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Agriculture for Development and Feeding 9 Billion Presentation to the Nuffield Farming Scholars Washington, D.C. March 8, 2010 Christopher Delgado Strategy and Policy Adviser Agriculture & Rural Development World Bank Outline • Vision of the Global Challenges for Agriculture—Analysis: The World Development Report 2008 • What the World Bank Is Trying to Do: The Agricultural Action Plan FY2010-FY2012 The Challenges Analysis: WDR 2008 Agriculture for Development 75% of the world’s poor are rural and most are involved in farming. In the 21st century agriculture remains fundamental for poverty reduction, economic growth and environmental sustainability. Three Functions of Agriculture for Development 1. Lead sector for poverty reduction 2. Lead sector for growth 3. Major impact on natural resources Agriculture’s share in growth 1990-2005 Three Worlds of Agriculture 80% Agriculture based countries Mainly SS-Africa 417 million rural people 20% Transforming countries Mainly Asia, MENA 2.2 billion rural people Urbanized countries Mainly Latin America 255 million rural people 0 0 50% Rural poor/total poor, 2002 100% 1. Poverty Reduction Global extreme poverty 2002, $1.08 a day – 2.5 billion people depend directly on agriculture Global Urban poor 287 mill. South Asia rural 407 mill. MENA rural 5 mill. ECA rural 5 mill. LAC rural 27 mill. East Asia rural 218 mill. Sub-Saharan Africa rural 229 mill. – 800 m smallholders – 75% of poor are rural and the majority will be rural to about 2040 Poverty and Hunger • No. of chronically malnourished growing since 2006 not decreasing as desired in MDG 1 • Chronically malnourished higher in 2009 than during food crisis in 2008! • More than one billion people now go to bed hungry every night • Problem in 2007/08 was prices, but now income compression added • Roughly 80 million new mouths added every year, mostly in developing countries; poverty alleviation is necessary for alleviating hunger Expenditure gains induced by 1% GDP growth (%) Growth from Agriculture is Especially Effective for Poverty Reduction GDP growth from agriculture benefits the income of the poor 2-4 times more than GDP growth from nonagriculture (43 countries) 8 6 Agriculture 4 2 0 -2 Nonagriculture Low est 2 3 4 5 6 7 Expenditure deciles 9 8 9 Highest 2. Economic Growth The Millennium Development Goals cannot be met without higher agricultural productivity, especially in Africa – – – – Large sector for GDP growth Affordable food and wage competitiveness Comparative advantage in trade Strong growth linkages Average annual real agricultural growth (%) Accelerating agricultural growth in Africa 10 4.0 3.3 3.5 3.5 3.0 2.5 2.3 2.0 1.5 1.0 0.5 0.0 1980-1990 1990-2000 2000-2005 3. Environmental Sustainability Important user of natural resources: 70-75% of fresh water resources 40% of land area 25-30% of greenhouse gas emissions Contributions to greenhouse gas emissions Developing country agriculture & deforestation 21% Industrialized countries 64% 11 Developing country other sources 15% Many Opportunities: Sustainable farming systems and environmental services (conservation farming, agroforestry, managing landscapes for climate resilience) Agriculture is the 2nd Largest Emitter Global Greenhouse Gases (GHG) Agriculture for Development: Improved Opportunities Changing diets ̶ a new agriculture of high value products and non-traditional exports Developing country exports 250 Meat 200 150 100 Horticulture Cereals 50 0 13 1981 1984 1987 1990 1993 1996 1999 2002 Value of exports (1980=100) Kcal consumption/capita/day (1981=100) Developing country consumption 350 Horticulture 300 Meat 250 200 150 Traditional exports 100 50 0 1980 1990 2000 2004 Improved Opportunities The policy bias against agriculture is getting better: e.g., lower levels of “taxation” 15 10 Average taxation % 5 0 -5 -10 -15 -20 -25 1980-84 -30 Agriculture-based Transforming 2000-04 Urbanized Improved Opportunities • Technological innovations: – Conservation farming, precision farming, improved and resilient varieties – NERICA rice, Bt cotton – Information technology • Risk management innovations (weather insurance) • Stronger producer organizations • Public-private-civil society partnerships 15 Improved Opportunities Expanding sources of income in the rural non-farm economy Mexico: Sources of income rural population Bangladesh: Sources of income rural population 100% 100% 90% 90% 80% 80% 70% Other 70% 60% Transfers 60% NonAgIncome 50% AgWage 40% 50% 40% 30% Farm 20% 10% 30% 20% 10% 0% 1992 2002 0% 1992 2002 Challenges Increasing land and water constraints Cropland per capita of agricultural population 180 140 % of population in absolute water scarcity ECA LAC 120 70 100 60 MENA EAP 80 SA 60 SSA Percent (%) 50 40 30 20 10 40 SSA 20 2003 1997 1991 1985 1979 1973 18 1967 0 1961 Index of cropland per ag population (1961=100) 160 SA EAP MENA ECA LAC Challenges • Making growth pro-poor – Connecting smallholders to new markets – Improving assets of the poor, especially women • Weaknesses in governance – New state roles, coordination, decentralization – Global governance issues (trade, standards, animal health, biodiversity, climate change, donor support) 19 Challenges Agricultural-based countries spend too little on agriculture (and R&D) Ag GDP/GDP Public Spending on Ag (% of Ag GDP) Spending on Ag R&D (% of Ag GDP) 35 12 percent 25 10 20 16 15 10 10 percent 30 14 29 8 6 4 5 2 0 Agriculture-based Transforming Urbanized 0 Agriculture based Transforming Urbanized 20 Challenges “Misinvestment” is also pervasive 7 Subsidies Percent of Ag. GDP 6 5 4 3 Public Investment 2 1 0 1975-79 21 1980-84 1985-89 1990-94 1995-99 2000-02 1 Initial year Pakistan 1999-2001 India 1989-1999 3 Bangladesh 1991-2000 Indonesia 1993-2002 Vietnam 1992-2001 China 1985-2001 Cambodia 1997-2004 Thailand 1990-2002 Guatemala 1989-2002 Ratio of urban to rural median income Challenges Rising rural-urban disparities 3.5 End year 2.5 2 1.5 Challenges 100 90 80 14 % rural poverty 12 10 70 60 50 40 30 8 6 % ODA to Ag 4 20 10 2 - 0 1990 23 1992 1994 1996 1998 2000 2002 2004 % ODA to agriculture % poverty in rural areas Donor support to agriculture Donor Support to Agriculture 1980-2009 Early 1980s Official development assistance (ODA): 17% World Bank lending: 30% Early 1990s Official development assistance (ODA): 12% World Bank lending: 15% World Bank lending is recovering ….. World Bank lending: 14% Early 2000s Official development assistance (ODA): 4% World Bank lending: 7% …but overall ODA just starting to recover Challenges AGRICULTURE WORLD POOR 4% OFFICIAL DEVELOPMENT ASSISTANCE (12% in 1990) AGRICULTURE RURAL 75% 4% PUBLIC SPENDING (Sub-Saharan Africa) Going About Doing It WBG Agriculture Action Plan: FY10-12 • Operationalizes the WDR 2008: Agriculture for Development • 3 year time frame aligns with internal planning horizons Global Challenges to Focus On Poverty reduction • Agriculture has been effective at reducing poverty, enhancement requires linking farmers to markets Feeding the World • Food crop demand is rising (population growth, biofuels) yet grain crop yield growth has declined • Agriculture is part of the problem (deforestation, Climate change pollution) and is part of the solution (productivity, soil carbon, managing intensification) • Increasing agricultural incomes can temper the rise Economic in rural-urban income disparities, and the transformation associated political and social tensions Food & • Volatile grain prices and lower purchasing power financial crises are hurting poor producers and consumers What we will try to do in FY10-12 Five Focal Areas Raise agricultural productivity Link farmers to market & strengthen value chains Reduce risk and vulnerability Facilitate agricultural entry, exit & rural non-farm income Enhance environmental services and sustainability 1. Raise agricultural productivity [selective areas] Reverse the decline in crop yield growth rates • Better use existing technology • Improve water management • Strengthen tenure security and land markets • Invest in technology generation 2. Link farmers to markets & strengthen value chains [selective areas] Reduce transaction costs e.g. focus on infrastructure to open high potential areas to markets (Africa) …focus on organization to integrate smallholders into higher value markets (LCR) • Continue support for the Doha trade round • Expand infrastructure • Strengthen producer organizations • Expand business models for market integration • Improve access to finance 3. Reduce risk and vulnerability [selective areas] Better manage volatility… which may be increasing • Safety nets, fiscal support • Better manage national food imports • Further explore policy options to address price volatility • Protect assets from catastrophic loss (insurance innovations) • Reduce risk of livestock disease outbreaks 4. Facilitate entry and exit, and rural non-farm income [selective areas] • Improve land markets – Rental and sales markets – Code of conduct for foreign investment – Safety nets to reduce distress sales • Improve the local investment climate – Rural investment climate assessments • Upgrade skills – Vocational training – Private sector links to curricula development 5. Enhance environmental services & sustainability [selective areas] • Climate change adaptation and mitigation – More drought tolerant crops and livestock breeds – Reduce barriers to access (soil) carbon markets • Manage intensive livestock systems – Pollution and disease risk • Reduce forest degradation – Improve incentive systems, institutional capacity – Complementary agriculture investments • Improve fisheries sustainability – Awareness raising for improved fisheries governance – Capacity building for implementation and enforcements Agriculture’s share in growth 1990-2005 Mix of Support Varies Across Three Worlds of Agriculture 80% Agriculture based countries (mainly SS-Africa. 417 million rural people) 20% Transforming countries Urbanized countries 0 0 36 (mainly Asia, MENA. 2.2 billion rural people) (mainly LAC, ECA. 255 million rural people) 50% Rural poor/total poor, 2002 100% Mix of Support Varies Across Three Worlds of Agriculture Action Plan Focal Areas Agriculture-based Transforming Urbanized Agricultural productivity Close the crop yield and livestock productivity gap, expand irrigated areas and improve rainfed systems, improve security of land rights, invest in agricultural research Improve productivity in higher value markets (including livestock products and aquaculture), and in lagging regions, strengthen land rental and sales markets, improve water use efficiency Improve equality in land access, invest in agricultural research, focus on grains and oilseeds, as well as higher value markets Link farmers to markets Improve market information, infrastructure, strengthen producer organizations, and finance Improve food safety, standards, market integration business models, and finance Improve international trade, food safety, standards, and market integration business models Risk and vulnerability Provide safety nets, asset protection against catastrophic loss Better manage food imports, reduce risk of livestock disease, provide safety nets Provide safety nets, reduce risk of livestock disease outbreaks Rural non-farm income Improve the rural investment climate, expand infrastructure Upgrade skills, decentralize nonfarm activities, expand rural livelihoods approaches Upgrade skills, expand territorial development Environment services, and sustainability Improve rangeland management, support for carbon market access Manage intensive livestock systems Reduce deforestation, expand payment schemes for environmental services Program Composition: FY10-12 Ongoing program: $10 bn to be disbursed over FY10-12 Areas of emphasis for new commitments: FY10-12 Investment support Productivity – Extension, land, research – Gender responsive Link farmers to market – Infrastructure, market information Reduce vulnerability AAA Agricultural productivity Linking farmers to markets Rural non-farm Public expenditure Managing risk Productivity Program Size: FY10-12 Projections US$ billions Annual Average: IBRD/IDA & IFC 9 8 7 6 5 4 3 2 1 0 Low Case High Case 8.3 Other ag. related investments Ag. production & markets 6.2 IFC 4.1 3.0 2.3 FY2000-02 FY2003-05 FY2006-08 FY2010-12 Achieving targets dependent on: 1. Continued strong client demand 2. The extent of impacts of the financial crisis 3. Adequate staff and budgets 4. IDA 16 replenishment FY2010-12