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The Importance of Scaling up for Agriculture and Rural; and a Scaling Up Framework for the International Fund for Agricultural Development (IFAD)

Kevin CleaverAssociate Vice President, Programmes

Seas of Change Initiative Event, Scheveningen, The Hague, April 2012

2 ____________________________________________________Source: World Economic Forum

Global Risks Landscape – 2012

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Asia - 753 million, 64%

Sub-Saharan Africa - 382 million, 32%

Rest of the world - 52 mil-lion, 4%

____________________________________________________Source: Asian Development Bank (AsDB)

Distribution of poverty in 2008 by region (millions)

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Asia568,

65%

Sub-Sa-haran Africa

217, 25%

Latin America47,5%

Rest of the World39 5%

Distribution of undernourishment during 2006-2008 by region (millions)

____________________________________________________Source: Asian Development Bank (AsDB)

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1990-92 1995-97 2000-02 2006-08

80

90

100

110

120

130

140

Sub-Saharan Africa Asia Latin America World

____________________________________________________Source: Asian Development Bank (AsDB)

Number of undernourished people Trendline

Agriculture Growth, an Effective instrument for poverty reduction

• A 1 per cent per annum increase in agriculture growth, on average leads to a 2.7 per cent increase in income of the lowest 3 income deciles in developing countries (World Bank, World Development Report, 2008; Agriculture for Development).

• Agriculture is 2.5 to 3 times more effective in increasing income of the poor than is non-agriculture investment (World Development Report, 2008).

• “Agriculture growth, as opposed to growth in general, is typically found to be the primary source of poverty reduction (IFPRI, 2007).

• The contrary is also true; a decline in agriculture growth throws many poor people into poverty, and explains some of the increase in developing country poverty and hunger in 2008 and again in 2010 when food prices increased worldwide.

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The star Agriculture Growth Performers were the star performers in poverty reduction

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Countries with greatest agriculture GDP growth rates in 1990s and 2000s

Agriculture growth rate in 1990s and 2000s

(per cent per annum)

Change in percentage of population living at

below US$1.25 per day between 1998 and 2008

(percentage of population)

Change in percentage of population undernourished

from 1990/1992 to 2004/2006(per cent)

Average for developing world as a whole

3.3 -20 n.a.

Algeria 5.2 n.a. n.a.Belize 4.8 n.a. n.aBenin 5.2 n.a. -9.0Brazil 4.0 -9.7 -4.0Burkina Faso 6.7 -49.7 -5.0Cambodia 4.6 n.a. -13.0Chile 4.3 -1.5 n.a.China 4.0 -31.6 n.a.Ethiopia 4.8 -46.0 -27.4Laos 4.0 -37.2 -8.0Malawi 5.7 -50.8 -16.0Morocco 5.7 -6.3 n.a.Mozambique 5.6 -45.9 -22.0Paraguay 4.4 -16.9 -4.0Peru 4.4 -6.7 -15.0Rwanda 4.4 n.a. -5.0Syria 5.6 n.a. n.a.Tanzania 4.0 n.a. n.a.Viet Nam 4.9 -45.1 -15.0

[1] IFAD Rural Poverty Report 2011, pp 249-253 based on FAOSTAT data

Key ingredient of effective agriculture investment for scaling up

• Supporting farm investment– investment in agricultural research and extension– rural finance– land tenure, land rehabilitation, land management

• Rural employment generation and support for non-farm small businesses through investment in smallholder farming, agro-industry, marketing, input supply

• Development of farmers’ organizations, to help manage village-level development

• Infrastructure– rural water management and irrigation– rural roads, energy

• Sustainable management of natural assets including forests, fisheries pasture land

• Nutrition, household food security through rural education• Building decentralized public services in rural areas• An enabling agricultural policy

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Public (and donor) expenditure in agriculture, necessary, but not sufficient, for good agriculture growth

Countries with greatest agriculture GDP growth rates in 1990s and 2000s

Agriculture growth rate in 1990s and 2000s

(per cent per annum)

Average public expenditure on agriculture as a percentage of GDP 1995-2007 (per cent)

Average for developing world as a whole 3.3 0.81

Algeria 5.2 n.a.Belize 4.8 n.a.

Benin 5.2 n.a.Brazil 4.0 0.31Burkina Faso 6.7 n.a.Cambodia 4.6 n.a.Chile 4.3 n.a.China 4.0 1.25Ethiopia 4.8 1.94Laos 4.0 n.a.Malawi 5.7 1.6Morocco 5.7 0.96Mozambique 5.6 n.a.Paraguay 4.4 n.a.Peru 4.4 n.a.Rwanda 4.4 n.a.Syria 5.6 2.3Tanzania 4.0 n.a.Viet Nam 4.9 n.a.     Other countries with high agriculture expenditure but lower agriculture growth

   

India 3.1 0.8Philippines 2.9 0.9Tunisia 3.1 2.28Thailand 2.4 1.47Egypt 3.3 1.36Bhutan 2.0 4.05Sri Lanka 2.2 1.1

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Local talent mobilized

Peru- Key innovations being scaled up

Local Resource Allocation Commitees (LARC)

Competitions among beneficiaries for NRM and small businesses

Women’s saving accounts

Direct transfer of public funds to community organizations

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Scaling up in Peru – Phase I

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Scaling up in Peru – Phase 2

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Scaling up in Peru – Phase 3

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Scaling up in Peru – Phase 4

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Scaling up in Peru – Phase 5

Why is it hard to scale up?

• Scaling up project approaches relies on leveraging other sources of finance, particularly domestic. This can be difficult if there is not an existing track record of partnership.

• A market-centered rather than a production-oriented approach has a greater chance of developing sustainable operations that benefit rural producers if win-win scenarios can be developed with agribusinesses.

• It takes time to build capacity for governments and smallholder groups to negotiate and manage relationships (trust building) with agribusiness

• The viability of smallholder agriculture value chains are not uniform across countries or types of market. This creates a challenge for developing cost effective and easily replicable models which can be scaled up across geographic areas and markets.

• The technical capacities and governance structures of producer groups and farmer organizations are weak requiring support to move to scale

• A   challenge of scaling up is to improve monitoring and evaluation mechanisms to assess the actual impact and to demonstrate positive cost-benefits.

• Best to plan for scaling up early in the design process rather than at the end

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