In examining aid effectiveness, first we need to ask ‘for what and for whom?’
Agriculture is particularly important to the world’s poor. Three-fourths of the world’s population surviving on less than $2 per day live in rural areas and most of them depend directly or indirectly on agriculture for their survival. Indeed, it is no exaggeration to say that none of the Millennium Development Goals (MDG) can be attained without particular policies for agriculture and rural development (see Table 1).
However, the pivotal role that agriculture plays in ensuring people’ s right to human development, ecological sustainability, gender equality and poverty eradication contrasts starkly with the trends in public spending and development assistance devoted to this sector over the last two-and-a-half decades.
Declining Expenditure for Agriculture
In the majority of developing countries public expenditure and aid to agriculture has been stagnant or declining for over two decades. According to a study covering 44 developing countries over the period 1980 to 2002[1] public expenditure in agriculture has increased over the last 25 years in real terms but has declined as a share of total government spending and as a proportion of agricultural gross domestic product (GDP) (see Tables 2 and 3).
The increase in real expenditures on agriculture is most evident for the Asian countries in the study, where real sector expenditures nearly tripled from 1980 to 2002 for a trend annual growth rate of 4.4 percent. But agriculture’s share of government expenditure declined from 15 percent to 9 percent over the same period. This is faster than the decline in agriculture’s contribution to GDP in the region which fell from 8.4 to 6.2 percent on average.[2]
In the African continent the actual increase in real spending has been modest even though the heads of state of the Assembly of the African Union pledged (in the Maputo Declaration of 2003) to raise spending on agriculture to 10 percent of their budgets within five years. In Sub-Saharan Africa, agriculture’s share of total government spending actually fell from 6.4 percent to 4.5 percent from 1980 to 2002.[3]
In Latin America and the Caribbean (LAC), real expenditure on agriculture declined sharply between 1980 and 1990. It has recovered somewhat since then but remains below the 1980 level. For Latin America, agricultural spending as a percentage of agricultural GDP decreased from 19.5 percent in 1980 to 11.5 percent in 2002. LAC also experienced the steepest decline in spending to agriculture as a proportion of total government expenditure, falling from 8 percent to less than 3 percent over the same period.[4]
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Table 1. MDGs and Agriculture
|
|
|
MDG
|
Particular significance of agriculture and rural areas
|
| 1. Eradicate extreme poverty and hunger | 900 million people or 70 percent of the world’s poor (living on less than $1 per day) are found in rural areas. Four-fifths of the hungry live in rural areas as smallholder farmers, pastoralists, fisherfolk or forest-users. Undernutrition is higher in agriculture-dependent economies. |
| 2. Achieve universal primary education | Poor rural households often involve their children in agricultural production, thus constraining their educational opportunities. |
| 3. Promote gender equality and empower women | Women are equally engaged in farming yet face unequal access to productive resources and exercise less control over agricultural production. They also spend more time on domestic work. |
| 4. Reduce child mortality | As a result of poor nutrition and more limited access to quality health services, education, sanitation and protected water sources, mortality rates for children under five years of age are higher among rural children. |
| 5. Improve maternal health | Access to proper diet (including nutrient-dense food crops) and health care is a significant determinant of maternal health |
| 6. Combat human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS), malaria, and other diseases | Of the 25 countries in the world with an adult HIV infection level above 5 percent in 2001, all except two have predominantly rural populations. Changing local water management for irrigation may alter local disease ecologies, particularly for malaria and water-borne diseases. Increasing wage-labor migration associated with agriculture may expose populations to new diseases. |
| 7. Ensure environmental sustainability | Intensive commercial agriculture is a major driving force for environmental degradation and climate change. Agriculture uses 85 percent of freshwater resources and contributes 25-33 percent of greenhouse gases. ; deforestation |
| 8. Develop a global partnership for development. | Agriculture comprises a significant share of global trade. Developing agriculture requires significant capital investments, scientific and technical inputs, development assistance and international cooperation. |
| Sources: World Bank and International Food Policy Research Institute (undated). Agriculture and Achieving TheMillennium Development Goals. Washington, D.C.; World Bank (2007). The World Development Report 2008: Agriculture for Development. Washington, D.C. | |
In all three regions, the decline in agriculture’s share of expenditure contrasts with the significant increase in health and education spending. This is a reflection of the relative prioritization of social sectors within poverty reduction strategies.[5]
The relative neglect of agriculture is even more pronounced in the sectoral distribution of Official Development Assistance (ODA) flows over the last 25 years. Figure 1 above shows that ODA for agriculture has fallen by more than half between 1980 and 2005. Since total ODA commitments have increased by 250% in real terms over the same period, this means agriculture’s share of total ODA has dropped even more sharply, from 17% in 1982 to a meager 3% in 2005.
Even in the highly agriculture-dependent countries of Sub-Saharan Africa, aid for agriculture has declined, albeit less dramatically, over the same period.[6] Between 1980 and 2002, ODA to agriculture halved in sub-Saharan Africa and decreased by 83% in South and Central Asia.[7]
| Table 2. Public expenditure in agriculture, 1980-2002 | ||||||||
|
Constant 2000 $ (bn)
|
Percentage of agricultural GDP
|
|||||||
| Region | ||||||||
|
1980
|
1990
|
2000
|
2002
|
1980
|
1990
|
2000
|
2002
|
|
| Africa (17) |
7.3
|
7.9
|
9.9
|
12.6
|
7.4
|
5.4
|
5.7
|
6.7
|
| Asia (11) |
74.0
|
106.5
|
162.8
|
191.8
|
9.4
|
8.5
|
9.5
|
10.6
|
| L America and Caribbean (16) |
30.5
|
11.5
|
18.2
|
21.2
|
19.5
|
6.8
|
11.1
|
11.6
|
| Total Developing Countries |
111.8
|
125.9
|
190.3
|
225.6
|
10.8
|
8.0
|
9.3
|
10.3
|
| Source: Stephen Akroyd and Lawrence Smith (2007). Review of Public Spending to Agriculture. A Joint Study by the Department for International Development and the World Bank, p. 2 | ||||||||
As in the case of public spending more generally, the decrease in ODA spending on agriculture contrasts with the increase in the share of social infrastructure and services. Spending for the latter sectors rose steadily between 1980 and 2002 from 9% to 33% of all ODA.[8]
Both multilateral and bilateral donors cut their spending on agriculture over the period 1980 to 2002 — from US$ 3.4 billion to US$ 0.5 billion (a decrease of 85%) in the case of multilaterals, and from US$ 2.8 billion to US$ 1.7 billion (a decrease of 39%) for bilaterals.[9] Even the World Bank, which has traditionally been the leading provider of loan support to agriculture, reduced its support for the sector from a peak of around 31% of its total lending in 1979-81 at the height of the Green Revolution, to around 17% in the mid-1990s, to just 8.4% in 2001. Nevertheless, the Bank remains a major contributor, supplying about one-third of the total ODA to agriculture.[10] It has also been increasing the share of its assistance devoted to agriculture since 2004 (up to 13 percent of all lending by 2006).[11]
| Table 3. Shares of total government spending by major sectors, 1980-2002 | |||||||||
|
Agriculture
|
Education
|
Health
|
|||||||
| Sector | |||||||||
|
1980
|
1990
|
2002
|
1980
|
1990
|
2002
|
1980
|
1990
|
2002
|
|
| Africa |
6.4 |
5.2
|
4.5
|
12.3
|
14.6
|
14.0
|
3.8
|
4.6
|
8.3
|
| Asia |
14.8
|
12.2
|
8.6
|
13.7
|
17.3
|
1532
|
5.3
|
4.3
|
4.4
|
| L America and Caribbean |
8.0
|
2.0
|
2.5
|
10.0
|
7.7
|
14.1
|
5.9
|
6.1
|
7.6
|
| Total |
11.3
|
7.9
|
6.7
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
| Source: Stephen Akroyd and Lawrence Smith (2007). Review of Public Spending to Agriculture. A Joint Study by the Department for International Development and the World Bank, p. 3. | |||||||||
Explaining the Neglect
A multiplicity of factors are behind the decline in resources made available to agriculture over the past two decades. The ideological shift away from state intervention in the economy towards the neoliberal model of market-led development is certainly a major factor. The dismantling of parastatals, reduction of subsidies for agriculture, and tighter fiscal constraints faced by developing countries under structural adjustment programs in the 1980s restricted the scope of public expenditure in the sector. Growth and efficiency in production, including agriculture, was perceived to be better supported by privatization, trade liberalization, deregulation and infrastructure spending. Poverty Reduction Strategies in the 1990s and the Millennium Challenge of the present decade has shifted the focus of state intervention and expenditure (and ODA) on social sectors, particularly health and education.[12]
Source: Cabral, Lidia (2007). "Funding agriculture: Not ’how much’ but ’what for?’", ODI Opinion 86 (October 2007). Overseas Development Institute, U.K.
Donor confidence in agriculture also began to wane starting in the 1980s as enthusiasm for the Green Revolution wore off, replaced by frustration over its emerging limitations, particularly in Africa.[13] The Bank also notes the increasing “agroskepticism” on the part of donors because of unsuccessful interventions in agriculture, particularly the large-scale integrated rural development programs and the training-and-visit system of agricultural extension which had absorbed large amounts of funds in the past.[14]
| Table 4. Assistance to agriculture 1980-2002: volumes and shares in total ODA | |||
|
Year
|
ODA to agriculture (contant 2002 US$, billions)
|
Total ODA (constant 2002 US$, billions)
|
Share of ODA to agriculture (%)
|
| 1980 |
6.2
|
37.0
|
16.7
|
| 1985 |
6.6
|
40.0
|
16.6
|
| 1990 |
5.4
|
44.8
|
12.0
|
| 1995 |
3.0
|
38.9
|
7.6
|
| 2002 |
2.3
|
61.4
|
3.7
|
| Source: UK Department of International Development (2004). Official Development assistance to agriculture. DFID, U.K. p. 9 | |||
The relatively weak institutional capacities of developing country agriculture ministries and line agencies to claim limited resources and implement spatially dispersed programs have also been cited as a factor. With the demise of parastatals, donors found it increasingly more difficult and costly to identify and transact with multiple partners with diverging priorities and strategies in agriculture and rural development (even among government ministries).[15]
In addition, the Bank cites the opposition of vested interests within some donor countries to supporting agriculture in their major export markets as another factor.[16]
Towards a New Agenda for Agriculture?
In recent years, development circles and the donor community have taken note of the yawning gap between the needs and potential of the rural sector on the one hand and the resources available for its development on the other. Most aid agencies and donor governments have reviewed their rural development policies since the start of this decade and nearly all the major multilateral institutions have come up with key policy documents on rural poverty. Simon Maxwell of the Overseas Development Institute (ODI) summarizes the key policy thrusts (circa 2003) of the four “market leaders” in this arena in Table 5 below.
There is greater attention to ecological concerns and a strong emphasis on poverty alleviation in all these policy documents, at least on paper. But there is also considerable inconsistency and ambivalence in terms of their vision of the role of the state, markets and civil society in ensuring human development. Indeed, the renewed attention directed at rural poverty has not yet been translated to a significant increase in aid for rural and agricultural development in the aggregate (Figure 1). A “consistent and compelling narrative”, in the words of Maxwell, may well be what is lacking to galvanize donor commitment and mobilize resources for rural development.
| Table 5. Policy Thrusts in Agriculture and Rural Development | ||
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Key Document
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Focus Areas and Main Thrusts
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|
| International Fund for Agricultural Development (IFAD) | Rural Poverty Report 2001: The Challenge of ending Rural Poverty (2001) | 1. the role of food staples in the livelihoods of the rural poor; 2. allocation and distribution of water; 3. The importance, if poverty targets are to be met, of redistributing assets, institutions, technologies and markets; and 4. special attention to women, ethnic minorities, hill people and residents of semi-arid areas. |
| European Union (EU) | Fighting Rural Poverty: European Community policy and approach to rural development and sustainable natural resources management in developing countries (July 2002) | 1. Promote broad-based rural economic growth; 2. Ensure more equitable access to productive assets, markets and services; 3. Support human and social development; 4. Ensure sustainable natural resources management; 5. Reduce vulnerability to risks; and 6. Address the social and political exclusion of the rural poor. |
| Food and Agriculture Organization (FAO) | Anti-Hunger Programme: Reducing hunger through sustainable agricultural and rural development and wider access to food (July 2002) | 1. Improve agricultural productivity and enhance livelihoods and food security in poor rural communities; 2. Develop and conserve natural resources; 3. Expand rural infrastructure (including capacity for food safety, plant and animal health) and broaden market access; 4. Strengthen capacity for knowledge generation and dissemination (research, extension, education and communication); and 5. Ensure access to food for the most needy through safety nets and other direct assistance |
| World Bank (WB) | Reaching the Rural Poor: A Renewed Strategy for Rural Development (October 2002) | 1. Fostering an enabling environment for broad-based rural growth; 2. Enhancing agricultural productivity and competitiveness; 3. Encouraging non-farm rural economic growth; 4. Improving social well-being, managing risk and reducing vulnerability; and 5. Enhancing sustainable management of natural resources. |
| Source: Maxwell, Simon (2003). "Six characters (and a few more) in search of an author: How to rescue rural development before its too late". Paper prepared for the 25th International Conference of Agricultural Economists held in Durban, South Africa, 18-22 August 2003. | ||
It is this compelling narrative that the World Bank wishes to proffer in the latest issue of its flagship publication, the World Development Report (WDR) 2008, entitled “Agriculture for Development” released last October 2007. The WDR 2008 sums up the World Bank Group’s new agenda for agriculture and the rural sector which, like previous WDRs, is likely to become highly influential in development circles and the donor community.
Indeed, the WDR 2008 takes off from the observation that “the agricultural and rural sectors have suffered from neglect and underinvestment over the past 20 years. While 75 percent of the world’s poor live in rural areas, a mere 4 percent of official development assistance goes to agriculture in developing countries.”[17]
For its part, the Bank has announced its intention to continue increasing its support for agriculture and rural development, following a decline in lending in the 1980s and 1990s. It earmarked $3.1 billion in 2007 for the sector, an increase for the fourth straight year. More importantly, the Bank expects to devise “agriculture for development agendas” for specific regions and countries, mobilizing skills, political commitments and resources necessary for this endeavor. It is “actively involved with the key development stakeholders on how they will share and implement the WDR’s messages. For instance, the Africa Region of the Bank is linking with the Comprehensive African Agriculture Development Program (CAADP) to engage in country roundtables on national agricultural programs.” The CAADP serves as the blueprint for Africa’s agricultural development at the national, regional and continental levels under the New Partnership for African Development (NEPAD). It also serves as a common platform for coordinating donor investments in a region where donor contributions account for at least 28 percent of agricultural development spending (in 24 Sub-Saharan African countries). The Bank is also “developing plans to translate the findings into concrete actions on future lending and advisory operations in agriculture.”[18]
| Table 6. The World Bank’s New Agenda for Agriculture | |
|
The WB’s Vision of Agriculture for Development
|
Policy Objectives
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| "An emerging vision of agriculture for development redefines the roles of producers, the private sector, and the state. Production is mainly by smallholders, who often remain the most efficient producers, in particular when supported by their organizations. But when these organizations cannot capture economies of scale in production and marketing, labor-intensive commercial farming can be a better form of production, and efficient and fair labor markets are the key instrument to reducing rural poverty. The private sector drives the organization of value chains that bring the market to smallholders and commercial farms. The state—through enhanced capacity and new forms of governance—corrects market failures, regulates competition, and engages strategically in public-private partnerships to promote competitiveness in the agribusiness sector and support the greater inclusion of smallholders and rural workers." | 1. Improve access to markets and establish efficient value chains 2. Enhance smallholder competitiveness and facilitate market entry 3. Improve livelihoods in subsistence farming and low-skill rural occupations 4. Increase employment in agriculture and the rural nonfarm economy, and enhance skills |
| Source: World Bank (2007). The World Development Report 2008: Agriculture for Development. Washington, D.C., p. 8 and p. 19 | |
Rectifying the sins of omission and commission?
Given the clout of the World Bank Group among donors and governments, especially in heavily indebted poor countries, the WDR 2008 is therefore likely to serve as one lens, if not the lens, through which policy makers examine issues, formulate policies, design programs and allocate resources for development. As such, the WDR 2008 itself warrants scrutiny.
Sophia Murphy and Tilman Santarius of the EcoFair Trade Dialogue describe the report as “a better thought through version of more of the same.”[19] Indeed, the Bank’s vision of Agriculture-for-development (Table 6 above) clearly reaffirms its ideological commitment to the market-led development paradigm it has been propagating since the 1980s. The WDR 2008 devotes due attention to poor smallholder farmers but presupposes that the solution to their plight is to integrate them to the global trading system. Having presided over the dismantling of parastatals and state subsidies in the 1980s for distorting the market, the Bank is remarkably uncritical of the oligopolistic power of international trading companies and supermarket chains in today’s global agrofood market that enables them to extract the lion’s share of value-added from agricultural production. The WDR acknowledges the undue market power of these agribusiness transnational corporations (TNCs) but prescribes little more than appeals to corporate social responsibility.
Likewise, the WDR 2008 correctly stresses the need to promote farmer-led technologies and calls for extending the Green Revolution to subsistence farmers in less favorable regions yet avoids grappling with the increasing monopolistic control of biotech firms and agrochemical TNCs over genes, seeds, plant varieties, fertilizers and other associated inputs for their propagation. It acknowledges the importance of improving poor farmers’ access to productive assets but favors market-based land reform and water management which more often than not has resulted in increasing, rather than decreasing, inequities and further marginalization of subsistence farmers. It stresses the state’s role in providing core public goods such as infrastructure and research and development but does not consider how the benefits of such “public goods” are disproportionately captured by richer farmers and agribusiness corporations while the social and environmental costs are disproportionately borne by landless and subsistence farmers, indigenous people and rural women.
The latest WDR notes the increasing political voice of smallholder farmers and the rural poor and welcomes this development as it contributes to improving governance in developing countries. But the report is silent about political power at the global level and glosses over the realpolitik that actually determines the highly skewed outcomes of, for instance, the multilateral and bilateral trade and investment agreements that favor the developed North and elite interests. Indeed, as a major determinant of policies and channel of resources throughout the developing world, the Bank itself does not account for its contribution to deepening poverty, inequality and environmental degradation in the world today.
The emerging consensus in development circles about the need to increase support for agriculture and rural development is certainly a welcome change after decades of relative neglect. But we need to go beyond “more of the same”. Murphy and Santarius pose the question that the WDR 2008 elides: “What conclusions for the future should be drawn from the sad irony that the world basically produces more than enough food to meet the needs of all its six billion people, but hunger is still prevalent?”[20] The challenge, in short, is not merely nor mainly in boosting growth and productivity but grappling with the issues of equity and justice. We must not allow noble intentions of “poverty alleviation” and “human development” to be hijacked by those who thrive on poverty and underdevelopment.
Notes
[1] Cited in Stephen Akroyd and Lawrence Smith (2007). Review of Public Spending to Agriculture. A Joint Study by the Department for International Development and the World Bank, p. 5
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Cabral, Lidia (2007). “Funding agriculture: Not ‘how much’ but ‘what for?’”, ODI Opinion 86 (October 2007). Overseas Development Institute, U.K.
[7] UK Department for International Development (2004). Official development assistance to agriculture. DFID, U.K.
[8] Ibid.
[9] Ibid. p.3
[10] DFID (2004, p. 11)
[11] World Bank Calls for Renewed Emphasis on Agriculture for Development” Press Release, October 19, 2007. Viewed at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS0,,contentMDK:21519837~menuPK:34476~pagePK: 34370~piPK:34424~theSitePK:4607,00.html
[12] Akroyd and Smith (2007)
[13] DFID (2004, p.4)
[14] WB (2007)
[15] DFID (2004, p. 4)
[16] WB (2007)
[17] World Bank Calls for Renewed Emphasis on Agriculture for Development” Press Release, October 19, 2007. Viewed at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21519837~menuPK:34476~
pagePK:34370~piPK:34424~theSitePK:4607,00.html
[18] Press Briefing for World Development Report 2008, October 19, 2007. Viewed at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS0,,contentMDK:21519837~menuPK:34476~pagePK:34370~piPK:34424~theSitePK:4607,00.html
[19] Sophia Murphy and Tilman Santarius (2007). “The World Bank’s WDR 2008: Agriculture for Development. Response from a Slow Trade — Sound Farming Perspective.” EcoFair Trade Dialogue Discussion Papers No. 10, November 2007, p. 26
[20] Ibid. p. 10
References
Stephen Akroyd and Lawrence Smith (2007). Review of Public Spending to Agriculture. A Joint Study by the Department for International Development and the World Bank, p. 5
Cabral, Lidia (2007). “Funding agriculture: Not ‘how much’ but ‘what for?’”, ODI Opinion 86 (October 2007). Overseas Development Institute, U.K.
Maxwell, Simon (2003). “Six characters (and a few more) in search of an author: How to rescue rural development before its too late”. Paper prepared for the 25th International Conference of Agricultural Economists held in Durban, South Africa, 18-22 August 2003.
Sophia Murphy and Tilman Santarius (2007). “The World Bank’s WDR 2008: Agriculture for Development. Response from a Slow Trade — Sound Farming Perspective.” EcoFair Trade Dialogue Discussion Papers No. 10, November 2007, p. 26
UK Department for International Development (2004). Official development assistance to agriculture. DFID, U.K.
World Bank and International Food Policy Research Institute (undated). Agriculture and Achieving The Millennium Development Goals. Washington, D.C.;
World Bank (2007). The World Development Report 2008: Agriculture for Development. Washington, D.C.
World Bank Calls for Renewed Emphasis on Agriculture for Development” Press Release, October 19, 2007. Viewed at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21519837~menuPK:34476~pagePK:34370~
piPK:34424~theSitePK:4607,00.html
Press Briefing for World Development Report 2008, October 19, 2007. Viewed at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21519837~menuPK: 34476~pagePK:34370~piPK:34424~theSitePK:4607,00.html
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