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Overview Agriculture in Timor-Leste contributes 30 percent of the non-petroleum GDP of Timor-Leste and 80 percent of the population is dependent on agriculture, forestry and fisheries. While the nationwide poverty incidence is around 40 percent, 86 percent of the poor live in rural areas. A third of the households rely on subsistence agriculture exclusively, and 98 percent use firewood as their primary source of energy. Since 1999, farmers have had to adjust to a drastic change in the demand for agricultural products and in the role of the public sector. The Indonesian system of guaranteed Government purchases of essential food products at subsidized prices was abandoned. Farmers also lost the markets constituted by vast numbers of Indonesian military and civil servants living throughout the territory before independence.   In addition, public sector staff devoted to agriculture, livestock, fisheries and forestry declined from 6,000 under the Indonesian administration to around 300 now, practically eliminating extension services. Finally, the tendency of people to move back to their ancestral lands, often in remote mountain areas and away from the lowlands where they had been relocated under the Indonesian Government, is creating additional challenges for the delivery of public services in rural areas. The World Bank has been engaged in Timor-Leste since 2000, and its current engagement is guided by the 2005 Country Assistance Strategy (CAS), which outlines a framework for assistance until 2008.  In recognition of the multi-faceted challenges facing Timor-Leste, the CAS supports the whole-of-Government approach in support of the National Development Plan and Stability Program, underpinned by three strategic pillars: (a) delivering sustainable services; (b) creating productive employment; and (c) strengthening governance. The cross-sectoral issues of youth and gender are mainstreamed across these pillars.
The CAS also emphasize four principles of engagement across the pillars: (a) building institutional capacity; (b) deepening the results orientation; (c) strengthening transparency and communication; and (d) consolidating and extending the strong partnerships that have been established with development partners. Back to top Progress The country’s own vision for the sustainable management of the agriculture, forestry and fisheries sector as laid down in the National Development Plan (May 2002) has five strategic priorities to be achieved by 2020: to improve food security and raise self-reliance; to increase value-added production and marketing; to achieve sustainable production and management of natural resources; to strengthen the balance of trade by promoting commodity exports; and to increase income and employment in rural areas.
Back to top Key Issues Institutional rescaling and capacity building. The current challenge in the agriculture sector is assisting farmers to adjust to a market that is very different from before independence. The sector needs to deal with reduced fiscal support and much smaller public service administration. There is also a high probability of increased budget allocation and the Ministry of Agriculture, Forestry and Fisheries (MAFF) will need to think strategically about policies and programs for the use of these additional resources. Agricultural productivity enhancement. The country’s very low agricultural productivity stems in part from traditional practices (with very low reliance on inputs) and from a culture of dependence on Government subsidies and artificial markets which characterized the Indonesian period. Agriculture losses are very high due to spoilage and pests, and quality problems continue to hinder exports. To address these constraints, the Government will need to establish an adequate system of technical transfer, formulate adequate policies and programs that address agricultural supply and agriculture health aspects and promote the development of new markets through strengthening product supply chains. Avian influenza prevention. Even though there have not been any cases reported, the threat of avian influenza is a critical emerging issue due to the proximity to Indonesia. Rapid-response strategies are being developed by the Government. However, there is also an urgent need to increase the emphasis on prevention. Contribution towards employment creation. The agriculture sector has the potential to contribute towards job creation, in particular through assistance to private sector development and increased production of agriculture commodities for export. Creating rural jobs is an area that can be targeted through increased support of agri-business activities, which has been taken up by the new Agribusiness Division in the Ministry of Agriculture, Forestry and Fisheries. However, it is unlikely that the agriculture sector has sufficient capacity to address all the needs of the fast growing labor force. Managing environmental degradation. Population growth (rate) puts tremendous pressure on agricultural land, which will have an increasing impact on agricultural productivity in coming years. Secondary forest covers 76 percent of the country’s surface, but about two thirds of the lands are severely degraded by deforestation, grazing, shifting cultivation practices, and naturally poor land, leading to watershed degradation and erosion. Coastal resources are extremely rich but lie in a narrow patch of fringing reef and are therefore particularly vulnerable to over-exploitation. The size and status of offshore resources is largely unknown. Back to top World Bank Program  The World Bank currently supports the sector through its Third Agriculture and Rehabilitation Project (ARP III), which is funded in part through the multi donor Trust Fund for East Timor (TFET) and an EC Grant, and through the Consolidated Support Program.
- ARP III supports the Ministry of Agriculture, Forestry and Fisheries' main programs of assistance to rural communities, including the delivery of essential services in irrigation rehabilitation and management, agriculture information, animal health, natural resource management and agribusiness support.
 - ARP III and the Consolidated Support Program support the Ministry in developing key agricultural and natural resources policies needed to clarify the roles of the Government, rural communities and civil society in the sustainable management of the sector.
 - In particular, these programs support one of the highest priorities in the sector, institutional development in both the public and private sectors.
With an increasing number of initiatives supporting agriculture and rural development, there is a need for more strategic and coordinated donor interventions in the sector. The Bank’s future engagement in the rural sector in Timor-Leste beyond current programs will be discussed with Government in 2007. In particular, the Bank would be looking at opportunities for joint work with other donors and supporting better coordination of rural development efforts. Back to top  |
 
 
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