Dina Umali-Deininger Lead Agriculture Economist, World Bank Revitalizing Agriculture and Rural Development to Sustain Growth and Reduce Poverty Dina Umali-Deininger Lead Agriculture Economist, World Bank

Most of South Asia’s poor are in rural areas

Most of rural people and poor depend on agriculture India: Low labor productivity contributes to rural poverty Agriculture a major employer in South Asia, but contribution to economy is shrinking

New opportunities: A “new agriculture” with dynamic demand Sri Lanka India Rising consumer demand for high value crops and animal products Rising high value crops and animal products in exports

Challenges in Agriculture in South Asia Slow down in agricultural productivity growth < 3% per year, in context high rural poverty rate Climate change: droughts, cyclones, floods Leading to rising rural-urban & regional income disparities Increasing land and water scarcity Land degradation: erosion, over-extraction of groundwater, waterlogging New demands on agriculture: strict sanitary and phyto-sanitary standards Health epidemics linked to agriculture Avian flu, mad-cow disease

India: Slowdown in yield growth and large yield gaps in many states Slow down in progress in yields for 10 major crops With large gaps between potential and actual yields (2003-05) Wheat: 6% (Punjab) to 84% (M.P.) Rice: Over 100% in Bihar and UP Maize: 7% (Gujarat) to 300% (Assam) Soybean: 7% (Rajasthan) to 185% (Karnataka) Sugarcane: 16% (A.P.) to 167% (M.P.) Need invest more in research Need invest more in extension

Strategic priorities for Agriculture Ag Technology Water use Improving agric productivity and competitiveness Enabling policy environment Markets INCLUSIVE GROWTH & POVERTY REDUCTION Income generation Rural Livelihood Development Sustainable Natural Resource Management Social empowerment Land Water Skills development

A. Improving agricultural productivity & competitiveness 1. Rationalizing role of government Promoting more effective public expenditures Towards productivity enhancing investments: research, extension, irrigation, roads, electricity, markets, education Improving policy and regulatory environment Promoting PPP Public Expenditures India Subsidies 75% Public investments 25%

A. Improving agricultural productivity & competitiveness 2. Technology, innovation & markets Effective agricultural research and extension systems increase agricultural productivity and enable diversification to high value products (F&V, livestock, fisheries) by small farmers Link farmers to market, Promote value addition and value chain development Invest in rural infrastructure: roads, electrification, markets Foster producer associations, agribusiness development services 3. Water/Irrigation management Better irrigation service delivery Farmer participation in management thru WUAs, pricing, water regulatory authority Reduce losses better O&M of irrigation system, technology—drip irrigation

B.Sustainable Natural Resource Use Watershed Management Participatory and holistic approach to soil and water conservation at watershed level Land Reforming of land ownership and tenancy policies Improving land administration systems

C. Rural Livelihood Development Promote growth of Rural Non-farm economy Promote employment and investment opportunities improve rural investment climate, public-private partnerships Develop skills of rural people for employment in RNF Education, vocational training Help labor out of agriculture: requires massive investment in human capital

Challenges to making this happen Government failures Lack of financial resources Inadequate capacity to implement programs effectively Political economy: vested interests against reforms Market failures: high costs of working with small/marginal farmers Lack of awareness/knowledge of new approaches

Conclusion Agricultural growth is critical to promoting rural growth and to reducing poverty in rural areas Making this a reality requires commitment of all stakeholders—government, farmers, private sector, civil society