IFAD aims to target poor rural populations and small-scale farmers. It supports about 36 million rural people annually through projects. IFAD seeks to expand its program of work by 17% to $1 billion USD, improve project quality, and deepen partnerships. Key issues include rising food prices, government responses to volatility, improving work in fragile states, modernizing to engage the private sector, and addressing climate change and environmental degradation impacts on small farmers.

1. An introduction to IFAD’s operational environment 26 September 2011

2. A snapshot of what we are supporting in the IFAD 8 period, in response to your instructions in the IFAD 8 consultation We target poor rural populations and small-scale farmers IFAD-supported projects reach about 36 million poor rural people a year (based on project M&E and survey data) IFAD is a major supporter of community-designed and managed rural development projects and farmer organizations We use government and local management systems rather than managing projects ourselves

3. A flavour of what we are doing in our loans and grants during the IFAD 8 period Improving basic foods and staples Including cash crops: exports are growing Integrating livestock to match rising demand Developing private agroprocessing and marketing

4. Supporting markets for smallholders ● Inputs Storage● ● Processing Marketing●

5. Peru: Management of Natural Resources in the Southern Highlands Project – agriculture services

6. Guinea: Fouta Djallon Agricultural Rehabilitation Project – farmer training

7. India: Tamil Nadu Women ’s Development Project – women’s groups

8. Senegal: Village Management and Development Project – women ’s training

9. Niger: Second Maradi Rural Development Project – irrigation

10. Mauritania: Agricultural Rehabilitation Programme II – reforestation

11. Ethiopia: Rehabilitation Programme for Drought Affected Areas

12. Operational achievements POW increased by 19% in 2009-2010 (US$ 811.5 million in loans and DSF grants, US$ 45.8 million in grants) Quality improvements to projects and country programs Supervising 185 ongoing projects by end 2008; 234 by September 2010; 260 by September 2011 Cofinancing with other donors expanded Collaborative agreements (AfDB, UNIDO, FAO, UNDP, AGRA, Global Platform, ILC, UN on food crisis, EC) Knowledge sharing improved (Agriculture Share Fair, quality enhancement and assurance learning notes, technical advisory notes) Innovation mainstreaming (value chain, rural finance, land, country strategy) Field offices expanded and functional CGIAR change programme catalyzed

13. IFAD loans and DSF grants, cofinancing and domestic contributions (2006-2010) Donor cofinancing Cofinancing

14. Results Measurement Framework IFAD has delivered real results * Only two targets established: Number of people receiving services, disaggregated by gender. Results Baseline year Baseline value 2009 achievement 2012 target* People receiving services from IFAD-supported projects Male:female ratio 2007 2007 29 m 57:43 36 m 51:49 60 m 50:50 Land under improved management (hectares) 2008 3.9 m 4.9 m Monitored Area under rehabilitation (hectares) 2008 228 000 322 000 Monitored People trained in crop production Male:female ratio 2008 1.7 m 4.1 m 63:37 Monitored Active borrowers from rural financial services Male:female ratio 2008 4.4 m 4.8 m 51:49 Monitored Marketing groups formed 2008 25 000 28 000 Monitored Community action plans 2008 24 000 29 000 Monitored

15. Key project performance indicators for IFAD’s development results IEE: Independent External Evaluation of IFAD, 2005 ARRI: Annual Report on Results and Impact (prepared by the Independent Office of Evaluation) PCR: Project Completion Report RMF – Results Measurement Framework % of projects found marginally satisfaction or better on the indicators

16. Summary of the operational plan for 2011 Expand programme of work by 17% to US$1 billion Improve quality of new grants and loans to level of targets (see new results measurement framework) Improve quality of ongoing portfolio through supervision of projects Cofinance US$1.5 for US$1 of IFAD lending Deepen partnerships with other institutions Expand country presence to 35 offices Share knowledge better within IFAD and with partners Strengthen innovation and upscaling successful innovation Become more efficient (less cost per US dollar loaned or granted) Further improve management systems, staff skills and staffing Implement results framework, improving M&E systems Improve staff technical skills through training, recruitment, partnerships

17. RMF in the context of IFAD: Operating model

18. IFAD has a knowledge management and innovation strategy, with results targets. Major outputs so far in the IFAD 8 period Rural Poverty Report 2011 Smallholder Agriculture Seminar 2011 IFAD portfolio review 2010 Project data for Results Measurement Framework Contributor to UN Comprehensive Framework for Food Security (HLTF) Contributor to Responsible Agriculture Investment Guidelines (with World Bank, FAO, UNCTAD) Regional knowledge networks established in Latin America, Africa, North Africa and Near East, and Asia

19. Expanded country presence IFAD country presence to expand from 29 to 35 countries with IFAD staff by end-2011 Outposted CPMs to be posted in 12 of the 35 countries by end 2011; up from 4 in 2008 Of 90 countries in which IFAD operates CPOs to have longer term IFAD contracts

20. Major contemporary agriculture issues Food, fuel, fertilizer price volatility and economic crisis increasing poverty Government and donor responses often counter-productive in short term and long term Past inadequacy of IFI agriculture project models to fragile states and conflict-prone countries Agriculture services, processing, input supply and farming itself are increasingly private; IFAD instruments should be modernized to deal with the private sector Climate change and environmental degradation increasingly serious and donor response inadequate Changing demands of middle income countries regarding agricultural assistance (South-South cooperation)

21. Issue #1 – Rural poverty and hunger is stable or increasing in much of sub-Saharan Africa and some other low income countries in Latin America and Asia About 1 billion hungry people in the World, up from 850 million last year 2 billion live on less than US$2 per day

22. Why are food prices rising; and why greater volatility? Due to rapidly rising global and local demand for food, at about 2% per annum and rising ( Chatham House ) In turn caused by income growth, population growth, dietary changes, bio-fuels Combined with a slowing of the increase in supply

23. Issue #2 – Government responses often counter-productive Supply response to higher prices strongest in industrial countries, China and Brazil Harmful government policy responses in many developing countries Export bans exacerbate the problem Farm price controls and consumer subsidies exacerbate the problem Bio-fuel subsidies and import barriers exacerbate Lack of investment in agriculture; too much focus on food aid Helpful policies include: Reducing barriers to food imports Eliminating price controls Expanding investment in agriculture Social protection for the most vulnerable

24. Issue #3 - How to make IFI projects in fragile states more effective Build on UN and bilateral donor managed projects in fragile states Focus more on institution building in fragile states, and less on targeting Introduce longer term approach, with 10-15 year partnerships reflected in 2 to 3 consecutive projects Don’t shy away from involvement in fragile states with poor governments Work through civil society, NGOs, private sector

25. Issue #4 – IFAD needs to modernize its instruments to deal with the private sector VALUE CHAIN APPROACH Research Extension service Input industry Producers Food process industry Food retail industry Consumers The market and the private sector are increasingly driving agriculture. IFAD works to adapt this evolving reality to the benefit of smallholder farmers New private sector strategy: December 2011

26. Issue #5 – Rural environmental issues and climate change have larger impact on small farmers than previously thought Deforestation, groundwater depletion, salinization of irrigation areas, destruction of rural biodiversity, soil loss (see UNEP Atlas of Africa ) Agriculture contributes 13% of green house gases Agriculture both a cause and victim of environment problems Rural environment problems to worsen due to climate change ( IPCC )

27. SOLUTIONS: Countries to better incorporate adaptation to climate change and environmental concerns in investments and policies Drought resistant cultivars Crop diversification Alternative tillage and erosion control Research for environmental services Weather insurance Drought contingency and early warning systems Water management, including flood response

28. Summary: IFAD has met and continues to meet operational commitments made in IFAD 8 consultation Loan and grant programme expanding Cofinancing and partnerships strengthened IFAD policy development and operational procedures Improved policy advice and knowledge sharing Measurement of results and delivery of results New strategic thrusts incorporated in our work