Agriculture for Development and Feeding 9 Billion Presentation to the Nuffield Farming Scholars Washington, D.C. March 8, 2010 Christopher Delgado Strategy and Policy Adviser Agriculture & Rural Development World Bank

Outline Vision of the Global Challenges for AgricultureAnalysis: The World Development Report 2008 What the World Bank Is Trying to Do: The Agricultural Action Plan FY2010-FY2012

The Challenges

75% of the worlds poor are rural and most are involved in farming. In the 21 st century agriculture remains fundamental for poverty reduction, economic growth and environmental sustainability. Analysis: WDR 2008 Agriculture for Development

Three Functions of Agriculture for Development 1.Lead sector for poverty reduction 2.Lead sector for growth 3.Major impact on natural resources

Agriculture based countries Mainly SS-Africa 417 million rural people Transforming countries Mainly Asia, MENA 2.2 billion rural people Urbanized countries Mainly Latin America 255 million rural people Agricultures share in growth Rural poor/total poor, 2002 Three Worlds of Agriculture 0100% 80% 0 50% 20%

– 2.5 billion people depend directly on agriculture – 800 m smallholders – 75% of poor are rural and the majority will be rural to about 2040 Global extreme poverty 2002, $1.08 a day Global Urban poor 287 mill. South Asia rural 407 mill. Sub-Saharan Africa rural 229 mill. East Asia rural 218 mill. LAC rural 27 mill. ECA rural 5 mill. MENA rural 5 mill. 1. Poverty Reduction

Poverty and Hunger No. of chronically malnourished growing since 2006 not decreasing as desired in MDG 1 Chronically malnourished higher in 2009 than during food crisis in 2008! More than one billion people now go to bed hungry every night Problem in 2007/08 was prices, but now income compression added Roughly 80 million new mouths added every year, mostly in developing countries; poverty alleviation is necessary for alleviating hunger

9 GDP growth from agriculture benefits the income of the poor 2-4 times more than GDP growth from non- agriculture (43 countries) Growth from Agriculture is Especially Effective for Poverty Reduction

10 –Large sector for GDP growth –Affordable food and wage competitiveness –Comparative advantage in trade –Strong growth linkages 2. Economic Growth Accelerating agricultural growth in Africa The Millennium Development Goals cannot be met without higher agricultural productivity, especially in Africa

11 Many Opportunities: Sustainable farming systems and environmental services (conservation farming, agroforestry, managing landscapes for climate resilience) Many Opportunities: Sustainable farming systems and environmental services (conservation farming, agroforestry, managing landscapes for climate resilience) 3. Environmental Sustainability Important user of natural resources: 70-75% of fresh water resources 40% of land area 25-30% of greenhouse gas emissions Contributions to greenhouse gas emissions Developing country agriculture & deforestation 21% Developing country other sources 15% Industrialized countries 64%

Agriculture is the 2nd Largest Emitter Global Greenhouse Gases (GHG)

13 Changing diets ̶ a new agriculture of high value products and non-traditional exports Developing country exports Developing country consumption Agriculture for Development: Improved Opportunities Meat Cereals Horticulture

The policy bias against agriculture is getting better: e.g., lower levels of taxation Improved Opportunities

15 Technological innovations: – Conservation farming, precision farming, improved and resilient varieties – NERICA rice, Bt cotton – Information technology Risk management innovations (weather insurance) Stronger producer organizations Public-private-civil society partnerships Improved Opportunities

Expanding sources of income in the rural non-farm economy Improved Opportunities Mexico: Sources of income rural population Bangladesh: Sources of income rural population

17 Real international commodity prices have been suppressed by current global trade policies (% of price) Trade share losses to developing countries due to current global trade policies (% point loss to developing country trade shares) Global trade distortions remain pervasive But Major Challenges…

18 Increasing land and water constraints % of population in absolute water scarcity Cropland per capita of agricultural population Challenges

19 Challenges Making growth pro-poor – Connecting smallholders to new markets – Improving assets of the poor, especially women Weaknesses in governance –New state roles, coordination, decentralization –Global governance issues (trade, standards, animal health, biodiversity, climate change, donor support)

20 Agricultural-based countries spend too little on agriculture (and R&D) Ag GDP/GDP Challenges

21 Misinvestment is also pervasive Subsidies Public Investment Challenges

Challenges Rising rural-urban disparities

23 Donor support to agriculture % rural poverty % ODA to Ag Challenges

Early 1980s Early 1990s Early 2000s Official development assistance (ODA): 17% World Bank lending: 30% Official development assistance (ODA): 12% World Bank lending: 15% Official development assistance (ODA): 4% World Bank lending: 7% …but overall ODA just starting to recover World Bank lending is recovering ….. Donor Support to Agriculture World Bank lending: 14%

OFFICIAL DEVELOPMENT ASSISTANCE (12% in 1990) PUBLIC SPENDING (Sub-Saharan Africa) AGRICULTURE 4% RURAL 75% AGRICULTURE 4% Challenges WORLD POOR

So, What Should We Do? 1.Accelerate smallholder productivity increases for agricultural growth and food security in Africa 2.Follow a comprehensive approach to reduce sectoral disparities and poverty in transforming countries of Asia 3.Enhance sustainability and environmental services from agriculture 4.Pursue multiple pathways out of poverty: smallholder farming, labor market, rural non-farm employment, migration 5.Improve the quality of governance in agriculture at local, national, and global levels

Going About Doing It

WBG Agriculture Action Plan: FY10-12 Operationalizes the WDR 2008: Agriculture for Development 3 year time frame aligns with internal planning horizons

Global Challenges to Focus On Agriculture has been effective at reducing poverty, enhancement requires linking farmers to markets Poverty reduction Food crop demand is rising (population growth, biofuels) yet grain crop yield growth has declined Feeding the World Agriculture is part of the problem (deforestation, pollution) and is part of the solution (productivity, soil carbon, managing intensification) Climate change Increasing agricultural incomes can temper the rise in rural-urban income disparities, and the associated political and social tensions Economic transformation Volatile grain prices and lower purchasing power are hurting poor producers and consumers Food & financial crises

Five Focal Areas Reduce risk and vulnerability Raise agricultural productivity Link farmers to market & strengthen value chains Facilitate agricultural entry, exit & rural non-farm income Enhance environmental services and sustainability What we will try to do in FY10-12

1. Raise agricultural productivity [selective areas] Better use existing technology Improve water management Strengthen tenure security and land markets Invest in technology generation Reverse the decline in crop yield growth rates

2. Link farmers to markets & strengthen value chains [selective areas] Continue support for the Doha trade round Expand infrastructure Strengthen producer organizations Expand business models for market integration Improve access to finance Reduce transaction costs e.g. focus on infrastructure to open high potential areas to markets (Africa) …focus on organization to integrate smallholders into higher value markets (LCR)

3. Reduce risk and vulnerability [selective areas] Safety nets, fiscal support Better manage national food imports Further explore policy options to address price volatility Protect assets from catastrophic loss (insurance innovations) Reduce risk of livestock disease outbreaks Better manage volatility… which may be increasing

4. Facilitate entry and exit, and rural non-farm income [selective areas] Improve land markets –Rental and sales markets –Code of conduct for foreign investment –Safety nets to reduce distress sales Improve the local investment climate –Rural investment climate assessments Upgrade skills –Vocational training –Private sector links to curricula development

5. Enhance environmental services & sustainability [selective areas] Climate change adaptation and mitigation –More drought tolerant crops and livestock breeds –Reduce barriers to access (soil) carbon markets Manage intensive livestock systems –Pollution and disease risk Reduce forest degradation –Improve incentive systems, institutional capacity –Complementary agriculture investments Improve fisheries sustainability –Awareness raising for improved fisheries governance –Capacity building for implementation and enforcements

36 Agriculture based countries (mainly SS-Africa. 417 million rural people) Transforming countries (mainly Asia, MENA. 2.2 billion rural people) Urbanized countries (mainly LAC, ECA. 255 million rural people) Agricultures share in growth Rural poor/total poor, % 80% 0 50% 20% Mix of Support Varies Across Three Worlds of Agriculture

Action Plan Focal Areas Agriculture-basedTransformingUrbanized Agricultural productivity Close the crop yield and livestock productivity gap, expand irrigated areas and improve rainfed systems, improve security of land rights, invest in agricultural research Improve productivity in higher value markets (including livestock products and aquaculture), and in lagging regions, strengthen land rental and sales markets, improve water use efficiency Improve equality in land access, invest in agricultural research, focus on grains and oilseeds, as well as higher value markets Link farmers to markets Improve market information, infrastructure, strengthen producer organizations, and finance Improve food safety, standards, market integration business models, and finance Improve international trade, food safety, standards, and market integration business models Risk and vulnerability Provide safety nets, asset protection against catastrophic loss Better manage food imports, reduce risk of livestock disease, provide safety nets Provide safety nets, reduce risk of livestock disease outbreaks Rural non-farm income Improve the rural investment climate, expand infrastructure Upgrade skills, decentralize non- farm activities, expand rural livelihoods approaches Upgrade skills, expand territorial development Environment services, and sustainability Improve rangeland management, support for carbon market access Manage intensive livestock systems Reduce deforestation, expand payment schemes for environmental services Mix of Support Varies Across Three Worlds of Agriculture

Program Composition: FY10-12 Ongoing program: $10 bn to be disbursed over FY10-12 Investment support Productivity –Extension, land, research –Gender responsive Link farmers to market –Infrastructure, market information Reduce vulnerability AAA Public expenditure Managing risk Productivity Areas of emphasis for new commitments: FY10-12 Agricultural productivity Linking farmers to markets Rural non-farm

Program Size: FY10-12 Projections Achieving targets dependent on: 1.Continued strong client demand 2.The extent of impacts of the financial crisis 3.Adequate staff and budgets 4.IDA 16 replenishment Achieving targets dependent on: 1.Continued strong client demand 2.The extent of impacts of the financial crisis 3.Adequate staff and budgets 4.IDA 16 replenishment

126 million (<1 percent) Guarantees, mediation services, TA on FDI 1.2 bn (29) Working capital facilities Direct financing in agribusiness firms 1.1 bn (27 percent) Direct financing of public investment in agriculture Technical assistance 1.8 bn (44 percent of FY06-08 commitments) Direct financing of public investment in agriculture Roles of WBG Institutions