World Development Report 2008 Agriculture for Development

Transcription

1 World Development Report 2008 Agriculture for Development Preliminary version in progress 75% of the world s poor are rural and most are involved in farming. Agriculture remains a fundamental instrument for development and poverty reduction 1

2 WDR 2008-Agriculture for Development Outline 1. Agriculture remains fundamental for development, and differentially by context 2. But the powers of agriculture are often under-used 3. There are new opportunities to use agriculture that open multiple pathways out of poverty 4. With new (and lingering) challenges to be addressed 5. Differentiated agendas and improved governance 6. WDR positions on emerging issues 2

3 Roles: A large economic sector in poor countries Share of Labor in Agriculture and Shre of Agriculture in GDP ZAR ZAR BDI ETH BDI ETH MWI NER NPL BFA RWA MOZ MLI UGA TCD MDG TGO GHA TZA KHM LAO BGD BEN LAO TZA MLI RWA UGAGHA NER NPL KHMBEN TGO NGA TJK NGA MDG SDN TCD MWI MOZ TJKBFA BGD VNM KEN IND ZMB GIN ZMB VNM SDN GIN KEN SEN IND SEN YEM PAK PNG AGO ZWE CMR CIV CHN IDN LKA BOL GTM THA PHL MAR EGY PRY HND CMR PER SLV PNG UZB UZB SYR AZE ECU PRY IRN CIV DZA TUN PAK HND IRN GTM YEM SYR COL LKA PHL DOM ROM CHN ZWE IDN UKR BOL MAR BLR COL AZE BLR EGY ROM TUN SLV UKR DOM AGO ECU BGRDZATHA PER TUR POL MYS BRA CHL MEX TUR HUN ZAF MYS SVK VEN CZE BRA SVK CHL HUN CZE MEX POL VEN ZAF Source: World Bank, DDP,September 2006 Share of Agriculture in GDP Log of GDP per capita (constant 2000 US$), Share of Labor in Agriculture ARG ARG The share of agriculture in GDP can be 30-50% in poor countries; the share in employment 60-90% 3

4 Roles: A source of livelihoods for many, but a huge reservoir of poverty million of rural poor ($1 a day) SSA SA EAP MENA ECA LAC 2.5 billion people related to agriculture, 1.3 billion smallholders 1.9 billion rural poor ($2/day), 800 m extreme rural poor ($1/day) 4

5 Expenditure gains induced by 1% GDP growth (%) Fundamental role: Agricultural growth has unique powers for poverty reduction Agriculture Non-agriculture Lowest Highest Expenditure deciles GDP growth from agriculture especially benefits the poorest 5

6 Fundamental role: Impressive successes at rural poverty reduction Headcount index and average farm yields Rural India Headcount index and average farm yields Rural China Log of Headcount index (rural areas) Rural Po (left axis) Yields (right axis) Log of average farm output per acre Log of Headcount (rural areas) Rural P0 (left axis) Yields (right axis) Log of average farm output per acre Years Years 4.6 Rural poverty fell sharply in in India and China as yields rose 6

7 Roles: An important user and often mis-user of natural resources 80% Developing countries Percent of total GHG emissions 60% 40% 20% 62.9% 15.4% 11.4% Developed countries 6.6% 3.8% 0% Energy Agriculture (excluding land use change) Deforestation Industrial processes Waste Agriculture uses 85% of water withdrawals and causes most of deforestation in developing countries Contributes to global warming: 21% (up to 35%) of Green House Gases 7

8 There are three worlds for the roles of agriculture in growth and poverty 0.8 Poverty data from Ravallion et al Other predicted poverty data Dynamic analysis Agriculture-based countries RWA BDI 0.6 CMR MWI 0.4 BGR BEN PRY NGA SDN TZA GHA TGO NER IND LAO PNG CHL BRA VEN ARG Urbanized countries BLR RUS BRA UKR CZE MEX COL AZE CIV SYR ETH MDG BFA ZMB KEN UGA MOZ GINMLI TCD HND PAK IRN YEM IND KHM GTM SEN DZA IDN PHL BOL BGD VNM IDN PER AGO EGY IND DOM MAR TUN SVK THA LKA TUR SLV BRA ROM ECU IDN ZAF POL HUN ZAR MYS TJK Transforming countries 81- NPL CHN CHN CHN CHN ZWE Share of total poverty in rural areas,

9 Message 1: The role of agriculture for development is fundamental and differs in the three worlds: growth, equality, inclusion Agricultural-based countries: growth Agriculture essential for growth: large sector, price of food with limited tradability, and comparative advantage where tradable Importance for poverty and food security Transforming countries: equality Rapidly growing nonagricultural sectors Agriculture key to reduce rural-urban income disparities and extreme rural poverty Urbanized countries: inclusion Subsectors with comparative advantage Include smallholders as suppliers to modern food markets and provide remunerative employment in agriculture 9

10 There is also deep heterogeneity across areas, households, and within households Favored vs marginal areas Agro-ecology, market access, social exclusion Household heterogeneity Market-oriented vs subsistence farming Rural non-farm enterprises low vs. high productivity Labor markets high vs low skills Migration out of vs. into poverty Intra-household differences Gender roles and decision making Access to assets and consumption Differentiated approaches are required in enhancing the role of agriculture for development 10

11 WDR 2008-Agriculture for Development 1. Agriculture remains fundamental for development, and differentially by context 2. But the powers of agriculture are often under-used 3. There are new opportunities to use agriculture that open multiple pathways out of poverty 4. With new (and lingering) challenges to be addressed 5. Differentiated agendas and improved governance 6. WDR positions on emerging issues 11

12 Under-use as global trade distortions remain pervasive 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) -21 Cotton -27 Cotton -15 Oilseed -34 Oilseed -12 Dairy products -7 Dairy products -7 Other grains -5 Course grains -5 Wheat -21 Wheat -4 Processed meat -18 Processed meat -4 Rice -2 Rice -3 Sugar -9 Sugar 12

13 Under-use as taxation of agriculture exports remains high in the agriculture-based and transforming countries Nominal rate of assistance (percent) Exportables -19 Agriculture-based Transforming Urbanized

14 Under-use as public spending on agriculture is low in the agriculture-based countries compared to the share of agriculture in GDP percent Ag GDP/GDP percent Public spending on Ag/Ag GDP Agriculture-based Transforming Urbanized 0 Agriculture-based Transforming Urbanized Transforming countries in 1980 had a much higher share of public spending on agriculture as a share of Ag GDP (10%) than the agriculture-based countries do today (4%) even though they had similar shares of agriculture in GDP 14

15 Mis-use is also pervasive: Subsidies are now four times larger than public investment in Indian agriculture 7 6 Subsidies Percent of Ag. GDP Public Investment

16 Under-use as donor support to agriculture has declined while rural poverty remained dominant % poverty in rural areas % ODA to Ag % rural poverty % ODA to agriculture

17 WDR 2008-Agriculture for Development 1. Agriculture remains fundamental for development, and differentially by context 2. But the powers of agriculture are often under-used 3. There are new opportunities to use agriculture that open multiple pathways out of poverty 4. With new (and lingering) challenges to be addressed 5. Differentiated agendas and improved governance 6. WDR positions on emerging issues 17

18 Opportunities: Improved macro-economic conditions favorable to agricultural growth in SS-Africa Macroeconomic score 6 4 Agriculture growth rate Average annual change of macroeconomic score Higher agricultural growth with improved macroeconomic scores since

19 Opportunities: Demands for a new agriculture of high value products and non-traditional exports Diets in the developing world are changing toward higher value products $ billion (2000 prices) Annual growth rate of kcal/person/day (%) Cereals Cereals Sugar Oil crops Horticulture Meat Milk Traditional exports Oilseeds, feeds and others Livestock and fish products Fruits and vegetables Non traditional exports from developing countries are increasing in absolute values and as a share of total exports 19

20 Opportunities: Institutional and technical innovations Institutional innovations a fertile field (with gaps) Land administration and markets, with use of IT Financial services: microfinance, use of IT Risk management: weather insurance More effective producer organizations & new approaches to extension using IT Technological innovations progress (with underinvestment) Continued spread of improved varieties to rainfed areas and better pest resistance GMOs--potential but only Bt cotton widely adopted by smallholders Conservation agriculture--especially zero tillage Improved livestock and fish breeds 20

21 Expanding income opportunities in the rural nonfarm economy 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mexico: Sources of income rural population Farm AgWage NonAgIncome Transfers Other 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bangladesh: Sources of income rural population Farm AgWage NonAgIncome Transfers Other Rising share of non-agricultural employment and transfers helping diversify rural household incomes 21

22 Opportunities: Agriculture for development goes beyond farming Promoting rural nonfarm development Investment climate, clusters of agro-industries, entrepreneurship Expanding and formalizing rural labor markets Skills, working conditions, gender inclusiveness Investing for successful out-migration Manage huge population transitions Providing social safety nets Safety nets for welfare and risk-taking 22

23 Opportunities open multiple pathways out of poverty for rural households Pathways out of poverty: not by agriculture alone Farming Agricultural wage employment; wage and selfemployment in the rural non-farm economy Migration and remittances Recognize important gender dimensions to each pathway at household level and within household labor allocation 23

24 Opportunities: New actors and new roles A redefined role for the state Regulation, decentralization, and partnerships Private and corporate sector Agribusiness and the supermarket revolution Civil society Rapid increase in producer organizations Growing role of NGOs New philanthropy New opportunities for public-private-civil society partnerships in using agriculture for development 24

25 From opportunities to objectives: a policy diamond Socio Socio political context Governance Macro Macro fundamentals Agricultural policy policy Demand for Ag products 1 Access to markets Establish efficient value chain Demand for Ag products 2 Enhance smallholder competitiveness Facilitate market entry Pathways out of poverty: farming, labor, migration 4 Increase employment in agriculture and the RNFE; enhance skills Social transition 3 Improve livelihoods in subsistence agriculture and low skill rural occupations Social transition 25

26 Message 2: The new agriculture is market- and value chain-driven, opening multiple pathways out of poverty for rural households Message 3: Livelihoods and food security for poor rural populations can be improved by developing more resilient farming systems, facilitating market entry, and improving skills 26

27 WDR 2008-Agriculture for Development 1. Agriculture remains fundamental for development, and differentially by context 2. But the powers of agriculture are often under-used 3. There are new opportunities to use agriculture that open multiple pathways out of poverty 4. With new (and lingering) challenges to be addressed 5. Differentiated agendas and improved governance 6. WDR positions on emerging issues 27

28 Share of supermarkets in retail food Rise of supermarkets: A challenge for the inclusion of smallholders 0.8 Brazil Philippines Ecuador Argentina Mexico Czech S. Africa Thailand R Costa Rica Chile S. Korea Colombia Guatemala 0.3 Indonesia Bulgaria Kenya 0.2 Nicaragua China Bangladesh India GDP, $000 per capita (PPP) 28

29 Message 4: Reducing agriculture s large environmental footprint is an inevitable requirement for success, and providing environmental services one of the development contributions of agriculture Key for this are removing perverse input subsidies, better definition of property rights, wider use of conservation technologies, devolution to communities of control over common property resources, and developing markets for environmental services 29

30 15.0 The rising cost of climatic instability on agriculture-based countries must be urgently addressed Real GDP grow th (%) Variability in Rainfall (Meter) Years percentage percentage rainfall variation around the mean rainfall variation around the mean GDP growth GDP growth year year Real GDP growth (%) Variability in Rainfall (Meter) Rainfall & GDP growth Ethiopia Zimbabwe

31 WDR 2008-Agriculture for Development 1. Agriculture remains fundamental for development, and differentially by context 2. But the powers of agriculture are often under-used 3. There are new opportunities to use agriculture that open multiple pathways out of poverty 4. With new (and lingering) challenges to be addressed 5. Differentiated agendas and improved governance 6. WDR positions on emerging issues 31

32 Agenda for agriculture-based countries (SS-Africa): agriculture for growth Structural features 1 Diverse local conditions Building markets Small and landlocked and value chains countries ++ Low population density Deficits in human 2 4 resources Smallholder-based Facilitate labor Limited food tradability revolution mobility and rural Some foreign exchange Promote exports nonfarm development constraints Access to markets 3 Securing livelihoods and food security of subsistence farmers +++ Policy diamond for agriculture-based countries 32

33 Agenda for transforming countries (Asia, MENA): agriculture to reduce disparities Structural features 1 Demographic pressures Infrastructure to & declining farm sizes support diversification Water scarcity + Lagging areas Political economy of 4 ag policies 2 Rural nonfarm economy; High value activities Skills for successful +++ migration Food staples and livestock; safety nets +++ Policy diamond for transforming countries 33

34 Agenda for urbanized countries (LAC, ECA): agriculture for social inclusion and jobs Structural features 1 Supermarket revolution Resilient rural poverty & high inequality Weak governance for agriculture 2 4 Inclusion in Territorial development; new food markets skills for the rural ++++ nonfarm economy Subsistence agriculture; social assistance; environmental services +++ Policy diamond for urbanized countries 34

35 Improving governance to implement agriculture-for-development agendas Double weakness of governance as a hurdle Governance weakest in agriculture-based countries Governance weak in agriculture vs other sectors Global governance needed for successful national agendas Improving governance at national, local, and global levels National and local: Inter-sectoral coordination, Min of Ag., decentralization Global: Coordinate sectoral agencies for complex and inter-related issues (trade, climate change, diseases, IPGs) New corporate and philanthropic actors Message 5: Using agriculture for development requires fixing the current serious deficiencies in local, national, and global governance for agriculture 35

36 Managing the political economy of agriculture-for-development agendas Political management of regressive subsidies, price distortions, and restrictive trade policies Roles of information, decentralization, new actors Coalitions of interests on specific policies Winners and losers: role of dealmakers Need to explore potential pathways to reform Role of second best instruments and of sequencing 36

37 WDR 2008-Agriculture for Development 1. Agriculture remains fundamental for development, and differentially by context 2. But the powers of agriculture are often under-used 3. There are new opportunities to use agriculture that open multiple pathways out of poverty 4. With new (and lingering) challenges to be addressed 5. Differentiated agendas and improved governance 6. WDR positions on emerging issues 37

38 WDR positions on emerging issues Doha must progress Emphasis on anti-poor policies such as cotton subsidies But even more important is to introduce complementary supporting policies for investment and smallholder response Food staples (special products) may need protection but only as part of transition strategies Recognize gainer-loser tradeoffs especially for the poor by country And only use as clear transition policies at best Subsidies can be used to trigger change Market smart subsidies can be needed to assist learning and promote market development when there are economies of scale 38

39 WDR positions (cont.) Public investment in agriculture must increase Especially in Africa, but emphasize quality first GMOs have unrealized potential for the poor Offer promise but need public R&D (or private incentives) and efficient regulatory frameworks IPRs are not the immediate constraint, but innovative formulas are needed to build capacity for the future Biofuels will be important, but require caution Improve efficiency, and recognize food and environmental tradeoffs Climate change requires immediate attention Urgency of funding adaptation for poor countries Extend carbon financing to provide agriculture incentives 39

40 Development of WDR: used a collaborative approach to raise issues, suggest an approach. Follow up on WDR: pursue a collaborative effort to customize and implement. Thank you 40

41 World Development Report 2008 APPENDIX TABLES 41

42 WDR chapter outline 1. Growth and poverty in agriculture s three worlds 2. Agriculture s performance, diversity, and uncertainties 3. Rural households and their pathways out of poverty 4. Realizing gains from trade, price, and subsidy policy reforms 5. Bringing agriculture to the market 6. Supporting smallholder competitiveness through institutional innovations 7. Innovating through science and technology 8. Making agricultural systems more environmentally sustainable 9. Moving beyond the farm 10. Emerging national agendas for agriculture s three worlds 11. Strengthening governance, from local to global 42

43 Short focus sections Declining rural poverty has been a key factor in aggregate poverty reduction What can biofuels do for agriculture and the environment? What are the links between agricultural production and food security? Agribusiness for development Capturing the benefits of GMOs for the poor Adaptation and mitigation of climate change in agriculture Education and skills for rural development The two-way links between agriculture and health 43

44 Characteristics of the three worlds Agric-based Transforming Urbanized Rural population (million) 417 2, Agriculture GDP growth rate* Non Agriculture GDP growth rate* Agricultural % of GDP growth Number of poor ($1/day) % of rural poor in total *Growth rates correspond to the period 44

45 Heterogeneity across smallholders: Sources of household income differ by country context Subsistence farming high in Ghana Market-oriented farming and diversification high in Vietnam Non-farm incomes and diversification high in Guatemala 100% 80% 60% 40% 20% 0% Ghana Vietnam Guatemala 4 7 Migration & remittances Agricultural wage & RNFE Diversified sources Market-oriented farming Subsistence-oriented farming 45

46 Technological innovations: Sustained gains in yields, but falling behind in Sub-Saharan Africa Yields (ton/ha) Developed Countries Asia Developing Latin American and the Caribbean Sub-Saharan Africa

47 Smallholder inclusion and employment as two options for rural poverty reduction Green bean export production in Senegal: Participants whether as contract farmers or as farm workers in estates had higher income than non participating households Share of participating households (%) Household participation Contract farmers Estate farm workers Total participants Share of households (%) Incidence of poverty and extreme poverty among participating households nonparticipants estate farm workers Poverty Extreme poverty contract farmers 47

48 Agricultural population transitions: the need to prepare surplus populations Population in developing countries will remain predominantly rural until 2020 Rural population has been declining in Latin America and East Asia since 1995 due to slower population growth and rapid urbanization EAP SA Billion people 3.0 Rural Urban Billion people SSA LAC

49 The increasing land and water constraints on agriculture must be addressed 180 Index of cropland per ag population (1961=100) ECA LAC MENA Cropland per capita of agricultural population is falling in Asia and Africa EAP SA SSA 2003 Percent (%) Water scarcity affects millions in Asia and over 60 percent of population in the Middle East and North Africa % of population in absolute water scarcity SSA SA EAP MENA ECA LAC 49