FAQ Page Contents:
Why support agriculture?
Why is the World Bank returning to agriculture? For four reasons: (i) a greater recognition that improving agriculture performance is the most powerful tool we have available to reduce global poverty and hunger, both directly and indirectly, (ii) the policy environment that directly impacts the returns to agriculture investment has improved significantly, particularly the lowering of overall agricultural taxation, (iii) there is a continuing and significant public financing gap in agriculture with increased demand for support from our clients, and (iv) there is a growing list of good practice project examples that can be scaled-up. The World Bank has been increasing its support to agriculture since the start of 2000, but more is needed, both from us and other development partners.
Shouldn’t we just focus on getting people out of agriculture by supporting the non-agriculture sectors? Several pieces of evidence suggest that this is not the most effective way to reduce poverty and hunger: (i) The World Development Report 2008: Agriculture for Development (WDR2008) showed that GDP growth originating in agriculture is two to four times more effective at raising the incomes of the poorest households as growth originating in the non-agriculture sectors, (ii) the result is not surprising in that seventy five percent of the poor live in rural areas, and most rely on agriculture for their livelihoods, and (iii) eighty percent of global poverty reduction from 1993 to 2002 was the result of falling rural poverty, of which only about twenty percent was due to out-migration, the remainder from improved conditions in rural areas. So contrary to common perceptions, migration to cities has not been the main instrument for rural (and global) poverty reduction. The Millennium Development Goal of halving poverty and hunger cannot be reached without attention to agriculture.
Is agriculture still relevant for overall economic growth? Agriculture contributes both directly and indirectly to overall economic growth. Directly through agricultural GDP growth, which in agriculture based countries, almost by definition, is the largest share of overall growth (as in Rwanda where agriculture has accounted for about 70 percent of overall GDP growth since 1990). And indirectly through several channels, including: (i) raising demand for non-farm products and services via higher agricultural incomes (rural investment climate surveys suggest that about 70 percent of rural non-farm products are sold locally, mostly relying agricultural income demand), (ii) raising purchasing power (real wages) through lower food prices driven by agricultural productivity growth, (iii) maintaining political and economic stability to continue overall growth, by tempering rural-urban income disparities through improved agricultural performance (as is relevant in many fast growing countries in Asia), and (iv) market driven rural-to-urban shift in land and labor for eventual urban expansion (i.e. producing more with less), as in many parts of East Asia.
What is it?
Why an action plan and not a strategy? We need action. The World Development Report 2008: Agriculture for Development (WDR2008) provides the strategic framework for our future support to the agriculture sector, and the WDR2008 has been providing the primary vehicle for engaging a wide range of stakeholders since it was released. The preparation of another formal “Strategy” was thus viewed as being duplicative of the WDR 2008, and hence an inefficient use of time and resources. Rather, the attention and focus has been given to preparing an Action Plan to operationalize the WDR 2008, guide implementation of our agriculture program, and improve our response to support country driven agricultural agendas.
Why three years? For two main reasons: (i) to align the action plan closely with the international planning cycle within the World Bank. Country Assistance Strategies often have a three year duration, and internal country team budget allocation planning doesn’t extend beyond three years, and (ii) we are living in more uncertain times as reflected in the recent food price spike, the financial crisis, concerns about H1N1 and climate change. While the long-term agenda remains central, short-term adaptation and adjustment may be needed.
How have past lessons been incorporated into the plan? Lessons at three levels have been incorporated into the Action Plan: (i) Strategic focus: Building on the extensive work undertaken in the preparation of the World Development Report 2008: Agriculture for Development (WDR2008) , and to effectively contribute to overall economic development, the Action Plan has a clearer differentiation of the mix of support by the ‘three worlds of agriculture”, (ii) Implementation: In support of country-led agendas, greater focus will be on scaling-up and strengthening specific business lines, strengthening local processes, improving efficiency of broader public spending in the sector, and a greater focus on women, (iii) Partnership will be strengthened to reduce past fragmentation of effort, high transaction cost for client countries, and to leverage the needed additional financing.
What does the Action Plan hope to achieve? The Action Plan will help our clients make further progress towards the Millennium Development Goals of halving poverty and hunger, primarily through raising pro-poor agricultural growth. Success will include an improved responsiveness of the World Bank Group to supporting existing and emerging country led agricultural agendas. This will include helping our clients raise agriculture productivity, link farmer to markets, reduce risk and vulnerability, facilitate rural non-farm income, and enhance environmental sustainability and services.
What will it Support?
What’s changed since the World Development Report 2008: Agriculture for Development (WDR2008), and how is this reflected in the Action Plan? Three notable events happened since the WDR2008 was published in October 2007: (i) the sudden food price spike in 2008 that is estimated to have driven 100 million more people into poverty; (ii) the financial crisis and global recession unfolding from October 2008 leading to higher interest rates on borrowing, lower remittances to rural areas, and less Government revenues to respond; and (iii) the H1N1 outbreak that adds to concerns about livestock disease risk that surfaced with the outbreak of Avian influenza. All of these events add to the urgency for action. Both a short-term and longer term response is needed. Short-term actions have aimed to mitigate impacts through increased support for social protection, and short-term supply response–primarily through the Global Food Crisis Response Program. The Action Plan gives a specific focus to reducing future risk and vulnerability. Long-term actions are needed for adaptation and prevention of these events. These include improving the ability of institutions, policy, and investment to respond to the longer-term challenges of accelerated demand for food, globalization of markets and associated risks, rising urbanization, growing land and water scarcity, and climate change. The Action Plan gives specific focus to raising agricultural productivity and better linking farmers to market.
How will the focus differ from the last rural strategy? Relative to the 2003 Agriculture and Rural Development Strategy and consistent with the main messages of the World Development Report 2008: Agriculture for Development (WDR2008), the Action Plan gives greater emphasis to: (i) agricultural productivity, (ii) differentiating the mix of support dependent on local conditions (e.g. across the “three worlds of agriculture” as described in the WDR 2008), and (iii) environmental services and sustainability, including in the context of climate change.
Will the Action Plan support large or small scale agriculture or both? Of all the developing world’s rural people, 60 percent are smallholder agriculture households (2 hectares or less). Halving rural poverty and hunger will not be achieved if the performance of smallholder agriculture is not improved. Similarly, increased investment in large-scale agriculture can spur growth, fiscal revenues, and create jobs and local income – ignoring large-scale agriculture can miss opportunities. Both are important and both will receive attention in the Action Plan. The dominant focus will be on raising smallholder productivity, strengthening smallholder linkages with markets, and helping better manage risks. Complementary support will be provided to strengthening land rental and sale markets to allow farm size to reflect management capacity, and to facilitate entry to and exit from agriculture. In addition, together with other development partners, assistance will be provided to develop a code of conduct for large scale foreign investment in agriculture to ensure equitable sharing of benefits.
How Will It Be Implemented?
How does the Action Plan relate to regional initiatives such as the Comprehensive Africa Agriculture Development Program? The Action Plan is very much aligned to regional initiatives. For example, the World Bank support for agriculture in the Africa region is aligned around the four pillars of the Comprehensive Africa Agriculture Development Program (CAADP) – specifically (i) land and water management, (ii) markets and infrastructure, (iii) risk and vulnerability, and (iv) agricultural technology. In addition, support is being provided to strengthen the CAADP country roundtable discussion to improve the quality of resulting country investment programs. The analytical program of public expenditure reviews in contributing to this process.
How will the World Bank work with other partners to implement the Action Plan? The World Bank will work at several levels: (i) Global partnerships: We will continue to support and strengthen global partnerships. Many are ongoing such as the Global Donor Platform for Rural Development, and the Consultative Group on International Agricultural Research. Some are being developed, such as the Global Agriculture and Food Security Program. (ii) Regional partnerships: Most notable is the joint development partner support for CAADP, and regional agricultural research, and (iii) Country partnerships: These will ranges from joint project financing to improved coordination of country programs. The World Bank has increasingly decentralized lead staff who can also help foster these partnerships.