Emerging Issues in Developing Countries’ Food and Agriculture: Challenges for Policy and Research

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IFAD seminar …

IFAD seminar
Rome, September 22, 2006

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  • 1. 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
  • 2. 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 Joachim von Braun, IFPRI, September 2006
  • 3. IFPRI’s offices Washington DC Beijing New Delhi San Jose Addis Ababa
  • 4. Hunger and malnutrition 1000 Number of hungry people in millions 950 900 Developing world 850 800 750 700 Developing world without China 650 600 550 500 1969-1971 1979-1981 1990-1992 1995-1997 2001-2003 2002-2004 provisional prelim inary Data source: FAO 2006 Joachim von Braun, IFPRI, September 2006
  • 5. Territory size based on the proportion of underweight children that live there Source: SASI Group (University of Sheffield) and Newman (University of Michigan) 2006 Joachim von Braun, IFPRI, September 2006
  • 6. 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 Joachim von Braun, IFPRI, September 2006
  • 7. Driving forces of the food, health and agriculture situation Economic growth and distributions Linkages among them, and each with different risk/opportunity profiles Joachim von Braun, IFPRI, September 2006
  • 8. The corporate world food system, 2005 Consumers Agricultural Food input processors Food industry Farms and traders retailers top 10: $37 bln Agricultural top 10: $363 bln top 10:$777bln value added: • Syngenta $1,315 bln • Nestle • Wal-Mart • Bayer • Cargill • Carrefour $4.000 billion • BASF 450 million • Unilever • Royal Ahold • Monsanto >100 ha: 0.5% • Metro AG • ADM • DuPont • Kraft Foods • Tesco < 2 ha: 85% Source: von Braun 2005 Joachim von Braun, IFPRI, September 2006
  • 9. Transformation of small farm agriculture • Shrinking farms • Growing food processors • Even more growing retailers Rural-to-urban job exports? Rural industrialization? Rural urbanization? Joachim von Braun, IFPRI, September 2006
  • 10. What future for the small farms? Fast transformation but a long run issue Number of farms Farm Size (ha) % of all farms (millions) <2 85 387 2 - 10 12 54 10 - 100 3 12.5 > 100 0.5 2 Total 100 456 The numbers still increase in Africa and diminish very slowly in Asia Source: von Braun 2003 Joachim von Braun, IFPRI, September 2006
  • 11. Big Picture on farm, services, and industry employment 2005 – 2020 (Billions) Farm SI-Rural SI-Urban Total Areas Areas 2005 0.9 0.6 1.5 3 2020 0.6 1.0 1.9 3.5 Change - 0.3 +0.4 +0.4 +0.5 2005-2020 SI refers to services and industry Source: von Braun based on Tarantino 2005, UN World Population Prospects and ILO 2005 Joachim von Braun, IFPRI, September 2006
  • 12. Disappointing progress in WTO Doha negotiations Little achieved in December 2005 Hong Kong Ministerial conference although parties agreed to • eliminate agricultural export subsidies by 2013 • grant LDCs free access to OECD markets for at least 97 % of ag. and manufacturing tariff lines by 2008 A more substantial agreement still elusive  breakdown of talks in July 2006 Joachim von Braun, IFPRI, September 2006
  • 13. WTO Doha negotiations: Potential scenarios Developed Middle income Low-income countries countries countries Initial share in real world income 80 18.7 1.2 Basic scenario Real income gain (billions of US$) 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$) 38.9 23 7 Share of real income gain (%) 56.4 33.4 10.2 Fewer sensitive/special products Real income gain (billions of US$) 38.3 22.6 1.1 Share of real income gain (%) 61.8 36.4 1.8 Source: Bouët 2006 Joachim von Braun, IFPRI, September 2006
  • 14. 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 Joachim von Braun, IFPRI, September 2006
  • 15. Classification of favored Access to infrastructure and Markets and less favored areas Favored Less High Areas Favored Areas Less Less Lowa Favored Favored Areas Areas High Lowb aSocial economic constraints bBiophysical Agriculture potential constraints Source: Pender 2004 Joachim von Braun, IFPRI, September 2006
  • 16. 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 Joachim von Braun, IFPRI, September 2006
  • 17. Returns to investments in India Impacts on agricultural production Irrigated High potential Low potential Investment Units areas rainfed areas rainfed areas HYV’s Rps/ha 63 243 688 Roads Rps/km 100,598 6,451 136,173 Canal Rps/ha 938 3,310 1,434 irrigation Private Rps/ha 1,000 -2,213 4,559 irrigation Electrification Rps/ha -546 96 1,274 Education Rps/ha -360 571 902 Source: Fan and Hazell 1999 Joachim von Braun, IFPRI, September 2006
  • 18. Returns to investments in India Impacts on poverty reduction Investment Units Irrigated High potential Low potential areas rainfed areas rainfed areas HYV’s Persons/ha 0.00 0.02 0.05 Roads Persons/km 1.57 3.50 9.51 Canal Persons/ha 0.01 0.23 0.09 irrigation Private Persons/ha 0.01 -0.15 0.30 irrigation Electrificati Persons/ha 0.01 0.07 0.10 on Education Persons/ha 0.01 0.23 0.01 Source: Fan and Hazell 1999 Joachim von Braun, IFPRI, September 2006
  • 19. Returns to Investments in Uganda Impacts on agricultural production (Ush/Us invested) 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 Source: Fan, et. al. 2004 Joachim von Braun, IFPRI, September 2006
  • 20. Returns to investments in Uganda Impacts on poverty reduction (persons/million USh inv.) 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 Source: Fan, et. al. 2004 Joachim von Braun, IFPRI, September 2006
  • 21. Climate change • Changed perception and concern • Largest impact on the poor • Need for an ecosystem perspective Joachim von Braun, IFPRI, September 2006
  • 22. Global warming Earth temperature: 1,000–2,100 (IPCC) Joachim von Braun, IFPRI, September 2006 Source: IPCC 2001
  • 23. World food and energy prices 1995–2005 Price indices 1995= 100 350 Sugar 300 Crude oil Maize 250 Rice Wheat 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: World Economic Outlook, IMF, April 2006 Joachim von Braun, IFPRI, September 2006
  • 24. Biofuels: Agriculture as a producer of energy has become competitive Net cost of Bio-ethanol production (US cents/liter) US cents / liter 60 55 50 40 30 30 26 20 16 10 0 Brazil (cane) Thailand (cassava) United States EU (wheat) large (maize) plant Source: Henniges 2005 and European Commission 2005 Joachim von Braun, IFPRI, September 2006
  • 25. Growth matters a lot: hunger - income linkage Hunger and GDP/ capita in developing countries Undernourishme nt (% of pop) Log. (1990-1992) 50 Log. (2001-03) Log. (1995-1997) 40 30 20 10 0 0 1000 2000 3000 4000 5000 6000 GDP per Capita (in constant 2000 US$) Source: von Braun, regressions based on data from World Bank (2005) and FAO (2005) Joachim von Braun, IFPRI, September 2006
  • 26. 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 Joachim von Braun, IFPRI, September 2006
  • 27. Sub-Saharan Africa Agriculture value added and GDP growth rates 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 Data source: World Bank 2006 Joachim von Braun, IFPRI, September 2006
  • 28. 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 Joachim von Braun, IFPRI, September 2006
  • 29. Traditional but still relevant conceptual issues  Agricultural and growth linkages  Food and nutrition security • Availability • Access • Safety Joachim von Braun, IFPRI, September 2006
  • 30. 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 Joachim von Braun, IFPRI, September 2006
  • 31. Conceptual issues: Newly understood complications 1. Poverty • Pathways and dynamics of transformations • Poverty traps and thresholds 2. Risks and uncertainties 3. Linkages & externalities Joachim von Braun, IFPRI, September 2006
  • 32. Re 1: Pathways and dynamics of transformations Pathways from poverty: • Institutional rigidities (capital and assets) e.g. urban assets • Transformation of small farm agriculture Joachim von Braun, IFPRI, September 2006
  • 33. Who is affected by hunger? Why rural/agriculture focus is so relevant Urban poor 20% Fishers, herders Land less, rural Small Framers 20% 50% Source: UN Millennium Project, Hunger Task Force, 2005 Joachim von Braun, IFPRI, September 2006
  • 34. Re 2. Risks and uncertainties General types of risks and uncertainties Political Economic and social  Technological Health Environmental ...and their adverse combinations and links; …and more and less man-made Joachim von Braun, IFPRI, September 2006
  • 35. Framework: severity & likelihood of risks Severity High Severity Oil price Low Likelihood High Severity shocks High Likelihood Avian Flu – end of globalization Mass migration away from smallholder farming Low Severity Low Severity Low Likelihood High Likelihood Source: adapted from World Economic Forum 2006 Joachim von Braun, IFPRI, September 2006 Likelihood
  • 36. 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 Joachim von Braun, IFPRI, September 2006
  • 37. Re 3. Linkages & externalities: Example of agriculture & health Expanding the value chain concept AGRICULTURAL Producers Agricultural Agricultural SUPPLY CHAIN outputs system PROCESS/GOVERNANCE POLICY AND POLICY INTERMEDIARY Labor Environmental Income Access PROCESSES Occupa- Water- Food- tional vector-born Nutrition borne HIV/AIDS Livestock- HEALTH health diseases illnesses related OUTCOMES illnesses Joachim von Braun, IFPRI, September 2006
  • 38. 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 Joachim von Braun, IFPRI, September 2006
  • 39. Development strategies and the role of food and agriculture FROM • Growth linkages between Growth agriculture and rest of the Linkages economy • Political economy of food policy • Role of agriculture “on the road toward industrialization” • Agricultural commercialization TO • Microfinance and gender Economywide • Public investment to reduce Policy Analysis poverty Joachim von Braun, IFPRI, September 2006
  • 40. Priorities for research and development actions Connecting new concepts to priorities for research and development in food and agriculture development Experimentation strategies Joachim von Braun, IFPRI, September 2006
  • 41. Macro framework Building a Strategic Analysis and Knowledge System (SAKSS) to inform the design and implementation of rural development strategies Source: IFPRI 2005 Joachim von Braun, IFPRI, September 2006
  • 42. Example: Ethiopia SAKSS •smallholder commercialization •ag/non-ag linkages •price stabilization •public investment •development domains •water harvesting Source: IFPRI 2005 •access to markets and space Joachim von Braun, IFPRI, September 2006
  • 43. Experiments – the how to A new basis for cooperation of research with development policy Toward “experimentalism” Joachim von Braun, IFPRI, September 2006
  • 44. 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 Joachim von Braun, IFPRI, September 2006
  • 45. 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) Joachim von Braun, IFPRI, September 2006 Source: Adato and Maluccio, 2005
  • 46. 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 Source: Adato and Maluccio, 2005 Joachim von Braun, IFPRI, September 2006
  • 47. RPS overall targeting NICARAGUA MAPA DE POBREZA EXTREMA Honduras Madriz Matagalpa Océano Pacífico Mar Caribe Rangos de la Brecha de Pobreza Extrema Pobreza Severa Pobreza Alta Pobreza Media Pobreza Menor Costa Rica Source: Adato and Maluccio, 2005 Joachim von Braun, IFPRI, September 2006
  • 48. 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 Joachim von Braun, IFPRI, September 2006
  • 49. 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 Joachim von Braun, IFPRI, September 2006
  • 50. Innovations in finance, insurance and social protection  Credit for the poor (micro-finance)  Crop insurance for farmers  Health insurance (PPP)  Employment programs Joachim von Braun, IFPRI, September 2006
  • 51. Combining risks and opportunities Governance is key: Essential elements at the national level  Political stability and control of corruption  Rule of law  Voice and accountability  Regulatory quality  Government effectiveness Joachim von Braun, IFPRI, September 2006
  • 52. 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 Joachim von Braun, IFPRI, September 2006
  • 53. Combining risks and opportunities Public investments are key Example from China Returns to Number of poor poverty reduced per 10,000 reduction from Yuan expenditure Returns to rural Average for all regions investments in (average from all GDP from (Yuan per Yuan regions) investments in expenditure) Education 8.8 R&D 9.59 R&D 6.79 Roads 8.83 Roads 3.22 Education 8.68 Electricity 2.27 Telephone 6.98 Telephone 2.21 Irrigation 1.88 Irrigation 1.33 Electricity 1.28 Poverty loan 1.13 Source: Fan, Zhang and Zhang 2002 Joachim von Braun, IFPRI, September 2006
  • 54. 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 Joachim von Braun, IFPRI, September 2006
  • 55. Projected world cereal yields 5,000 4,500 4,000 kg/ha 3,500 3,000 2,500 Progressive Policy Actions Policy Failure Technology and Resource Management Failure 2,000 1997 2015 2030 2050 Source: IFPRI IMPACT projections (February 2005 ) Joachim von Braun, IFPRI, September 2006
  • 56. World Cereal Production (million mt) Progressive Policy Actions 3,500 Policy Failure Technology and Resource Managem ent Failure 3,000 2,500 2,000 1,500 1997 2015 2030 2050 Source: von Braun 2003 Joachim von Braun, IFPRI, September 2006
  • 57. Percentage of malnourished children Progressive Policy Actions 35 Policy Failure Technology and Resource Managem ent Failure 30 25 20 15 10 1997 2015 2030 2050 Source: von Braun 2003 Joachim von Braun, IFPRI, September 2006
  • 58. Summing up 1: Linking conceptual innovations to risks and opportunities in the changed drivers of food and agriculture Drivers Concepts • Consumer & corporate Poverty driven agri-food system • Pathways and dynamics of transformations • Demographics • Poverty traps and • Science & technology thresholds • Energy and climate Risks and uncertainties • Disease • Growth and Linkages & externalities distributions Joachim von Braun, IFPRI, September 2006
  • 59. Summing up 2: goal and context specific linking of drivers and concepts [where strategy and where experiments?] 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 Joachim von Braun, IFPRI, September 2006
  • 60. 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 Joachim von Braun, IFPRI, September 2006
  • 61. Joachim von Braun, IFPRI, September 2006
  • 62. 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 Joachim von Braun, IFPRI, September 2006
  • 63. 15 themes Joachim von Braun, IFPRI, September 2006