Agriculture renaissance 2010
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Transcript of Agriculture renaissance 2010
Agriculture Renaissance
Prabhu Pingali
Deputy Director
Agriculture Development
Making “Agriculture for Development” Work
April 20th, 2010
Why Agricultural Development?
Agriculture is key to reducing
hunger and poverty
• Most people living on $1 a day rely
on agriculture for food and income
• In Sub-Saharan Africa, farming
accounts for 2/3 of employment and
1/3 of GDP
• In South Asia, the rural poverty rate
is still approximately 40%
Employment in Sub-Saharan Africa
GDP in Sub-Saharan Africa
Other laborFarming
Other laborFarming
The Transformative Power of Agriculture
• Agriculture growth is 2–4 times
more effective for the poor than
non-agricultural growth
• Almost no country has
managed a rapid rise out
of hunger and poverty without
increasing its agricultural
productivity
• Reducing hunger and
poverty on a large scale
starts with improving
agricultural development
For the poor, agriculture has special poverty-reducing benefits.
Expenditure gains induced by 1% GDP growth, %
Expenditure deciles
Agriculture based
Lowest 2 3 4 5 6 7 8 9 Highest
8
6
4
2
0
-2
Non-agriculture
The Green Revolution
We know progress is possible.
From the 1960s to the 1980s,
crop improvements in Asia and
Latin America helped:
• Double food production
• Save hundreds of millions of lives
• Lay a foundation for growth in
countries like India and China
Rural poverty in India
Poverty rate, %60
50
40
1985
1980
1975
1970
1965
Nearly 20% reduction inpoverty in just two decades.
GREENREVOLUTION
PERIOD
20%
Green revolution impacts on crop improvement
Production• Cereal output in
developing countries has grown 2.8 percent annually for three decades
Productivity• Yields, not area, were
responsible for growth• TFP grew along with
yields
Long run commodity price decline has had a positive impact on food security and poverty reduction
Real prices for commodity group
Investments in agricultural research and development yield high returns.
Agricultural research and development (R&D) yield returns of 40-50 percent.
Returns are high in all regions, including Sub-Saharan Africa.
Traditionally, public research carried out in OECD countries had large spillover effects in developing countries.
Kick Starting Agriculture Productivity Growth: Lessons from Asia
Policy and institutional reforms set the stage for success• These accounted for the largest shares of both agricultural growth and poverty reduction over the six
Asian economies agricultural growth boom periods – Household Responsibility System in China and Vietnam’s doi moi reforms
• Firming up property rights spurs investment and access to credit for business development
• Market-oriented liberalization improves market efficiency and resilience to demand and supply fluctuations through price mechanisms –China and Indonesia developed their ag sectors with careful planning in this area.
Developing and implementing technological improvements essential• The successful Asian economies built up world-class scientific research enterprises in agriculture. These
research institutes, universities and private firms developed new cultivars, agri-chemicals and farm machinery and designs adapted to the needs of local farmers.
• Much of this research was accomplished through close interaction with key international partners such as the agricultural research centres of the Consultative Group for International Agricultural Research (CGIAR)
Support for public infrastructure must be given a priority• Improved rural roads, irrigation, electricity, rural health care and other public services accounted for
nearly 30%, on average, of agricultural output growth in the six Asian economies studied
• Government expenditure on agriculture averaged 15% of total government expenditure in Asia during the boom years in the 1980s; African agriculture investment levels average currently around 5%.
Agricultural Transformation: a Global Phenomenon
Low Productivity Agriculture
Industrialized Agriculture
Modernizing
Agriculture
0
10
20
30
40
50
60
70
80
-1,000 4,000 9,000 14,000 19,000 24,000 29,000 34,000 39,000 44,000 49,000 54,000
GDP (US$ per Capita)
Share of
Agriculture
(% GDP)
Low
Income
Lower
Middle
Income
Upper Middle
Income
High Income
0
10
20
30
40
50
60
70
80
-1,000 4,000 9,000 14,000 19,000 24,000 29,000 34,000 39,000 44,000 49,000 54,000
GDP (US$ per Capita)
Share of
Agriculture
(% GDP)
High Human Development
Medium Human Development
Low Human Development
Characteristics of Agricultural Transformation
Traditional
Agriculture
Modernizing
Agriculture
Industrialized
Agriculture
Share of Ag
in GDP>30% 10%-30% <10%
Share of Ag
labor in total>50% 15-50% <15%
Market
OrientationSubsistence National International
Output
MixFood Staples
Food Staples
+ Export Crops
Highly
differentiated
Scale
EconomicsNot Important Not Important Important
Developing world agriculture is facing increasing divergence
Low Productive Agriculture in the Least Developed Countries
Modernizing Agriculture in the Transforming Economies
Low-Productivity Agricultural Economies
Generally the Least Developed Countries (LDCs)
Ag has a large share of GDP yet productivity is low
Low NARS capacity & low private sector interest
Low prospects for reaching the MDG goals on poverty and hunger & high levels of environmental degradation
Low agricultural productivity in Africa is a multi-faceted problem
Low investment in research Very limited access to markets
Poor policy and regulatory environments
Low input usage and yield levels
Average cereal yields by region, 1960-2003mt/ha
SSA
ROW4
9
SSA
101
World
Fertilizer use
kg/ha arable land,
2002
21.4
3.01.4
Nigeria India USA
Road access
Metres road/capita
Agricultural research expenditures, 2000
8.2
2.6
1.5
1.5
$13.8 billion
ME and
N. Africa
LATAM
SSA
Asia-Pacific
100% = $36 billion per year
62% 38%
Developed
countries
Developing
countries
Of the ~$36 billion spent on agricultural
research in 2000, only ~$1.5 billion (~4%)
was spent on SSA
Source: FAOStat; IFDC; World Bank
Net ODA and Subsidies to Domestic Agriculture Producers ((Avg. 2003-2005)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Japan US EU
% G
DP
Producer subsidies
for agriculture
Net ODA
Policies, such as trade and investment, towards the developing world often contradict and counteract official development assistance
Developing
countries
Although these regions
have abundant
potential (e.g.,
sunlight, labor, water,
knowledge),
productivity is low,
which represents both
a huge need and
opportunity.
Implications for Agricultural R&D: back to basics?
Focusing on productivity improvement but with the benefit of modern science and 40 years of lessons learnt on trade-offs.
Dealing with the “Changing Locus of Agricultural Research” -- Public to Private Sector
Going further down the impact pathway than in the past
Building local capacity for R&D
Transforming Economies
Dietary transformation fueled by economic growth and demographic shifts
Organizational changes in retail, wholesale, processing, and procurement
Tremendous heterogeneity observed w/ respect to participation and distribution of benefits
Dietary transition in Asia: an overview
Reduced consumption of rice Increased consumption of wheat and wheat
based productsRise in high protein and energy dense diets Increased consumption of temperate zone
productsRising popularity of convenience food and
beverages
Rising GDP per capita is associated with a larger share of supermarkets in food retail
0%
20%
40%
60%
80%
100%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
GDP per Capita, PPP, 2002
Sh
are
of
Su
perm
ark
ets
in
Fo
od
Reta
il
Source: data from Traill (2006) and World Bank World Development Indicators (2006)
The Changing Food System
InputsPrimary
production
Processing
and
packaging
Distribution
and retail Consumption
Individuals Enterprises
Governed by Institutions:
Rules and regulations
Markets (Contracts)
Transport Services
Transforming Economies: implications for R&D
Sustaining and enhancing staple crop productivity gains
Making domestic agriculture globally competitive
Diversifying agricultural systems & household incomes
Reducing rural poverty & malnutrition, especially in marginal environments
Industrialized Economies
Low share of agriculture in GDP
Productive agricultural sector
High yet declining protection to agricultural sector
Emergence of markets for non-commodity roles of agriculture
Food Price Crisis of 2007-2008
IMPACTS
Real
prices
(USD per
metric
ton)
Source: IMF Commodities database
0
100
200
300
400
500
600
700
800
900
Rice
Wheat
Maize
◊ Demand side determinants
• Population growth &
Urbanization
• Income elasticity of food
demand
• Feed & bio-fuel demand
◊ Supply responsiveness
• Area expansion possibilities
• Increased Intensification
• Reducing the yield gap
• Input price trends
◊ Enabling Policy Environment
• Infrastructure development
• Agricultural R&D
• Macroeconomic & trade policy
◊ Climate Change Risks
• Long term productivity impacts
• Volatility in supplies
Determinants of Future Food Prices and Food Security
Thank You
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