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World Development Report 2008 – Agriculture for Development

On 19 October 2007, the World Bank launched its World Development Report (WDR) 2008, which focuses on agriculture. This is the first WDR to focus on agriculture in 25 years.

The report calls for greater investment in agriculture in developing countries (Item 1).

It warns that the Millennium Development Goals of
halving extreme poverty and hunger by 2015 will not be realized unless the
sector is placed at the centre of the development agenda.

The renewed focus on agriculture and the WDR’s broad messages are welcome, given the persistent neglect and declining investment in the sector. However, critics point out that the prescriptions outlined in the report, for example, trade liberalization, technological fixes (including genetic engineering) and market efficiency, remain flawed (Items 2 and 3).

Some critical analyses of WDR 2008 are available at:

* Oxfam International - What agenda now for agriculture? A response to the World Development Report 2008

http://www.oxfam.org.uk/resources/policy/trade/downloads/bn_wdr2008.pdf

* Action Aid International – The World Bank and Agriculture: A Critical Review of the World Bank’s World Development Report 2008

http://www.actionaid.org/assets/pdf/Agricultural%20FINAL%20corrected%20(low%20res).pdf

* IATP - The World Bank’s WDR 2008: Agriculture for Development - Response from a Slow Trade ­ Sound Farming Perspective

www.ecofair-trade.org/pics/en/EcoFair_Trade_Paper_No_10_Murphy_Santarius.pdf

The World Development Report 2008 can be downloaded at www.worldbank.org/wdr2008

With best wishes,
Lim Li Ching
Third World Network
131 Jalan Macalister,
10400 Penang,
Malaysia
Email: twnet@po.jaring.my
Websites: www.twnside.org.sg, www.biosafety-info.net

Item 1

World Bank Calls for Renewed Emphasis on Agriculture for Development

Press Release No:2008/080/DEC

Contacts:

In Washington: Merrell Tuck (202) 473-9516

Mobile: (202) 415-1775

mtuckprimdahl@worldbank.org

Radio/TV: Nazanine AtabakI (202) 458-1450

Natabaki@worldbank.org

WASHINGTON , DC , October 19, 2007 – The latest World Development Report calls for greater investment in agriculture in developing countries and warns that the sector must be placed at the center of the development agenda if the goals of halving extreme poverty and hunger by 2015 are to be realized. 

Titled 'Agriculture for Development', the reportsays the agricultural and rural sectors have suffered from neglect and underinvestment over the past 20 years. While 75 percent of the world’s poor live in rural areas, a mere 4 percent of official development assistance goes to agriculture in developing countries. In Sub-Saharan Africa, a region heavily reliant on agriculture for overall growth, public spending for farming is also only 4 percent of total government spending and the sector is still taxed at relatively high levels.

The World Bank Group is advocating a new ‘agriculture for development’ agenda. According to the WDR, for the poorest people, GDP growth originating in agriculture is about four times more effective in reducing poverty than GDP growth originating outside the sector.  

“A dynamic ‘agriculture for development’ agenda can benefit the estimated 900 million rural people in the developing world who live on less than $1 a day, most of whom are engaged in agriculture,” said Robert B. Zoellick, World Bank Group President. “We need to give agriculture more prominence across the board. At the global level, countries must deliver on vital reforms such as cutting distorting subsidies and opening markets, while civil society groups, especially farmer organizations, need more say in setting the agricultural agenda.”

According to the report, agriculture can offer pathways out of poverty if efforts are made to increase productivity in the staple foods sector; connect smallholders to rapidly expanding high-value horticulture, poultry, aquaculture, as well as dairy markets; and generate jobs in the rural nonfarm economy.

“Agricultural growth has been highly successful in reducing rural poverty in East Asia over the past 15 years,” said Francois Bourguignon, World Bank Chief Economist and Senior Vice President, Development Economics. “The challenge is to sustain and expand agriculture’s unique poverty-reducing power, especially in Sub-Saharan Africa and South Asia where the number of rural poor people is still rising and will continue to exceed the number of urban poor for at least another 30 years.”

For its part, the Bank intends to continue increasing its support for agriculture and rural development, following a decline in lending in the 1980s and 1990s.  Commitments in FY07 reached $3.1 billion, marking an increase for the fourth straight year.

DETAILED FINDINGS

The report also warns global food supplies are under pressure from expanding demand for food, feed, and biofuels; the rising price of energy; and increasing land and water scarcity; as well as the effects of climate change. This in turn is contributing to uncertainty about future food prices.

Agriculture consumes 85 percent of the world’s utilized water and the sector contributes to deforestation, land degradation, and pollution. The report recommends measures to achieve more sustainable production systems and outlines incentives to protect the environment.
The report says in agriculture-based countries—home to 417 million rural people, 170 million of whom live on less than $1 a day—the agricultural sector is essential to overall growth, poverty reduction, and food security. Most of these countries are in Sub-Saharan Africa, where the sector employs 65 percent of the labor force and generates 32 percent of GDP growth.

For Sub-Saharan Africa’s development, the report highlights issues to be urgently confronted: too little public spending on agriculture; donor support for emergency food aid with insufficient attention to income-raising investments; rich-country trade barriers and subsidies for key commodities such as cotton and oilseeds; and the under-recognized potential of millions of women who play a dominant role in farming.

In transforming countries such as China, India, and Morocco, agriculture contributes on average only 7 percent to GDP growth, but lagging rural incomes are a major source of political tensions.  Dynamism in the rural and agricultural sectors is needed to narrow the rural-urban income gap and reduce rural poverty for 600 million poor while avoiding falling into subsidy and protection traps that will stymie growth and tax poor consumers. 

In urbanized countries, mainly in Latin America and the Caribbean and Eastern Europe and Central Asia, agriculture contributes just 5 percent of GDP growth on average. However, rural areas are still home to 45 percent of the poor, and agribusiness and food services account for as much as one third of GDP. The broad goal is to link smallholders to modern food markets and provide remunerative jobs in rural areas.

The report says rich countries need to reform policies which harm the poor. For example, it is vital that the United States reduces cotton subsidies which depress prices for African smallholders. In the emerging area of biofuels, the problem is both restrictive tariffs and heavy subsidies in rich countries, which drive up food prices and limit export opportunities for efficient developing country producers.  The report also asserts that industrialized countries that were the major contributors to global warming urgently need to do more to help poor farmers adapt their production systems to climate change.

Item 2

http://www.oxfam.org.uk/applications/blogs/pressoffice/2007/10/world_development_report_must.html

October 19, 2007 4:00 PM

World Development Report must galvanise greater international support for agriculture, says Oxfam

Today's new World Development Report must galvanize a strong response from governments and institutions to correct many years of neglect of the millions of poor people who depend on agriculture, says international agency Oxfam.

Oxfam welcomes the World Bank's report in highlighting the vital contribution that agriculture can make to reduce global poverty. Donors and governments have until recently turned their backs on this vital sector, with overall global aid to agriculture falling by two thirds, from $11.5bn in 1987 to $3.9bn in 2005, despite the millions of poor people still living in rural areas. World Bank lending to agriculture amounted to $1.75bn in 2006, just 7% of total bank lending compared with more than 30 per cent when the last agriculture report was published in 1982. The world's richest countries - France, Germany, Japan, the UK and the US - all provide less aid to agriculture today than they have in the past.

"There are signs that the rich world is at last rediscovering the huge poverty-fighting potential of agriculture," said Gawain Kripke of Oxfam International. "Three-quarters of all poor people in developing countries live in rural areas and women make up the vast majority. Women produce more than half of all the food grown worldwide, yet own only two per cent of all land and get only one per cent of lending to agriculture.

Oxfam warns that there is also a danger of past mistakes being repeated.

"Spending is only a part of the battle," said Kripke. "The World Bank has long insisted that as a condition of receiving its aid, poor countries have to liberalise their agricultural sectors before they receive its money. This has left millions of poor farmers without assistance to face markets that are very distorted in favour of rich country exporters. International trade rules are rigged in favour of rich countries preventing developing countries from reaping the economic growth that agriculture offers."

"The Bank must learn, and not repeat mistakes from its last agricultural report 25 years ago. Trade liberalisation by itself does not help the poor. Rapid liberalisation can undermine growth and compound inequality. Moreover rich countries have yet to reform their own agricultural policies and are still dumping on the world markets. Forcing developing countries to liberalise in the face of this would be a continuing disaster."

There is now substantial evidence that liberalising at the wrong time can hurt development. In Peru smallholder farmers growing quinoa, beans and potatoes were unable to compete against cheap wheat and rice imports following market opening, while the lowering of rice tariffs in Honduras meant cheaper prices for importers but consumers were worse off as price cuts were not passed on.

"It is a staggering indictment that the rich world has treated this vast and vital sector with such distain for so long. There's reason to be optimistic that's finally changing but at the moment those changes are not enough nor fast enough," said Kripke.

The Bank's report does not consider the quality of the jobs it says can be created from rural labour markets, nor the impact on women workers. It also fails to explain adequately how agri-businesses should be better regulated and how poor farmers can avoid being exploited within market chains that are increasingly dominated by big business. The state must take a greater role in safeguarding the interests of small farmers and agricultural labourers.

/ Ends

Press enquiries to Amy Barry +44 (0)1865472313 or Louis Belanger +1 202 496 1173 or +1 202 321 2967

1. Oxfam Briefing Note: What agenda now for agriculture?: A response to the World Development Report 2008

2. OECD aid to agriculture 1980-2005 (http://stats.oecd.org/wbos/default.aspx?DatasetCode=TABLE5)

• Japan spent $2.4bn on agricultural aid at its height in 1996, falling to a low of $539m in 2004, and up to $1bn in 2005
• US spent $1.1bn at its height in 1980, falling to a low of $199m in 2003, and up to $644m in 2005
• UK spent $244m at its height in 1990, falling to a low of $121m in 2001, and up to $161m in 2005
• France spent $642m at its height in 1988, falling to a low of $127m in 2005
• Germany spent $588m at its height in 1996, falling to a low of $136m in 2000, and up to $211m in 2005

Item 3

http://www.actionaid.org/main.aspx?PageID=947

"Dangerous" World Bank Report

HungerFREE slams bank's first agriculture report for 25 years

The World Bank’s World Development Report (WDR) on agriculture, was today rejected by ActionAid's HungerFREE campaign, as “a dangerous document that will worsen, not fix, the crisis among the world’s small farmers".

A new study released by ActionAid today shows how World Bank lending policies over the last 25 years have had a devastating effect on small farmers.

"The World Development Report continues the World Bank’s same market-led approach, which for the last 25 years has been a massive failure even by its own standards,” said Collins Magalasi, head of policy at ActionAid in Malawi.

“This approach has led not only to exorbitant fertilizer prices, inadequate transport and lack of credit, but also to the increased concentration of land and food distribution in the hands of agribusiness monopolies that are distorting prices at the expense of the poor.”

Failure

“We condemn the World Bank’s long history of failure in agriculture,” said Eric Gutierrez, International Policy Coordinator of ActionAid.

“We blame the Bank for contributing to the destruction of smallholder agriculture which has left hundreds of millions in the developing world unable to feed themselves.”

“The WDR recognises the importance of the right to food. Yet, through its recommendations, small farmers are going out of business, and families are going hungry. This is an absurd contradiction,” added Gutierrez.

Ignoring World Bank Advice

Aside from a detailed critique of the WDR, ActionAid has looked into cases in which countries have met their food security objectives by ignoring World Bank advice.

“After suffering from years of famine, Malawi reintroduced fertilizer and seed subsidies, against World Bank advice. As a result, our nation has recovered and is now seeing bumper harvests,” said Magalasi.

Vietnam, which was recently proclaimed by World Bank President, Robert Zoellick, as one of “the best performing developing economies in the world”, achieved its development success by prioritising food security before opening up to further market-based reforms - a direct challenge to World Bank orthodoxy.

Vietnam

The ActionAid-commissioned report on Vietnam reveals how the World Bank systematically complained over the years for Vietnam’s non-compliance with its policy prescriptions.

“The IMF even went a step further by suspending two programs in Vietnam to express their displeasure,” said Gutierrez.

“This only serves to show that there are alternative ways to achieve development,” said Gutierrez.

“Hopefully, the lessons of Vietnam and Malawi will be given careful attention by the rest of the developing world.”

 


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