World Agricultural Forum Regional Congress

Mr. Chairman, ladies and gentlemen,

It is a great honor to speak before you at this 2004 Regional Congress of the World Agricultural Forum. I would like to thank the World Agricultural Forum, for providing me with the opportunity to exchange some ideas with you on how our organizations, governments and societies, can take advantage of the new trends and opportunities in the Americas, to sharply reduce rural poverty, in order to meet and indeed surpass, the objectives of the Millennium Development Goals.

In 2000, world leaders gathered at the Millennium Summit in New York and pledged to cut poverty in half by 2015. These Millennium Development Goals include targets for health, education, and the environment and provide the foundation for a new global partnership to reduce poverty and hunger. Three quarters of the world’s extreme poor, some 900 million poor men and women, those living on less than USD 1 per day, live in rural areas in developing countries and mainly depend on agriculture for their living. Rural development is thus a pre-condition for the reduction of extreme poverty and hunger.

One generation ago, Latin America had 73 million rural poor, 40 million in a condition of extreme deprivation. The latest figures tell us that today the region has 78 million rural poor, including 48 million in extreme poverty. As a percentage of the rural population, the situation is also equally disturbing: 60% were rural poor in 1980 versus 62% today, 11% in extreme poverty then, 14% today - a far higher poverty incidence than in urban areas.

In addition, in comparison, between 1980 and 2000 there is also a great a political and social significance in that there were 90 million more urban poor in the region. A majority of them are rural poor who migrated to the sprawling urban centers. I do not need to argue about the consequences of this trend in terms of political instability, urban development, urban environmental pressures, employment demands and so on.

However, important as these numbers are, what is more interesting and more relevant is to recognize the changing nature of rural poverty, for it is here that we must look for clues about what is it that we can do to be more effective in reducing rural poverty in the years to come. At this point, I would like to call your attention just to five issues that are growing in importance when it comes to defining effective rural poverty reduction strategies: rural women, indigenous peoples, transnational migrants, non-farm rural employment and the revolution in food retail.

The concept of ‘feminization of rural poverty’ describes very well the fact that a growing percentage of rural households are now headed by single women, and that a majority of them are poor. In the past decade, the rate of participation of rural women in the off-farm labor market, grew by 10%, and their participation in the agricultural labor market did so by a third. A study of 17 countries in the Americas showed that in 1999, rural poverty would have increased by more than 10 percentage points if rural households did not have access to the income derived from women from their increased participation in the labor markets.

The social movements that since the mid-90’s have rocked countries as diverse as Mexico, Ecuador, and Bolivia, have made public opinion and decision makers aware of the plight of the approximately 40 million people belonging to one of the 400 indigenous cultures of Latin America and the Caribbean. It is quite obvious that the conventional rural development strategies and policies are quite inadequate in the face of these new forms of sociopolitical mobilization of the indigenous peoples. Their demands express a mix of more traditional issues, such as access to land and recognition of their constitutional rights to their territories, with new complex questions such as the coexistence of cultural and ethnical diversity within the same States and societies, or the recognition of local governance systems organized on the basis of the ancestral institutions of indigenous peoples.

Transnational rural communities are also a new element in the landscape of rural poverty. We are all extremely impressed by the fact that Latin American migrants to the USA and, to a lesser extent, to Europe –the majority of them from rural communities- remitted $38 billion in 2003, according to official figures. Experts estimate it could be 50 billion plus. The poor themselves are not only remitting much more than the sum of all of development aid, but have even surpassed the financial flow to the region from Foreign Direct Investment. One of the important goals is to lower high transaction and transfers cost, often cutting away 10 – 15%, and the other is to enable remittances to strengthen local financial institutions.

It is now firmly established that about half of the total income of rural households in Latin American, is derived from non-agricultural employment, in the services and industry sectors. In the past decade, about 2.5 millions rural persons became non-farm rural employees, while the number of workers in agriculture, including the self-employed, remained stagnant. Non-farm rural employment is of particular significance to rural women and to youth. Vibrant rural economies must build on increasing opportunities for non-farm employment expansion.

Finally, in this brief review of some of the trends in Latin American rural societies, it is important to recognize the revolutionary change taking place in the structure of agri-food systems, a revolution spurred by the rapid expansion of supermarkets. Already supermarket chains control about 60% of the retail of food in Latin America, up from 10 to 20% in 1990. Supermarkets sell in the region between 2 and 3 times more fresh fruits and vegetables than the total amount exported by Latin America. Only five large multinational supermarket chains control two-thirds or more of the food retail market in countries as diverse as Argentina, Honduras, Mexico and El Salvador. This market power has allowed them to firmly impose their grades and standards in all major food products. Therefore, these grades and standards, in turn, send large technological, organizational, managerial and financial ripples up the food systems, profoundly changing the ways in which food is grown, processed, traded, sold and consumed. This development creates both opportunities and threats to the rural small holder farmer.

In summary, the Latin American rural societies are undergoing rapid changes that are transforming the nature and the dynamics of rural poverty in this region. In response, the rural poor are changing their livelihood strategies. If we want to continue to serve and support this region and the rural poor well and effectively, we need to adjust our own strategies to make them more responsive to this complex and rapidly changing regional scenario.

At IFAD we have defined three strategic objectives for the period 2002-2006, to enable the rural poor to overcome their poverty:

1. Strengthen the capacity of the rural poor and their organizations
2. Improve equitable access to productive natural resources and technologies
3. Increase access to financial services and markets

IFAD has funded a total of 108 projects in 28 countries of Latin America and the Caribbean, with a contribution of USD 1,2 billion. Our development activities reached some 7 million direct beneficiaries, all of them poor people living in some of the most deprived regions of the continent.

One such initiative launched in 1995 is FIDAMERICA, a network linking 40 IFAD-funded projects in Latin America and the Caribbean. FIDAMERICA is a pioneer in terms of exchange of information and dissemination of lessons learned and provides a range of services and activities that link use of the Internet with opportunities for face-to-face exchanges. These include: Internet-based facilities and systems, such as a website, monthly electronic newsletters, electronic mail lists and electronic conferencing facilities; electronic conferences on important poverty reduction and rural development topics, with the active participation of representatives from farmers’ and rural organizations, non-governmental organizations (NGOs), the private sector, local governments, national governments and donor agencies; biannual regional workshops to discuss and exchange experience, innovations, knowledge, approaches, methodologies and tools for eradicating poverty; technical assistance to projects so that they are better able to use the Internet; technical, methodological and logistical support to new networks of rural grass-roots organizations working with IFAD projects; and cofinancing of demand-driven projects to develop and strengthen learning systems and processes within and among IFAD projects.

To be successful in the future we need a broad understanding of what the term ‘rural’ means today in this region. As we have seen, agriculture does no longer generate all or often not even most of rural employment or incomes. The rural poor households are pluri-active, that is, they have diversified livelihood strategies, and we must support all of them with adequate policies and programs. This means that we must broaden our view and understanding of rural societies, to include not only the agricultural hinterlands, but also the many small towns and intermediate rural cities that contain key resources and assets of all kinds that are indispensable to the objective of substantially reducing rural poverty. Urban-rural linkages is the key in strengthening the market linkages of the rural poor.

This is where the private sector has a critical role in contributing to the reduction of rural poverty and to the increase in economic growth. Lack of access to markets is a major problem for many rural people. While trade liberalization and globalization present opportunities for the rural poor, they cannot take advantage of them unless they can compete on an equal footing. It has been estimated that the potential gains from freer trade in agriculture – the sector that most closely affects the rural poor – could mean an annual increase in global welfare in developing countries by 2015 of USD 160 billion. Meanwhile, subsidies for agriculture in the OECD countries are soaring, and are equivalent to more than six times total development assistance.

The positive news from Paris on progress in the talks to restart the Doha trade negotiations and address the agricultural subsidies issues is welcome and long over due. Support for poverty reduction through trade will however not be effective if it focuses only on trade regulation reforms and only on liberalization of the trade regime. In parallel with these necessary efforts, policies and resources will need to aim at enabling small holder producers to deal with market forces and engage in a mutually beneficial way with larger-scale private-sector entities in marketing and processing. If this can be done, many rural poor will indeed be able to gain a more secure and sustainable livelihood by engaging in market processes both internal and increasingly in a rule-based open trading system.

We at IFAD continue to focus on mobilizing support and the public's attention on rural poverty issues, and in the process, affect key decision-makers to broaden support for rural development to achieve the Millennium Development Goals. Furthermore, we call on the private sector to become engaged as a development partner, supporter and advocate in poverty reduction efforts. Only when all sectors of society – the private sector, governments and civil society – combine efforts to combat rural poverty will global economic growth and human security be achievable. It is not an easy task to change the ways in which our organizations think and act. But it is necessary, if we want to be relevant to the needs of Latin American societies and, in particular, the rural poor. After all, we cannot expect to have different and better results in the future, if we continue to act as in the past.

Thank you very much.

17 May 2004, St. Louis, Missouri