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Reducing Poverty in Rural Communities in Argentina

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Productivity Growth and Supportive Public Policy for Rural Development


Overview

To address the hardships facing many in rural Argentina in the period from late 1998 through September 2011, a World Bank initiative sought to boost farmers' incomes and raise the profile of rural development issues. This operation financed 12,000 subprojects benefiting some 74,000 small farm families – over 355,000 people of which about 50 percent were women – and increasing their net incomes by at least 20 percent. Rural development and poverty reduction were prioritized in the new national and provincial sector strategies, and there is now stronger collaboration between farmers and institutions.

Challenge

Rural poverty in Argentina had been traditionally overlooked, largely due to the dispersion of poor farmers in regional economies, far from urban centers. Recessionary conditions in the mid-1990s and the contraction of local governments had reduced off-farm job opportunities, while mechanization had eliminated seasonal work. The traditional safety valve for rural families - out-migration to urban areas - contracted, causing civil unrest and reverse migration to rural areas. Concurrently, the government's macro-economic stabilization efforts reduced its role in the agriculture sector and brought with it a major restructuring to exploit comparative advantage and promote output and exports through diversification and higher productivity. However, small-scale farmers lacked access to the resources they needed - financing, productive infrastructure and technical assistance - to adjust their production systems to the new incentive structure while national and provincial governments lacked adequate rural policies, strategies and capacity to support them.


Approach

The Small Farmer Development Project (known by its Spanish acronym, PROINDER) sought to strengthen rural development and poverty reduction using targeted assistance to small farmers while building capacity in national and provincial sector authorities and institutions.

PROINDER used a decentralized, demand-led grants mechanism to finance on-farm infrastructure and productive investments with appropriate technical support, and it ensured the inclusion of vulnerable populations such as women, indigenous people, and youth. Competitive grants also financed adaptive research in small-farm systems.  In parallel, intensive technical assistance and training of national and provincial authorities were designed to build capacity for rural strategy development and create long-term, sustainable political and institutional commitment to the small farm sector.


Results

The Small Farmer Development Project successfully achieved its objectives, albeit over a longer-than-expected period (August 1998 to September 2011). This was due to its support for government’s flood emergency program in the first two years, followed by a profound national economic crisis in the early 2000s that restricted project activity.  The project achieved the following:

  • 12,000 infrastructure and productive sub-project investments benefited close to 74,000 small farm families in 23 provinces; in all, it helped over 355,000 people of which about half were women.
  • All beneficiary families saw their incomes rise by at least 20 percent and for some 39,000 or about 53 percent of the total, income increases exceeded 40 percent, due to greater productivity stimulated by project investments.
  • The proportion of farmers with lowest income pre-project decreased from 15 percent to 5 percent, indicating important poverty reduction impacts.
  • 65 percent of investment subprojects benefited women, indigenous people, and youth, based on headcount within subprojects; 15 percent of all subprojects had women as primary titleholders.
  • Beneficiaries organized into 1,550 associations, even in provinces with no prior tradition of collective activity.
  • PROINDER provided US$40 million in financing in 1998 for the government’s Flood Emergency Program, which benefitted 39,000 families.
  • Rural development and poverty reduction were successfully woven into national and provincial sector policies and strategies.
  • Rural Development Strategies were prepared and adopted by the national government and 19 provincial governments.

The National Family Agriculture Forum and the National Register of Family Agriculture were created, promoting better relations between the government and farmers, and development of a rural database.


Bank Contribution

The aggregate project cost was US$139.4 million, of which the International Bank for Reconstruction and Development (IBRD) contributed US$119.8 million or 86 percent. This was a higher level of support than initially planned due to exceptional fiscal circumstances affecting Argentina from 2000 to 2004. Around 85 percent of aggregate Bank loan resources went into the Rural Investment Fund, financing infrastructure and productive subprojects for small farmers, while the remaining 15 percent supported technical assistance and training, as well as the costs of project administration, monitoring, and evaluation. Notably, about US$30.0 million of Bank resources financed Flood Emergency Program recovery activities in the initial project period from 1998-99, out of the total US$40.0 million reallocated for this purpose.


Partners

The IBRD partnered with the Secretariat – now Ministry – of Agriculture, and helped catalyze rural development cooperation agreements between the Ministry and numerous participating provinces. It also worked with the newly-created National Family Agriculture Forum, which was designed explicitly to facilitate partnering and mutual exchange between the Ministry, related national and provincial rural authorities, and small farmer organizations. Additionally, the Inter-American Development Bank’s (IADB) contribution to the government’s Flood Emergency Program used a reallocation from the Provincial Agricultural Development Project, which was jointly-financed by the Bank and the IADB.


Moving Forward

The effort to promote long-term sustainability among Argentina’s small-scale farmers will benefit from the legacies of this project, namely: new and restructured institutions, modernized strategies and databases, coordination, increased budgets and human resource development, and intensified targeting of the most vulnerable. Also, the proposed Argentina Socio-Economic Inclusion in Rural Areas Project, based on evidence that rural poverty remains unacceptably high in Argentina, would continue to support rural development activities introduced under PROINDER. It would also increase the focus on indigenous people and on linking organized small producers to markets.


Beneficiaries

The project improved the wellbeing and quality of life of many families as a result of increased food supply.  Women in particular praised the benefits of access to latrines, water storage facilities, solar energy, and housing improvements.  Beneficiaries, especially indigenous communities, also appreciated the project’s technical assistance and training aspects, and their new-found capacity to demand their rights and engage with institutions.


For more information, please visit the Projects website.



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