Presented by Stefan Dercon at the ISPC Science Forum 2016, Addis Ababa, 12-14 April 2016

1. Does Agricultural Research reduce Poverty?
Stefan Dercon
Centre for the Study of African Economies, Economics Department and Blavatnik
School of Government, University of Oxford
and UK Department for International Development
Addis Ababa, 12-14 April 2016

2. Central Questions
• Does agricultural research create rural prosperity and reduce
poverty?
• If so, what are the pathways and mechanisms through which this works?
• Is there clear evidence?
• What lessons can we draw from past experiences – both successes
and failures?
• Is “success” of Asia being replicated in Africa?
• How can we improve our understanding of the pathways to impact?

3. The challenge?
• Rural poverty across the world higher than urban poverty
• Multidimensional Poverty (MPI, often based on DHS):
Incidence of multiple deprivations (Alkire et al, 2014) (% of population)
• Dominant livelihood of the poor: dependent on agriculture, in Africa
largely as smallholders
• So large scale spending on agricultural research surely good for the
poor?
Urban Rural
East Asia/Pacific (not China) 13 52
Latin America 2 17
South Asia 24 63
Sub-Saharan Africa 27 74

4. Evidence of Development Impact
• Clear causal links from agricultural research to development
outcomes at the macro scale have been very difficult to demonstrate.
• There are certainly grounds for believing that this relationship could
be strong:
• Theory
• Quantitative evidence
• Descriptive and qualitative evidence

5. Theory
• “Boosting food production will feed the world and defeat hunger”
• However, ‘food insecurity’ is a problem of poverty
• Focus has to be on how agricultural technology improvements impact on
poverty in a society and economy
• Poor as consumers? Positive
• Poor as producers (smallholders) or workers?
• Not always clear that all producers will benefit from higher productivity, as impact
on prices (mediated by the way economy works)
• Dependent on technology: impact on demand for and returns to capital, land,
labour
• Net impacts: dependent on nature of technology and context, with
plenty of scope of winners and losers. Assuming that the rural poor will
benefit is naïve.

6. Quantitative Evidence
• Empirical studies are often linked to particular cases or instances of
innovation. Lots of it is weak.
• Comparing adopters and on-adopters – hard and often poorly done
• Summaries of evidence: mixed, ambiguous, it all depends…
• The “best” quantitative evidence to date has come from modelling
exercises (econometric and CGE),
• consistently showing huge beneficial impacts of productivity
improvements
• but in unconvincing ways given present-day understanding of
method.
• Econometric models struggle to convince statistically (Thirtle et al. ; Fan et al . 2000,
2002)
• Often assumptions or model structures drive CGE results.

7. Qualitative and Descriptive Evidence
• Recall the Green Revolution in India
• wheat or rice promise in 1960s for India: 5 time yield benefit (10 for
rice with optimal input packages).
• Was it good for poverty?
• Yield gains in India 1960-1990: wheat 750 to 2200 kg/ha; rice 900 to
1700 kg/ha.
• Probably contributed to economic growth and kept food prices in check
• Poverty in India barely declined in this period – large scale reduction in
poverty rates came in 1990s and 2000s
• How it the technology impacted on the poor brilliantly synthesized in
a 1989 book by Michael Lipton and Richard Longhurst, entitled New
Seeds and Poor People. … with generally positive verdict, but…

8. Lipton and Longhurst
• The research did not pay enough attention to the profile of the poor
• In particular, they argued that the poor were increasingly landless or near-
landless, or very small smallholders.
• In rice, increased demand for labour, but in wheat returns to land from
mechanization (reducing demand for labour)
• Returns for farmer strongly dependent on complementary inputs (with
differential access)
• Agricultural research system had not given enough attention to
“socio-political distortions” in thinking through the features of the
target economies.
• Price declines (also linked to overall economic strategy in country)
• Lower agricultural wages in real terms for many
• Losers and winners from agricultural technology strongly dependent on
credit, land and other market distortions

9. What Has Changed Since 1989?
Attention has shifted to Africa, with different set of issues and
challenges.
• Different crops, more diverse agriculture, more difficult environments
– affecting scope for research gains
• Different profile of the poor:
• how does technology fit into this profile (labour saving,
• Different macro environment and different geographies: h
• How does technology improvement fit in it? Does it contribute to the best
strategy to get poverty down

10. Profile of the Poor in Africa?
But much still depends on positions in factors of production, income
structure, consumption structure. Very poor data on stylised facts.
• Most of the poor are rural
• Most are smallholders with rather small holding – across very marginal to very high
potential areas
• Agricultural wage labour only 5% of rural income on average
• Off-farm often a route out of poverty
• 55% of (total) income from crops but not necessarily food
• About 50% of smallholders are net buyers of food (35% in Niger to 65% in Tanzania),
often at relatively ‘marginal’ levels (or with timing issues)
• Not obvious that:
• Growing more food is the most effective for the poor farmers
• That technologies that increase demand for labour or reducing demand for labour in
agriculture are the best for poverty

11. Impacts on African rural poor?
• Technological change: direct effect on adopting poor?
• What is the nature of technological change on demand for labour? Will it save
time, release time for off-farm or require more time?
• What is the impact of the price effect on profitability including of technology
adoption?
• Price effect on consumption of net buyers?
• Winners and losers most likely…
• Impacts bound to come from indirect effects through growth and the
process of structural transformation
• Evidence shows that this is the fundamental force of growth and sustained
poverty reduction
• But via direct adoption of technology by the poor?

12. Agricultural Research, Growth, and Distribution
• Targeting agricultural research to support economic growth and
transformation may be the route, but:
• Agricultural growth has a higher impact on poverty reduction than other
growth
• Role of food prices will matter
• But is targeting production of smallholders the best way?
• Is agricultural productivity growth the best way of increasing growth?
Not obvious at all.
• This is globally low productivity sector
• Gollin et al. (2014) agricultural labour productivity is 28% of productivity in
non-labour productivity across Africa.
• Role of agriculture will depend on economic context

13. Economic context will matter…
• For coastal and resource-rich countries, rural poverty alleviation will
not necessarily dependent on domestic production of staple foods or
on the corresponding agricultural research.
• In resource-rich countries, rural livelihoods will depend on the ability of
governments to manage macro environment effectively and to steer resource
rents into inclusive programs.
• In coastal economies, with access to global markets, cash crops may be a
better (or at least an additional) source of rural income.
• In landlocked economies (or poorly connected regions within coastal
or resource-rich economies), smallholder staple food production for
quasi-subsistence may be important as a means of delivering
improvements in livelihoods.

14. Conclusion
• Huge expenditure on R&D for agriculture in poor settings
• Largely assumed impact on the poor
• Worth learning from lessons from the past, as poverty impacts of Green
Revolution mediated by
• Profile of the poor (labour, capital, land positions)
• Macroeconomic and growth context
• Despite massive promise for yield gains (even if on the ground lower)
• R&D for Africa
• No obvious large yield gains promise ‘on the shelf’
• Diversity of the poor – smallholders, net buyers, less relevance of food crop in income
• Macroeconomic heterogeneity means different ways of supporting structural
transformation

15. Ethiopia
• Fast growth
• One of the big success stories of present-day Africa
• Partly driven exceptionally by smallholder agriculture and productivity gains
• Drought and possibly hunger affecting 18 million people; 8 million in long-
term safety net programme
• So how to focus research, needing to weigh.
• Industrialization attempts: structural transformation with huge industrial zones, so
low food prices matter hugely for success
• Booming smallholder agriculture in higher potential areas, especially in cereals, how
to promote this?
• Emerging commercial agriculture, crucial for sustaining growth
• Very marginal production systems in drought-prone areas