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Africa: Neglecting Agriculture, 2

AfricaFocus Bulletin
Oct 24, 2007 (071024)
(Reposted from sources cited below)

Editor's Note

"For the first time in 25 years, the World Bank's annual Development Report (WDR 2008) is dedicated to agriculture. The report is a welcome indicator of renewed interest in agriculture worldwide that is urgently needed... [But] though the WDR 2008 makes a few guarded references to the mistakes made under structural adjustment programs, there is no place that adequately describes the responsibility of countries and firms who made irresponsible loans, or of the Bank itself for its rigid and often misguided programs " EcoFair Trade Dialogue

In its World Development Report for 2008, released on October 19 and entitled "Agriculture for Development," the World Bank stressed the importance of a renewed emphasis on agriculture. The report argues that "for the poorest people, GDP growth originating in agriculture is about four time more effective in reducing poverty than GDP growth originating outside the sector.

The report, which was covered extensively in the international press, is available, along with much related material, on the World Bank website at http://go.worldbank.org/ZJIAOSUFU0

In this and another Bulletin sent out today, AfricaFocus presents excerpts from two related reports that have received much less press attention. The first, the executive summary of which is excerpted in another Bulletin, is a highly critical report of the World Bank's record on agriculture from its own Independent Evaluation Group. The second, a report from the EcoFair Trade Dialogue on "What the World Bank Missed," is excerpted below.

The U.S. Farm Bill, which the Senate is due to discuss this week, is likely to be renewed with little or no reforms demanded by critics. For background on the bill and its implications for international agriculture, see the resource page from the Wilson Center at http://tinyurl.com/39x6vo

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

The World Bank's WDR 2008: Agriculture for Development
Response from a Slow Trade Sound Farming Perspective

by Sophia Murphy and Tilman Santarius

The EcoFair Trade Dialogue

Discussion Papers No. 10 / October 2007 / English Version

http://www.ecofair-trade.org

The EcoFair Trade Dialogue is a project carried out by the Heinrich B”ll Foundation and Misereor in cooperation with the Wuppertal Institute.

[Excerpts only: for full text see http://www.ecofair-trade.org]

This document has been produced with the financial assistance of the European Union. The contents of this document are the sole responsibility of Misereor and Heinrich-B”ll- Stiftung and can under no circumstances be regarded as reflecting the position of the European Union.

Sophia Murphy, currently living in Australia, is Senior Advisor to the US-based Institute for Agriculture and Trade Policy (IATP) and an internationally recognized expert in food and trade issues. ... Tilman Santarius, from Germany, is Senior Research Fellow at the Wuppertal Institute for Climate, Environment and Energy. ...

About the EcoFair Trade Dialogue:

The EcoFair Trade Dialogue is a project carried out by the Heinrich Boell Foundation and Misereor in cooperation with the Wuppertal Institute.... This discussion paper is one out of several "implementation papers" that are based on the perspectives and proposals contained in the full "Slow Trade Sound Farming" report.

Introduction

For the first time in 25 years, the World Bank's annual Development Report (WDR 2008) is dedicated to agriculture. The report is a welcome indicator of renewed interest in agriculture worldwide that is urgently needed. The generation-long silence on agriculture is indicative of how agriculture went out of fashion in development circles. Assistance to agriculture from bilateral and multilateral sources decreased from US$ 6.2 billion to US$ 2.3 billion between 1980 and 2002 (in 2002 prices), a neglect that is all but incomprehensible given that three quarters of the world's population living below the $2 per day poverty line live in rural areas, most of them directly or indirectly dependent on agriculture for their survival. The share of agriculture in the International Financial Institutions' portfolio of loans fell from roughly 20 percent of the total to nearer 9 percent over the 1990s.

... The choice of agriculture as the focus for the WDR 2008 is welcome. The report offers a comprehensive, detailed discussion of many of the facets of agricultural production and distribution, giving space to questions of gender equity, political voice, peasant organizing and unequal market power. The strong focus on institutional issues is welcome, as is the serious discussion of many of the environmental challenges confronting agriculture. Science and technology, in particular, are comprehensively discussed. For all that, we welcome the report and trust the newly revived interest in agriculture's role in development will prove lasting. The following critique is just that: it is focused on where the authors differ with the authors of the WDR 2008. From our perspective, there are still important lacunae in the thinking and analysis that need further debate.

... N.B. The WDR 2008 report referred to in this review is the July 2007 draft edition of the report. The report Slow Trade Sound Farming. A Multilateral Framework for Sustainable Markets in Agriculture (2007) can be downloaded at
http://www.ecofair-trade.org.

Overview

The WDR 2008 is comprehensive and detailed, filled with illustrations from different developing country experiences that make for a rich read. Yet there are some important and telling gaps in the story set out, as well as some contradictions. These are sometimes not explicit, but rather remain implicit in an analysis that does not, so to speak, join all the dots. Somewhat glaring, for instance, is the marked lack of historical perspective in the report. The report does not ask how it is that sub-Saharan Africa, for example, came to be as poor as it is today. In the 1960s and early 1970s, commodity trade made the region wealthier than many Asian countries. Then commodity prices fell, and a wave of irresponsible borrowing and lending in the 1970s coupled with poor domestic policy choices left many developing countries in financial crisis, including much of sub-Saharan Africa. The policy prescriptions imposed by the World Bank and IMF in response to this crisis and the further liberalization of trade under the provision of the Uruguay Round Agreements at the World Trade Organization (WTO) did little to help, and in some cases aggravated the already serious situation. Many African countries are still not recovered from the effects of all these events.

Though the WDR 2008 makes a few guarded references to the mistakes made under structural adjustment programs, there is no place that adequately describes the responsibility of countries and firms who made irresponsible loans, or of the Bank itself for its rigid and often misguided programs, which aimed to restore fiscal balance or to open markets to trade and investment but which ignored empirical experience. The lack of historical perspective is evident in the literature quoted, with very few sources from before the mid 1990s.

Unless we understand history, it is difficult to get the next generation of policies right. And without looking at history anew, we can miss lessons that are there for the taking what we are looking for in our historical experience changes as our context evolves. ...

The WDR 2008 also fails to set out a bold vision for agriculture, nor does it set out a vision for rural economies as a whole. The WDR 2008 vision of agriculture implicitly incorporates mainstream development thinking, which has tended to assume that agriculture, once a country is becoming more developed, should not occupy a significant place in a country's economy. Because returns to agriculture are lower when compared to manufacturing and services, economists tend to view agriculture as necessary, but as of marginal interest. ...Yet this minimizing of agriculture is both disingenuous and partial. ...although wealthy economies in our day and age have relatively small agricultural sectors compared to the economy as a whole, their agriculture is nonetheless worth billions of dollars. Small does not mean unimportant: indeed, many OECD countries spend tens of billions of dollars in public money on food and agriculture. Nor is share of GDP the only indicator of agriculture's importance to a country's economy. ...Most [developing countreis] have a significant share of employment in agriculture, even when agriculture's share of GDP is relatively small. ..

... the importance of agriculture is much greater than its economic value. Agriculture underpins the availability of common goods in both the natural and the social sphere. Ecologically, it is mainly through agriculture that humans shape the natural commonwealth and the biodiversity surrounding us. Socially, first and foremost agriculture is the basis for food security and subsistence. In addition, agriculture is the mainstay of the rural world, including its contributions other sectors of the rural economy, as well as to social cohesion, community life, and religion.

The EcoFair Trade Dialogue chose multi-functionality as one of the principles that should underlie any policy prescription for agricultural trade. ... Reading the WDR 2008, agriculture is presented in instrumental terms rather than as an end in its own right. ...It is portrayed as a way to raise GDP; to create jobs; to manage natural resources, but not as a way of life. ... By remaining silent on agriculture's wider contributions to ecology and society, the WDR 2008 limits the vision for agriculture to "its role as an engine for growth and poverty reduction" (p. 39).

The WDR 2008 is structured around three categories of countries: agriculture-based, transforming, and urbanized. The first category is most of sub-Saharan Africa, with countries that have a large share of GDP in agriculture and where most of the people living in poverty live in rural areas. Transforming countries include most of Asia, the Middle East and North Africa, as well as parts of Europe and Central Asia. In these countries, most economic growth is in non-agricultural sectors, but poverty remains overwhelmingly rural. Urbanized countries are mostly in Latin America and some parts of Europe and Central Asia, where poverty is mostly urban and agriculture may be dynamic but is a small share of total GDP.

Given the report's focus on how to use agriculture to reduce poverty, it makes sense to categorize countries according to where poverty is concentrated and to consider the relative importance of agriculture in the economy before making recommendations for policy changes. On the other hand, the framework suggests a somehow inevitable progression from more to less agriculture in a country's economy. It assumes a progression from more extensive, small-scale and labour-intensive forms of agriculture, such as are still prevalent in the global South, to intensive, large-scale and input-intensive forms of farming. This assumption is highly questionable. Despite the detailed discussion of the various environmental challenges facing agriculture worldwide, the WDR 2008 does not clearly point out the real limitations confronting the industrial agriculture model. ...

The EcoFair Trade Dialogue debated the questions these new departures often give rise to: can we feed the world with other technologies than those that have so dramatically increased yields over the past 50 years? How can we increase productivity where we need to (especially in sub-Saharan Africa) without relying on external inputs? Without definitively answering these questions, the EcoFair Trade Dialogue did challenge the assumption that more of the same is an option: developing countries must not imitate developed countries to find the answer to their agricultural needs. The WDR 2008 does not ultimately confront these problems, leaving a tension in the report that still needs to be answered: 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? ,,,

The EcoFair Trade Panel explored a different conception of three rural worlds. Our notion was to capture three co-extensive, indeed interdependent, kinds of agriculture: a heavily capitalized industrial agriculture, found everywhere but more typical of developed countries and developing countries with plantation agriculture; an agriculture based on family-owned enterprises, the most common model of agriculture, including in the U.S., Europe and Japan; and, subsistence agriculture and landless agricultural workers, in which even those who own land may depend on selling their labour to survive.

Central to this conceptualization of three rural worlds is the way the worlds interact with one another. For instance, heavily capitalized industrial agriculture depends on a supply of low-cost workers, many of whom have too little or too poor quality land to support a household. Industrial agriculture, besides its parasitic relationship to nature, has unfortunately a well-deserved reputation for exploitative levels of pay and for taking advantage of workers with very few choices who sell their labour for nearly nothing. The WDR 2008 does acknowledge a "dualism" in the agriculture of many developing countries.... It does not, however, consider how these sectors relate to one another, or how, for instance, the investments to meet the needs of the modern sector (such as port terminals, and roads or locks and dams to get produce to the terminals) come at the expense of infrastructure to meet domestic demand or to build regional markets. ...

The WDR 2008 describes the poorest countries as
"agriculture-based" nations, which under-plays the role of large-scale and modern farm operations in these countries. The large, modern farms often produce with high external social and environmental costs, at the expense of their smallholder counterparts. For example, commercial tomato growers that export from S‚n‚gal have seriously depleted ground water levels in one of the most prosperous agricultural regions of the country. At the same time, describing richer countries as "urbanized" or "industrialized" hides the presence of (poor) farmers in these countries. In many "urbanized countries" of Latin America, poverty is widespread; in the U.S., the worst poverty is found in rural areas, not in the urban centres where much of the population lives.

The three rural worlds framework used by the EcoFair Trade Panel avoids the assumption that there is an inevitable progression from agriculture-dependence to urbanization. The framework allows the possibility that countries' economic well-being, developed and developing, is inter-related. Without suggesting a simple zero-sum distribution, it is clear, for instance, that processing firms such as Sarah Lee and Nestl‚ take a much larger share of the value of coffee than do the farmers who grow the coffee. In the current market structure, consumers in developed countries are able to buy relatively cheap coffee. With higher tariffs on processed coffee in most rich countries, which reinforce the market power advantage of the processing firms, Nestl‚ and like firms make good profits from these sales. But coffee producers do not earn enough to make a decent living or to invest in the future of their families and communities. Meanwhile, exporting countries are short-changed on their foreign exchange earnings. This makes coffee growers, and coffee exporting countries poorer than they should be, while increasing the returns to food processing based in developed (urbanized) countries the actual value of the commodity production is not realized by producers in the agriculture-dependent country, because they are exploited by firms based in urbanized countries. Understanding this inter-relationship is central to any policy analysis of agriculture. It is not absent in the WDR 2008, but its implications for countries' agricultural development strategies is strangely lacking.

Global agriculture is marked by deeply unequal distribution, which reduces farmers' returns from the market in both developed and developing countries and affects what developing countries earn for their agricultural exports. The WDR 2008 gives important space to the differentiated impact of different policies on women. It also acknowledges differences among rural populations and how they might be affected by various policy measures. The WDR 2008 discusses the violence that unequal access to land gives rise to and gives due importance to peasant organizing and the need for political empowerment at the local level to allow rural communities some political control. The report does not talk about political power at the global level, however, nor about the power of transnational corporations and their ability to extract a disproportionate share of the benefit of agricultural production and processing, as a result both of market distortions and uncorrected market failures. ...

Conclusion

We are living in a period of great uncertainty related to agriculture. We know that climate change is real and that temperatures are rising more rapidly than most scientists at first predicted. We know that many of the technologies developed during the Green Revolution have run out of steam, while the social and environmental problems they have created, including the debt crisis of resource-poor farmers and their loss of land, the over-use of water, soil salinity, polluted waterways, and loss of biodiversity, have reduced the options for the next generation of technologies. ...

There are a number of hopeful signs that a new paradigm will emerge for agriculture. The signs are there in the WDR 2008, although the report as a whole leans towards a better-thoughtthrough version of more of the same. This will not do if we are to meet the challenges we face. The WDR 2008 provides a lot of illustrative examples but no vision for the next decades of agriculture. . ..

a new paradigm for agriculture is needed. The strong assumption underlying the WDR 2008 recommendations is that all countries are at different points on a road that culminates in an economy such as that of the U.S. or Western Europe. The heavily polluted, economically distorted nature of that agriculture, which nests in depressed rural economies which see little benefit from agriculture because the profits are mostly captured off-farm and in metropolitan centres rather than local market towns, is not any kind of model to emulate.

Mainstream agriculture in developed countries is not a good example to follow. First, the land's productive potential should be assessed from the perspective of diversity not yield per plant. ...

Second, we need to move beyond the fossil fuel age. Global demand for oil will soon outpace global supply, resulting in unprecedented price peaks. Oil will not be available as cheaply as the oil that has fuelled economic growth for a century or so. ... the WDR 2008 at no point factors in the mounting expense of fossil fuel inputs as a real brake on agricultural production as we now know it. Already, oil imports are a significant drain on foreign exchange reserves in many developing countries. The widely anticipated significant increase in oil prices will make it impossible for many developing countries to pursue the agricultural development path mapped out by developed and transitional economies. ... Planning ahead, especially for low-income resource poor farmers, opportunities would best be developed in local and regional markets, where transportation needs are reduced and local crops, appropriate to the prevailing water and soil conditions as well as local tastes, will find buyers.

Linked to this need to curb dependence on fossil fuels is the need to respond to climate change. ...The WDR 2008 focuses on the issue in its chapter on the environment and in Focus F. Yet the issue is so significant that it ought to have shaped other chapters as well, particularly the question of science and technology. Countries should be investing in preparedness for uncertainty. ...

Ultimately, just as there are more satisfactory measures of poverty than dollar per day income, there are also other ways out of poverty than increasing that income. As UNDP has documented in its Human Development Reports since 1990, money matters, but human welfare is about much more. The poverty of someone who has no money in a developed economy is very different to the poverty of someone without money in an economy that is still significantly reliant on subsistence production, barter and exchange, and where there are resources held in common that everyone can access. Agriculture and rural cultures more broadly have paid a price, sometimes a heavy price, with the commodification of not just their produce but also their production systems. ...

Poverty lies not just in lack of income, but in the loss of culture and loss of diversity. This tension, and the failure to consider development from a wider perspective such as Amartya Sen's notion of entitlements leaves the WDR 2008 without an anchoring vision from which to advocate some of the really radical changes needed to move agriculture beyond reliance on fossil fuels and beyond servicing the markets of a few wealthy countries and social groups, towards a sustainable, locallyowned and locally accountable sector that neither excludes trade nor makes trade the focus of infrastructure and technology investments.

The WDR 2008, just as it is by and large silent on the past and the question of how things came to be as they are, is also silent about the role of the World Bank and other development funders and investors in meeting the challenges and seizing the opportunities described in the report. Given the prominent role of the World Bank in promoting and financing structural adjustment; in promoting a trade agenda that is now acknowledged to have paid insufficient attention to developing countries' supply constraints and the concentrated power of the firms that operate in world markets; and, in financing projects that caused significant environmental damage, it would be good to see the World Bank setting out a new agenda for itself. ...

The reader is waiting for an annex to the WDR 2008, perhaps to be entitled, "The role of the World Bank in Building Sustainable and Fair Agricultural Systems for the Future".


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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