1. Rural Poverty, Food Security, and Trade Liberalization: Exploring the Linkages WTO Symposium on Trade and Sustainable Development 10- 11 October, 2005 John Nash Agriculture & Rural Development Dept / Trade Dept The World Bank

2. This presentation Whats the problem? Whats the problem? Rural poverty Rural poverty Hunger Hunger Whats the way forward? Whats the way forward? Trade policy Trade policy Behind the border Behind the border

3. Why is agriculture so important for developing countries and the rural poor? 63 percent of population live in rural areas 63 percent of population live in rural areas 73 percent of poor live in rural areas, and most depend on agriculture as producers or workers 73 percent of poor live in rural areas, and most depend on agriculture as producers or workers Agriculture and agro- processing account for 30-60 percent of GDP in developing countries, and an even larger share of Agriculture and agro- processing account for 30-60 percent of GDP in developing countries, and an even larger share of Even with rapid urbanization, more than 50% of the poor will be in rural areas by 2035, and depend significantly on agriculture Even with rapid urbanization, more than 50% of the poor will be in rural areas by 2035, and depend significantly on agriculture

4. Poverty is disproportionately rural Poverty Rates from PRSPs

5. West Africa Southern Africa East Africa Central Africa North Africa Near East South America Caribbean Central America North America Other South Asia India Southeast Asia China* Other East Asia Proportion of Undernourished (%) Number of Undernourished (millions) 6050403020100 050100150200250 *includes Taiwan Province of China Hunger is a Continuing Problem Hunger is a Continuing Problem Number and Proportion of Undernourished, 1999-2001 Source: FAO

6. Improving food security and reducing rural poverty are closely related goals Food Availability Food Availability Depends on global agricultural productivity Depends on global agricultural productivity International and national market and distribution systems International and national market and distribution systems International and national trade policy: make sure food is available to all at a reasonable cost International and national trade policy: make sure food is available to all at a reasonable cost Food Access Food Access Poverty reduction: hunger is a result of poverty, so whatever reduces poverty reduces hunger Poverty reduction: hunger is a result of poverty, so whatever reduces poverty reduces hunger Food (processing and storage) markets Food (processing and storage) markets Food Utilization Food Utilization Nutrition education (promotion of breast feeding in women, child care, sanitary conditions, child care time to free womens time) Nutrition education (promotion of breast feeding in women, child care, sanitary conditions, child care time to free womens time) Nutrition interventions to supplement food (vitamin A, iodine, iron, etc), or provide food supplements (for calories, protein) Nutrition interventions to supplement food (vitamin A, iodine, iron, etc), or provide food supplements (for calories, protein) Health care Health care Safe water provision Safe water provision Sanitation Sanitation

7. Trade liberalization enhances food security through many channels Increases rural growth and reduces rural poverty Increases rural growth and reduces rural poverty

8. Increased Trade is the Best Lever for Enhancing Agricultural Growth Sustained trade reforms doubled growth in agricultural sector (Michaely, Choksi, Papageorgiou) Sustained trade reforms doubled growth in agricultural sector (Michaely, Choksi, Papageorgiou) Agricultural trade liberalization gives much higher ag growth rate – 5.7% vs. 1.1% (Valdes) Agricultural trade liberalization gives much higher ag growth rate – 5.7% vs. 1.1% (Valdes) SSA – countries with large improvement in macro/ trade policies had higher ag growth rate -- 3.5% vs. 0.3% for those with deterioration (World Bank) SSA – countries with large improvement in macro/ trade policies had higher ag growth rate -- 3.5% vs. 0.3% for those with deterioration (World Bank) Huge amount of evidence that global trade reforms can have big poverty-reduction effects Huge amount of evidence that global trade reforms can have big poverty-reduction effects

9. Trade liberalization enhances food security through many channels Increases rural growth and reduces rural poverty Increases rural growth and reduces rural poverty Keeps food prices affordable Keeps food prices affordable Improves access to imported agricultural technology, mostly embedded in inputs Improves access to imported agricultural technology, mostly embedded in inputs Provides cash to buy inputs Provides cash to buy inputs

10. Production of export and non-food crops can enhance food production…

12. National policies to reduce rural poverty and food insecurity Incorporate policies on food security, hunger and nutrition into PRSPs Incorporate policies on food security, hunger and nutrition into PRSPs In countries where agriculture is dominant, increase agricultural expenditure (from very low 1-4% of government spending in many countries) In countries where agriculture is dominant, increase agricultural expenditure (from very low 1-4% of government spending in many countries) Avoid policies which target self sufficiency: trade and investment policies should be aimed at raising rural incomes, not food production Avoid policies which target self sufficiency: trade and investment policies should be aimed at raising rural incomes, not food production Lower barriers to South-South trade Lower barriers to South-South trade Finance nutrition interventions explicitly Finance nutrition interventions explicitly

13. Actions by international donors and financial institutions Reform food aid mechanisms: make them quicker and less disruptive Reform food aid mechanisms: make them quicker and less disruptive Improve donor coordination of agriculture, nutrition, and rural development programs Improve donor coordination of agriculture, nutrition, and rural development programs Reduce industrial country agricultural tariffs and subsidies Reduce industrial country agricultural tariffs and subsidies Pay more attention to closing technology gap between industrial countries / large middle income countries and low income countries Pay more attention to closing technology gap between industrial countries / large middle income countries and low income countries

14. Agricultural Trade Reform and the Doha Development Agenda Kym Anderson and Will Martin (eds.),, Washington DC: World Bank, forthcoming but chapters now available on World Bank website at: Kym Anderson and Will Martin (eds.),, Washington DC: World Bank, forthcoming but chapters now available on World Bank website at: http://web.worldbank.org/WBSITE/EXTERNAL/T OPICS/TRADE/0,,contentMDK:20366035~pageP K:210058~piPK:210062~theSitePK:239071,00.html