emerging issues in developing countries’ food and agriculture: challenges for policy and research

Emerging Issues in Developing

Countries’ Food and Agriculture:

Challenges for Policy and

Research

Joachim von Braun

Director General

International Food Policy Research Institute

IFAD seminar

Rome, September 22, 2006

Joachim von Braun, IFPRI, September 2006

IFPRI basics

• A research center supported by the CGIAR

• Staff of 260 (ca. 80 PhDs, 70% econ.; from

about 30 countries)

• A networked institute, cooperating with all

CGIAR centers and many partners

• Decentralized (Washington, Addis Ababa and

New Delhi)

• Budget: about US$ 40 million (2006); grew from

25 to 40 mill. 2002 - 06

• Governed by a board of trustees

• 5 research divisions

IFPRI’s offices

San JoseAddis Ababa

New Delhi

BeijingWashington DC


Hunger and malnutrition

500

550

600

650

700

750

800

850

900

950

1000

1969-1971 1979-1981 1990-1992 1995-1997 2001-2003

provisional

2002-2004

preliminary

Developing world

Developing world without China

Data source: FAO 2006

Number of hungry people in millions


Territory size based on the proportion of

underweight children that live there

Source: SASI Group (University of Sheffield) and Newman (University of Michigan) 2006


Overview

1. Big drivers of the food, health and

agriculture situation

2. Innovation in the “how-to” of cooperation

between research and development

actors

3. Priorities: Attention beyond the MDGs

and the role of agriculture and rural

change


Driving forces of the food, health and


Linkages among them, and

each with different risk/opportunity profiles

Economic

growth and

distributions


Food

retailers

top 10:$777bln

• Wal-Mart

• Carrefour

• Royal Ahold

• Metro AG

• Tesco

C o

n s

u m

e r s

$4

.00

0 b

illion

The corporate world food system, 2005

Food

processors

and traders

top 10: $363 bln

• Nestle

• Cargill

• Unilever

• ADM

• Kraft Foods

Agricultural

input

industry

top 10: $37 bln

• Syngenta

• Bayer

• BASF

• Monsanto

• DuPont

Farms

Agricultural

value added:

$1,315 bln

450 million

>100 ha: 0.5%

< 2 ha: 85%

Source: von Braun 2005


Transformation of small farm agriculture

• Shrinking farms

• Growing food processors

• Even more growing retailers

Rural-to-urban job exports?

Rural industrialization?

Rural urbanization?


What future for the small farms?Fast transformation but a long run issue

Farm Size (ha) % of all farmsNumber of farms

(millions)

< 2 85 387

2 - 10 12 54

10 - 100 3 12.5

> 100 0.5 2

Total 100 456

The numbers still increase in Africa and diminish very slowly in Asia



Big Picture on farm, services, and industry

employment 2005 – 2020 (Billions)

Farm SI-Rural

Areas

SI-Urban

Areas

Total

2005 0.9 0.6 1.5 3

2020 0.6 1.0 1.9 3.5

Change

2005-2020

- 0.3 +0.4 +0.4 +0.5

SI refers to services and industrySource: von Braun based on Tarantino 2005, UN World Population Prospects and ILO 2005


Disappointing progress in

WTO Doha negotiations

Little achieved in December 2005 Hong

Kong Ministerial conferencealthough parties agreed to

• eliminate agricultural export subsidies by

2013

• grant LDCs free access to OECD markets

for at least 97 % of ag. and manufacturing

tariff lines by 2008

A more substantial agreement still elusive breakdown of talks in July 2006


WTO Doha negotiations: Potential

scenariosDeveloped

countries

Middle income

countries

Low-income

countries

Initial share in real world income 80 18.7 1.2

Basic scenario

Real income gain (billions of US$) 32 21.7 1

Share of real income gain (%) 58.5 39.6 1.9

Free LDC access to OECD

Real income gain (billions of US$) 38.9 23 7


Fewer sensitive/special products

Real income gain (billions of US$) 38.3 22.6 1.1


Source: Bouët 2006


Science and Technology

• Traditional technology:

Innovations at the local level in

water and crop resource use

• Innovations in less favored areas

• Innovations in molecular biology

• ICT revolution and development


Access to infr

astr

uctu

re a

nd M

ark

ets

High

Lowa

High Lowb

Agriculture potential

Favored

AreasLess

Favored

Areas

Less

Favored

Areas

Less

Favored

Areas

Classification of favored

and less favored areas

aSocial economic constraints

bBiophysical constraintsSource: Pender 2004


Why be concerned about

less favored areas?

Over 1 billion inhabitants

Problems of low agricultural productivity, poverty, and natural resource degradation severe and worsening

Problems give rise to conflict, emigration to other areas, & have negative environmental consequences


Returns to investments in India

Impacts on agricultural production

Investment Units

Irrigated

areas

High potential

rainfed areas

Low potential

rainfed areas

HYV’s Rps/ha 63 243 688

Roads Rps/km 100,598 6,451 136,173

Canal

irrigation

Rps/ha 938 3,310 1,434

Private

irrigation

Rps/ha 1,000 -2,213 4,559

Electrification Rps/ha -546 96 1,274

Education Rps/ha -360 571 902

Source: Fan and Hazell 1999


Returns to investments in India

Impacts on poverty reduction

Investment Units Irrigated

areas

High potential

rainfed areas

Low potential

rainfed areas

HYV’s Persons/ha 0.00 0.02 0.05

Roads Persons/km 1.57 3.50 9.51

Canal

irrigation

Persons/ha 0.01 0.23 0.09

Private

irrigation

Persons/ha 0.01 -0.15 0.30

Electrificati

on

Persons/ha 0.01 0.07 0.10

Education Persons/ha 0.01 0.23 0.01

Source: Fan and Hazell 1999


Returns to Investments in Uganda

Impacts on agricultural production

Investment Central East West North

Ag. R&D 12.49 10.77 14.74 11.77

Education 2.05 3.51 3.80 2.10

Feeder roads 6.03 8.74 9.19 4.88

Murram roads n.s. n.s. n.s. n.s.

Tarmac roads n.s. n.s. n.s. n.s.

Health 1.37 0.92 0.96 0.37

(Ush/Us invested)

Source: Fan, et. al. 2004


Returns to investments in Uganda

Impacts on poverty reduction

Investment Central East West North

Ag. R&D 21.75 66.31 48.91 175.52

Education 3.57 21.60 12.62 31.38

Feeder roads 10.51 53.85 30.49 72.82

Murram roads 4.08 11.88 9.77 14.80

Tarmac roads 2.58 13.12 9.39 62.92

Health 2.60 6.15 3.46 5.95

(persons/million USh inv.)

Source: Fan, et. al. 2004


Climate change

• Changed perception and concern

• Largest impact on the poor

• Need for an ecosystem

perspective


Global warmingEarth temperature: 1,000–2,100 (IPCC)

Source: IPCC 2001


World food and energy prices

1995–2005

Source: World Economic Outlook, IMF, April 2006

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Sugar

Crude oil

Maize

Rice

Wheat

Price indices 1995= 100


Biofuels: Agriculture as a producer of

energy has become competitive

Net cost of Bio-ethanol production (US cents/liter)

Source: Henniges 2005 and European Commission 2005

55

16

30

26

0

10

20

30

40

50

60

Brazil (cane) Thailand (cassava) United States

(maize)

EU (wheat) large

plant

US cents / liter


Growth matters a lot:

hunger - income linkage

Source: von Braun, regressions based on data from World Bank (2005) and FAO (2005)

Hunger and GDP/ capita in developing countries

0

10

20

30

40

50

0 1000 2000 3000 4000 5000 6000

GDP per Capita (in constant 2000 US$)

Undernourishme

nt (% of pop)Log. (1990-1992)

Log. (2001-03)

Log. (1995-1997)


But in some countries growth has been

accompanied by increased poverty…

Out of 30 developing countries,

Increased poverty with growth in

12 countries: e.g. Peru, Uganda,

Pakistan

Reduced poverty with growth in 18

countries

Implications for social protection


Sub-Saharan Africa

Agriculture value added and GDP growth rates

Data source: World Bank 2006

Five year average of annual growth rates (in %)

1980-84 1985-89 1990-94 1995-99 2000-04

Agriculture, value

added 0.1 4.5 1.1 4.5 3.5

GDP growth 1.7 2.6 0.6 3.5 3.8


Overview





actors



change


Agricultural and growth

linkages

Food and nutrition

security

• Availability

• Access

• Safety

Traditional but still relevant conceptual

issues


Regional income multipliers from agricultural

growth: typical magnitudes

• Asia: 1.6 – 1.9

(each additional $1 of income generated

in agriculture leads to another $ .6 to .9

of income in the local RNFE)

• Africa: 1.3 - 1.5

• Latin America: 1.4 – 1.6

Source: Haggblade, Hazell and Reardon 2005


Conceptual issues:

Newly understood complications

1. Poverty

• Pathways and dynamics of

transformations

• Poverty traps and thresholds

2. Risks and uncertainties

3. Linkages & externalities


Re 1: Pathways and dynamics of

transformations

Pathways from poverty:

• Institutional rigidities (capital

and assets) e.g. urban assets

• Transformation of small farm

agriculture


Who is affected by hunger?

Why rural/agriculture focus is so relevant

Source: UN Millennium Project, Hunger Task Force, 2005

Land less, rural

20%

Urban poor

20%

Small Framers

50%

Fishers, herders


Re 2. Risks and uncertaintiesGeneral types of risks and uncertainties

Economic and social

Political

Environmental

Health

Technological

...and their adverse combinations and links;

…and more and less man-made


Low Severity

Low Likelihood

High Severity

High Likelihood

High Severity

Low Likelihood

Low Severity

High Likelihood

Mass migration

away from

smallholder

farming

Oil price

shocks

Framework: severity & likelihood of

risks

Likelihood

Severity

Avian Flu –

end of

globalization

Source: adapted from World Economic Forum 2006


Poor people themselves cope with risk

and uncertainty

Diversification

Innovation

Networks

Migration

Savings

and should be supported in these autonomous

strategies with innovation, market access,

social protection


Re 3. Linkages & externalities:

Example of agriculture & health

AGRICULTURAL SUPPLY CHAIN

INTERMEDIARY PROCESSES

PO

LIC

Y A

ND

PO

LIC

Y

PR

OC

ES

S/G

OV

ER

NA

NC

E

HEALTH OUTCOMES

Producers

Agricultural system

Agricultural outputs

Occupa-tional health

Water- vector-born

diseases

Nutrition Food-borne

illnesses

HIV/AIDS

Labor Environmental Income Access

Livestock-related

illnesses

Expanding the value chain concept


Overview





actors



change


Development strategies and the role of

food and agriculture

FROM

Growth Linkages

TO

Economywide

Policy Analysis

• Growth linkages between

agriculture and rest of the

economy

• Political economy of food policy

• Role of agriculture “on the road

toward industrialization”

• Agricultural commercialization

• Microfinance and gender

• Public investment to reduce

poverty


Priorities for research and development

actions

development

strategies

Experimentation

Connecting new concepts to priorities for

research and development in food and

agriculture


Macro framework

Building a Strategic Analysis and Knowledge System (SAKSS) to inform

the design and implementation of rural development strategies

Source: IFPRI 2005


Example: Ethiopia SAKSS

•development domains•water harvesting•access to markets and space

•smallholder commercialization•ag/non-ag linkages•price stabilization•public investment

Source: IFPRI 2005


Experiments – the how to

A new basis for cooperation of

research with development policy

Toward “experimentalism”


Experiments & evaluation design

New standards

Good quantitative evaluation design requires the

use of data collected:

• Before and after the intervention is implemented

And

• From both beneficiaries and non-beneficiaries (those

“with” and “without” the intervention

Pre-program/treatment and control groups

have to be as alike as possible


Example 1: Conditional cash transfer program

Nicaraguan Pilot Red de Protección Social

• Specific objectives of Red de Protección Social• Supplement household income to increase expenditures on food

• Increase healthcare and nutritional status of children under age five

• Increase primary school enrollment and attendance for grades 1-4

• Targeted to six poor rural municipalities in Central Region of Nicaragua

• Transfers made to households who then must comply with program requirements, otherwise they do not receive next transfer

• Size of transfer between 13-21% household expenditures (in Phase I)

Source: Adato and Maluccio, 2005


Design of the quantitative evaluation

• Phase I evaluation based on

randomization and therefore very

powerful design

• Phase II based on matched census areas,

that appear to have been slightly better

off and had more new (health)

interventions over the period 2002-04



RPS overall targeting

NICARAGUAMAPA DE POBREZA EXTREMA

Océano

Pacífico

Costa Rica

Rangos de la Brecha de Pobreza Extrema

Pobreza AltaPobreza MediaPobreza Menor

Pobreza Severa

Honduras

Mar Caribe

Matagalpa

Madriz



Example 2: Estimating impact of rural

electrification and ICT programs in Ethiopia

Objectives of evaluation:

• measure the impact that program has on

the welfare of the population

• investigate whether specific interventions

are more effective than others in

achieving positive outcomes.

Source: Torero, 2006


Distribution of

observations by

control and

treatment groups

• Identification of 17

substations

• Identification of the

towns that fall in the 100k

radius

• Identification of towns

that do not have access

to electricity

• Non parametric

matching to control for

any additional selection

bias as a result of the

feasibility study

Source: Torero, 2006


Innovations in finance, insurance and

social protection

Credit for the poor (micro-finance)

Crop insurance for farmers

Health insurance (PPP)

Employment programs


Combining risks and opportunities

Political stability and control

of corruption

Rule of law

Voice and accountability

Regulatory quality

Government effectiveness

Governance is key:

Essential elements at the national level


Government effectiveness map

Green: Best quartile (over 75th percentile),

with top 10th colored in darker green

Yellow: second best quartile (over 50th)

Orange: third quartile (over 25th)

Red: fourth quartile, with bottom 10th in darker red.

Source: Kaufmann et al., 2005


Combining risks and opportunities

Returns to rural

GDP from

investments in

Average for all regions

(Yuan per Yuan

expenditure)

R&D 9.59

Roads 8.83

Education 8.68

Telephone 6.98

Irrigation 1.88

Electricity 1.28

Returns to

poverty

reduction from

investments in

Number of poor

reduced per 10,000

Yuan expenditure

(average from all

regions)

Education 8.8

R&D 6.79

Roads 3.22

Electricity 2.27

Telephone 2.21

Irrigation 1.33

Poverty loan 1.13

Source: Fan, Zhang and Zhang 2002

Public investments are key

Example from China


Combining risks and opportunities:

Scenarios of IMPACT Model

Progressive Policy Actions Scenario:

New Focus on Agricultural Growth and Rural

Development

Policy Failure Scenario:

Trade and Political Conflict, rise in protectionism

worldwide

Technology and Resource Management Failure

Scenario:

Adverse technology/natural resource interactions


Projected world cereal yields

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1997 2015 2030 2050

kg

/ha

Progressive Policy Actions

Policy Failure


Source: IFPRI IMPACT projections (February 2005)


World Cereal Production (million mt)

1,500

2,000

2,500

3,000

3,500

1997 2015 2030 2050


Policy Failure




Percentage of malnourished children

10

15

20

25

30

35

1997 2015 2030 2050


Policy Failure




Summing up 1: Linking conceptual innovations to

risks and opportunities in the changed drivers of

food and agriculture

Drivers

• Consumer & corporate

driven agri-food system

• Demographics

• Science & technology

• Energy and climate

• Disease

• Growth and

distributions

Concepts

Poverty

• Pathways and dynamics

of transformations

• Poverty traps and

thresholds

Risks and uncertainties

Linkages & externalities


Summing up 2: goal and context specific

linking of drivers and concepts

1. Macro policy and governance (strategy)

2. Agricultural growth promotion through rural infrastructure, and agriculture innovation (strategy and experiments)

3. Rural non-farm employment and small business facilitation (strategy and experiments)

4. Targeted programs for strengthening health and education (experiments)

5. Insurance and social protection (experiments)

Posing a challenge for complex campaigns

[where strategy and where experiments?]


Summing up 3: Reaching the “other half” left

aside by MDG1 - soon after 2015

Attention beyond the MDGs with new initiatives

needed…

1. Governance strengthening (country specific)

2. Rural infrastructure and agriculture public

investment for pro-poor growth

3. Targeted programs for strengthening capabilities of

the poor

4. Insurance and social protection

Posing a challenge for more complex campaigns

around the MDGs


Priority setting criteria at IFPRI

1. Program / projects must conform to

IFPRI mission (policy solutions that

reduce hunger and malnutrition),

2. Address emerging issues

3. Dynamic comparative advantage

4. Stakeholders’ and partners’ voice

All 4 criteria together, not in isolation


15 themes

emerging issues in developing countries’ food and agriculture: challenges for policy and research

Documents

ifpri basics

development joachim

real world income

share of real income

research divisions joachim

favored areas innovations

food processors

developing world