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  International Fund for Agricultural Development

Market Access for Agricultural and Rural Development

A Ministerial Roundtable Breakfast Organized by
the International Fund for Agricultural Development
on the Occasion of the ECOSOC High Level Segment

Geneva, Switzerland - 2 July 2003

Globalization has created unprecedented growth in global markets and opportunities for individuals to prosper. Yet, 1.2 billion people live in extreme poverty on less than one dollar a day. Their poverty is partially determined by constraints that limit their ability to enter and compete in national, regional, and global markets.

Most of the poor – some 900 million people – live in rural communities in developing countries and make their livings in agriculture as smallholder farmers, farm laborers, herders, fisher folk, and traders. Enabling the rural poor to reach opportunities in markets beyond their communities and to improve the terms on which they interact with them is a powerful tool to reduce poverty and fuel economic growth. It will also restore much needed vibrancy to global efforts geared to cut poverty in half by 2015, by some measures proceeding at nearly one-third the rate needed for success.

The rural poor are not a monolithic group but generally face three kinds of constraints to market access.

  • Physical Constraints – The roads linking poor rural communities with larger markets are often seasonal, badly maintained or non-existent, making the transport of their products to market expensive and difficult. In the absence of crop storage technologies and facilities, many perishables do not survive the journey to market. Additionally, poor communications infrastructure makes access to reliable and up-to-date information about prices, products and potential business partners difficult, if not impossible.
  • Capacity Constraints – The rural poor need improved links to the basic tools they need to prosper. Financial services – such as savings and credit – enable them to invest in the productivity of their businesses. Technologies – such as fertilizers, irrigation equipment, and crop processing – and training help the poor become more efficient and competitive producers. Moreover, institutions – such as farmer co-operatives and water-use associations – give them a stronger voice when engaging governmental bodies and industry.
  • Policy Constraints – The rural poor face layers of policy constraints both in-country and internationally. In developing countries, market links are constrained by overly restrictive legal frameworks concerning the registration of farmer institutions, the lack of legal frameworks for contract enforcement, excessive licensing requirements for traders, and divergent standards for product quality. The near $300 billion each year in agricultural subsidies of developed countries lead to surplus production that, when exported, lowers global commodity prices. This reduces the income stream of the rural poor. In nearly all countries, agricultural goods face trade barriers and systems of tariff escalation that increase the rate of import tax proportionately to the processing levels that add product value. This makes products produced by the poor artificially expensive when exported and, therefore, less attractive to consumers.

In view of these constraints, improved market access for the rural poor rests on integrating development planning with development assistance as well as trade and investment policies in order to encourage investments in remote rural areas and the people that live within them. In plain terms, these investments must be used to help the rural poor overcome physical and capacity constraints. Policy and regulatory constraints to market access as outlined above likewise need to be addressed urgently. The Development Round of the World Trade Organization promises to be the most significant international discussion on agricultural trade in a decade. Should it lead to a new agreement on the issues of agricultural trade, market access, reduction of trade barriers and minimization of the effects of commodity price fluctuations, the potential for markets to deliver the promise of development for poor rural producers may be unleashed.

Items for Reflection and Discussion


1. The International Conference on Financing for Development led to the consensus view that policy coherence in development planning, aid, trade, and investment policies is fundamental for economic growth and poverty reduction. How can these elements of development finance be best reformed to expand and increase the effectiveness of resources directed to rural communities for broader poverty reduction?

2. Partnerships are an essential part of sustainable development. Recognizing that civil society, the private sector, governments, and international institutions have varying comparative advantages in the development process, how can they best capture investment and capacity complementarities to broaden economic opportunities for the rural poor?

3. Donors, governments and development agencies cannot do development for poor people. What they can do is assist and enable. In other words, change will take place only to the extent that effective support is given to the rural initiatives of individuals, groups and communities. What have been some key success stories in linking the priorities of the rural poor within national development planning and international policy frameworks that could be upscaled for broader application?

4. Regional economic and trade agreements have been negotiated broadly to foster improved conditions for economic growth and stability worldwide. How can their regulation of agricultural trade be improved to reduce constraints on the growth of commerce among the rural poor ?

5. Multilateral solutions to the issue of agricultural trade liberalization have remained out of reach since the launching the General Agreement on Tariffs and Trade at the Palais des Nations of Geneva in 1947. What specific elements of today’s negotiations through the Development Round of the World Trade Organization can be supported to advance a new agricultural trade agreement that broadens market access for the rural poor?

6. Extensive research shows clear links between trade liberalization and global economic growth. Some of this research concludes that developing countries would benefit from removing their agricultural protections and subsidies regardless of reciprocal market access reforms in developed countries. What are the tradeoffs that such an action require and what would be needed to assure that benefits accrue to poor rural communities?

7. Trade liberalization has a mixed relationship with the natural environment. Given the inseparable links between agricultural production, poverty, and the environment, the need to augment capacity for sustainable and productive agriculture will increase under conditions of liberalized agricultural trade. What have been some key successes that can be built on for broader impact among poor rural producers, especially those living in dryland agro-ecological areas?

8. Most of the rural poor face discrimination, as women or as ethnic minorities or as indigenous peoples. What are some of the unique challenges that they face in market access and how can they be overcome?

 
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