Transcript dyson.cornell.edu

Stimulating
Agricultural
and Rural
Transformation
(StART)
in the LowIncome Tropics
Chris Barrett
February 20, 2009
The promise
Extreme poverty has fallen rapidly in east Asia and
worldwide, but only proportional gains in South Asia
and none in Sub-Saharan Africa, where >50% still
live on less than $1.25/day.
Extreme and Ultra Poverty, 1981-2004
90
East Asia: 1.1 bn (79%) in 1981, 0.3 bn (18%) in 2005
80
% of Population
70
SSA: 0.2 bn (51%) in 1981, 0.4 bn (50%) in 2005
60
50
40
South Asia: 0.5 bn (59%) in 1981, 0.6 bn (40%) in 2005
30
20
10
Worldwide: 1.9 bn (52%) in 1981, down to 1.4 bn (26%) in 2005
1980
1985
East Asia
1990
Sub-Saharan Africa
1995
2000
2005
South Asia
Bubble sizes reflect number of people living in extreme poverty (2005US$1.25/day-person) and ultra poverty ($0.54/day-person)
Source: Chen and Ravallion (2008)
The challenge
Ultra-poverty is especially persistent and
prevalent in sub-Saharan Africa
Ultra-poor (income per capita< 2005US$0.54/day)
48% African in 1990, 75% in 2004
200
180
Middle East & North
Africa
160
Europe & Central Asia
140
120
Latin America & the
Caribbean
100
East Asia & Pacific
80
60
South Asia
40
20
Sub-Saharan Africa
0
1990
Source: IFPRI (2007)
1993
1996
1999
2002
2004
A key driver
Persistent poverty is closely tied to
agricultural stagnation
4000
3500
50
3500
3000
40
Poverty (right axis)
2500
30
2000
Yields (left axis)
20
1500
10
1000
500
1984
1987
1990
1993
1996
Source: World Bank (2007)
1999
0
2002
60
Poverty (right axis)
50
3000
40
2500
30
2000
20
1500
10
1000
500
1984
Yields (left axis)
1987
1990
1993
1996
1999
0
2002
Poverty incidence (%)
60
Cereal yields (Kg/Ha)
4000
Poverty incidence (%)
Cereal yields (Kg/Ha)
Cereal yields and extreme poverty move inversely.
South Asian progress
Sub-Saharan African stasis
The consequence
Agricultural stagnation is a key driver of
poverty and undernutrition
Per Capita Nutrient Availability
(shaded areas below minima)
The WHO identifies
undernutrition as the
biggest risk factor for
disease and death
worldwide … and
30/47 SSA countries
have macronutrient
availability shortfalls .
Protein/day (grams)
140
120
10.3%
70.3%
16.6%
2.9%
100
80
60
40
20
1000
2000
3000
Calories/day
Source: Barrett & Maxwell (2005), data: FAO food balance sheets
4000
Poverty traps
Reinforcing feedback:
Low productivity causes poverty.
Poverty causes hunger and natural
resource degradation.
But hunger and degraded natural
resources also cause poverty and low
productivity.
Hence the vicious cycle of poverty
traps, hunger and natural resources
degradation.
The challenge:
Poverty traps
Why such
persistence?
Two key features of poverty traps:
1) Initial conditions matter
- “It takes money to make money” … investment is
the engine of growth and exit from poverty.
- In SSA, ultra-poor are heavily rural and depend
on meager (and degrading) natural resource base
and have little access to key infrastructure.
2)Risk matters
- Direct loss of productive assets to disease,
conflict, climate variability, etc.
- Responses: ex post coping (e.g., school drop-outs,
distress asset sale) and ex ante risk management
(e.g., low-risk, low-return livelihoods).
Need to StART
Need agricultural and rural transformation to
break out of ultra-poverty/hunger trap:
Reason 1: location, livelihood and asset holdings
- Most ultra-poor live in rural areas (rural-urban poverty
gap increases in poverty depth)
- Most ultra-poor work in agriculture, at least part-time.
- Increasing the productivity of the assets controlled by the
poor (and the stock of assets they control) is fundamental
to any strategy to break out of the poverty/hunger trap. So
must increase the productivity of the rural poor’s labor,
land, livestock and other assets.
Need to StART
Reason 2: Budget dependence
Food is 65-80% of ultra-poor’s budgets.
Most SSA farmers are not net sellers of basic commodities …
most are net buyers.
So food price effects of agricultural productivity growth
reinforce gains to the rural poor by reducing cost of living.
Hence the seriousness of the recent global food price crisis for
the poor, including most small farmers!
Need to StART
An example from Madagascar:
A doubling of rice yields:
- reduces the share of food insecure
households by 38%
- shortens the average hungry period
by 1.7 months (1/3)
- increases real unskilled wages in
lean season by 89 % (due to both
price and labor demand effects)
- All the poor benefit: unskilled
workers, consumers, and net seller producers
… the poorest gain most.
(Minten and Barrett, World Development, 2008).
Need to StART
Result:
- World Bank estimates that real GDP growth from
agriculture is 2.7 times more effective in reducing extreme
poverty headcount in poorest countries, vs. non-ag sectors.
- Historically, advances in food system productivity have
been the foundation of poverty reduction and modern
economic growth throughout history.
- Agricultural growth has strong multiplier effects on the
rural non-farm economy … generating both local demand
and investible resources, as well as ensuring the food
security of those who leave the farm.
Key StART principles
No one size fits all approach is viable. Need to
contextualize. But there exist several key principles
for targeting StART interventions:
Principle 1: Build and protect productive assets.
Multiple assets matter: Human capital, land (incl. soil fertility),
water, livestock, investible funds (savings, credit)
Interventions include direct provision (e.g., free education) or
subsidies for asset accumulation or insurance of existing assets
For privately held assets (land, livestock, equipment, education,
businesses, etc.), mainly need to improve investment incentives.
Also need to conserve common pool assets (rangelands, water,
forest, etc.) through better governance and incentives.
Key StART principles
Principle 1: Build and protect productive assets.
How to improve incentives?
1) More secure property rights (tenure, police)
2) Resolve financial market failures
3) “Crowding-in” investment in complementary inputs (e.g.,
physical and institutional infrastructure)
4) Provision of safety nets
5) Clear conservation rules, authority w/o burdening the poor.
A key concern: Soil quality
SSA losing ~$4bn/yr in soil nutrients…
plus feeds a Striga problem that costs
another $7 bn/yr in yield losses and
mycotoxin contamination of >25% of
food supply.
Key StART principles
Principle 2: Improve the productivity of the poor’s
current asset holdings.
1) Improved production/processing technologies
2) More efficient/remunerative marketing channels
Uptake/participation turns on assets, so don’t forget #1!
Key concern 1: Agricultural research in SSA
Avg RoR ~35%, and ~80% of ultra-poor in agriculture
But only 4% of public expenditures are on ag and a small
fraction of that goes into research.
Key concern 2: Changing agrifood supply chains
Who is participating, on what terms, w/ what effects?
Key StART principles
Principle 3: Improve risk management options for
the ultra-poor.
Regressivity, multidimensionality and
context-specificity of uninsured risk
exposure make this a serious challenge.
Risk reduction:
Improved crops and livestock, better
water control, diversification, peace,
disease control
Risk transfer:
Improved markets, index-based risk
finance, global humanitarian response
Global + local (“Glocal”)
Solutions
Key StART
principles
Principle 4: Facilitate favorable transitions out of
agriculture.
Must equip the next generation
to transition into remunerative
non-farm employment.
Keys are (i) supporting physical
and institutional infrastructure;
(ii) early childhood health, nutrition and education, especially
for disadvantaged children. Closely tied to improvements to
parents’ productivity, risk management and asset holdings.
Global + local (“Glocal”) Conclusions
Solutions
There is real reason for hope:
- Real ag output growth is accelerating in South Asia and
SSA at long last … back to positive per capita rates of food
output growth
- Renewed and innovative initiatives (e.g., AGRA) and
attention (e.g., WDR 2008), and turn-around in both public
aid and private investment in low-income countries.
- Exciting new innovations in technologies (e.g.,
micronutrient-rich staple crops, drought-resistant
cultivars), advances in finance (e.g., index insurance to prefinance emergency response and provide a productive
safety net), and improvements in policies (e.g., rule of law,
tenurial security, global food aid).
Global + local (“Glocal”) Conclusions
Solutions
But recognizing the need to intervene is the easy part.
We need to emphasize and focus on four key StART principles:
- Build and protect productive assets.
- Improve the productivity of the poor’s current asset holdings.
- Improve risk management options for the ultra-poor.
- Facilitate favorable transitions out of agriculture.
And remember that appropriate policy design and
implementation are highly context specific. So need to
continuously and rigorously research the settings in which we
work and the policies we design and introduce …
… beware repeating the errors of the 1980s-90s!
Thank you
Thank you for your time, interest and comments!