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Agricultural development

“Inclusive processes are essential”

In depth

“Small-farm development correlates clearly with rural poverty reduction and agricultural growth.” Herdswoman in the Peruvian Andes.

“Small-farm development correlates clearly with rural poverty reduction and agricultural growth.” Herdswoman in the Peruvian Andes.

Deprivation and food shortages remain predominantly rural issues – and need to be tackled in the countryside if the Millennium Development Goals (MDGs) of fighting poverty are to be achieved. Interviewed by Tillmann Elliesen, Lennart Bage of the International Fund for Agricultural Development argued that more funding would serve that purpose. [ Interview with IFAD-President Lennart Bage ]

What kind of investment in agriculture and rural development is needed most?
We must dramatically boost institutional development, with a specific focus on farmers’ organisations and other rural institutions. Enabling poor people to overcome poverty means strengthening their capacity to access resources, services and markets. Investments must be made in rural finance institutions, in producers’ groups, farmer field schools, value-chain organisation and rural industries. We also need to invest in local governments and municipalities, as that is often a precondition for progress in terms of rural roads, water supply, irrigation and so on. Finally, funds are needed for agricultural research that benefits poor rural people.

If you compare different world regions in this respect, what lessons are there?
High government spending in East, Southeast and South Asia has clearly been linked to rapid progress towards food security for all. Conversely, in sub-Saharan Africa, extreme poverty remains high and the first Millennium Development Goal is unlikely to be met. African public expenditure for agriculture was always scarce, declined in the 1990s and still remains low. The Green Revolution would never have succeeded in Asia without strong public support of the sector and stringent market regulations. That government action matters is also underscored by the advanced nations’ policies and regulatory measures on food safety standards, biotechnology, subsidies and other related matters.

Should developing countries strive for food self-sufficiency, or should they bank on export-orientation?
Growth needs to be market-oriented. Demand for agricultural products is expanding most rapidly in the developing countries, thanks to fast growing urban populations. The first issue most smallholders face is how to access local, national and regional markets on better terms. Export crops can be important, and as poverty and food security remain major problems, we need a two-pronged strategy. It is not a question of choosing between self-sufficiency or export orientation. What is needed is intelligent public intervention, because, in agriculture, market failures are common and transaction costs are high.

How important are land reforms and an equitable distribution of land?
In rural societies, the landless, the near landless and those with insecure tenure rights often constitute the poorest and most vulnerable groups. These are the people who frequently suffer food shortages, have little control over their livelihoods and are among the first to suffer the effects of low rainfall, environmental degradation or rising prices. It is essential to empower poor rural people through equitable access to land and tenure security. In fact, IFAD considers it a strategic objective to help “ensure that, at the national level, poor rural men and women have better and sustainable access to …natural resources (land and water), which they are then able to manage efficiently and sustainably.” Otherwise, it will not be possible to reach the MDGs. One snag, however, is that governmental cadastres and legal titling often fail to capture the full range of established customary rights. Therefore, this approach does not always lead to improved security and greater investment. Nor does it automatically benefit the poor, rather it may benefit powerful elites, if they manage to influence such formalisation processes.

In the Sahel, tensions between settled farmers and nomad herders have grown in the past decades. What can be done to reduce the potential for conflict?
IFAD supports the facilitation of broad social dialogue, multistakeholder consultations and the empowerment of civil society to represent the various parties in policy-making processes and in development planning. These inclusive processes are essential, and have proved successful, for instance in Niger. But for lasting solutions, there must be a real increase in the productivity and profitability of livestock and cropping systems – which brings us back to the issue of more public investment.

According to some, it does not make sense to support and protect lots of smallholder farmers, as large farms are more efficient. What is your view?
I do not agree. With suitable investment, smallholders can produce as efficiently as large producers, and the immediate impact on poverty is greater. Small-farm development correlates clearly with rural poverty reduction and agricultural growth. After all, small farms are particularly labour-intensive, and the consumption patterns of such households tend to promote growth in the local non-farm economy as well as rural towns, by creating demand for many labour-intensive, locally-produced goods and services. Moreover, small farms should be in a better position to cope with climate change. For example, traditional rain-fed cultivation does not need as much water as do large-scale, irrigated plantations.

Biofuel production has recently been gaining momentum. What does that mean for poor countries?
The current high price of fossil fuels has made biofuels economically viable. Besides savings in foreign exchange and the potential to earn more from exports, biofuel production in developing countries can contribute to reducing poverty, thanks to rising prices for agricultural commodities and, accordingly, rising rural incomes and increased opportunities for farm and off-farm employment. One caution, however, is that we must listen to the concerns that have been raised over the risk of large-scale fuel plantations displacing poor people from their fields. Moreover, there are worries related to the loss of biodiversity.

But is biofuel production not also inflating food prices?
The subject is complex, as conditions vary from country to country. With the present state of technology, however, it seems rising prices for fossil energy should result in increasing demand for agricultural output. The immediate effect would be to increase food prices, potentially reversing the long-term trend of declining real prices of agricultural commodities over the last 40 years.

What would the consequences be?
Higher real prices for agricultural products would have numerous effects on rural areas, rural industries and food security. They would create opportunities as well as challenges. In the immediate future, higher prices would probably re-vitalise rural areas and help to reduce poverty there, thanks to higher incomes and more employment. On the other hand, food security may come under threat as supply-demand imbalances arise. However, that problem could be avoided through the introduction of new second-generation technologies to increase the sugar content of biomass, leaving much of the grain available for food consumption. In any case, more investment in research and development is needed to ensure that biofuel production does not benefit only large-scale commercial farmers, but also poor family farmers in developing countries.