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Investment is key to battling hunger

Article by Lennart Båge, President of IFAD published in Arab Times, Kuwait

THE "Triple Scourge" of poverty, soaring food prices and climate change threaten the lives of the 720 million extremely poor who live in rural areas and depend on agriculture for their livelihoods. Without major new efforts, more people will be pushed deeper into poverty, more will go hungry and the poorest countries will fail to reach the first Millennium Development Goal (MDG1), halving extremely poverty and hunger by 2015. The recent swift and dramatic price increases for staples like maize, wheat and rice has led to misery for the poor and social unrest in countries as diverse as Bangladesh, Egypt, Indonesia, Mauritania, Morocco, Pakistan and Yemen.

These huge price upswings are generally attributable to the sharp decline of the world grain production in the period 2004-2006; the current record low stocks; increased bio-fuels production; demand from growing economies; the high price of petroleum-based fertilisers; and transportation costs. A fully coordinated response is required from the international community in order to ensure food availability and to continue to reduce poverty. A three-pronged approach is needed: first, emergency food aid is needed to feed the hungry today; second, support in the short-term to allow smallholder farmers to boost their production in the next cropping season; and third, longer term investment in agriculture to guarantee food security, nutrition and rural development and to eliminate the root causes of hunger.

Smallholder farmers, who comprise about 85 percent of farms worldwide (or 450 million farms), can be key to solving todays' global food crisis, by growing more food and replenishing food stocks. But they need help; the rising prices of seed and fertiliser and transportation to market mean that many smallholder farmers who want to grow more food are unable to do so. IFAD is therefore making up to US$200 available to help small farmers in the most seriously affected countries obtain the inputs they need for the next cropping season. In the longer term substantially greater investment in agriculture is essential. Agriculture is the proven engine for pulling women and men out of poverty. The World Bank's World Development Report 2007 noted that agriculture is up to four times more effective in reducing poverty than growth in other economic sectors.
Yet actual support to the sector remains low. The amount of aid going to agriculture fell from $8 billion in 1984 to about $3 billion in 2006, by which time it made up less than 3 percent of total aid.

Against this trend, IFAD has expanded its loans and grants programme by 10 percent each year since 2003. IFAD financed projects with a total investment cost of about of $1.2 billion in 2007. IFAD's ongoing projects are making a positive impact in the lives of 100 million poor rural people, helping them to obtain access to land, water, financial services, markets and technology. IFAD-financed projects in the Near East and North Africa emphasize increasing food production and rural youth employment while helping small farmers adapt to climate change, drought and water scarcity. In Egypt, for example IFAD's West Noubaria Rural Development project was launched in 2002 on reclaimed desert lands. The land was distributed among unemployed landless people and young couples and is becoming more and more productive.

The project supports the adoption of better on-farm water-management practices, the development of small and medium enterprises in agricultural production, marketing and the hosting of commercial services. It also enables the emerging communities to become viable and self-reliant.

This project builds on an earlier intervention, the IFAD New Lands Agricultural Services Project, which helped establish new settlements (35,000 families) and profitable farming systems in the three adjacent districts of West Noubaria, El Bustan and Sugar Beet. Most of these new farmers have gone a long way in becoming market suppliers of food products, including organic products, some of which were exported to European supermarkets.

Replicating on a larger scale the innovative projects designed to diversify and intensify food production under harsh climatic conditions can ensure greater food availability, income generation and employment opportunities for young people in developing countries, including members of the Organization of Islamic Conference (OIC). During its 30 year history, IFAD has dedicated about 43 percent of its global investments of $10 billion, in the 55 member countries of the OIC in Africa and Asia, including the Arab region. Among IFAD's traditional co-financiers and strong partners is the Kuwait Fund, which co-financed three projects in Burundi, Morocco and Yemen. It is also encouraging to note that 16 percent of Kuwait Fund's assistance went to the agricultural sector, mostly in Arab and Islamic countries in Africa and Asia.

With the recent announcement of His Highness Sheikh Sabah Al Ahmed Al Sabah, Amir of the State of Kuwait to contributed $100 million to the creation of a survival fund that will help provide staple foods for the needy in Islamic countries, Kuwait is leading by example. This is a most welcome initiative and reflects a great spirit of solidarity with the people suffering from hunger and poverty. IFAD, as the only international financial fully dedicated to the cause of reducing hunger and rural poverty through agriculture and rural development, will spare no effort to assist Kuwait in developing and implementing food production programmes under this initiative.

Kuwait is a strong founding member of IFAD, plays a leading role in IFAD, to which it provided the third president, and has generously contributed to the Seventh Replenishment of the fund's resources in 2005. This year, IFAD's member countries, including Kuwait, are discussing IFAD's financing for 2010-2012. IFAD hopes to expand its programmes considerably so it can continue to do more to support agriculture and rural development projects and aims to develop new programmes to make a substantial contribution to helping 50 million poor rural people across the world meet the challenges they face.

IFAD received welcome news earlier this month at a meeting of member countries to discuss IFAD's funding needs. Saudi Arabia announced it would increase its contributions five-fold to a total of $50 million. This pledge demonstrated the Kingdom's commitment to help poor rural people to overcome hunger and poverty as well as the kingdom's confidence in IFAD. IFAD hopes that other countries will be inspired by Saudi Arabia's announcement and will also increase their contributions. The leadership and support for agricultural development demonstrated by OPEC members will hopefully inspire other nations to recognize that investing in agriculture and rural development will play huge dividends for smallholder farmers as well as help provide more food for a growing world.

May 2008

Source: IFAD