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Afghanistan: Priorities for Agriculture and Rural Development

BACKGROUND

Nearly a quarter century of debilitating conflict and unrest have devastated Afghanistan, leaving several generations of Afghans out of the economic growth and development experienced elsewhere in Asia. Agriculture sector has suffered as well:

  • Over 75% of the Afghan people live in rural areas where agriculture is the primary activity
  • Agriculture sector contributes about half of the GDP (excluding the opium economy).
  • Only 12% of the country’s 65 million hectares of land is arable.
  • Only 40% of agricultural land is irrigated.
  • Agricultural production grew at a rate of only 0.2% per year during the conflict period (1978-2001), compared to 2.2% per year in the pre-conflict period (1961-78).

To enable faster economic growth and rural poverty reduction, agriculture needs to grow at least 5% per year over the next decade. But the main drivers of growth – technology, roads, irrigation, and education – have all deteriorated due to conflict, lack of maintenance, and frequent droughts.

 

ISSUES & CHALLENGES

  • Poverty and Vulnerability remain widespread. According to data from the National Rural Vulnerability Assessment (LINK), almost half of the rural population in 2003 had food expenditures less than that required to purchase adequate calories (2100 calories/person/day).
  • Spread of Opium Poppy:  In conditions of lawlessness and impoverishment, the cultivation of opium poppy started in the late 1970s - with gross income per hectare yields 12 to 30 times higher than the country’s staple, wheat – and has become Afghanistan’s leading economic activity. Although poppy accounts for only about 3% of cultivated land, the opium economy accounted for more than one-third of estimated total (drug-inclusive) GDP in 2003.(Please see  Report on Opium Economy)
  • Poorly Managed Natural Resources: Only about 30% of the country’s available water resources are currently being used, and at very low efficiency and productivity. Irrigation and rural water supply infrastructure have deteriorated due to strife, drought, and lack of maintenance. The country’s limited forest resources suffered depletion to meet demands from lucrative export markets and for firewood. Severe overgrazing and the recent drought have contributed to the decline of the livestock population, and reduction in ground cover in hillsides has led to floods, widespread soil erosion, and reduced water retention in aquifers.
  • Weak Institutions: Unlike many other countries, the incentive structure for agriculture in Afghanistan is largely market driven and there are no major distortions arising from input subsidies, price support policies, or trade restrictions. The main challenge is weak institutional capacity. Both public and private institutions lack the physical infrastructure, necessary regulatory framework, and the skilled staff to build a modern and competitive agricultural sector.
  • Poorly Functioning Factor Markets:  There is no formal rural financial system. Traditional sources (such as moneylenders, family, and friends) and NGO-led micro-finance initiatives under the Micro-Finance Support Facility of Afghanistan are currently the main sources of credit. Years of conflict have also disturbed tenure security, including farm and pasture rights and weakened the ability of administrators or courts to uphold rights fairly.
  • Inadequate Marketing Infrastructure: Constrains include poorly maintained road network, fears about security, inadequate market facilities (even lacking basic water, electricity, and sewage in many cases), telecommunications and support services like market information systems, food safety regulations, grades and standards, and quality control. 

 

PRIORITY AREAS FOR THE WORLD BANK'S SUPPORT

 

1. Increasing agriculture productivity and growth

  • Tackling the opium economy: Given past experience and the size of the opium economy, there are no easy answers. Increasing productivity and growth in non-opium agriculture will be crucial to eventually eliminate the opium economy.   But given the large profitability differences between opium and other crops, this will also require carefully sequenced interdiction, promotion of alternative non-farm livelihoods. (Please see Report on Opium Economy)
  •     Improving water resources and irrigation management: Expansion of irrigation infrastructure and active participation of farmers and community organizations are needed. Other priority actions include improving watershed management to increase productivity of rainfed areas, and strengthening the lead ministry to prepare a coherent water policy, a legislative framework for sustainable water resources management, and a hydro-meteorological database and network to backstop implementation of the water policy.
  • Expanding Access to Technology: Key priorities include adaptive rather than basic research, farmer participation in setting priorities, implementation, and evaluation of research programs.
  • Strengthening Marketing Systems: This requires modern post-harvest marketing systems with a focus, in short term, on market prospects for horticultural commodities, investments in rural roads to link farms to markets, developing grades and standards, involving both the public and private sector in the process, formulating financially sustainable management processes with government oversight to ensure fair trading practices.

2.         Increasing access to assets and sustainable use of natural resources

  • Enhancing Land Tenure Security: Resolving property rights and land tenure issues can be complex and controversial. In Afghanistan, it may be prudent to carry out more research.
  • Improving Access to Credit: Improving access to rural finance is a priority area. Ensuring the financial sustainability of the rapidly growing micro-finance system is crucial. Commercial banks have begun operations in the major cities of the country, but it will likely be many years before they reach rural Afghanistan, so immediate needs must be addressed.

3.         Institutions for the poor and service delivery

 

Community Driven Development:   Mobilizing Afghan communities to lead the local development programs will be vital. This includes involving the Community Development Councils (CDCs) established under the  National Solidarity Program in various activities The joint planning process involving CDC representatives and district authorities, currently being piloted under National Solidarity Project for school rehabilitation, could be expanded to other services. Female CDCs could become a conduit for mother/child health education and literacy.




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