Transcript Agriculture, Pro-poor Growth and Rural Development

Agriculture for Development
Chişinău, May 12th, 2008
Main WDR 2008 message
World Development Report 2008
 For sustainable development and poverty
reduction, agriculture must be given a much
more prominent place in the development
agenda
 Today there are improved opportunities to use
agriculture for development
 But not business as usual
More and better investments
Multisectoral & decentralized approaches tailored to
local situations
2
World Development Report 2008
Unique context of transitional
countries
 Agrarian structures — from collective to individual,
from public to private (plots, farms, enterprises)
 Role of state — from directing input & output
allocations to providing public goods and a
regulatory framework
 Agricultural policy objectives — from food security
& social service provision to food safety, quality &
competitiveness
 Heterogeneity across countries and within
countries
3
Agriculture’s share in growth 1990-2005
World Development Report 2008
Functions of agriculture differ in
the three worlds of agriculture
80%
Agriculture based countries
Mainly SS-Africa
Albania, Moldova, Kirghiz Rep
20%
0
0
Urbanized countries
Transforming countries
Mainly LAC,
Bulgaria, Hungary, Poland,
Russia, Ukraine
Mainly Asia, MENA
Tajikistan, Uzbekistan,
Romania
50%
Rural poor/total poor, 2002
100%
4
Four Functions of Agriculture for
Development
1. Lead sector for growth
2. Source of livelihoods
 Poverty reduction
3. Food security
4. A way of better managing natural
resources
World Development Report 2008
1. A trigger for overall growth in
early stages
 Large sector for GDP growth
 Affordable food and wage competitiveness
 Strong growth linkages
Accelerating agricultural growth in
agriculture-based countries
Average annual growth rate (%)
4.0
3.0
3.4
3.5
1990-2000
2000-2004
Successes:
China, India, Vietnam
2.7
2.0
1.0
0.0
1980-1990
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2. A source of livelihoods
World Development Report 2008
Global extreme poverty 2002, $1.08 a day
Global
Urban poor
287 mill.
 2.5 billion people
related to
agriculture,
 800 m smallholders
South
Asia rural
407 mill.
MENA rural
5 mill.
ECA rural
5 mill.
LAC rural
27 mill.
East Asia
rural
218 mill.
 75% of poor are
rural and the
majority will be rural
to about 2040
Sub-Saharan
Africa rural
229 mill.
7
World Development Report 2008
Growth from agriculture is especially
effective for poverty reduction
Expenditure gains induced by 1%
GDP growth (%)
GDP growth from agriculture benefits the income of the poor 2-4 times
more than GDP growth from non-agriculture (43 countries)
8
6
Agriculture
4
2
0
Nonagriculture
-2
Low est
2
3
4
5
6
7
Expenditure deciles
8
9
Highest
8
World Development Report 2008
Agriculture and poverty in
Europe and Central Asia
Recovery in Eastern Europe and Central Asian agriculture is
accompanied by a sharp drop in rural poverty
9
Agricultural growth and poverty
reduction in Moldova
World Development Report 2008
In Moldova too, restoration of agricultural growth, after a strong initial
downturn, has been associated with declining poverty
10
Agricultural growth
3.6
5
0.2 0.3
1.7
0
80
Poverty rates Moldova
70
-5
60
-3.5
50
-10
40
-15
30
20
-20
Moldova
-25
-25.4
National poverty
Rural areas
10
Europe & Central Asia
0
2000
-30
2001
2002
2003
2004
2005
10
1991-95
1996-00
2001-06
World Development Report 2008
3. Agriculture and its
key role for food security
 Agriculture plays a key role in providing;
1. Food availability: globally, nationally and locally
 Food prices and volatility
2. Access to food: a critical source of income to purchase food
3. Utilization of food: e.g., high nutritional status
 Domestic and global shocks place additional strain on import capacity and
therefore food availability
600
600
US$/ ton
400
Domestic price shocks:
Maize in Malawi and Ethiopia
Lilongw e
Addis Ababa
300
500
Rice
Maize
300
200
200
100
100
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Global price shocks:
Rice and Maize
400
US$/ton
500
0
1994
11
1996
1998
2000
2002
2004
2006
2008
World Development Report 2008
4. A way of managing natural
resources and the environment
Important user of natural resources:
 80% of fresh water resources
 40% of land area
 21+ % of greenhouse gas emissions
Successes
Watershed management, and
environmental services
Contributions to greenhouse
gas emissions
Developing
country
agriculture &
deforestation
21.4
Industrialized
countries
63.4
Developing
country
other
sources
15.2
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Improved Opportunities to Use
Agriculture for Development
1. Incentives
2. Markets
3. Innovations
Improved opportunities--Incentives
World Development Report 2008
Agriculture is now protected in ECA countries
40
Nominal Rate of Assistance %
30
1992-93
20
10
0
-10
-20
1980-84
-30
2000-04
-40
Agriculture-based
Transforming
(excluding ECA)
Urbanized
ECA
14
Improved opportunities--Markets
World Development Report 2008
Changing diets ̶ high value products and nontraditional exports
Developing and transition country
consumption
Developing and transition
country exports
250
300
250
Meat
200
150
Horticulture
100
Cereals
50
0
1980
1990
2000
2004
Kcal consumption/capita/day (1981=100)
Value of exports (1980=100)
350
200
Meat
150
Horticulture
100
Cereals
50
0
15
1981 1984 1987 1990 1993 1996 1999 2002
Moldova is shifting to high value exports
World Development Report 2008
Net agricultural exports
Million US$
300
1995
200
2005
100
0
-100
Cereals
Trad.
products
Meat
Fruits & veg.
Wine, other
beverages
Oilseeds
Note: Traditional products comprise tobacco and derived products, sugar, cotton, jute, coffee, tea,
spices, and natural rubber latex.
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Improved opportunities--Innovations
World Development Report 2008


Technological innovations—much progress but
underinvestment

Conservation farming and sustainable practices, Bt
cotton

ICT in financial, marketing and extension services
Institutional innovations—many at early stages

Risk insurance

Rural finance

Marketing “software”—exchanges, information

Stronger producer organizations

Public-private-CSO partnerships
•
Value chains, extension, rural finance
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Challenges to Effectively Use
Agriculture for Development
1. Achieving higher agriculture growth
2. Implementing through better
investment
3. Promoting rural nonfarm pathways
Challenges—Growth
World Development Report 2008
 Supporting macro-policy environment and
rural investment climate
 Consistency of agricultural policies to suport
private market development
 Property rights for market development
 Redefined roles of the state
 Core public goods
 Regulation and standards
 Coordination
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Challenges—Growth
World Development Report 2008
Global trade distortions remain pervasive
Real international commodity prices have
been suppressed by current global trade
policies (% of price)
-21
Trade share losses to developing countries
due to current global trade policies
(% point loss to developing country trade shares)
-27
Cotton
-15
Oilseed
-12
Cotton
-34
Oilseed
-7
Dairy products
-7
-5
Coarse grains
-5
Wheat
-4
Processed meat
-4
Rice
-3
Sugar
Dairy products
Coarse grains
-21
Wheat
-18
Processed meat
-2
-9
Rice
Sugar
20
World Development Report 2008
Challenges—Connecting small
farmers to markets
 Policies on agrarian structure
 Family farms usually more efficient
 Economies of scale in high value markets
Demands of high value markets
 SPS standards
 Integrated supply chains
Key role of producer organizations and
labor markets
 Chile vs Central America
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Challenges—Public investment
World Development Report 2008
Agricultural-based countries spend too
little on agriculture
Public spending on agric as a
share of agricultural GDP (%)
Share of Agriculture in GDP (%)
14
35
30
12
29
25
12
11
10
22
8
20
16
6
15
10
10
4
5
2
0
0
Agriculturebased
Moldova
Transforming
Urbanized
4
4
Agriculturebased
Moldova
Transforming
Sources: WDR2008, data for Moldova from “Public Expenditures for Agricultural Development” Moldova Agricultural Policy Notes, World
Bank. All data in figure is for 2004
Urbanized
22
Challenges—Investment
World Development Report 2008
Misinvestment and underinvestment
in core public goods
Subsidies have risen at the expense of
public goods in India
Governance challenges
●
Political economy of
reforms
●
New roles of the state
●
Vastly improved capacity
to implement
23
Agricultural subsidies in Moldova
World Development Report 2008
 Farm subsidies but have been growing since 2001
 Trade offs for investments in core public goods such as R&D?
 Need clear objectives for subsidies such as:
 Overcome temporary market failures
 Market development and innovation grants
 Equity and poverty reduction
Total Spending on Agriculture by type
% of consolidated public spending
4.5
4.0
3.5
3.0
2.5
Delivery of Services
2.0
Subsidies
1.5
1.0
0.5
0.0
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1998 1999 2000 2001 2002 2003 2004 2005
World Development Report 2008
Potential of agriculture for development :
Multiple pathways out of poverty
Efficient markets,
value chains
Demand for
Ag products
$$
Commercial
smallholders
$$
Demand for
Ag products
Rural labor market:
Ag, Rural nnofarm,
Migration
Pathways out of
poverty:



Transition
to market:
commercialization
farming, labor,
migration
Social assistance
Subsistence
farming



Transition
to market
25
Moving beyond agriculture
World Development Report 2008
Improve nonfarm employment opportunities
100%
% adults
80%
Nonactive
Nonag wage
Nonag selfemployed
Farm labor
Own farm
60%
40%
20%
0%
ECA Male
ECA
Female
LAC Male
LAC
Female
26
Moving beyond agriculture
World Development Report 2008
Average years of education of rural 18–25 yrs
ECA has a good base
12
10
8
Men
Women
6
4
2
0
Sub
Saharan
Africa
South Asia
East Asia
Pacific
Middle East Europe &
& North
Central Asia
Africa
Latin
America &
Caribbean
27
World Development Report 2008
Key Elements of a Policy Agenda for
ECA
 Policy objectives
 Raising competitiveness and value added of agriculture
 Making growth pro-poor and green
 Stimulating rural non-farm income growth and exit from
agriculture
 Key policy issues for agriculture
 Improving the rural investment climate
• Reducing risk from policy changes & policy reversals
 Improving access to markets, including to the EU
• Food safety, standards, certification
• Reducing barriers to regional trade




Supporting institutions (e.g., credit, tenure security, mkts)
Investment in core public goods (R&D, infrastructure)
Reducing the environmental footprint from agriculture
Fostering broader rural development
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Postscript
Wine as a successful high value
export
South Australia as a major
wine exporter
• From wool and wheat to wine
•80 percent plus exported
• Exports over a billion dollars
annually
• Rapid growth since 1990
• Focus on increasing quality and
price
Ingredients of success
• Shared vision and strategy
• Foreign investment and alliances
• Branding and GI
• R&D, training and education
• Strong producer and trade
associations
• Public-private partnerships
Building of tourist industry
30
World Development Report 2008
Postscript 2: Tapping Global Wine
Markets
Rapid expansion of Australian exports and
increasing unit value
800
thosand tonnes
600
Australia
Australia
2,000
Moldova
million US$
700
2,500
500
400
300
Moldova
1,500
1,000
200
500
100
0
1990 1992
Source: FAOSTAT
1994
1996
1998
2000
2002
2004
1990 1992
Source: FAOSTAT
1994
1996
1998
2000
2002
2004
31
Thank you
www.worldbank.org/WDR2008