The State of Food and Agriculture 2015 - Social protection and agriculture: breaking the cycle of rural poverty

1. FAO Economic and Social Development Department Social protection and agriculture: breaking the cycle of rural poverty The State of Food and Agriculture 2015 #sofa15 Rome, 13 October 2015
2. FAO Economic and Social Development Department #sofa15 Social protection: Why FAO? • Most of the poor and hungry live in rural areas • In informal sector, not modern formal sector • State of world economy, bleak prospects • Existing economic distribution difficult to reform • From protection to production • 2012 GA: Social protection floor • SDGs: Preamble, 1, 5, 10
3. #sofa2014#sofa15 Most of the extreme poor live in sub-Saharan Africa and South Asia
4. #sofa2014#sofa15 Most of the extreme poor live in rural areas
5. #sofa2014#sofa15 Key factors reducing poverty and hunger • Economic growth necessary, but not sufficient – Needs to be inclusive to reach the poorest • Increase productivity of smallholder and family farming – Improves incomes and access to food • Access to rural markets – Provides market and employment opportunities • Reduce impact of natural and human-made disasters – Of 20 countries in protracted crisis, only Ethiopia reached the MDG hunger target • Increase coverage of social protection – Reduces poverty and hunger directly – Fosters economic opportunities and builds resilience • SP includes interventions to: – reduce social and economic risk and vulnerability – alleviate extreme poverty and deprivation
6. #sofa2014#sofa15 Most in developing world not covered by social protection
7. #sofa2014#sofa15 Poorest households more likely to be covered by social protection, but the shares vary
8. #sofa2014#sofa15 SP protects poor, prevents worse deprivation • Social protection reduces poverty – In 2013, SP measures prevented 150 m. people worldwide from falling into poverty. • Social protection reduces food insecurity and seasonal hunger – Improves quantity and quality of food consumption, increases dietary diversity • Having a SP system in place enables governments to react quickly to crises • Gender-sensitive social protection increases positive impact on food security
9. #sofa2014#sofa15 Social protection empowers, encourages investment • Boosts demand for local goods, services, economy • Long-term effects of improved human resources • Increases on- and off-farm investment, production • Helps households manage risk • Reduces burden on social networks and informal insurance mechanisms • Broadens labour choices, but does not reduce work effort • Adults tend to move from casual agricultural wage labour to on-farm activities • Children work less and go to school more • SP affordable in all countries, especially middle- income countries; LICs could do more with aid
10. #sofa2014#sofa15 Social protection alone not enough to eliminate poverty • Addressing chronic poverty and food insecurity requires long-term, predictable social protection and complementary measures • Social protection, agricultural investments part of rural development strategy • Programmes necessary to address structural constraints faced by poor households • Social protection and agricultural investments together build resilience • e.g. Purchase from Africans for Africa Programme (PAA) creates markets for family farmers to meet demand for social protection programmes. Home grown school-feeding programmes are examples of IPPs. In Africa, they sometimes build on WFP’s Purchase for Progress, P4P.
11. #sofa2014 Incomes, investment requirements
12. #sofa2014 Incomes of poor, poverty line
13. #sofa2014#sofa15 For more information … The State of Food and Agriculture 2015 Social protection and agriculture: breaking the cycle of rural poverty FAO‘s major annual flagship publication Available in: Arabic, Chinese, English, French, Russian and Spanish www.fao.org/publications/sofa

Editor's Notes

We have achieved considerable progress in fighting global hunger and poverty.
The share of people living in extreme poverty (living on less than $ 1.25 per day) has fallen from 43% in 1990 to about 17% today.
But the numbers remain high.
… about 1 billion people, more than 1/3 of all people in low- and middle-income countries, are poor (living on less than $ 2.00 per day).
And, almost another 1 billion, about 1/6, is extremely poor (living on less than $ 1.25 per day)
Extreme poverty has fallen substantially over the past three decades in many regions, especially in East Asia and the Pacific as well as in South Asia.
In sub-Saharan Africa little progress has been made and almost half the population is extremely poor.
Sub-Saharan Africa accounts for about half the world’s extreme poor and about two-thirds of the world’s ultra-poor, with the latter referring to those living on less than half the $1.25 per day extreme poverty line.

Graphic source: World Bank. 2015. Povcalnet. Online analysis tool for global poverty monitoring.
[Graphic shows: share of rural and urban populations in low- and middle-income countries in extreme poverty (less than $ 1.25 a day), by region]

Extreme poverty is disproportionately concentrated in rural areas.
The World Bank estimates that, by 2010, 78% of the extreme poor lived in rural areas.
This pattern of rural deprivation is evident across regions despite differences in overall poverty rates. In all regions, the share of people in extreme poverty is larger in rural than in urban areas.
The relative deprivation in rural areas is reflected in a wide range of indicators of socio-economic welfare. For example, child malnutrition, as measured by the prevalence of underweight in children under five, is worse in rural areas in virtually every country for which data are available
Rural people in most developing countries, but especially in SSA, rely on agriculture for an important share of their incomes, although they may engage in many income-generating activities.
And for poor agricultural households, income from on-farm activities is relatively more important than it is for other agricultural households.
For example, in Ghana food producers make up 43% of the population but account for 69% of the headcount poor.
In SSA almost three-quarters of the economically active rural population are small family farmers who produce a significant share of their own food consumption: many of them are poor or extremely poor.
Family farms are the backbone of agriculture in low- and middle-income countries, but many family farms are small and poor. Almost 75% (375 million family farms) of farms in low- and middle-income countries are smaller than one hectare.
The poorest farming households are net food buyers, and food makes up a large share of the household budgets of the poor, whether or not they farm.

Graphic sources: World Bank. 2015. Povcalnet. Online analysis tool for global poverty monitoring, and World Bank. 2015. World Development Indicators database.
Growth, especially in agriculture, is necessary but not sufficient: Economic growth, esp. ag growth, has been essential in driving down poverty rates; strong economic growth helped reduce the global poverty rate from 46 to 27 percent between 1990 and 2005.
But economic growth takes a long time:
households build physical and financial assets very slowly. This is also because poor households adopt livelihood strategies that leave them less exposed to risk (managing risk), but that earn lower returns.
Growth is not always inclusive. Many of the poor live in areas where markets for inputs and outputs, labour and other goods and services such as credit and insurance, are lacking or do not function well.
For some groups, such as children and the elderly, economic growth may bring little relief or come too late to prevent lasting deprivation and damage.
Poor nutrition and an inability to invest in education and health helps perpetuate poverty over generations.
Also, the path out of poverty is not smooth.
Many non-poor households vulnerable to poverty when faced with natural or human-induced shocks. For example, as a result of the fuel, food, and financial crises, some 64 million more people around the world were expected to be living on less than $1.25 per day by the end of 2010 than would have been the case without the crisis. In some countries and regions, such as the Sahel, rainfall variability, land degradation and desertification contribute to vulnerability and poverty.
Households may also adopt coping (after shock) strategies, such as selling assets, taking children out of school and reducing food consumption, that worsen and help perpetuate their poverty.

Without public assistance, many of the poor and vulnerable will suffer unnecessary hardship and lasting deprivation, perpetuating poverty for future generations. In developing countries, successful experiences with large-scale programmes that help the poor and vulnerable, for example in Brazil, Ethiopia, India and Mexico, have given impetus to a reassessment of the value and role of such programmes in combating poverty and hunger, as well as social, economic and political inequality.
In developing countries, the successful experiences with large-scale programmes that help the poor and vulnerable, as for example in Brazil, Ethiopia, India, and Mexico, has given impetus to a reassessment of the value and role of such programmes in combating poverty, hunger as well as social, economic and political inequality. There has been a rapid expansion of SP programmes in the last two decades.
In 2014 at least 145 countries provided one or more forms of SP. Nearly all countries have some form of school feeding, covering at least 368 million children. Throughout the developing world about 2.1 billion people, about 1/3 of the population, are covered by some form of SP. There is a wide variation among regions, with coverage lowest in the regions where poverty incidence is highest. Only about 30% of the population of South Asia and 20% of the population of SSA are covered by SP measures of any kind.
In South Asia and SSA, social assistance transfers have the broadest coverage, reaching on average about 17 and 16 % of the population, respectively. These levels are far lower than the social assistance coverage in other regions, which ranges from an average of 27 % in Latin America and the Caribbean to 34 % in the Middle East and North Africa.
CCTs have expanded dramatically between 2008 and 2014 when they were operated in 63 countries, up from 27 in 2008. Twenty-two out of the 33 countries in Latin America and the Caribbean has a CCT programme in place. In SSA the figure was 18.
There are about 130 UCTs, 37 of which are social pension programmes. In SSA there were 41 UCT programmes operating in 2014, 20 more than in 2008. Globally, the number of public works programmes rose from 62 to 94 between 2011 and 2014; they are most prevalent in SSA (39 countries), although South Asia has some of the world’s largest programmes of this type.

Graphic source: ASPIRE, World Bank, online database.
[Graphic shows: shares of rural population covered by social assistance, by income quintile and region]

… and within rural areas poorer households are more likely to receive social assistance than higher-income households. Coverage is much lower in the poorest regions: in rural areas of South Asia and sub-Saharan Africa, the share of the poorest quintile receiving some sort of social assistance is only about 30% and 20 % respectively, compared to about 70 % in Latin America and the Caribbean.

The poorest income quintiles are more likely to receive social assistance, but significant shares of other income quintiles, including the richest, also receive social assistance. Across all regions, about 15-35 % of the richest quintile in rural areas receives social assistance.

Graphic source: ASPIRE, World Bank, online database.
Fiszbein, Kanbur and Yemtsov (2014) estimate that about 150 million people are kept out of poverty by different SP measures.
The majority of these people are in Eastern Europe and Central Asia. Far fewer people are protected in SSA and it is estimated that only 1 % of the population moves out of poverty each year as a result of SP transfers.
In Mexico the Prospera programme reduced poverty by 10 % and the poverty gap by about 30% between 1998 and 2000. Mexico highlights the importance of rigorous independent monitoring and evaluation.
In Brazil, Bolsa Família is an example of a comprehensive network of complementary policies. The government was able to react quickly after 2008, scaling up at low cost.
India’s Targeted Public Distribution System reached about 45% of the population in 2010-11 and is expected to expand to about 75% of the pop. In 2009-10 the poverty headcount rate would have been 4.6% higher in the absence of the TPDS. It reduced rural poverty but about 11 % and the poverty gap by about 18%.
Seasonality is a major contributor to hunger and undernutrition.
A meta-analysis covering 48 studies of 39 social protection programmes, found average programme impacts (relative to the baseline) of 13% for calorie intake, 17% for food consumption/expenditure. Some programmes improved dietary diversity, esp wrt to consumption of animal products.
Impact of SP on food security and poverty reduction can be enhanced by focusing on role of women and addressing gender inequalities in decision-making and control over household income.
Many poor households’ livelihoods are based on agriculture, mainly subsistence.
They often live in areas where markets for inputs and outputs, labour and other goods and services such as credit and insurance, are lacking or do not function well.
Households also face risks such as bad weather, plant or animal disease, or illness without access to affordable insurance.
Without access to credit markets, and with poor alternative risk-coping mechanisms, the time horizon of agricultural households shortens when their survival is threatened.
As a result, households often adopt low-risk, low-return agricultural and other income-generating strategies. For similar reasons, they may underinvest in the education and health of their children, or adopt negative risk-coping strategies such as distress sale of assets, reducing the quantity and quality of food consumption, taking children out of school, etc.
In this context, social protection can affect investment decisions via three pathways:
managing risks (regular and predicable transfers provides certainty and security, partially substituting for insurance);
relaxing liquidity, credit and savings constraints (regular and predictable transfers provide liquidity and can serve as collateral), and;
spillover effects into the community and local economy (transfers strengthen social networks and the additional income leads to a multiplier effect for the local economy).
How to link agriculture and social protection?
There are different way in which agriculture and social protection can be brought together in combatting hunger and poverty in rural areas:

Making social protection interventions more sensitive to agriculture and vice-versa. Social protection interventions can be tailored to agricultural livelihoods. E.g. Kenya’s Hunger Safety Net Programme, is well suited to the semi-nomadic lifestyle of its main beneficiary group since households are able to redeem payments where and when they want.
Focusing both agriculture AND social protection interventions on targeted households. This can be achieved by combining interventions into joint programmes or by coordinating different programmes. e.g. Ethiopia’s Food Security Programme includes the Productive Safety Net Programme (a cash transfer and public works programme) and Household Asset Building Programme (which provides access to credit, inputs and agricultural extension). Beneficiaries with access to both PSNP (and HABP had the largest improvements in food security, better agricultural technologies and participation in non-farm business enterprises compared to beneficiaries of either PSNP alone or PSNP with higher benefit levels
Aligning interventions that target different households. Institutional procurement programmes (IPP) create markets for family farmers to meet demand for social protection programmes. Home grown school-feeding programmes are examples of IPPs (in Africa they sometimes build on WFP’s Purchase for Progress, P4P). IPPs can also be designed to help specifically disadvantaged, poor farmers.

How can it be done?
Mobilize political supportThere is growing recognition of the combined role of agriculture and social protection (e.g. CFS 2013; Malabo Declaration 2014 ) in reducing hunger and ongoing country-level efforts in this direction. But more neds to be done, Political support and drive to get things done is fundamental. Development Partners can play a role by supporting Governments in testing new ideas and generating evidence on what works/does not work so well.
Adjust policy and investment frameworksFrameworks related to food security, poverty reduction rural development need to recognize the role that together agriculture and social protection can play in achieving their goals. Similarly, agricultural policies should recognise how social protection can help support productive inclusion and
Strengthen coordination mechanismsAt national and sub-national levels to ensure that these include adequate membership from agriculture and social protection and that formal procedures for working together are clear and that agencies have the required capacities e.g. personnel, transport
Harmonize targetingAgreeing on which households should be targeted by different interventions and relevant targeting criteria; sharing information on who is participating in which programmes (unified registries may help for this).
Support programme design and implementationSetting a transfer size commensurate with desired impact; selecting the appropriate instruments (e.g. subsidy and/or cash transfer); ensuring the timely and predictable delivery of transfers; sensitive to rural and agricultural seasonality and to the profiles of beneficiaries; messaging regarding use of the transfers and support

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The State of Food and Agriculture 2015 - Social protection and agriculture: breaking the cycle of rural poverty

Editor's Notes