Coordination of global actors (apex) for
  multilateral interventions in support of national
  agendas

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Country-level messages Pursue integral
strategies of ag-for-dev by country category

• Agriculture-based countries (SS Africa) Old
  development model in a new context
• Capitalize on a better macro-political
  environment
• Build on the best (entrepreneurs and regions) in
  investing in core public goods (RD,
  infrastructure, education and health)
• Develop institutions based on decentralization
  and participation (RPO)
• Priority to food staples and food security (an
  African Green Revolution)
• Transforming economies (Asia, MENA) Toward a
  brand new social model
• Diversify smallholder farming toward high value
  agriculture
• Promote a vibrant rural non-farm sector to absorb
  surplus labor
• Urbanizing economies (LAC) Business model with
  unexplored social challenges
• Make smallholder agriculture competitive in high
  value chains
• Favor more remunerative employment and pace
  transitions (including the role of subsistence
  farming)