The recent decline in the $1-a-day poverty rate in developing countries—from ‘28 percent in 1993 to 22 percent in 2002’—has been mainly the result of falling rural poverty “(from 37 percent to 29 percent) while the urban poverty rate remained nearly constant (at 13 percent)”.
More than 80 percent of the decline in rural poverty is attributable to better conditions in rural areas rather than to out-migration of the poor.
So, contrary to common perceptions, migration to cities has not been the main instrument for rural (and world) poverty reduction.
In South Asia and Sub-Saharan Africa, the number of rural poor has continued to rise and will likely exceed the number of urban poor until 2040. In these regions, a high priority is to mobilize agriculture for poverty reduction.
While land and water are critical assets in rural areas, education is often the most valuable asset for rural people to pursue opportunities in the new agriculture, obtain skilled jobs, start businesses in the rural nonfarm economy, and migrate successfully.
Yet education levels in rural areas tend to be dismally low worldwide: an average of four years for rural adult males and less than three years for rural adult females in Sub-Saharan Africa, South Asia, the Middle East and North Africa.
Improving basic rural education has been slower than in urban areas. Where demand for education is lagging among rural households, it can be enhanced through cash transfers and conditional on school attendance.
However, increasingly it is the quality of rural education that requires the most improvement, with education conceived broadly to include vocational training that can provide technical and business skills that are useful in the new agriculture and the rural nonfarm economy.
Recent reforms have improved price incentives for agricultural producers in developing countries, reducing but not eliminating historical policy biases against agriculture.
However, a low level of net taxation hides a combination of protection of importable and taxation of exportable (especially in the agriculture-based and transforming countries), which can both be high.
Hence, considerable room remains for further efficiency gains through reforms in developing countries’ own trade policies. Liberalization of imports of food staples can also be pro-poor because often the largest numbers of poor, including smallholders, are net food buyers.
But many poor net sellers (sometimes the largest group of poor) will lose, and programs tailored to country-specific circumstances will be needed to ease the transition to new market realities.
Financial constraints in agriculture remain pervasive, and they are costly and inequitably distributed, severely limiting smallholders’ ability to compete.
Financial constraints originate in the lack of asset ownership to serve as collateral (wealth rationing) and in the reticence to put assets at risk as collateral when they are vital to livelihoods (risk rationing).
The demise of special credit lines to agriculture through public programs or state banks has left huge gaps in financial services, still largely unfilled despite numerous institutional innovations.
What to do requires a policy framework anchored on the behaviour of agents—producers and their organizations, the private sector in value chains, and the state.
Moreover, how to do it requires effective governance to muster political support and implementation capacity, again based on the behaviour of agents—the state, civil society, the private sector, donors, and global institutions.
What now? Toward implementation; if any nation is committed to reducing poverty and achieving sustainable growth, the powers of agriculture for development must be unleashed.
But there are no magic bullets. Using agriculture for development is a complex process. It requires broad consultations at the country level to customize agendas and define implementation strategies.
It also requires having agriculture work in concert with other sectors in industrialization and with actors at local, national, and global levels. It requires building the capacity of smallholders and their organizations, private agribusiness, and the state.
It requires institutions to help agriculture serve development and technologies for sustainable natural resource use. And it requires mobilizing political support, skills, and resources.
There is growing recognition among governments and donors that agriculture must be a prominent part of the development agenda, whether for delivering growth in the agriculture-based countries or for reducing rural poverty and addressing the environmental agenda everywhere.
Today’s improved opportunities and greater willingness to invest in agriculture provide optimism that agriculture-for-development agendas can move forward.
The window of opportunity that this offers should not be missed because success will provide high payoffs toward the Millennium Development Goals and beyond.
Three types of governance problems can hamper the agriculture for-development agenda. Lack of macroeconomic and political stability limits the development potential of the sector.
Political economy problems lead to policy biases and to underinvestment and disinvestment in agriculture. And state resource and capacity problems cause failures in implementing the policy agenda, especially in agriculture-based countries.
Macroeconomic and political stability have improved in many countries. The antiagriculture bias in macroeconomic policies has been reduced as a consequence of economic reforms.
In addition, agriculture is likely to benefit from general governance reforms that are now high on the agenda and include decentralization, results-based public sector management, e-government, more rights to information, and new accountability mechanisms.
Evidence suggests that the political economy has been changing in favour of agricultural and rural development. Both civil society and the private sector are stronger.
Democratization and the rise of participatory policy making have increased the possibilities for smallholders and the rural poor to raise their political voice.
Countries have been passing laws that promote rural equity, as in Senegal and Mexico. New and powerful private actors have entered agricultural value chains, and they often have an economic interest in a dynamic and prosperous agricultural sector.
It cannot be assumed, however, that the agriculture-for-development agenda will succeed even if conditions are better now.
Policy makers and stakeholders at all levels, from local to global, have to make special efforts to seize these opportunities for realizing the agenda.
To use the new political space created by democratization and decentralization and exercise political voice, smallholders and the rural poor need to form more effective organizations.
To strengthen capacity for policy implementation, countries have to identify the combination of demand-side and supply-side governance reforms that best fit their specific conditions.
Institutional innovations are required to better coordinate the agriculture agenda across different sectors. Sound agricultural development strategies require stronger capacity for policy analysis and evaluation, and a commitment to evidence-based policy making.
And—as past successes show—using agriculture for development calls for vision and leadership. The global agriculture-for development agenda requires specialized institutions that have long-term support and commitment, such as the standard-setting bodies.
It requires cross-sectoral, issue-specific networks that can capture emerging opportunities and react quickly to emergencies. And it requires new mechanisms to ensure that the agenda is well coordinated and integrated into the overarching tasks of the 21st century.
Those tasks include ending hunger and poverty, combating pandemic diseases, sustaining the environment, mitigating and adapting to climate change, and providing security.
The challenges in delivering on the international agenda are considerable. But in a global world and on a small planet, there is considerable mutual interest in supporting every country’s agriculture-for-development agenda.
Meeting those challenges is ultimately a matter of equity and justice between North and South—and between present and future generations.