DEVELOPMENT: Farming Boost Could Lift a Billion People

By IPS Correspondents Reprint | | Print |

Abid Aslam

WASHINGTON, Oct 19 2007 (IPS) - The World Bank urged greater investment in the developing world&#39s farms Friday, warning that failure to boost agriculture would doom the international community&#39s ambition to halve extreme poverty in the next eight years.

Three-fourths of the world&#39s poor live in rural areas, yet they receive only 4 percent of the 100 billion dollars given each year in foreign aid, the bank said in its annual World Development Report, released Friday.

In Africa south of the Sahara and in South Asia, "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," said Francois Bourguignon, the bank&#39s chief economist.

Governments in Sub-Saharan Africa, a region particularly reliant on agriculture for overall growth, tax farms relatively heavily but spend a scant 4 percent of their budgets to support the sector, the bank found.

The opportunity thus squandered is immense: Economic growth generated by agriculture is about four times more effective in lifting people out of poverty than growth stemming from industry or services, it said.

"A dynamic &#39agriculture for development&#39 agenda can benefit the estimated 900 million rural people in the developing world who live on less than one dollar a day, most of whom are engaged in agriculture," said Robert Zoellick, the bank&#39s president.

The bank&#39s support for rural initiatives fell during the 1980s and 1990s but has begun to rise again in the past four years. This year, the multilateral lender has committed 3.1 billion dollars to the sector. Officials said the bank plans further increases.

The report urged more than just increased financing. Productivity must be boosted in the raising of staple foods, it said. At the same time, smallholders must be enabled to take advantage of the rapidly expanding global market for high-value goods including flowers, poultry, farmed fish, and dairy products.

The bank exhorted rich countries to reform policies that harm the poor.

"It is vital that the United States reduces cotton subsidies which depress prices for African smallholders," it said.

Turning to biofuels, it scored "restrictive tariffs and heavy subsidies in rich countries, which drive up food prices and limit export opportunities for efficient developing country producers."

It further asserted that industrialised countries, the major contributors to global warming, "urgently need to do more to help poor farmers adapt their production systems to climate change."

The U.N.&#39s International Fund for Agricultural Development (IFAD), which helped produce the bank&#39s flagship report, urged government support and a greater say in trade policies for small-scale farmers.

"Smallholder farmers, traditionally, have been the most efficient producers," Lennart Bage, IFAD&#39s president, said in a statement. "They are the future of agriculture in most developing countries."

"However, smallholders face both old and new challenges that require intervention by the state," Bage said.

Turning to trade, he said rich countries must go beyond reducing subsidies and tariffs. Rather, "space needs to be made for the full engagement of poor rural people and their organisations in policy making on trade."

The report warned that global food supplies are under pressure from rising demand for food, animal feed, and biofuels; the rising price of energy; increasing land and water scarcity; and climate change. In turn, the outlook for food prices remains uncertain.

Agriculture itself contributes to environmental stress. The sector soaks up 85 percent of the world&#39s utilised water and is a cause of deforestation, land degradation, and pollution. The report urged more sustainable production systems and incentives to protect the environment.

Agriculture remains important in all regions, not just predominantly rural ones.

To be sure, it employs 65 percent of the labour force and generates 32 percent of gross domestic product (GDP) growth in sub-Saharan Africa.

In "transforming countries" such as China, India, and Morocco, farming contributes an average of 7 percent to GDP growth, but lagging rural incomes are a major source of political tension.

In urbanised countries, mainly in Latin America and the Caribbean and Eastern Europe and Central Asia, agriculture contributes just 5 percent of GDP growth, the bank said. But even here, the countryside is home to 45 percent of the poor.

The report follows a recent internal evaluation that said the bank itself had long neglected African agriculture.

The bank evaluation found that the bank pushed African governments in the 1980s and 1990s to pull back from agriculture. In the agency&#39s defence, the study noted that the bank had assumed that private concerns would step in to fill the void left by fiscally stressed and badly managed government programmes.

In most cases, this did not happen and farmers were left on their own to cope with rocketing fertiliser costs and shortages of seeds and credit. Consequently, cereal yields fell to less than half of South Asia&#39s and one-third of Latin America&#39s, the evaluation said.

Zoellick, who took office in July, has said that reviving African agriculture will be a top priority under his leadership.