This document discusses rural poverty, food security, and the link to trade liberalization. It argues that trade policy and reducing barriers to both domestic and international trade can help increase agricultural growth, reduce rural poverty, and enhance food security in developing countries in several ways. Specifically, trade liberalization can increase rural incomes and reduce rural poverty, keep food prices affordable, improve access to technologies, and provide cash to purchase agricultural inputs. While national policies and international actions are also needed, trade reforms through the Doha Development Agenda hold promise for addressing hunger and rural development challenges.

1. Rural Poverty, Food Security, and
Trade Liberalization: Exploring
the Linkages
WTO Symposium on Trade and Sustainable
Development
10- 11 October, 2005
John Nash
Agriculture & Rural Development Dept / Trade Dept
The World Bank

2. This presentation
 What’s the problem?
 Rural poverty
 Hunger
 What’s the way forward?
 Trade policy
 Behind the border

3. Why is agriculture so important for
developing countries and the rural poor?
 63 percent of population live in
rural areas
 73 percent of poor live in rural
areas, and most depend on
agriculture as producers or
workers
 Agriculture and agro-
processing account for 30-60
percent of GDP in developing
countries, and an even larger
share of
 Even with rapid urbanization,
more than 50% of the poor will
be in rural areas by 2035, and
depend significantly on
agriculture

4. Poverty is disproportionately rural
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thiopia
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Mongolia
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orgia
Hondura
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Y
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Rural 51 46 68 50 71 66 80 61 47 34 67 40 57 33 70 10 51 69 45 44 27
Urban 17 16 25 24 62 52 56 48 37 27 55 21 26 39 49 12 57 31 31 23 15
Difference 34 30 43 26 9 14 24 13 10 7 12 19 31 -
6 21 -
2 -
6 38 14 21 12
Poverty Rates
Poverty Rates from PRSPs

5. West Africa
Southern Africa
East Africa
Central Africa
North Africa
Near East
South America
Caribbean
Central America
North America
Other South Asia
India
Southeast Asia
China*
Other East Asia
Proportion of Undernourished (%) Number of Undernourished (millions)
60 50 40 30 20 10 0 0 50 100 150 200 250
*includes Taiwan
Province of China
Hunger is a Continuing Problem
Number and Proportion of Undernourished, 1999-2001
Source: FAO

6. Improving
food
security
and
reducing
rural
poverty are
closely
related
goals
 Food Availability
 Depends on global agricultural productivity
 International and national market and distribution
systems
 International and national trade policy: make sure
food is available to all at a reasonable cost
 Food Access
 Poverty reduction: hunger is a result of poverty,
so whatever reduces poverty reduces hunger
 Food (processing and storage) markets
 Food Utilization
 Nutrition education (promotion of breast feeding in
women, child care, sanitary conditions, child care time
to free women’s time)
 Nutrition interventions to supplement food (vitamin A,
iodine, iron, etc), or provide food supplements (for
calories, protein)
 Health care
 Safe water provision
 Sanitation

7. Trade liberalization enhances
food security through many
channels
 Increases rural growth and reduces rural
poverty

8. Increased Trade is the
Best Lever for Enhancing
Agricultural Growth
 Sustained trade reforms doubled growth in
agricultural sector (Michaely, Choksi, Papageorgiou)
 Agricultural trade liberalization gives much higher ag
growth rate – 5.7% vs. 1.1% (Valdes)
 SSA – countries with large improvement in macro/
trade policies had higher ag growth rate -- 3.5% vs.
0.3% for those with deterioration (World Bank)
 Huge amount of evidence that global trade reforms
can have big poverty-reduction effects

9. Trade liberalization enhances
food security through many
channels
 Increases rural growth and reduces rural
poverty
 Keeps food prices affordable
 Improves access to imported agricultural
technology, mostly embedded in inputs
 Provides cash to buy inputs

10. Production of export and non-
food crops can enhance food
production…
Production Growth Rate, 1980- 2000
Food vs. Non-Food
Low Income Countries with Agr/GDP > 20%
-1
0
1
2
3
4
5
6
7
-5 0 5 10 15 20
Non-Food
Food
Y = 2 . 1 3 + 0 . 2 2 X
( t = 3 . 6 6 ) R
2 =
0 . 4 6

11. Production of export and non-
food crops can enhance food
production…
Production Growth Rate, 1980- 2000
Food vs. exports
Countries with Agr/GDP > 20%
-1
0
1
2
3
4
5
6
7
-10 -5 0 5 10 15 20 25 30
Agr. Export Growth
(Annual 1980-99)
Food Pro. Growth
(Annual 1980-99 )
Y = 2.58 + 0.14 X
( t =3.99) R2 =

12. National
policies to
reduce rural
poverty and
food
insecurity
 Incorporate policies on food security,
hunger and nutrition into PRSPs
 In countries where agriculture is
dominant, increase agricultural
expenditure (from very low 1-4% of
government spending in many
countries)
 Avoid policies which target self
sufficiency: trade and investment
policies should be aimed at raising
rural incomes, not food production
 Lower barriers to South-South trade
 Finance nutrition interventions explicitly

13. Actions by
international
donors and
financial
institutions
 Reform food aid mechanisms:
make them quicker and less
disruptive
 Improve donor coordination of
agriculture, nutrition, and rural
development programs
 Reduce industrial country
agricultural tariffs and subsidies
 Pay more attention to closing
technology gap between
industrial countries / large
middle income countries and
low income countries

14. Agricultural Trade Reform and
the Doha Development Agenda
Kym Anderson and Will Martin (eds.),, Washington DC:
World Bank, forthcoming but chapters now available on
World Bank website at:
http://web.worldbank.org/WBSITE/EXTERNAL/T
OPICS/TRADE/0,,contentMDK:20366035~pageP
K:210058~piPK:210062~theSitePK:239071,00
.html