WDR 2008

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Slide1: 

Agriculture for Development

Slide2: 

Goals versus Actions MDGs

Overall Message: 

Overall Message “75% of the world’s poor are rural and most are involved in farming. In the 21st century, agriculture continues to be fundamental for sustainable development and poverty reduction”

Slide4: 

There are three worlds for the roles of agriculture in growth and poverty Agriculture based Transforming Urbanizing

There is also deep heterogeneity across areas, households, and within households: 

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 and labor markets Intra-household differences Gender roles and decision making Access to assets and services

Heterogeneity across smallholders: Sources of household income differ by country context: 

Heterogeneity across smallholders: Sources of household income differ by country context

Three Functions of Agriculture in Development: 

Three Functions of Agriculture in Development As an engine of growth In early stages of development As a source of livelihoods Especially effective in poverty reduction As a user (and misuser) of natural resources

1. Agriculture essential for overall growth in agriculture-based countries: 

1. Agriculture essential for overall growth in agriculture-based countries A large sector: 30% of GDP, 65% of labor force Limited tradability of food staples Productivity determines price of food and wage costs Agric. critical to national food security in many countries Comparative advantage is in primary subsectors Resource endowments, weak investment climate for industry Strong growth linkages to other sectors

2. Agriculture is a source of livelihoods for billions, but a huge reservoir of poverty: 

2. Agriculture is a source of livelihoods for billions, but a huge reservoir of poverty 2.5 billion people related to agriculture, 800 m smallholders 75% of poor are rural and the majority will be rural to about 2040 900 m extreme rural poor ($1/day) Global extreme poverty 2002, $1.08 a day Global Urban poor 287 mill. South Asia rural 407 mill. Sub-Saharan Africa rural 229 mill. East Asia rural 218 mill. LAC rural 27 mill. ECA rural 5 mill. MENA rural 5 mill.

But agricultural growth has unique powers for poverty reduction: 

But agricultural growth has unique powers for poverty reduction GDP growth from agriculture benefits the poorest half 2+ times more than GDP growth from non-agriculture

There were impressive historical successes in using agriculture for rural poverty reduction: 

There were impressive historical successes in using agriculture for rural poverty reduction Headcount index and average farm yields Rural India 1959-1994 Headcount index and average farm yields Rural China 1980-2001

But stagnant yields in Sub-Saharan Africa: 

But stagnant yields in Sub-Saharan Africa Cereal Yields and $1 a day Poverty Incidence in South Asia Cereal Yields and $1 a day Poverty Incidence in Sub-Saharan Africa

Also rising rural-urban income disparities in the transforming countries: 

Also rising rural-urban income disparities in the transforming countries

Major Challenges by Three Rural Worlds: 

Message 1 Accelerating aggregate growth in the agriculture-based countries (Sub-Saharan Africa) requires achieving a productivity revolution in smallholder farming Message 2 Addressing the disparity problem in transforming countries requires a comprehensive approach Shift to high value agriculture and attention to lagging regions Development of rural nonfarm sector (linked to urban areas) Move people out of agriculture Urbanized countries: including smallholders in modern food markets and creating good rural jobs Major Challenges by Three Rural Worlds

3. Agriculture major user and abuser of natural resources: 

3. Agriculture major user and abuser of natural resources Agriculture use 85% of water with growing competition from nonagriculture Large environmental footprint of agriculture Land degradation and deforestation in fragile areas Agro-chemicals and animal waste pollution in intensive systems Major impacts of climate change (also a contributor) Message 3: Reducing agriculture’s large environmental footprint and climate proofing farming systems is an inevitable requirement for success, and providing environmental services is a promising new role

Under Use—Policy Neglect: 

Under Use—Policy Neglect Taxation through trade and price policies Low spending on core public goods Donors have turned their back

Under-use as global trade distortions remain pervasive: 

Trade share losses to developing countries due to current global trade policies (% point loss to developing country trade shares) Under-use as global trade distortions remain pervasive

Under use--Agricultural exports continue to be taxed: 

Under use--Agricultural exports continue to be taxed Exportables

Under-use as public spending on agriculture is low in the agriculture-based countries compared to the share of agriculture in GDP: 

Under-use as public spending on agriculture is low in the agriculture-based countries compared to the share of agriculture in GDP Public spending on Ag/Ag GDP Ag GDP/GDP

Mis-use is also pervasive: Subsidies are now four times larger than public investment in Indian agriculture: 

Mis-use is also pervasive: Subsidies are now four times larger than public investment in Indian agriculture Subsidies Public Investment

Under-use as donor support to agriculture has declined while rural poverty remained dominant: 

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

Opportunities: Improved macro-economic conditions favorable to agricultural growth in Sub Saharan-Africa : 

Opportunities: Improved macro-economic conditions favorable to agricultural growth in Sub Saharan-Africa

Demands for a new agriculture of high value products and non-traditional exports: 

Demands for a new agriculture of high value products and non-traditional exports Meat Traditional Exports Horticulture Cereals Meat Horticulture Developing country exports Developing country consumption

Opportunities: Institutional and technical innovations: 

Opportunities: Institutional and technical innovations Institutional innovations—a fertile field (but 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, also IT Technological innovations—progress (but under-investment) Improved varieties for rainfed areas and better pest resistance GMOs--potential but only Bt cotton widely adopted by smallholders Conservation farming Innovations in value chains (value adding, quality) Improved livestock and fish breeds

Opportunities: Expanding sources of income in the rural non-farm economy: 

Opportunities: Expanding sources of income in the rural non-farm economy Mexico: Sources of income rural population Bangladesh: Sources of income rural population

Opportunities: New actors and new roles: 

Opportunities: New actors and new roles Increasing role of the private sectors Agribusiness and the supermarket revolution A redefined role for the state Regulation, coordination, PPPs, decentralization, Rise of civil society Rapid increase in producer organizations Growing role of NGOs Emergence of new philanthropy  New opportunities for public-private-civil society partnerships in using agriculture for development, and a new political economy

Slide27: 

Message 4 The new opportunities for agriculture open multiple pathways out of poverty As commercial smallholders, Workers in agriculture and the RNFE Migrants. They are also providing opportunities to improve the livelihoods and food security of large numbers of subsistence farmers and unskilled farm workers

Balancing objectives: a policy diamond: 

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

Challenges: 

Challenges Fostering competitive and inclusive markets Growing uncertainties Climate change Rising competition (biofuels?) Science to farm? Growing resource scarcity Governance

Increasing land and water constraints: 

Increasing land and water constraints % of population in absolute water scarcity Cropland per capita of agricultural population

Improving governance to implement agriculture-for-development agendas: 

Improving governance to implement agriculture-for-development agendas 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, but deficient 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, poverty and security, climate change, health, IPGs) Coordinate with new corporate and philanthropic actors

Slide32: 

Doha must progress Emphasis on anti-poor policies such as cotton subsidies Even more important is to introduce complementary supporting policies for smallholder response Subsidies Role of market-smart subsidies for input market development GMOs have unrealized potential for the poor Offer promise but need public R&D (or private incentives) and efficient regulatory frameworks 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 (agroforestry, avoid deforestation) WDR positions on current issues

Agenda for Action: 

Agenda for Action Agriculture remains fundamental for development Achieve a productivity revolution for agricultural growth and food security in Africa Follow a comprehensive approach to reduce sectoral disparities and poverty in transforming countries Enhance sustainability and environmental services from agriculture Pursue multiple pathways out of poverty: smallholder farming, labor market, RNFE, migration Improve the quality of governance in agriculture at local, national, and global levels

WDR chapter outline: 

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

Short focus sections: 

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

Slide36: 

www.worldbank.org/WDR2008