Agriculture’s vital contribution to pro-poor growth

After two decades of decline, investments in agriculture are rising. Some 75 percent of the world’s poor people live in rural areas. Evidence shows that agricultural growth, through its leverage effects on the rest of the economy, enables poor countries, regions and households to embark on the process of economic transformation which is essential for poverty reduction.

Agriculture is a broad concept, encompassing farming, herding, livestock production, fishing, aquaculture and non-timber forest cultivation, as well as food, feed and fibre processing and trading. Growth in the agricultural sector reduces poverty by harnessing poor people’s key assets of land and labour, lowering and stabilising food prices, providing labour-intensive employment for poor people, and stimulating growth in the rural economy. Policy analysts from development agencies, coming together in the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD), reviewed the evidence of agriculture’s contribution to pro-poor growth, and have proposed a new agenda for a stronger agriculture sector.

New global trading conditions can hurt poorer producers. Developing countries protect their own markets, and economic restructuring has not worked. The private sector has not replaced cuts in public support to agriculture, and public investment in agriculture has declined. This is the context today for agricultural policy, and a new and broader agenda is needed to develop the agricultural sector and rural livelihoods.

The DAC’s policy guidance for donors identifies a new agriculture agenda for enabling pro-poor growth. It recognises new challenges – such as HIV and AIDS, natural resource degradation, global competition, demographic change and migration – but also new opportunities through spatial and occupational diversity. It also identifies three main priorities for action in the new agenda: enhancing sector productivity and market opportunities; promoting diversified livelihoods; and reducing risk and vulnerability. The report found these enabling activities to be key:

• Promote investments in high productivity activities and links to new market opportunities, in urban centres and in regional and global markets.
• Along with improved productivity, encourage the development of the broader agricultural sector and rural economy, so that the benefits from agriculture can be realised.
• Make it easier for small producers and landless agricultural workers to diversify out of agricultural production.

This report identifies four principles of engagement at the core of the new agenda. These principles are essential in defining how the new agriculture agenda should be promoted, and how the investment and policy options proposed under the new agenda should be articulated. These principles are:

• Adapt approaches to diverse contexts. Tailor flexible policies to agro-ecological potential and changing levels of economic transformation.
• Build institutions and empower stakeholders. Weakened state institutions need new skills and capacity to re-launch the agricultural sector and to encourage and regulate the private sector to play its vital roles.
• Support pro-poor international actions. Particularly important are trade negotiations to reduce agricultural subsidies, increased aid to respond to the challenge of meeting the Millennium Development Goals, and multi-donor commitments to improve aid effectiveness, as set out in the “Paris Declaration on Aid Effectiveness”.
• Foster country-led partnerships. National poverty reduction strategies should focus more on the productive sectors, agriculture in particular, and have effective monitoring frameworks.

Source(s):
‘PromotingPro-poor Growth: Agriculture’, OECD: Paris, 2006 Full document.
‘Promoting Pro‑Poor Growth: Policy Guidance for Donors’, OECD: Paris, 2007 Full document.

Funded by: Members of the Organisation for Economic Cooperation and Development (OECD)

id21 Research Highlight: 13 April 2007

Further Information:
OECD DAC
2, rue André-Pascal
F-75775 Paris Cedex 16
France

Tel: +33 1 45 24 82 00
Fax: +33 1 45 24 85 00
Contact the contributor: dac.contact@oecd.org

Organisation for Economic Co-operation and Development - Development Co-operation Directorate (DAC)

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