IFAD’s objective is to contribute to accelerating and deepening the global process of reducing rural poverty and food insecurity. The Fund has an important role to play in achieving the Millennium Development Goals: directly, and catalytically, through sharing insights with other development partners as to who the rural poor are, how they become or remain poor, and how they may be enabled to overcome their poverty. There are many different groups of rural poor, with very different livelihood situations: smallholders, herders, fisherfolk, landless agricultural labourers, indigenous groups and, cutting across all of these, poor rural women. The varying situations of these people involve specific challenges, and IFAD is heavily engaged in developing different types of responses to each such challenge. However, a number of common elements are increasingly entering the environment of all groups of poor people – although they may be experienced differently. One of these elements is the organization and evolution of markets. Virtually all poor rural people rely on markets to access goods essential for their human, social and material development. In most cases, reducing such people’s poverty will require better linkages between small-scale poor producers and a variety of official and other local institutions, civil society and market actors, including medium- and larger-scale private-sector entities.

The influence that markets and trade can have in reducing poverty was recognized both in the Millennium Development Goals and in the Monterrey Consensus, and the relation between rural poverty in developing countries and international markets was at the centre of the Doha Development Agenda. International markets for agricultural products are directly and indirectly important for a very large number of the world’s 900 million rural people living in poverty. The reduction of agricultural protectionism and subsidies, particularly in developed countries, would help many of the rural poor obtain better prices for their products and strengthen their basis for long-term livelihood change and improvement.

How much the rural poor may benefit from the changes envisaged in international trade regulations depends upon both the macroeconomic policies of national governments in the developing world and the extent to which those governments provide the institutional, policy and material framework foundations for a positive response from different groups of rural poor. To benefit from trade opportunities, the rural poor need access to capital, relevant technology, land, water, infrastructure and opportunities for organization. Without these, the direct benefits of changes in trade regulations may be modest in terms of rural poverty reduction.

Increasingly, the issue of markets and the poor must be seen in terms of the consequences of globalization rather than of changes in trade regulation alone. The global economy is changing in such a way as to increase the influence of non-local markets – but also to challenge the viability and profitability of existing relations with them among the rural poor. The rural poor need assistance to successfully meet these challenges. In order for that to happen poor rural producers, governments and donors will need to appreciate and develop answers to some fundamental questions, including: how to reduce small farmers’ dependence on traditional exports to developed country markets; how to diversify into higher-value products; how to enter the value-added chain – everything from improving processing and quality control to addressing tariff escalation issues; how to forge mutually beneficial relations with the larger-scale private sector; and, how much to focus on developed country markets – as opposed, for example, to focusing on regional, national and local markets in the developing countries themselves.

These questions have become critical at the beginning of the twenty-first century, and they will need new, twenty-first century answers. In some cases they will involve strengthening, and in other cases changing, rural livelihoods. The answers will differ according to the situation of each group. The basic issue for poor rural people – and for IFAD – is how to help strengthen livelihoods through raising on- and off-farm productivity, and translate higher output into higher incomes through effective engagement in market processes.

Source: IFAD