THE WORKSHOP FOR THE NATIONAL FOCAL POINTS ON THE IMPLEMENTATION OF THE BRUSSELS

PROGRAMME OF ACTION FOR THE LEAST DEVELOPED COUNTRIES

New York

17 – 21 May 2004,

Role of Agriculture in the Development of LDCs

Harmon C. ThomasChief

Commodity Policy and Projections ServiceCommodities and Trade Division

FAO, Rome

I. Development challenges facing LDCs and

the role of the agricultural sector

II. FAO approach to the implementation of the

BPoA

Outline of the Presentation

I. Development challenges facing LDCs and the role of the agricultural sector

• Challenges:

- reducing poverty; and

- enhancing food security

Extent of poverty: proportion of the poor in total population(Select LDCs)

0 10 20 30 40 50 60 70 80

Benin

Senegal

Tanzania

Cambodia

Lao PDR

Guinea

Yemen

Nepal

Uganda

Ethiopia

Djibouti

Burkina Faso

Mauritania

Bangladesh

Rwanda

Eritrea

Niger

Mali

Chad

Gambia

Malawi

Mozambique

Madagascar

Zambia

PercentSource: World Bank , World Development Indicators 2003

Extent of food insecurity: percentage of population undernourished, 1998-2000 (available data for 36 LDCs)

Above 70% 30 – 49% 10 -29% DR of Congo Sierra Leone Lesotho Somalia Tanzania Senegal Afghanistan Central Africa R Lao Burundi Ethiopia Burkina Faso Madagascar Togo 50 – 69 % Rwanda Gambia Liberia Sudan Eritrea Cambodia Uganda Mozambique Niger Mali Angola Bangladesh Nepal Haiti Malawi Benin Zambia Yemen Mauritania Chad Guinea Below 10%

Myanmar Source: FAO, SOFI 2002

I. Development challenges and the agricultural sector

• Importance of the agricultural sector in LDCs

• Why is the agricultural potential in LDCs underexploited?

1. Importance of Agriculture in LDCs

- Proportion of population dependent on agricultural activities

- Share of agriculture in GDP

- Share of agriculture in exports

- Agricultural potential

The rural sector: population size, 2001

CountryRural pop. as % of total pop.

Total pop (million)

LDCs Total

Rwanda

74

94

684.3

8.0

Bhutan 93 2.1

Burundi 91 6.4

Nepal 88 24.1

Uganda 85 24.2

Malawi 85 11.6

Ethiopia 84 67.3

Burkina Faso 83 12.3

Cambodia 82 13.5

Eritrea 81 3.9

Laos 80 5.4

.  . .

. . .

Share of population dependent on agriculture for livelihood (frequency distribution of LDCs)

0

5

10

15

20

25

30

35

20 - 39% 50 - 69% Above 70%

Agricultural population as percentage of total population

Num

ber

of c

ount

ries

Share of agriculture in GDP (frequency distribution of 42 LDCs)

below 15 4

Share of Agricultural GDP in Total GDP (%)

0

4

8

12

16

20

below 15 15-24 25-39 40 andabove

percent

Nu

mb

er

of

co

un

trie

s

Share of agricultural products in total merchandise exports (frequency distribution of LDCs)

0

5

10

15

20

25

30

Less than 5 5-25 25-50 Greater than 50

Num

ber o

f cou

ntrie

s

Share of single agricultural commodity in total merchandise exports (frequency distribution of LDCs)

Above 40% 10 – 19% Below 10% Burundi Djibouti Liberia Sao Tome & Principe Tanzania, United Rep. of Niger Ethiopia Afghanistan Haiti Malawi Myanmar Mozambique Guinea-Bissau Sudan Nepal Rwanda Madagascar Bhutan Vanuatu Central African Rep. Eritrea Kiribati Congo, Dem. Rep. of Zambia Lao PDR 20 – 39 % Mauritania Burkina Faso Guinea Chad Senegal Comoros Bangladesh Benin Equatorial Guinea Mali Lesotho Somalia Zambia Togo Cape Verde Gambia Source: FAO (2003)

Agricultural potential (35 LDCs)

Arable land in use as % of potential

Number of countries

5 – 20% 13

Congo DRC; Mozambique; Central African R; Angola; Liberia; Guinea-Bissau; Mali; Madagascar; Zambia; Sudan; Chad; Tanzania; Guinea.

21 – 50% 8Gambia; Lao; Burkina Faso; Benin; Sierra Leone; Myanmar; Ethiopia; Cambodia;

51-90% 7Malawi; Nepal; Mauritania; Bangladesh; Togo; Uganda; Somalia;

Above 90% 7Burundi; Haiti; Yemen; Lesotho; Eriterea; Afghanistan; Rwanda.

Source: FAO 2003

2. Why is the agricultural potential in LDCs underexploited?

• Domestic factors– Low investment and utilization of modern technology– Ineffective domestic policy frameworks

• External factors- distorted international markets and the challenges arising from integrating into such

markets

Domestic factors

Low investment in agriculture

1992 1995 1999

Investment in agriculture (millions US $, at 1995 prices)

Burundi 15 22 15

Zambia 20 16 3

Madagascar 16 24 37

Nepal 69 34 71

Yemen 107 46 156Ethiopia 164 127 …..Myanmar 323 1705 3099

Source: FAO (2003)

Government expenditure on agriculture as a share of total expenditure

Source: FAO (2003)

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

Share of agriculture in GDP

Share of agriculture in total government expenditure

External assistance (ODA) to agriculture in all developing countries

4

8

12

16

20

24

billi

on U

S$

0

5

10

15

20

25

perc

ent

External assistance to agriculture (EAA) Share of EAA in total ODA

Why is the agricultural potential in LDCs underexploited?

External factors

• Differences in support to agriculture (rich vs. poor countries)

• Challenges arising from integrating into distorted international agricultural markets

External factors .... consequences

External factors .... consequences

Agricultural trade balance, 1960 to 2000

Least developed countries

Source: FAO data

External factors .... consequences

• Specific challenges

– Displacement effect of import surges – Continuing rise in food imports – Financing the increasing food import bills

Displacement effects of import surgesExamples of import surges and production shortfalls

Senegal - tomato production and tomato paste import

-1

9

19

29

39

49

59

69

1980 1984 1988 1992 1996 2000

To

mat

o p

rod

uct

ion

(

1000

mt)

-1

1

3

5

7

9

To

mat

o p

aste

imp

ort

(

1000

mt)

Production Import

Commerical food import bills - current US$

0

2,000

4,000

6,000

8,000

10,000

12,00019

70

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Year

US$

mill

ion

Commericial Food Imports LDCs Commercial Food Imports NFIDCs

Rising commercial food import bills – LDCs & NFIDCs

Rising commercial food import bills - LDCs

Source: FAO (2003)

  1980-89 1996-2001 Change

  million US$ percent

LDCs Total 2716 4985 84

Myanmar 17.1 145.7 752

Tanzania 39.8 202.7 409

Uganda 20.0 85.2 326

Haiti 66.5 247.7 272

Nepal 32.7 118.8 263

Malawi 12.0 40.9 241

Bhutan 3.4 11.2 230

Cape Verde 13.1 42.5 224

Benin 32.6 91.1 179

Laos 9.0 24.5 172

Bangladesh 341.7 891.3 161

Equatorial Guinea 4.1 8.4 103

Tuvalu 0.5 1.0 103

Kiribati 4.1 7.8 90

Zambia 33.1 61.8 87

Comoros 9.4 15.0 59

Cambodia 33.2 48.9 47

Ability to finance food import bills

Food imports as a percentage of total exports of goods and

services minus debt service, 1999

Haiti 62.7 Djibouti 39.7 Mauritania 56.4 Senegal 28.9 Rwanda 55.7 Burkina Faso 27.7 Guinea-Bissau 49.7 Niger 27.2 Mozambique 46.7 Bangladesh 26.8 Lesotho 44.0 Gambia 41.8 Burundi 26.1 Benin 21.0

Conclusions: What needs to be done from a development and food security perspective?

• Reform international agricultural markets – by reducing/eliminating distortions in such markets

• Improve the policy incentives in LDCs for productivity raising investments in agriculture

• Financial and technical assistance– to help LDCs diversify from excessive economic dependence

on one or a few agricultural commodities

I. Development challenges facing LDCs and

the role of the agricultural sector

II. FAO approach to the implementation of the

BPoA

Outline of the Presentation

II. FAO Approach to the implementation of the Brussels PoA

• Mainstreaming those aspects of the PoA within FAO’s mandate into its existing Programme of Work.

• Addressing the specific problems of LDCs on a case-by-case basis through FAO’s technical assistance programme.

• Annual reporting to FAO Council on progress of implementation

II. FAO Approach to the implementation of the Brussels PoA

FAO’s technical assistance to LDCs is focussed on:

– Strengthening supply-side capacity and production

– Responding to emergencies

FAO Contributions to the implementation of Brussels PoA: major areas of assistance

PoA Commitments Major FAO activities

Commitment 1 -FAO Anti-hunger programme

Commitment 3 - Food and nutrition education - Nutritional care and support for people with HIV/AIDS- Agricultural education, training and extension -Support for rural women-Food safety and quality standards- Building institutions that foster farmers’ and rural people’s organisations

Commitment 4 - Special programme for food security- Strengthening agricultural productive capacity: productivity, diversification and quality enhancement- Livestock production and health - Forest and forest management- Fishery industry: utilization, development and marketing

FAO Contributions to the implementation of Brussels PoA: major areas of assistance

PoA Commitments Major FAO activities

Commitment 4 (cont.)

- Assistance on emergencies- Support in policy formulation and agricultural development strategies- Food insecurity and vulnerability information and mapping system

Commitment 5 - Promoting regional economic integration by collaborating with Regional Economic Organisations (REO)- Support to the NEPAD initiative of the African continent- Technical analyses and support on trade negotiations- Assistance on agricultural commodities

Commitment 6 - Support to developing and implementing national forest programmes- Assistance for disaster preparedness and prevention

FAO and mobilization of resources for LDCs

• FAO field programme – In 2003, more than 510 FAO field projects, with a total budget

value of US$ 532 million, were active in 45 of the 49 LDCs.

• FAO assistance to LDCs in mobilising external assistance to agriculture and rural development projects.

– During 2001 – 2003, FAO assisted LDCs by mobilizing external funding commitments for 84 agricultural and rural development projects, amounting to total investments of US$1,428.9 million.

FAO Field Programme Delivery in LDCs by technical sector, 2003

Emergency 36%

Crops24%

Food Production Support

10%

Forestry6%

Natural Resources

4%

Rural Development

3%

Others17%

Thank you