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The World’s Oldest Enterprise Under Strain

Vegetable market, GuatemalaNongma village. Southwest China. Photo: Steve Harris / World BankIndonesia, rice fields. Photo: Curt Carnemark/ World BankMan in field sifting seeds along Red River in Northern Vietnam. Photo:Quy-Toan Do / World BankChildren eat meal at school. Photo: © Arne Hoel/The World Bank

according to the fao's most recent estimates, 925 million people will suffer from chronic hunger this year - investment in agriculture remains a key development priority.

 


October 21, 2010

Agriculture may be the most important way for developing countries to reduce poverty and stimulate economic growth. Food production accounts for about one-third of economic growth in poor communities, and three-quarters of the world’s poor live in rural areas, where agriculture is the principal source of livelihood.


The Agricultural Challenge Has Never Been Greater

Pumpkin seller
South Asia, pumpkin seller, local market

The food, fuel, and financial upheavals of the last two years have driven 100 million more people into poverty and persistent hunger worldwide, raising to about 920 million the global tally of poor and undernourished people.

These recent shocks have undermined progress in key elements of the United Nations’ eight Millennium Development Goals (MDGs), which commit member countries and their development partners to eliminate extreme poverty and hunger, and significantly improve the economic welfare, education and health of the world’s poor by 2015.

The world faced a seemingly similar set of problems in the early 1970s. Now, however, land and water scarcities are much more acute, irreversible climate change more imminent, and the ability, not to mention the mandate, of a small set of wealthy countries to provide the coordination and funding for a coherent response is much less. 

Progress on Eliminating Poverty and Hunger Uneven

Many developing countries were progressing well towards the goal of reducing poverty and hunger – although with uneven rates of success between regions and goal types. Extreme poverty rates had gradually declined over the last 30 years: in 2005 one-quarter of all people in developing countries were living in extreme poverty; compared to more than double that proportion in 1981. This overall improvement showed that the international community can make, and was making, a difference.

When representatives of all the major stakeholders, including the World Bank, held a Summit at the UN headquarters in New York September 20-22 to review progress in the MDGs and revise an action plan, their optimism was tempered by the scale of the challenges.

“The overall poverty rate is still expected to fall to 15 per cent by 2015, which translates to around 920 million people living under the international poverty line—half the number in 1990,” a World Bank report stated. But, despite this improvement, it said that the number of people who are undernourished has continued to grow, while slow progress in reducing the prevalence of hunger stalled—or even reversed itself—in some regions between 2000-2002 and 2005-2007.

According to World Bank research, about one in four children under the age of five are underweight, mainly due to lack of food and quality food, inadequate water, sanitation and health services, and poor care and feeding practices. An estimated 1.4 billion people were still living in extreme poverty in 2005. Moreover, the effects of the global financial crisis are likely to persist it argues, stating that “poverty rates will be slightly higher in 2015 and even beyond, to 2020, than they would have been had the world economy grown steadily at its pre-crisis pace.”

World Bank’s Growing Commitment to Agriculture and Food Security

World Bank Group President Robert B. Zoellick told the gathering that the “Millennium Development Goals are central to the World Bank Group’s mission and our everyday work”. He noted that since 2000, when the MDGs were instituted, the Bank had saved 13 million lives through MDG-related funding through its International Development Association (IDA) programs.

Following consultation with its client countries, the World Bank Group projects that its spending on agriculture and related sectors will be in the range of $6.4 to $8.3 billion on average annually through 2012, from the previous $4.1 billion annually in 2004-2006, under its Agriculture Action Plan 2010-2012. The Action Plan puts into practice the Bank’s core philosophy of what is needed for agricultural development contained in the World Development Report 2008: Agriculture for Development, and focuses on five aims, to:

  1. Raise agricultural productivity;
  2. Link farmers to markets and strengthen value addition;
  3. Reduce risk and vulnerability;
  4. Facilitate agricultural entry and exit and rural nonfarm income, and;
  5. Enhance environmental services and sustainability.

Food security in poor developing countries has been severely undermined by food price rises of recent years, especially the spike in grain prices during 2007/2008. That event graphically illustrated “that food in particular – and agriculture more generally – is not a ‘sector’ in developing countries in the same sense as energy or health, but simultaneously is a way of life, a pathway to poverty alleviation, and a primary contributor to economic welfare and political stability for the majority of the population,” says Juergen Voegele, the World Bank’s Director for Agriculture and Rural Development.

Knowing the importance of food security to IDA-dependent countries, the Bank acted swiftly to the 2007/2008 food crisis by setting up the Global Food Crisis Response Program (GFRP), in May 2008 with a capital budget ceiling of $1.2 billion (increased to $2 billion the following year) to provide immediate relief to countries hard hit by the high food prices. It linked the GFRP to the United Nations’ High-Level Task Force (HLTF) on food security, and participated with all the food and nutrition related UN agencies in the drafting of the UN HLTF’s Comprehensive Framework for Action (CFA).

Food market, Eastern Europe
Food Market, Eastern Europe
“The GFRP is essentially an emergency measure, in response to the 2007/2008 food crisis; to bridge delays in funding experienced by client countries that needed immediate assistance. The answer was a fast-acting fund, ready to disburse donor assistance for any of a wide variety of approved and pre-tested menu items, chosen by the client country, ranging from budget support to social protection, to short term assistance with agricultural inputs and advice for smallholders,” says Christopher Delgado, Strategy and Policy Adviser in Bank’s Agriculture and Rural Development department; “Most significantly, this allowed countries to choose support from among a wide variety of pre-tested options for what their individual circumstances most required, while greatly speeding up the delivery time for the packages chosen”.

Donor Harmonization – Key to Ensuring Food Security

For years, donors had been urging poor countries to make their agricultural and food security investments more strategic, prioritized and technically efficient. The Paris Declaration on Aid Effectiveness of 2005, the outcome of the 2005 Paris High-Level Forum on Aid Effectiveness, committed a number of partner countries, donor countries, and development agencies, including the World Bank, to specific actions to promote country ownership, harmonization, alignment, managing for development results, and mutual accountability for the use of all aid, including resources destined for agriculture and rural development.

The 2008 follow-up “Agenda for Action” agreed upon at a meeting in Accra, stressed enhanced country ownership, effective and inclusive partnerships between donors and clients and accountability.

Partnering for Food Security

COUNTRY-OWNED CHANGE 

The purpose of GAFSP is to improve the income and food security of poor people through more effective public- and private-sector investment in agriculture and rural development that is country-owned and led.

In November of 2009, the Rome World Summit on Food Security repeated the call for donors to align behind strong, strategic country-owned plans. But a major problem in achieving these aims is that both multilateral and bilateral aid is allocated on a country basis, and are typically programmed into sectoral projects three years in advance on different cycles by different donors; so available new money to fund coordinated pooled plans is rarely available when needed. Delgado points out that multilateral actions such as the new Global Agriculture and Food Security Program (GAFSP) recently set up at the request of the G20 Summit in Pittsburgh provide a multilateral option for dealing with this issue.

GAFSP was set up in April 2010 as a trustee account within the World Bank but under external governance of donors, recipients, civil society and other stakeholders to finance country-led and executed agricultural development and food security plans, using a variety of external supervising entities, such as the multilateral development banks and UN agencies.

The program’s purpose is to improve the income and food security of poor people through more effective public- and private-sector investment in agriculture and rural development that is country-owned and led. It aims to close existing financing gaps in bilateral and multilateral assistance by:

  • Providing additional financing to developing countries that have shown a commitment to a increasing agricultural growth, enhancing food security, and combating rural poverty in an environmentally sustainable manner;

  • Aligning responses to funding requests by countries and regional entities to increase the effectiveness of interventions through peer review and inclusive consultations, approving additional funding based on transparent and needs-based processes;

  • Including a separate private sector financing window that will provide long and short term loans, credit guarantees, and equity to support private sector activities for agricultural development and food security.

Vegetable market, Rajasthan, India
Vegetable market, Rajasthan, India
The Bank has called on the G20 nations to substantially increase resources and agricultural and food security assistance to eligible developing countries. “Even with presently increased direct support by bilateral and multilateral agencies, there remains a financing gap to achieve the Millennium Development Goal (MDG1) of halving poverty and hunger by 2015,” it said in the December 2009 GAFSP Framework paper addressed to the G20. It estimates that at least $14 billion per year is needed for all developing countries to meet the MDG1.

The GAFSP intends to support country led agriculture and food security plans which will help these countries in their efforts to meet the MDG1. It was created as a multilateral means to assist in the implementation of more than $20 billion in pledges made by G8 and other countries at a meeting in L’Aquila, Italy, in 2009. By the second-half of September 2010, the United States, Canada, Spain, Ireland, and South Korea, as well as the Bill and Melinda Gates Foundation – had pledged about $914 million to GAFSP, of which nearly 235 million had already been allocated to assist investment plans in five countries. The countries and projects are:

  • Bangladesh ($50 million): Enhancing productivity and resilience of smallholder farmers against tidal surges, flash floods and frequent droughts, using improved seed varieties and better water management techniques;

  • Haiti ($35 million): Raising the productivity of smallholder farmers, especially women, by improving access to seeds, fertilizers and technology;

  • Rwanda ($50 million): Reducing erosion and bolstering productivity on hillside farms in an environmentally sustainable manner;

  • Sierra Leone ($50 million): Commercialization of smallholder farmers through better inputs, farm management training and linking farmers to markets, and;

  • Togo ($39 million): Bolstering yields in rice, maize and cassava with improved seed varieties, technical assistance for smallholder farmers, and better smallholder access to affordable credit.

Funding looks set to be an abiding challenge for GAFSP and wealthier nations gripped by the global financial crisis however, as many more developing countries step forward with requests for agricultural assistance.

GAFSP is currently set to receive commitments through 2013, with implementation through 2019. Its continuation will likely depend on funding availability and performance.

Related Resources

Agriculture and Rural Development Website
Food Crisis Response Helps Farmers, Food-Insecure Populations
Food Crisis Website
IDA at Work: Food Security
World Bank Agriculture and Rural Development: Sourcebook and Resource Toolkits
Sustainable Development Website of the World Bank


Last updated: 2010-10-20



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