Why a WDR on Agriculture for Development?

1. Why a WDR on Agriculture for Development? Agriculture in a very large economic and social sector, and a major player in the environmental balance, that deserves more attention Rapid changes in the “world of agriculture” require a new agenda There are good reasons to invest in agriculture for development (theory)

2. 1. Agriculture is a very large economic and social sector and a major player in the environmental balance • A large contributor to growth • On average 26% of GDP in Sub-Saharan Africa countries • Contributes 20 to 60% of GDP growth in these countries • “Extended” agriculture increases the share of agriculture in GDP by 50 (Mexico) to 90% (Chile) • A large contributor to well-being - a way of life for billions • 3 billion rural people, 73% of LDC population • 2.5 billion related to agriculture, 1.3 billion smallholders, more than half women • 70% of the world poor live in rural areas, 3/4 of the world malnourished (803 million) • A major contributor to the environmental balance • Uses 85% of world water resources, 33% of land • Contributes to global warming (20% CO2) and pollution • An important source of environmental services

3. 2. Rapid changes in the “world of agriculture” since WDR-1982 require a new agenda • Globalization, structural adjustment, integrated supply chains, new technologies, institutional innovations, environmental pressures • Create new opportunities for agricultural growth but also major challenges for the link between growth and development • Rising divergences at the national, sub-national, and household levels • Need typologies to guide the analysis and define differentiated policy recommendations

4. 3. There are four good reasons to invest in agriculture for development (theory) • Agricultural growth can be the engine of national economic growth (NT food sector) • Traditional role of agriculture in low income countries based on strong growth linkages (surplus extraction, price transmission) • Agricultural growth can be particularly effective for poverty reduction • Also for equity (including gender) and creating effective demand (ADLI) as sources of future growth • Some sub-sectors of agriculture have or can acquire strong comparative advantage (T sector) • Smallholder participation and employment help reduce poverty • Improved agricultural practices can reduce use of natural resources and provide environmental services.

5. Pathways out of poverty framework

6. Figure 3: Urbanization in developing countries Billions of people projected 4 3 Rural 2 1 Urban 0 1975 1985 2005 1965 1995 2015 2025

7. S-side: Growing bifurcations in agricultural productivity

8. Long-run Trend in Per capita AgGDP, Ethiopia, 1962-2005

9. Typology of countries : 3 categories according to the share of agriculture in growth and of the rural sector in poverty

10. Donor Support Also Declined:World Bank Lending

11. Agriculture’s Share of Public Expenditures Fell in the 90s Source: Fan and Rao

12. Some Types of Public Investments are Especially Pro-Poor

13. Increasing Private Sector Role makes Public- Private Partnerships Inevitable Total Global Investment - $33.2 billion $10.2 billion $11.5 billion Public Public Developing Developed Private Private $0.7 billion $10.8 billion

14. Growth spillovers and poverty reduction effects of growth (China) GDP growth originating in agriculture creates spillovers and is more effective at poverty reduction than growth originating in non-agriculture

15. Elasticity of poverty reduction with respect to yield growth, India Source: Ravallion and Datt, 1998

16. China. F-pathway: Negative correlation between yields and rural poverty

17. India. F-pathway: Negative correlation between yields and rural poverty

18. India. P-pathway: Importance of food prices as a transmission mechanism between productivity and poverty

19. Nominal rate of assistance, Uganda, 1961 to 2004 Source: Anderson and Martin, 2006

20. NRofAssist. for agric and manufacturing, India Source: Pursell, Gulati, and Gupta, 2006

21. Share of AgGDP of Agricultural Public Expenditures, India

22. Expenditures on public goods and subsidies

23. Decline in global commodity prices; 1979-1999

24. Price bifurcations Evolution of international prices more favorable for non-traditional exports (pineapple, tomatoes) than for traditional exports (sugar) and staple foods (rice)

25. Major changes in the structure of agricultural exports toward high value

26. Demand bifurcations: Unequal share of supermarkets in the retail food market Winners are producers in countries with rapidly growing demand for high value products and able to meet supermarket quality standards and delivery deadlines

27. Changes in the structure of farm household incomes Mexico, Bangladesh. L-pathway: Rising importance of pluriactivity as a factor in the survival of smallholder agriculture. Role of territorial development to increase the size of the local multiplier of agricultural growth.

28. M-pathway: Manage population transitions out of agriculture and rural areas. Prepare future migrants and pace the decline in the number of family farms (social agriculture)

29. MDG 7: Sustainability: Agriculture is the Major User of Natural Resources

30. Natural Disasters and Vulnerability Rainfall & GDP growth: Zimbabwe 1978-1993 Rainfall & GDP growth: Ethiopia 1982-2000

31. WDR 2008 Agriculture for Development Proposed Messages

32. Main message: Need and opportunity to restore the place of agriculture in the development agenda After decades of neglect and mis-management, agriculture deserves to be placed squarely back as a priority item on the development agenda • to cancel the current huge economic, human, and environmental costs of under- and mis-investment; • to capture the full potential benefit of new opportunities in using agriculture-for-development arising from better understanding and from more favorable contexts (The world cannot afford to get it wrong this time)

33. Specific messages: 7 instruments to make agriculture work for development (do what and do how) 1. Rebalance the roles of the state, private sector (in ag and value chains), and civil society (rural producer organizations) in agriculture-for-development • Make markets work and attract private sector investment 2. Exploit fully the new sources of growth available to agriculture on both the demand and the supply sides • New & expanded markets; institutional, technological, and NRM innovations 3. Make agricultural and rural growth more pro-poor, capitalizing on the multiple pathways out of poverty for rural populations • A (assets), F (smallholder farming), L (employment), M (migration), and P (food prices) pathways 4. Make agriculture more sustainable and a source of environmental services • Incentives, property rights, community capacity, technology, and PES 5. Reduce risk in agriculture and the vulnerability of rural populations • Risk management and risk coping instruments; safety nets (food aid and cash) 6. Promote agriculture-for-development coalitions in the political economy of policy • Agricultural lobbies (ag-based), and median voter interests (other) 7. Collaborate on a global agenda in support of agriculture-for-development • Coordination of global actors (apex) for multilateral interventions in support of national agendas

34. Country-level messages: Pursue integral strategies of ag-for-dev by country category • Agriculture-based countries (SS Africa):Old development model in a new context • Capitalize on a better macro-political environment • Build on the best (entrepreneurs and regions) in investing in core public goods (R&D, infrastructure, education and health) • Develop institutions based on decentralization and participation (RPO) • Priority to food staples and food security (an African “Green Revolution”) • Transforming economies (Asia, MENA):Toward a brand new social model • Diversify smallholder farming toward high value agriculture • Promote a vibrant rural non-farm sector to absorb surplus labor • Urbanizing economies (LAC):Business model with unexplored social challenges • Make smallholder agriculture competitive in high value chains • Favor more remunerative employment and pace transitions (including the role of subsistence farming)