Download beyond cdd the “people sector”

Revitalizing Agriculture and
Rural Development to Sustain
Growth and Reduce Poverty
Dina Umali-Deininger
Lead Agriculture Economist, World Bank
1
Most of South Asia’s
poor are in rural areas
Where are South Asia's Poor?
5%
15%
23% 5%
27%
100%
80%
16%
60%
95%
85%
40%
95%
84%
77%
73%
20%
00
02
20
ut
an
Bh
iL
an
ka
20
/0
5
Rural Poor (%)
Sr
n
20
04
00
3/
04
Pa
ki
sta
N
ep
al
2
4/
05
20
0
di
a
In
Ba
ng
l
ad
es
h
20
05
0%
Urban Poor (%)
2
Most of rural people and
poor depend on agriculture
Agriculture a major employer in South
Asia, but contribution to economy is
shrinking
Agriculture in the Economy
100%
93%
80%
81%
80%
60%
52%
60%
58%
40%
40%
34%
14%
20%
Ne
pa
l
Pa
kis
ta
n
Sr
iL
an
ka
So
ut
h
As
ia
es
al
di
v
M
In
di
a
Af
gh
an
is
ta
Ba
n
ng
la
de
sh
Bh
ut
an
0%
Agriculture as % of GDP 2003/06
Share of Labor Force in Agriculture 2000-03
India: Low labor productivity
contributes to rural poverty
Pun
Ker
Har
WB
Uttn
Ass
All India
AP
Kar
Guj
UP
Mah
TN
Raj
Oris
MP
Bih
Jha
Chh
0.0
Non Ag
Ag
50.0
100.0
150.0 3
Labor Productivity, Rs 000/w orker
3 5%
3 0%
1800
Sri Lanka
Exports, $ million (2000 prices)
Sh ar e in H o us e ho ld E x p end itu re s ,%
New opportunities: A “new
agriculture” with dynamic
demand
2 5%
2 0%
1 5%
1 0%
5%
0%
Ric e
19 80 /81
W h eat
pr od uc ts
V e g & Fru its
Me at,
Milk,Fis h,
Eg gs
1600
India
1990
2006
1400
1200
1000
800
600
400
200
0
Meat & Meat
Products
Fruit &
Vegetables
Coffee & Tea
Fish & Fish
Products
200 2
Rising consumer demand for high
value crops and animal products
Rising high value crops
and animal products in exports
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Challenges in Agriculture
in South Asia
• Slow down in agricultural productivity growth
– < 3% per year, in context high rural poverty rate
– Climate change: droughts, cyclones, floods
– Leading to rising rural-urban & regional income disparities
• Increasing land and water scarcity
– Land degradation: erosion, over-extraction of groundwater, waterlogging
• New demands on agriculture:
– strict sanitary and phyto-sanitary standards
• Health epidemics linked to agriculture
– Avian flu, mad-cow disease
5
India: Slowdown in yield growth and
large yield gaps in many states
Slow down in progress in yields
for 10 major crops
With large gaps between
potential and actual
yields (2003-05)
Technology Index
190.0
•
170.0
•
150.0
130.0
•
110.0
•
90.0
Need invest more in research
2002-03
2000-01
1998-99
1996-97
1994-95
1992-93
1990-91
1988-89
1986-87
1984-85
1982-83
1980-81
70.0
•
Wheat: 6% (Punjab) to 84%
(M.P.)
Rice: Over 100% in Bihar and
UP
Maize: 7% (Gujarat) to 300%
(Assam)
Soybean: 7% (Rajasthan) to
185% (Karnataka)
Sugarcane: 16% (A.P.) to 167%
(M.P.)
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Need invest more in extension
Strategic priorities for
Agriculture
Ag Technology
Enabling policy
environment
Water use
Improving agric
productivity and
competitiveness
INCLUSIVE
GROWTH &
POVERTY
REDUCTION
Land
Income generation
Rural
Livelihood
Development
Sustainable
Natural Resource
Management
Water
Markets
Social empowerment
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Skills development
A. Improving agricultural
productivity & competitiveness
1. Rationalizing role of government
 Promoting more effective public expenditures
 Towards productivity enhancing investments: research, extension,
irrigation, roads, electricity, markets, education
 Improving policy and regulatory environment
 Promoting PPP
7
Public Expenditures India
Percent of Ag. GDP
6
5
Subsidies
75%
4
3
2
1
Public investments
25%
0
8
1975-79
1980-84
1985-89
1990-94
1995-99
2000-02
A. Improving agricultural
productivity & competitiveness
2. Technology, innovation & markets
 Effective agricultural research and extension systems
 increase agricultural productivity and enable diversification to high
value products (F&V, livestock, fisheries) by small farmers
 Link farmers to market,
 Promote value addition and value chain development
 Invest in rural infrastructure: roads, electrification, markets
 Foster producer associations, agribusiness development services
3. Water/Irrigation management

Better irrigation service delivery
 Farmer participation in management thru WUAs, pricing, water
regulatory authority
 Reduce losses
 better O&M of irrigation system, technology—drip irrigation
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B.Sustainable Natural
Resource Use
Watershed Management
 Participatory and holistic approach to soil
and water conservation at watershed level
Land
Reforming of land ownership and tenancy
policies
Improving land administration systems
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C. Rural Livelihood
Development
Promote growth of Rural Non-farm
economy
 Promote employment and investment opportunities
 improve rural investment climate, public-private
partnerships
 Develop skills of rural people for employment in RNF
 Education, vocational training
 Help labor out of agriculture: requires massive
investment in human capital
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Challenges to making
this happen
• Government failures
– Lack of financial resources
– Inadequate capacity to implement programs
effectively
– Political economy: vested interests against reforms
• Market failures: high costs of working with
small/marginal farmers
• Lack of awareness/knowledge of new
approaches
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Conclusion
• Agricultural growth is critical to
promoting rural growth and to
reducing poverty in rural areas
• Making this a reality requires
commitment of all stakeholders—
government, farmers, private sector,
civil society
13