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Holger A. Kray Head | Africa Agriculture Policy Unit hkray@worldbank

Enabling Growth through Agricultural Transformation Economic Growth Forum l Kampala, Uganda| September 14-15, 2017. Holger A. Kray Head | Africa Agriculture Policy Unit hkray@worldbank.org. The weakest point in agricultural transformation is policy, not technology or other enablers.

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Holger A. Kray Head | Africa Agriculture Policy Unit hkray@worldbank

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  1. Enabling Growth through Agricultural TransformationEconomic Growth Forum l Kampala, Uganda| September 14-15, 2017 Holger A. Kray Head | Africa Agriculture Policy Unit hkray@worldbank.org

  2. The weakest point in agricultural transformation is policy, not technology or other enablers.

  3. Agriculture has Unique Importance for Uganda Smallholder agriculture has been crucial for poverty reduction in Uganda Poverty reduction between 2005/06 and 2012/13 Stunting affects productivity, lifetime earnings, and economic growth Sectoral annual GDP growth rates are volatile and generally low recently Poverty Growth Jobs Food • AG employs 72% of the workforce • 300,000 Ugandans join the labour market every year • Despite rapid urbanization, 78% of population still live in rural areas • 27% of the population is stunted • In 2006-2013, Uganda experienced the fastest reduction in extreme poverty in SSA • Agricultural households accounted for 79% of poverty reduction • AG generates 23% of GDP and over 40% of Uganda’s exports • ~2% sector growth p.a. [4% SSA] below population growth of 3.2% [2.7% SSA] Source: UNHS 2005/06-2012/13. Source: WB 2016, Uganda Poverty Assessment Agriculture contributes substantially to household incomes Source: Nagler & Naudé (2017), Food Policy

  4. If the poor are in agriculture, is this due to selection? NO Structural transformations (ST) away from agriculture across Africa have not been accompanied by growth in per capita income Source: De Janvry 2017

  5. Most poverty reduction has been achieved within agriculture and rural areas …. not through ST toward urban environment Uganda (2005-09): 70% of poverty reduction in baseline ag population achieved in agriculture Tanzania (1991-2010): 85% of rural poverty reduction achieved in agriculture (34%), in RNFE (25%), and in local towns (30%) Cross-country: Growth through structural transformation is less effective than through sector productivity growth. Hence, income growth in agriculture and rural areas (RNFE, local towns) key for rural poverty reduction Source: De Janvry 2017; Christiaensen et al 2017; McMillan, Rodrik, Sepulveda 2017

  6. Low annual labor productivity the root cause of rural poverty Labor productivity per person/year low in ag compared to non-Ag But labor productivity per person/hour is not very different in ag than in non-ag Source: De Janvry 2017; McCullough, 2017

  7. What explains low labor productivity in agriculture?Erratic/Spotty labor calendars! Average hours worked per worker per year: • non-ag: 1850 h/yr (7h/day); ag: 700/year (2.7h/day) • Ag labor calendars are seasonal for rural populations, with insufficient opportunities of access to employment in non-ag business and wage work to smooth out labor calendars Source: De Janvry 2017; McCullough, 2017

  8. What explains low labor productivity in agriculture?Erratic/Spotty labor calendars! For rural households, high seasonality in agriculture, with insufficient off-farm employment opportunities to smooth out labor calendars Urban households work more and have access to some countercyclicality, resulting in smoother labor calendars (and less poverty) Source: De Janvry 2017; McCullough, 2017

  9. Implications for Policy Making Gains in agriculture land/labor productivity key for poverty reduction. “Green Revolution” (land productivity growth in staple foods) necessary but not sufficient. Can help increase the productivity of work in agriculture, but does not directly address the low annual labor productivity issue. First-order of importance to reduce rural poverty is smoothing out labor calendars across the year. This requires an Agricultural Transformation (AT) and a Rural Transformation (RT)beyond a Green Revolution: • AT: smooth out labor calendars through the diversification and intensification of agricultural production systems • RT: smooth out labor calendars through complementary employment in an emerging rural non-farm economy Source: De Janvry, 2017; Poverty Status Report, 2014

  10. Steering ag transformation requires the right level of incentives Uganda: Public Expenditure on Agriculture Source: MAFAP 2017

  11. Steering ag transformation requires the right direction of incentives Coffee Rice Source: MAFAP 2017

  12. The weakest point in agricultural transformation is policy, not technology or other enablers.

  13. Enabling Growth through Agricultural TransformationEconomic Growth Forum l Kampala, Uganda| September 14-15, 2017 Holger A. Kray Head | Africa Agriculture Policy Unit hkray@worldbank.org

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