2007 Annual Meetings
Press Briefing for World Develpment Report 2008:
Agriculture for Development
François Bourguignon, Senior Economist & Senior Vice President for Development Economics, World Bank
Kathy Sierra, Vice President for Sustainable Development
Alain de Janvry, WDR co-team leader
Derek Byerlee, WDR co-team leader
Merrell Tuck, Senior Communications officer
Friday, October 19, 2007
MS. TUCK: Hello. Welcome, everyone, to the press conference to launch the World Development Report 2008, Agriculture For Development.
I am very pleased to have everyone here.
I am Merrell Tuck, Senior Communications officer.
First, let me say a few points of housekeeping.
This room has simultaneous interpretation into French, Spanish and English, and your headsets should all be at your chairs. Also, a transcript will be available after the press conference is over; and this is an embargoed press conference. I think everyone is aware that the embargo is for 12 noon today.
Also, please turn off your cell phones if you would.
Let me begin by introducing the people here at the head table, but I am also very pleased that we have some senior officials and constituency representatives in the room who will also be available in the question-and-answer period.
First of all, there is François Bourguignon, the Senior Economist of the World Bank and Senior Vice President for Development Economics.
Next to him is Kathy Sierra, Vice President for Sustainable Development and Chair of the Consultative Group on International Agricultural Research.
Next to me on my right is Alain de Janvry, who is the WDR co-team leader and Professor of Agricultural Economics at UC-Berkeley.
And next to me is Derek Byerlee, who is the other co-team leader of the World Development Report.
And I should say that several of the authors are also in the room. This is very much a collaborative effort. And in the spirit of collaboration, I am very pleased to let you know that we have in the room the Director-General of the Food and Agriculture Organization, Mr. Jacques Diouf--thank you, Mr. Diouf--and he will be available as well during the question-and-answer session.
We also have colleagues from the International Fund for Agricultural Development--I believe Mr. Leonard Boge is here as well as Mr. Kevin Cleaver. Mr. Boga is the President, and Mr. Cleaver is the Assistant President.
We also have Ajay Vashee, who is with the International Federation of Agricultural Producers. He is from Zambia, and he is also available to answer questions.
And our colleagues from IFAD have a press release which is circulating here as well.
So, let me now turn it over to François, who will begin with a bit of a big picture and the raison d'etre of the WDR.
MR. BOURGUIGNON: Thank you very much, Merrell, and welcome to everybody.
For the first time in 25 years, the World Development Report this year is focusing on agriculture and development. Major changes have occurred since then that make the role of agriculture and its priorities for development quite different. What has not changed, however, is the central role that agriculture can play to trigger growth and to reduce world poverty, which is still overwhelmingly rural and will be so for the decades to come.
The main message for this report is that agriculture is vital for development, and what we need to bring is a smallholder-based productivity revolution to Africa in order to trigger growth.
We also need to reduce massive poverty and widening rural-urban income disparities in countries where growth has taken off. Doing this will require devising "agriculture for development" agendas for specific Regions and countries and mobilizing the needed skills, political commitments, and resources.
This World Development Report warns that the Millennium Development Goal of halving by 2015 the proportion of people living in extreme poverty and suffering from hunger will only be met in poor countries if much greater attention is given to agriculture as an instrument for development.
So, let me touch briefly on the context for this World Development Report and highlight a few insights from the report.
Today, three out of every four people in developing countries, 900 million individuals below the $1 per day poverty line, live in rural areas, and most depend directly or indirectly on agriculture for their livelihoods. For these people, agriculture is vitally important, and it would be an illusion to believe that they will simply be absorbed by growth taking place outside agriculture--the examples of China or India in the recent years show that this would indeed be extremely difficult.
This World Development Report provides several new insights to guide more effective use of agriculture for development. It differentiates policies by three country types defined by their share of GDP in agriculture, and we make a distinction between agricultural based economies, transforming economies, and urbanized economies. It lays out new opportunities to use agriculture for development which are linked essentially to the globalization process.
It explains how success depends on improving local, national, and global governance; and it explores links between agriculture and the management of natural resources and the environment, positing that while the environment cost of agricultural growth has been high, it can reduced, and indeed, agriculture can provide critical environmental services.
More generally, this report is an important input into the overall development agenda for three major reasons.
First, it contributes to the central pillars of the Ban's strategy of poverty reduction, environmental sustainability, and better governance. The report gives special emphasis to Sub-Saharan Africa, and it also touches on new topics of interest, from biofuels to trade reforms to genetically-modified organizations, as Mr. de Janvry will describe in just a moment.
Second, the World Development Report extends ongoing research and other analytical work based on micro data provided by household surveys in developing typologies of rural households and pathways out of poverty. It also synthesizes evidence from evaluations of public policy interventions across many countries.
Finally, the report draws on the Bank's growing body of operational work, which includes regional and country studies on agriculture and rural development as well as lending. The Sustainable Development Network, headed by Kathy Sierra, is developing plans to translate the findings into concrete actions on future lending and advisory operations in agriculture, and she will describe them later on.
Rural development is a topic that has been part of the analysis in previous World Development Reports, dealing with general issues like poverty in 2000, with environment in 2003, with delivery of social services in 2004, and with equity in 2006. But it was time to have a World Development Report with a more exclusive focus on agriculture and the policy issues raised by that particular sector.
In effect, agricultural development is a challenge for government in all countries, rich and poor, but this World Development Report describes examples across many different settings where smallholder farmers and rural workers, supported by good policies and institutions, have been able to move out of poverty. We see this as a major contribution to our understanding of development.
Let me now turn to Alain de Janvry to summarize the key findings and messages from the report.
MS. TUCK: Thank you very much.
MR. DE JANVRY: Thank you very much, Mr. Bourguignon.
Let me follow on the highlights that Mr. Bourguignon mentioned to present some of the main results and mainly some of the main messages that derive from the World Development Report.
This report, as you see, follows on the Independent Evaluation Groups' report on Africa that stressed the importance of investing in African agriculture and the cost of not doing so in terms of development. So we are very much in line with this report, we bring it to a world scale, and we explore how this should be done.
We start with a striking observation that there is a discrepancy between the 75 percent of the world's poor that you find located in rural areas, most of whom derive their livelihoods from agriculture, and at the same time, only 4 percent of overseas development assistance is going to agriculture, only 4 percent of public spending in Africa going to agriculture.
This has been in the making for some time. If you go back to 1990, the share of overseas development assistance going to agriculture was 12 percent.
So, clearly, there is a major discrepancy, and that's the main message of the WDR--how could this discrepancy be remedied, how to go about it, what could be achieved differentially in different parts of the world.
So the main message, as François Bourguignon mentioned, is that the Millennium Development Goals to be met require that agriculture be given a more prominent place in government and donor priorities.
However, this is not saying let's go back to business as usual as it was in the 1990s and before. It says we need to redefine the role of the state, the role of the market and the private sector, and the role of civil society in order to do that, and that's the main challenge in a sense as to how this is going to be done differently in different parts of the world.
So we work with three categories of countries. The world is vast and heterogeneous and we recognize on the one hand what we call the agricultural-based countries, where the share of the poor on the horizontal axis is very large, ranging from 60 to 70 to 95 percent in China, and on the vertical axis, where the share that agriculture contributes to growth is also quite important. The agricultural-based countries are largely the African countries, with 470 million individuals located in the rural areas.
Second, countries that we call the "transforming countries," where certainly growth has accelerated in other sectors of the economy, but what we see--and that was the coverage page of The Economist of this week--is the rural population being left behind, rising rural/urban disparities, and major political tensions coming out of this. Hence, we put a lot of emphasis on how to reduce those disparities, 2.2 billion rural people being affected by this.
Finally, what we call the "urbanized countries," where agriculture is not so much a large sector in terms of economic growth. There are subsectors of the agricultural sector which are quite important in terms of growth but where poverty is still 40, 30, 60 percent located in the rural areas.
So we recognize that agriculture has multiple functions. It is not just producing food; it is also a major engine of growth, especially at low levels of economic development; it is a source of livelihoods, and it is a source of environmental services.
So let me briefly explore those three dimensions--a trigger of growth important for Sub-Saharan Africa. It is a large sector. It is a very important source of food security and wage competitiveness, particularly in countries which are landlocked, where transportation costs are high, where there are high transaction costs to bring food into those domestic markets. And finally, looking at comparative advantage, what we see is that for a number of years to come, agriculture will be the main source of comparative advantage for those countries.
And we see that it can be done. Growth has accelerated in Africa. Countries such as China, India and Vietnam, that were previously in the agricultural-based category are now well advanced and are experiencing sustained economic growth, and we see Sub-Saharan Africa joining the process of accelerating agricultural growth.
It is important as a source of livelihood, and there, the figures are in a sense quite impressive, with 2.5 billion people--half of humanity--in the developing countries depending on agriculture; 900 million extreme poor; and we see that rural poverty keeps on increasing, especially in Sub-Saharan Africa and South Asia.
Yet it can succeed. The figure has been mentioned before. Growth coming out of agriculture is much more effective than growth coming from other sectors in terms of raising the income of the poor. And this is not surprising given where the poor are and what the poor are doing.
Finally, it is an important source of environmental services. It uses 80 percent of freshwater resources, contributes 21 percent of greenhouse gases, and yet again it can be done. The emission of greenhouse gases can be reduced; environmental services can be provided, and sustainable systems can be developed, as you can see in this picture, which is quite remarkable as to how water is being managed.
There are new opportunities, and in a sense, we are at a turning point in the possibility of using agriculture much more effectively than in the past in terms of support to development. There has been reduced taxation; there is a new agriculture of high-value crops; the importance of the livestock economy; nontraditional exports, and also, biofuel is coming into the picture in terms of providing very important sources of effective demand for agriculture.
Very important institutional and technological innovations, institutions, for example, in terms of finance; for example, in terms of using IT for providing better ways of reducing transaction costs and giving access to financial service and insurance to smallholders; important new technological breakthroughs, for instance, for the new rice for Africa that is a major source of increasing yields and drought resistance and is yet partially being diffused; new rules for the state, market, and civil society--I think this is one of the main points that we stress in the World Development Report--the state has to assume new functions. The private sector and the market are assuming new functions as well, They are becoming very important actors in terms of how agriculture fits into development. Civil society, producers, and organizations having new roles, not only to service their members, but also to give voice to the rural population in policy discussions and international debate.
Then, finally, the rapid rise of the whole nonfarm economy, providing an important source of complements in terms of source of income for the rural population, which can move on to the farm, to the rural nonfarm economy, but very importantly have diversified sources of income, where you keep a foot in the farm, and at the same time, you find employment in the rural nonfarm economy. That is quite important in terms of the skills that it takes to be employed in those sectors and the way to create those jobs with a focus on territorial development.
There are obviously major challenges--constraints on growth, trade barriers that are still there, water scarcity, land degradation, climate change. A very big challenge is how to make this growth be more pro-poor, participation of smallholders and the way in which the labor markets are going to deliver pathways out of poverty via levels of remuneration and types of employment which are not basically poverty traps, reproducing poverty all the time.
And finally, important implementation bottlenecks, as François Bourguignon mentioned. We place a lot of emphasis on the issue of governance. We need better ways by which agriculture is going to be governed for the national level to the decentralized municipal levels to the way communities can manage their own affairs.
Let me finish with just the first dimension, that there are important current issues on which we need to take a stand. Doha must progress, but we need to pay attention to the way in which transitions are going to be managed; subsidies can be used, but they have to be part of a plan with an exit strategy, and they have to be well-targeted.
GMOs have been underused. Research has not been directed at the needs of smallholders in terms of what GMOs can contribute. Biofuels can be important, but they have to be used with caution. We need new technologies, we need greater efficiency, we need to reconcile the conflict between biofuels and food and food prices, and we need to reconcile the conflict between biofuels and expansion into marginal areas as it has impact on the environment.
Finally, we say basically that development and environment cannot be separated. They have to be managed jointly. The issue of climate change is a very serious issue. We see the impact already happening, yet we do not see enough action following in the wake of the impacts that witness.
So, two agendas--one for Sub-Saharan Africa which is going to be discussed later today--basically, a smallholder-based poverty revolution. It will be different from the green revolution in Asia. The conditions are quite different. It is much more rainfed farming. You need to invest in irrigation. You need to have much more multisectoral approach. It has to be differentiated given its heterogeneity. It has to be more decentralized and participatory in order to accommodate this heterogeneity.
So a four-pronged approach: 1) more efficient markets; 2) smallholder competitiveness; 3) entry into the markets for smallholders currently in the subsistence economy, and 4) the importance of income diversification into labor markets of the rural nonfarm economies.
Then, finally, as a last slide, the importance of rising disparities in the countries where growth has been accelerating in other sectors of the economy where we see 583 million rural people being left behind and not having a chance to participate in the benefits of economic growth.
Here, what we propose is a multi-pronged, multi-pathway approach to rural development and to agriculture, is a key contributor, moving to more high-value activities on the farm, extending the green revolution to marginal areas; very importantly, the decentralization of economic activity, successfully done in China but not sufficiently done in other parts of those countries; investing massively in rural human capital in order to allow those populations to move on to employment in other sectors of the economy; and finally, as people move and people take chances, the very great importance of putting safety nets into place so that they can indeed take chances and redefine their livelihoods and not fall into poverty in case there are setbacks.
So those are the main messages, and I would like to turn to Kathy Sierra to follow up on the WDR.
MS. SIERRA: Thank you very much.
Let me start by congratulating the WDR team for what we believe at the Bank is a very exceptional piece of work.
François, I want to thank you for your guidance on overseeing this project, and Derek Byerlee, to my left, and Alain as well for basically steering this and bringing together policy analysts, scientists, and development practitioners from across the world to help in pulling this together.
I particularly also want to thank our colleagues from the FAO and IFAD who are here today, because they were very strong contributors to this product, providing both their intellectual knowledge but also being able to push out to other partners in the public and the private sectors.
So, thank you very much to colleagues FAO and IFAD.
And as mentioned earlier, I also run the CGIAR, which is a consortium of research scientists and research centers across the world, and they also made a strong contribution, so I want to acknowledge that as well.
A little bit of the Bank's own history in agriculture and rural development is instructive as we listen to the presentation.
The green revolution of the 1970s and 1980s in Asia and Latin America saw cereal productions expand and famine averted. Then, agriculture was seen as a key development tool throughout the developing world and among development investors.
Disillusionment set in, however, when similar advances were slow to be seen in Africa. As well, complicated environmental and social issues began to surface in rural areas where agricultural systems were intensifying rapidly.
The numbers tell the story. From 1990, official development assistance from all donors to agriculture has been on a downward trend, from 17 percent of ODA in the early 1980s, or about $6.6 billion, to 3.5 percent in 2004, about $3.4 billion.
The World Bank's financing for agriculture and rural development had a similar downward trajectory in the 1990s. Agriculture for development moved from about 30 percent of total Bank lending in the early 1980s to 10 percent in 2004.
Since then, we have reversed the trend. The share of lending for agriculture and rural development is growing again and is currently 13 percent of all lending now.
The fiscal year just ended was the fourth straight year of increased World Bank commitments to the sector. Overall, loans and grants for the agriculture sector now stand at more than $3 billion per year.
Moreover, a significant portion of the Bank's agriculture lending, about 60 percent in FY07, is going to those Regions that rely most on agriculture, with very high concentrations of rural poverty--that is, going to Sub-Saharan Africa and to South Asia.
How do we put these recommendations into action? In terms of making the WDR operational, I can echo Alain's remark that this will not be business as usual. We need to be thinking about our work on three different levels--the global level, local and regional, and institutional advances.
At the global level, the WDR stresses the importance of global public goods to allow agriculture to play its key role in sustainable growth, poverty alleviation, and environmental services.
I have just arrived from a meeting in Rome of the Governing Body of the Consultative Group on International Agricultural Research which I mentioned earlier, better known as the CGIAR. It is a system of 15 research centers focusing mainly on maintaining and improving critical crops for economies and food security.
The World Bank has contributed $50 million a year to this partnership for some time. We and our partners are working hard to ensure that the CGIAR continues its critical mission, which is very closely aligned to the key messages of the WDR08. That is, it is critical to discover and implement sustainable paths to boost the productivity of smallholder farmers in developing countries.
The Bank is also moving forward on other global issues flagged by the WDR such as the control of dangerous animal diseases transmissible to humans, such as avian flu. In particular, we are working with partners to find ways to mitigate the rise in greenhouse gases and to facilitate adaptation of agriculture and agricultural communities to the inevitable impact of climate change. If these efforts fail, even more hunger in many poor tropical countries is highly likely.
In most of the Bank's activities that take place at the country and regional levels, where we work directly with our clients on the ground, we see many opportunities to put into operation the lessons of the WDR. We put them into four categories--collaborate, analyze, learn and integrate.
First is to collaborate. The Bank does not operate in a development vacuum. Each Region of the Bank is actively involved with the key development stakeholders on how they will share and implement the WDR's messages. For instance, the Africa Region of the Bank is linking with the Comprehensive African Agriculture Development Program of NEPAD to engage in country roundtables on national agricultural programs.
Second is to learn. Our Regions and pledged to increase the quantity and quality of impact of evaluation. For instance, East Asia and the South Asia Regions are increasing their impact assessment to develop ways to share lessons more systematically across projects and countries.
Third is to analyze. A major area will be supporting the role of public expenditures for agriculture. Clearly, more expenditure is needed, but also better expenditure on key public goods. For example, the South Asia Region has its upcoming work managing the rural transformation, and the Europe and Central Asia Region is working on food safety in Central Asia.
Fourth is to integrate. The Bank's Regions are working to find linkages across sectors that are needed to make agriculture more sustainable and more competitive. In the Middle East and North Africa Regions, for example, we will be holding workshops on the Bank's Human Development Unit to develop cash transfer programs and rural vocational training. Latin America and the Caribbean Region is expanding its work on territorial development to embrace and enhance the nonfarm economy, linking infrastructure, private sector partnerships, and agricultural investments.
Finally, in addition to our work at the global level, we will be putting this WDR into operation at the institutional level. On January 1 of the year, the Bank reorganized to bring agriculture under the same umbrella as many other sectors that the WDR identifies as critical to success. That is now under the rubric of the Sustainable Development Network which I lead and brings agriculture together with energy, water, environment, social, urban and transport. Together with other areas like economic development, finance, human development, we believe we can integrate the themes of the WDR much more closely into our work with much more success.
Let me close by repeating that this WDR does an excellent job in our view of identifying the importance of agriculture to poverty reduction and to growth; it admirably outlines the challenges that agriculture faces, and here at the Bank, we are committed to actively taking on these challenges and moving this document forward into action with our partners.
MS. TUCK: Thank you very much, Kathy.
Before we open it up for questions and answers, I want to once again remind everyone that we have a number of colleagues here from other organizations, and in fact we also have Mr. Raj Shah, who is the Director of Agricultural Policy at the Gates Foundation.
So, when we have our question-and-answer question, certainly, some of us on the panel may call on some of the other top officials and experts in the room.
So, without further ado, let us open it up to questions, and if you could identify your news organization at the outset; thank you.
The gentleman in the blue shirt.
QUESTION: Hi. Steve Schifferes, BBC News.
At the end of your report, you identify some of the difficulties facing the programs of agricultural development, and you mention political feasibility, the lack of administrative capacity, and potentially large financial cost.
Now, obviously, agriculture has been something that people have been concerned about for a long time, but which of those do you think has been the biggest problem in actually implementing agricultural development in Third World countries, and what proposals do you have which you think can overcome some of those quite deep-seated political, administrative, and financial difficulties?
MS. TUCK: Steven, did you have a preference for who would answer the question?
QUESTION: I thought I would start with the authors of the report, but perhaps--
MS. TUCK: Okay. Let's start with Alain, and Derek may also want to pitch in; so, thanks Steven.
MR. DE JANVRY: Let me just pick up on two issues here. One is that we place a lot of emphasis on the levels of public expenditure and donor support to agriculture, but we also place a lot of emphasis on the quality of those expenditures, and inasmuch as there would be a call to increase the levels of commitment, at the same time, what we need to be careful of is that it's not business as usual in the sense that we need to do a better job as to how those public and donor expenditures are being used.
We looked especially at the way in which such a large share of public expenditures tend to go to private subsidies as opposed to public goods, and that needs to be addressed.
And the second is certainly the issue that you mentioned, the question of governance. We see that ministries of agriculture have usually been affected very strongly by structural adjustment, and there has not really been reconstruction in terms of new models, new ways of doing business. The multiplicity of the task has expanded; the ministries have to deal with environmental issues, with social issues, with trade issues, with regulatory issues, with integrated food chains. It requires new talent, and it requires new ways of doing business which have not been put into place.
And finally, the issue of decentralization is very important. Many countries have decentralized, and yet what we see is that there is partial decentralization, but quite often, the issues of accountability are not being put into place at the same time as fiscal expenditures are being decentralized. As a consequence, it does not always play in favor of agriculture; it does not always play in favor of the stakeholders.
MS. TUCK: Do you want to add anything, Derek?
MR. BYERLEE: Just to add a quick comment, I think the answer to the question depends very much on country specificities, and what we would see from this World Development Report is that you have to get down to the country level, identify and discuss some of these findings at the country level to develop the priorities.
In some countries, I think political feasibility is definitely an issue, and we identify that in the report as some of the political economy issues, and making these changes is really difficult. We also identify some success stories in Chapter 4 in moving ahead on policy reform.
MS. TUCK: Thank you.
Next question--yes, over here.
QUESTION: I am Leslie Wroughton from Reuters.
I was wondering if anybody knows what the effects are yet on agriculture from climate change; and also, what sort of advice are you giving governments on how to deal with that? As far as I understand, Sub-Saharan Africa is beginning to get more arid as far as when climate change really sets in. So, what are you recommending?
MS. TUCK: Why don't I start with Derek, and then perhaps, Kathy, you may have something to add, and then François.
MR. BYERLEE: Well, when we began this report a year ago, we knew climate change was important, but since this last year, there has been the Stern Report and the Al Gore movie and the IPCC Report, so climate change has really been elevated in this report as an urgent part of the agenda.
Agriculture is the sector that is most affected by climate change, and we identify in the report that particular areas, but particularly Sub-Saharan Africa, are going to be most affected.
What we are recommending is that we have to really urgently step up investment in climate change, particularly adaptation to climate change. Now, some of these are win-win things. If we can develop drought- and heat-tolerent and flood-tolerant varieties and so on, they will be good in may situations.
The other aspect that we focus on in this report is mitigation of climate change, and we were a little surprised to see, looking at the figures, what a large contribution agriculture makes to greenhouse gases. Anywhere from around 25 to 33 percent of greenhouse gas is coming from agriculture, a lot of it from things like livestock, from fertilization and so on. So there is a real role for agriculture in terms of using agriculture to mitigate climate change.
MS. TUCK: Thank you, Derek.
François, maybe you'd like to go, and then Kathy?
MR. BOURGUIGNON: Yes, to be very precise on that question, there is a study which has been released very recently by Bill Klein from the Brookings Institution, where he is revising the estimates about the impact of climate change on agriculture at the horizon of 2080. So I know it is very far away from here, but in order to have more or less precise estimates, it is important to take a long period.
What is really quite impressive in those estimates is the inequality in the distribution of the impact of climate change. For OECD countries, the impact of climate change is somewhere between minus 3 percent and plus 7 percent, because those countries may benefit from better climate, and you know that there is also something favorable in the climate change story, which is that with more carbon particles in the atmosphere, the fertilization process is improving in agriculture; so you have to take that into account.
But in contrast, in the poorest countries, in particular in Sub-Saharan Africa, as Derek just said, we have countries where the loss in agricultural production may be as big as 20, 25 percent. One of the record countries is India, for which the estimates say that around 30 percent of the agricultural production can be lost by that time if no major technical innovation is taking place.
Now, even when you take into account the fact that in a country like India, the share of agriculture in GDP will decline, this still remains a very important estimate.
MS. TUCK: Thank you.
MS. SIERRA: Just very quickly to echo, I think the impact is going to be in the poorest countries and the poorest within those countries.
Some of the things on the operational side that we are doing include partnering with the CGIAR, which is responsible for, among others, the scientific community; we are thinking about developing more seeds that are more drought-resistant and more flood-tolerant. These also, unfortunately, to date are less productive but will be required going forward, recognizing that infrastructure is going to have to be enhanced, especially in the area of water, water storage, water resource management, and irrigation systems, to be able to cope.
Building new tools to assess projects, whether they are agricultural projects, rural development projects, to begin to bring to bear the science on climate, to see what types of investments will be required and we must think 20, 30 years ahead as we do this.
And then, finally, on the mitigation side, working on sustainable forestry, sustainable land management, we are developing a new Forest Carbon Partnership which is going to be testing new approaches to be able to bring the value of environmental services from sustaining forests, both to increase livelihoods for people but also to reduce greenhouse gas emissions.
MS. TUCK: Thank you.
Yes, Mr. Diouf, did you want to make an intervention?
MR. DIOPF: Thank you.
I just wanted to say that last Friday, we had a seminar of all the ambassadors and permanent representatives on the issue of world food security and climate change. We had our colleagues from IFAD and WFP, but also UNCC and IPPC. Two elements came out quite clearly--the need for these issues to be duly taken into consideration in the process toward Bali, so that they are appropriately addressed.
In addition, we have launched an initiative for having a high-level conference in June next year on the issue of world food security, the challenges of climate change, and bio-energy, and I must say that we already have a number of heads-of-state--Lula, Bachelet, et cetera--who have indicated that these subjects are so important that they can already commit themselves to participate. We are also trying to involve countries that are oil producers, and also the Secretariat of OPEC has indicated its willingness to participate. Naturally, as usual, we will work with our colleagues at the World Bank, and this meeting will be preceded by several technical meetings on the different aspects and different dimensions of the problem prior to creating an environment for policy discussion and decision.
MS. TUCK: Thank you.
Yes, Mr. Wood?
MR. WOOD: Barry Wood, Voice of America.
Could you give a scorecard on Southern Africa in terms of incentives for food production, impediments to food production--I'm thinking here of marketing, market pricing--and also by country--Zambia, Mozambique, Zimbabwe, South Africa--and an evaluation of land reform implications on production for Zimbabwe and proposals in South Africa?
MS. TUCK: Okay, that's a very specific question, and maybe we can see if two different people want to deal with it.
Derek, maybe you want to start, but Mr. Vashee might want to have a go at that one as well.
Barry, Mr. Vashee is the Vice President for the International Federation of Agricultural Producers, and he is a farmer from Zambia and heads a network of producers in Southern Africa.
MR. BYERLEE: Let me just pick up. There were many dimensions to the question--one, on incentives. One of the things that this report has done is revise the estimates of incentives to agricultural producers and the actual taxation of the sector. This is a sector that was taxed to the level of around 30 percent on average for developing countries in Africa 20 years ago, and that's taking into account the effect of macroeconomic policies, overvalued exchange rates, and agricultural sector-specific taxation.
We have now the estimates for 2000-2004, and that taxation level has come down to 10 percent in Sub-Saharan Africa in what we call the "agricultural-based countries." Now, it turns out that one of the countries where taxation is the highest is Zimbabwe--I think it was the highest in our study largely because of the overvalued exchange rate issue. But on the whole, incentives through macroeconomic policy and sector policy have substantially improved throughout the developing world and particularly in Sub-Saharan Africa.
MS. TUCK: Thank you.
Maybe, Mr. Vashee, you could comment.
MR. VASHEE: Thank you.
On the issue of subsidies, there have been targeted input subsidies in many Southern African countries, and it has been quite helpful. I think the danger we probably see is that if there is no proper exit strategy, this could become a political gain, too, and we will have a situation where the input subsidy will remain prolonged. Nonetheless, it has helped with food security and with production, especially of the staples.
Land--it is a difficult question to comment on land coming from Southern Africa, but I think land market reform is very essential for the Region. Essentially, it is how we are going to do it and manage the process. Specific to Zimbabwe, obviously, the way it has been carried out, it has had a detrimental effect on food security, but nonetheless I think lessons have been learned, and many other countries are looking at land reform in a more pragmatic and practical way to ensure that there are no big shocks in the economy, and it is more managed.
Essentially, I think most essentially, what is important to note is that there are many farmers and farmers' organizations in the Region which are very strong, who are able to articulate and work with government to influence the way certain procedures are taking place.
MS. TUCK: Thank you very much.
Yes, the gentleman over here.
QUESTION: Thank you. My name is Tom Routt [ph.], and I work for a business weekly in Addis Ababa, Ethiopia.
I am wondering about the population size in many of the African countries and their holding of plots, which is getting diminished by the year with the size of their families increasing. In the absence of fundamental land reform, you have plenty of farmers who are producing little with the little plot that they have. What kind of meaningful development are you seeking or are you hoping to see in the absence of fundamental land reform?
MR. BYERLEE: I was actually working in Ethiopia before I took on this assignment of the World Development Report, and I appreciate where you are coming from with your question.
There is definitely in many countries a real issue of growing rural population, declining farm size, and fragmentation of farm size. I think one of the key messages of this report is that we cannot solve rural poverty by agriculture alone. We certainly put a lot of emphasis that we can make a difference through agriculture and more rapid agricultural growth, particularly if it is pro-poor growth. But we have to look for other pathways out of poverty as well, then building the rural nonfarm sector and successful exit from agriculture.
MS. TUCK: Yes, the lady in the white turtleneck.
QUESTION: Thank you.
Lois Calderanas [ph.], Business World, Philippines.
I was just wondering--many of the formerly agriculture-based countries have now been shifting to other drives of growth, say, the BPO and the services sector. You mentioned that to meet the MDGs, agriculture must be given prominence. In the case of the Philippines, while the economy has been robust and buoyant, it is mainly driven by the services sector, with the share of agriculture to the overall economic output on the decline. And there has been criticism that while the economy is quite buoyant, it has not been trickling down to the poor.
How do you reconcile this, and what do you say or what do you recommend?
MS. TUCK: Maybe François wants to say a word, and then we can pass it to Alain.
MR. BOURGUIGNON: I think the question that you ask is a very fundamental question. We are not saying that agriculture should be the engine of growth. We are simply saying that what we observe in fast-growing countries is that poverty tends to concentrate in more and more and more areas and that the capacity of the nonagricultural sector to absorb poor people in rural areas is declining in some cases or is below what is needed in some other cases.
So, under these conditions, if we want to reduce poverty in rural areas, it is necessary to increase the productivity of smallholder farmers in those Regions. This will, of course, contribute part to growth, but this may not be the dominant factor or the decisive factor in growth. This is what we have in mind when we insist on agriculture being important for poverty reduction.
MS. TUCK: Okay.
Alain, do you want to add something?
MR. DE JANVRY: I think in the case of countries like the Philippines, we do not look so much at agriculture in terms of the Millennium Development Goals; we look at agriculture more in terms of the rising disparities and the fact that we see in a sense a tremendous resilience of rural poverty in spite of the fact that there is economic growth which is going on in other sectors. So the question is why is it that those populations don't move on, and what we need to do in a sense is create more opportunities in the rural areas for those populations to find gainful employment and new investment opportunities, which can be in smallholder farming.
We put a lot of emphasis on the importance of the rural labor market. The rural labor market has to perform better. It tends to be very informal. It tends to be unregulated. It has child labor. Working conditions are very hard; exposure to pesticides. There is very little effort to regulate and to implement regulations in agriculture in the rural labor markets. And increasingly, in a sense, what we are going to see is that the link between agriculture and poverty will go via the labor market; that's a very important area.
So disparities are key, and multiplicity of instruments is the way we propose to go about it. Agriculture is part of the picture, but it has to be complemented by relying on other pathways out of poverty, the labor market being one.
MS. TUCK: Thank you.
We have time for about two more questions. There is a gentleman waiting patiently at the far back with his hand up.
QUESTION: Thank you.
Ruben Barrera, with the Mexican News Agency NOTIMEX.
The report calls again for the end of subsidies and especially talks about the case of the United States and cotton. The question that I have is why do you think that countries like the United States feel compelled to end subsidies when they are arguing that through agreement of free trade, they are promoting development in poor countries, middle-income countries, and that this is a way to also fight poverty?
MS. TUCK: Perhaps, François, we can rely on you for that one.
MR. BOURGUIGNON: I come from a country where the agriculture sector doesn't represent a very high share of GDP, but certainly has a lot of political power, and I think this is the answer to your question.
We are in front of political economy problems in some countries. It is true that the agricultural producers are able to exert pressure on the rest of the society, and this is what we see. We know that everything is a problem of political economy, is a problem of distribution within the country of some advantages, and if we want to solve that problem, we need to have a collective will in those developed countries to end up with this subsidy or this market protection mechanism and possibly to find ways to compensate losers in this process. But for the moment, the political process has not converge toward that ending.
MS. TUCK: Okay. Thank you.
Yes, sir, toward the front.
QUESTION: I am Mahan Souleyman [ph.] from Sri Lanka Business Online.
In the eighties, the World Bank had a lot of development assistance pertaining to agriculture in Sri Lanka, with a lot of public goods, things like that. And in the process, we irrigated a lot of land, we cut down forests, and now we have thousands of small plot owners, and that has also become a kind of institutionalized poverty, even though the projects are done.
What will be different this time? Even though you are thinking of new funds in this sector, how can we expect it not to be different this time?
MS. TUCK: Okay. Maybe Kathy, could you have a try at that one?
MS. SIERRA: Thank you very much.
I think that in the eighties and the early nineties, we really didn't do as good a job as we might have of integrating social and environmental concerns into programs, into agriculture programs and into infrastructure programs. I think we have learned a lot since then, and that is some of the messaging that comes in the WDR but also the new ways that we are looking at our portfolio and our investments in agriculture and rural development, trying to see how we can find compatible systems that are environmentally sustainable, socially good, through participation, through much broader understanding of the environmental services that forests provide and the like; much tighter assessments of our irrigation schemes and water development schemes to both ensure that they are using the best technologies but also having done a deep environmental and social assessment as we go forward.
So my bottom line is that we are poised now to be able to do this job. The quality of our portfolio on all range of activities both in terms of the agricultural results, but also the environmental and social dimension, has been improving steadily over the last four or five years since we have reinvigorated our program, and I think with the wisdom that comes from the WDR and the practical, on-the-ground activities that we are doing, we are ready to go and to rebuild this portfolio.
MS. TUCK: Okay. One more question, and then I should mention that for journalists who are Spanish-speaking or from Latin America, there will be a Latin America-focused briefing with Mr. de Janvry and Laura Tuck from the Latin America Region Operations at 11:30, so in just a few moments, in R-710.
But with that mention, let me call on the lady in the white jacket, please.
QUESTION: Thank you very much.
Dorothy Baranas [ph.] of DB Media Productions.
Alain de Janvry, I have a question for you. You mentioned the Doha round, and you said we should definitely progress with it. It got stuck, which means that many farmers are very unhappy with it. I have talked to so many farmers in Europe, here in the States, and also in Africa, and they don't want to live without subsidies; they don't really want a change in tariffs. But I am very interested in your opinion. Where do you see a breakthrough in the Doha round and the negotiations, and what do you suggest?
MS. TUCK: Let's let François start, and then perhaps Alain can follow up.
MR. BOURGUIGNON: I'm afraid that for the moment, there is very much uncertainty around this issue. You know that progress has been made over time in the sense that the position of various major actors has evolved, and we are today with proposals on the table which are certainly much more favorable than what they were two years ago, but yet there is no agreement among the various parties. This is a political process. We know that there are several people pushing for a final agreement to go through, and we simply have to hope that those people at the end of the day will win.
MR. DE JANVRY: Just one point on this. I am completely in agreement with this, but what we also do in the WDR is to say we need to look beyond Doha. Although I am completely in agreement that this has to move forward, we need to look beyond Doha in terms of investment, participation, compensation, who is going to respond, who is going to capture the new comparative advantages, will the playing fields be level or not, will smallholders have a chance to respond.
So it is very important to focus on Doha, but we find it is very important also to look beyond in terms of what will be the capacity of different segments of the farming population to take advantage and to respond to the new rules of the game.
MS. TUCK: Thank you very much.
I would remind everybody that there are some extra materials just outside the briefing room, and we will have a transcript of this, and this event is embargoed until 12 noon.
There are full copies of the Report at the World Bank Press Desk as well.
[Whereupon, at 11:30 a.m., the press briefing was concluded.]