World Development Report Affirms Importance of Agriculture for Development

The 2008 World Development Report (WDR), "Agriculture for Development," recently brought renewed attention on the role of agriculture as a catalyst for development when it was released on October 19 th, 2007. An annual flagship publication of the World Bank, the WDR tackles a different development topic each year, and the 2008 edition is the first to address agriculture in 25 years. This article highlights some of the key findings from the report with a special focus on the role of science and technology for agriculture driven development

Agriculture Contributes to Poverty Reduction More than Any Other Sector

Overall, the WDR underscores the role of agriculture in reducing poverty and emphasizes the need for greater investment in agriculture in developing countries, especially if the Millennium Development Goal of halving extreme poverty and hunger by 2015 is to be realized. A key finding of the report is that, for the poorest people, GDP growth originating in agriculture is about four times more effective in reducing poverty than GDP growth originating outside the sector. Moreover, agriculture can offer pathways out of poverty if efforts are made to increase productivity in the staple foods sector; connect smallholders to rapidly expanding high-value horticulture, poultry, aquaculture, as well as dairy markets; and generate jobs in the rural nonfarm economy.

A Diagnosis of "Three Worlds" of Agriculture

The WDR groups countries according to three categories that reflect varying dependence on agriculture as an engine for economic growth - agriculture-based, transforming and urbanized. Most agriculture-based countries are in Sub-Saharan Africa. Transforming countries include China, India, Morocco, and other nations where nonagricultural sectors have been the fastest growing in the world. The urbanized countries are mainly in Latin America and the Caribbean, and Eastern Europe and Central Asia.

The agriculture-based countries are home to 417 million rural people, 170 million of whom live on less than $1 a day. In these countries, the agricultural sector is essential to overall growth, poverty reduction, and food security as it employs 65 percent of the labor force and generates 32 percent of GDP growth. For development in these countries, the report highlights issues to be urgently confronted: too little public spending on agriculture; donor support for emergency food aid with insufficient attention to income-raising investments; rich-country trade barriers and subsidies for key commodities such as cotton and oilseeds; and the under-recognized potential of millions of women who play a dominant role in farming.

In transforming countries, agriculture contributes on average only 7 percent to GDP growth, but lagging rural incomes are a major source of political tensions. Dynamism in the rural and agricultural sectors is needed to narrow the rural-urban income gap and reduce rural poverty for 600 million poor while avoiding falling into subsidy and protection traps that will stymie growth and tax poor consumers.

In urbanized countries, agriculture contributes just 5 percent of GDP growth on average. However, rural areas are still home to 45 percent of the poor, and agribusiness and food services account for as much as one third of GDP. In these countries, the agriculture sector can contribute by linking smallholders to modern food markets and creating remunerative jobs in rural areas.

The report also draws attention to how rich countries influence agriculture for development, calling upon these countries to reform policies that harm the poor such as subsidies that distort prices for internationally traded commodities. It also raises concerns over rich country policies around biofuels, notably restrictive tariffs and heavy subsidies, which drive up food prices and limit export opportunities for efficient developing country producers.

Innovations through Science and Technology

The high returns on agricultural productivity improvements resulting from investments in agricultural research and development (R&D) are confirmed by the WDR. Published estimates of rates of return on R&D and extension investments in the developing world average 43% a year. However, the WDR points to two obstacles that exist to getting the most from R&D despite this high return on investment. First, not all farmers and regions have benefited equally from R&D and second, agricultural science remains grossly underfunded in developing countries.

Compared with other regions, sub-Saharan Africa has seen very incomplete adoption of improved varieties, owing to the agro-ecological heterogeneity of the region, lack of infrastructure, and other factors. However, recent experience in Sub-Saharan Africa offers more promise as improved varieties are finally making an impact on some food staples, notably maize, cassava, beans and rice. Increasing public and private investment in R&D and strengthening institutions and partnerships with the private sector, farmers, and civil society organizations are now essential to assess user demand for R&D, increase market responsiveness and competitiveness, and ensure that the poor benefit.

In the developing world, private investment in agricultural R&D is very limited - 94% of the investment is from the public sector. But growth in public sector spending has slowed sharply in the past decade and remains a fraction of the public investment seen in industrialized countries. In the 1990s, public R&D spending in Sub-Saharan Africa fell in nearly half of the countries. This declining trend is partly due to political considerations, where decision-making emphasizes short-term payoffs rather than long-term benefits, and partly due to disincentives for small countries to spend scarce resources on agricultural science when they can often "free ride" on the efforts of larger, more affluent countries.

The Centers supported by of the Consultative Group on International Agricultural Research (CGIAR) are acknowledged in the WDR as having contributed significantly to public breeding programs in developing countries, resulting in the release of more than 8,000 improved crop varieties over the past 40 years. In the 1980s and 1990s following the main period of the green revolution, the spread of improved crop varieties accounted for as much as 50 percent of yield growth of food staples, more than doubling the estimated 21 percent gains of the preceding two decades, with poor consumers being the main beneficiaries. However, as the world faces new challenges institutions that finance and organize research on a multinational basis must be strengthened.

Future Challenges - Climate Change and Natural Resource Scarcity

The report warns that technological challenges facing agriculture in the 21 st century are likely even more daunting than those of recent decades. Global food supplies are under pressure from expanding demand for food, feed, and biofuels; the rising price of energy; and increasing land and water scarcity; as well as the effects of climate change. This in turn is contributing to uncertainty about future food prices. Mitigation and adaptation to climate change have emerged as priority areas for agriculture.

The public sector can facilitate adaptation to climate change through such measures as crop and livestock insurance, social safety nets, and research on and dissemination of flood-, heat-, and drought-resistant crops, including conservation of traditional plant varieties with those characteristics. New irrigation schemes in dryland farming areas are likely to be particularly effective, especially when combined with complementary reforms and better market access for high-value products.

With regard to mitigating the effects of climate change, livestock and crops emit carbon dioxide, methane, and nitrous oxide, making agriculture a major source of green house gases, accounting for about 15 percent of global emissions. New incentives and opportunities from the emerging market for trading carbon emissions will offer agriculture new possibilities to benefit from land uses that sequester carbon. CGIAR research is resulting in innovations to help mitigate climate change by improving our knowledge of how to maximize carbon sequestration through crop and land use choices as well as through monitoring technologies based on satellite imagery and infrared spectroscopy. For more information about the CGIAR's work on climate change, please have a look at our "Global Climate Change: Can Agriculture Cope?" dossier: http://www.cgiar.org/impact/global/climate.html

A Call to Increase Funding for Agricultural R&D

The WDR says that the need to increase funding for agricultural R&D throughout the developing world cannot be overstated. Investments must also be made for "maintenance research" to deliver continued yield stability and insure against outbreaks of new pathogens. Continuing progress, especially in extending benefits of R&D to agriculture-based countries and less-favored regions elsewhere, depends critically on research in these environments on improving crop, soil, water, and livestock management and on developing more sustainable and resilient agricultural systems. The work of the CGIAR Centers in close collaboration with national partners such as NARS is essential for rising to meet the new challenges confronting the agriculture sector through new innovation and solutions.

Related Links:

• Read the World Development Report 2008 online