The strategy, Reaching the Rural Poor, comes after broad external consultations with government officials, civil society organizations, academics, the business community, and donor agencies. The new strategy will guide the World Bank’s future rural lending operations. Bank lending for agriculture for the 2003 and 2004 fiscal years is projected to rise by 20 percent yearly under the new strategy, marking a net increase of about $400 million.

"The new Agriculture and Rural development strategy will contribute to the implementation of the outcomes of the Johannesburg World Summit on Sustainable Development in which more than 100 world leaders committed to make rural development a priority for action," says Ian Johnson, World Bank Vice President for Sustainable Development.

Agricultural and rural growth are essential to income growth in most low income countries—agricultural output amounts to 24 percent of their total GDP.

"Unless there is fast and broad-based rural development, we will not be able to achieve the Millennium Development Goals, including halving the proportion of people suffering from hunger," says Kevin Cleaver, Director of the World Bank’s Rural Development Department. "Since 75 percent of world’s poor live in rural areas, the battle against poverty will in large measure be fought and won there."

The new strategy rests on the following four pillars: focus on poor people—poverty is a predominantly, though not exclusively, rural phenomenon; address the entire rural area to address broad-based growth in both farm and non-farm activities; build alliances with all stakeholders; and address the impact of global developments in poor countries, such as trade policy, subsidies, and climate change.

According to Cleaver, "The Rural Strategy will promote broad-based rural economic growth, at the core of which remains enhancing agricultural productivity. Agriculture in developing countries must grow by at least 3.5 percent annually on average, up from 2-2.5 percent in the 1990-2000 period, in order to make a good contribution to achieving the goal of halving poverty and hunger by 2015."

But growth is not enough. According to the new strategy, "a major reason for the inability of developing countries to capture a larger share of agricultural trade is that protection, especially in the large OECD markets, has remained very high."

The potential economic welfare benefits of global agricultural trade reform for the developing world are estimated to be at least $142 billion annually. Currently, rich countries spend about $300 billion each year on agricultural subsidies—six times more than the annual $50 billion rich countries put into foreign aid.

The strategy emphasizes that developed countries need to make progress in agricultural trade liberalization, reduce trade-distorting agricultural subsidies, make scientific progress in agriculture accessible to developing countries, and re-focus assistance to rural development. This is especially pertinent in Sub-Saharan Africa and South Asia where the majority of rural poverty is found.

It recommends that developing countries end any discriminatory open and hidden taxation of agriculture, complete the reform in agricultural marketing, increase budget allocations to rural space, decentralize the provision of rural services and support rural organizations, and, in cases of serious distortions, promote land reform as a means to increase the assets of the rural poor.

The strategy reconfirms that agriculture is the main source of overall economic growth and poverty reduction in many poor countries. The second leg of rural development must be the non-farm rural economy, especially in countries that are under population pressure and face a scarcity of arable land. It also aims to improve infrastructure and financial and social services (health, education, sanitation, and water supply) to the rural poor. It puts special emphasis on the management of natural resources as a prerequisite for the sustainability of any rural development and poverty reduction effort.

The Bank will promote a Global Forum for Rural Development that will include all major donor agencies. The Forum will serve as a focal point for awareness building, advocacy, analytical, and policy work on rural subjects, coordination of assistance, co-financing, and, ultimately, reversing the decline of rural investments.

"The era of fragmentation of donor assistance to rural development must end," Cleaver says. "Not only are partnerships needed with other stakeholders in rural development, but also concurrence and active support by governments, the private sector, and civil society at large in developed and developing countries."

For more information on the Bank and rural development, please visit:http://www.worldbank.org/ruraldevelopment

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