IFAD parallel special event: “New realities, challenges and opportunities for rural development in LDCs – Findings from the IFAD Rural Poverty Report 2011”
In recent years, the economies of the 49 Least Developed Countries have, by and large performed strongly. Between 2005 and 2007 they grew at an average of 8% per year and even in 2009, the year of the economic crisis, they still grew at over 4%, before picking up in 2010.
Yet despite this positive headline, the performance of a number of individual countries has been considerably weaker than the average; in many LDCs there has been only limited progress made towards a structural transformation of the economy; and progress has been slow in terms of poverty reduction and achievement of the MDGs. Indeed, although the percentage of people in LDCs living on less than $1.25 a day has been declining since the mid-1990s, population growth has meant that the number of people living in extreme poverty has continued to increase, and today there are more than 350 million people in LDCs living on less than $1.25 a day.
Many LDCs remain heavily rural, and the agricultural sector continues to play a critical role as a source of food security and incomes for the poor, and as an engine of growth in other sectors of the economy. LDCs typically have the most rural populations – over 70% of the total population of LDCs or some 580 million people - still live in the rural areas, as compared to around 55% for all developing countries. Not surprisingly, extreme poverty in LDCs also has a distinctly rural face, and probably 4 out of 5 of those people living on less than $1.25 a day – 250-300 million of them - are rural. These people depend above all on agriculture, either as smallholder producers or as agricultural labours, often both. With an almost 50 % share of the agricultural labour force, rural women play a critical role in agriculture and food security in LDCs. However, their contribution to food production and food security is often constrained by their unequal access to essential resources and technologies, tools, assets and services, including land ownership and access to extension services.
The agricultural sector not only provides employment for a large proportion of the rural population; it is also an important contributor to economic growth. In well over half the LDCs it contributes more than 20 per cent of GDP and in at least 10 of them more than 40 per cent. Agriculture is also a significant contributor to export earnings, with up to 80 per cent or more of total export earnings coming from agriculture in some LDCs. In a number of LDCs strong rates of growth in the agricultural sector have been recorded over the past decade, with about one-third of the LDCs achieving rates of over 4 per cent per year. This has been an important driver of the declining poverty rates realised over this period.
We know that growth in the agricultural sector is an important engine of economic growth – a dollar of value added in agriculture generates $0.30-0.80 of income gains elsewhere, and that agricultural growth is significantly better at reducing poverty than growth in non-agriculture. More LDCs are beginning to recognise the importance of agriculture – in Africa the Maputo Declaration provides an important rallying point for doing so; yet there remains a pressing need for effective policies and investments in smallholder agriculture to promote broad-based growth, reduce poverty and food insecurity, address gender inequalities and create employment opportunities for the ever-growing number of young people who are entering the job market each year.
Looking forward, we see smallholder agriculture as offering a new set of economic opportunities for rural people – particularly in the rapidly growing, modern markets for food products that are emerging in the urban areas of most LDCs. But accessing these markets is not easy, and smallholder farmers need support so that they are able to engage more effectively and more profitably in them.
However at the same time, smallholder farming is also becoming more risky. Markets tend to exclude the weak and volatile markets undermine agricultural production. There is need to enable smallholder farmers to become more productive, manage risk and link up with new markets and value chains.
In addition, land and water resources are becoming more scarce across the developing world, there is growing competition for their use, and degradation of the natural resource base – soil loss and declining fertility, salinisation, deforestation, desertification, declining water tables, loss of biodiversity and the like - is widespread. Smallholder farming has to respond, by becoming more sustainable in its use of the natural resource base.
Finally, climate change exacerbates these problems – in the most extreme cases threatening the very existence of some small island developing states. Agricultural production must become more resilient to climatic shocks. At the same time, smallholder agriculture can contribute to global efforts to mitigate climate change, and if farmers can be supported and rewarded for doing so, then their transition to more sustainable and resilient systems can be made that much easier.
Many rural people will use smallholder farming as a ladder out of poverty; many more will use it as a first step, before moving out into other activities. Yet we know that for many other people in the rural area agriculture is not a feasible or attractive option. There is a pressing need to stimulate the rural non-farm economy, as a source both of growth and of employment opportunities, particularly for the next generation of rural men and women. Agriculture can play a key role in stimulating the rural economy, but support beyond agriculture also needs to be provided so as to take advantage of all the emerging opportunities in the rural economy as a whole.
Providing opportunities for poor rural people in LDCs to become more productive smallholder farmers and more active participants in the rural economy is one of the major challenges of our times. Failure to do so will condemn hundreds of millions of people to living in poverty and hunger and hanging on to their very survival.
