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World Bank, in report co-authored by UC economists, urges more agricultural investment

| 08 November 2007

A renewed focus on agricultural development is critical to successfully reducing global poverty and hunger, according to a new World Bank report co-authored by Berkeley economists.

"World Development Report 2008: Agriculture for Development," released last month at the World Bank's annual meeting in Washington, D.C., points out that 2.1 billion people earning less than $2 per day live in rural areas, and most of them depend upon agriculture for their livelihoods. However, only 4 percent of official development assistance to developing nations is earmarked for agriculture, down from 12 percent in 1990.

In recent years, the World Bank has started to increase its support for agriculture and rural development, committing $3.1 billion for fiscal year 2007. But more is needed, according to the report.

"What we're hoping to do with this report is put agriculture back on the map," says the report's co-director, Alain de Janvry, professor of agricultural and resource economics and of public policy. "The agricultural sector in developing nations has been underfunded for the past two decades. The Millennium Development Goal of cutting poverty and hunger in developing nations by half by 2015 is not going to be achieved unless more attention is paid to where the world's poor are and what they do."

Each year, the World Bank's World Development Report provides in-depth analysis of a specific aspect of development. De Janvry, along with Australian economist Derek Byerlee, co-directed the 18-member core team that prepared this year's report on agriculture. Elisabeth Sadoulet, a Berkeley professor of agricultural and resource economics, is also one of the report's authors.

According to the report, the world's demand for agricultural crops - for food, feed, and biofuels - is expected to double within the next 50 years. At the same time, the natural resources that sustain agriculture will become increasingly scarce and degraded with overuse and the effects of climate change.

The report concludes that greater investment in agriculture is needed to trigger economic growth, and that economic growth originating in agriculture will benefit the income of the poor two to three times more than growth from the non-agricultural sector. The power of agricultural growth in getting large numbers of people out of poverty has been amply demonstrated by recent successes in China and Vietnam, according to the report's authors.

"We are proposing that the shares of public investment and foreign aid to agriculture be increased from 4 to 10 percent in sub-Saharan Africa," says de Janvry. "This is akin to the investment of resources in successful countries such as India and China."

But along with investment, barriers to the development of the agricultural economy in sub-Saharan Africa need to be addressed, including farm subsidies in rich countries for key commodities, such as cotton and oilseeds, that depress prices for small farmers in developing nations.

The report also highlights the need to reduce politically destabilizing income disparities in countries such as India and China by using agriculture as a pathway out of poverty. This would require innovative policy initiatives - to help people shift to high-value agriculture as well as to decentralize non-farm economic activity, such as food processing, to rural areas.

Moreover, better governance and coordination among ministries in different sectors is needed to fully realize the benefits of agriculture for development, the report says.

"Agriculture must be given more prominence across the board," says Robert Zoellick, president of the World Bank. "At the global level, countries must deliver on vital reforms such as a level playing field for trade, while civil-society groups, especially farmer organizations, need more say in setting the agricultural agenda."

The report's authors recognize agriculture's close connection to today's environmental challenges, calling for the removal of subsidies that encourage the degradation of natural resources. Reducing agriculture's large environmental footprint requires the promotion of more sustainable production systems, the report says.

"We also need to encourage farming systems that are less vulnerable to the effects of global climate change, including crops that are more flood- and drought-resistant," says de Janvry. "Industrialized countries are the major contributors to global warming, so it is our moral responsibility to help reduce the impacts of climate change, which disproportionately affects poor farmers."

The report, a collaborative effort of the World Bank and a large number of development agencies, involved extensive consultations with governments and civil-society organizations. In addition to the 18-member core team, more than 300 experts throughout the world contributed to the report, which was supported by a Ford Foundation grant to UC Berkeley.