IFAD Asset Request Portlet

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Statement by President Lennart Båge

"DAKAR AGRICOLE" - La Fracture Agricole Mondiale: Ouvrir des perspectives pour les espaces agricoles en développement

Your Excellency, President Wade

Your Excellencies, Presidents

Honourable ministers,

Distinguished delegates,

Ladies and Gentlemen

It is my great honour and privilege to join you all today to address this critical issue of an agricultural divide.

The first requirement to bridge the divide is to focus on agriculture in developing countries. The rich countries are already paying great attention to the tune of over 300 billion USD subsidies a year, rougly equivalent to the total GDP of Sub-saharan Africa or five to six times the total aid to developing countries.

In contrast, over the last decades, less and less attention have been paid to agriculture in developing countries. The share of the national budget allocated to agricultural development has gone down in many developing countries. In six countries of West Africa, the average share of public expenditure in agriculture decreased from an already low 4% in 1980 to about 2% in 1998. In the same way global development assistance to agriculture has gone down from 6 billion USD in 1985 to 2 billion in 2002.

That is the bad news. The good news is that we are now starting to reverse the trend.

This wonderful initiative by President Wade is just one illustration of this. In fact the realities on the ground are finally starting to be noticed.

Let me give a few examples

The just published Millennium Project report clearly shows that of the 1.1 billion people living on less than a dollar a day, 800 million or three fourth live in rural areas depending on agriculture and related activities for their livelihood.

The Millennium Development Goals will not be met if rural development and agriculture are not put on the very top of our development agenda. In most of the countries which are of track to reach the MDGs, agriculture is the biggest sector in the economy, biggest export earner and biggest employer.

In West Africa 65% of the total labour force work in agriculture. What else but broad based agricultural growth can give hope and opportunities to the majority of the population?

The link between spending on agricultural development and economic growth and poverty reduction is also very clear. For the past 20 years greater levels of government expenditure for agriculture are strongly correlated with progress towards the Millennium Goal of halving poverty and hunger.

The comparison between Sub-Saharan Africa and Asia is striking. Rapid progress towards achievement of the MDG 1 in Asia is correlated with high and increasing levels of Government expenditure on agriculture per capita of the rural population. And, recently, we have seen a renewed focus on agriculture and rural development in India and China to deal with the problems of the rural poor whose livelihoods have not been improved by the overall economic growth in these countries.

In Africa on the other hand, where the level of public expenditure for agriculture is relatively extremely low and has further declined during the 1990s, little progress has been made. The present level of public support to agriculture which corresponds to less than 10 USD per head of the rural population per year is in marked contrast with any of the broad based agricultural development processes that took place in other regions of the developing world.

We see the 2003 African Union Maputo Summit declaration to urge member countries to devote 10% of their budgets to agriculture, from a level often well under 5%.

We see the Doha Development Round of trade negotiations where agriculture is recognized as the key issue for success.

We realize the potential of rapidly increasing global demand from an additional 2 billion people on this planet within the next 20-25 years, as well as the added demand of the more varied diet that comes from rapid development in large parts of the developing world .

With a growing global demand, with hopefully a successful outcome of the Doha round and a gradual decline of OECD subsidies, we can see the emergence of a more level playing field.

How can Africa take advantage of its agricultural potential? And, first of all, of its hundreds of millions of agricultural producers? How should it use increase budget resources and increase ODA and debt relief?

Africa has demonstrated that it has the potential to feed its people and to export. Cassava production has quadrupled during the past 10 years - making Africa the largest producer of this crop. And with favourable climatic conditions, African countries have recorded bumper harvests of millet and sorghum. We are pleased to have been associated with these successes.

African cotton production is soaring - despite persistent challenges and an international trade regime that is particularly adverse to African farmers. With a level playing field what could not be achieved?

Indeed, to bridge the agricultural divide, rich countries must address the issue of the direct and indirect subsidies to their agricultural exports that are depressing prices on international markets. They should also open further their own markets. Under the eight Millennium Development Goals, world leaders committed themselves to develop further an “open, rule-based, predictable, non-discriminatory trading system".

This would strongly reinforce the emergence of new opportunities for many African farmers in particular in the sector of non traditional commodities.

But, for many more farmers, the first market to access is not oversees. It is the nearby rural town and the rapidly growing urban markets of their countries and of their region.

We have seen imports of basic food products increasing sharply in Africa over the last twenty years. This has to do with stagnating productivity of African agriculture and with low prices on the international market. It has to do also with insufficient development of local agro-industries able to process local products in order to meet the growing but changing urban demand. It has to do with very high transaction costs, including transport costs. For example long distance freight rates in Tanzania are three times higher than in Indonesia. The cost of local transportation is also particularly high: in Cameroun, Cote d'Ivoire and Mali the per-kilometer cost of short-haul transport tends to be six times higher than for long-haul transport. Finally this has to do with increasing levels of risks and vulnerability.

How can small farmers and local food industries invest, develop and reach competitiveness in circumstances of unfair competition, highly volatile prices and high risks on both the production and the market sides? That is the challenge.

Small farmers' access to market has to be improved first within developing countries and even better within developing regions. That means investing in infrastructure and communication, eliminating non-tariff barriers, strengthening capacities of farmers' organisations and cooperatives engaged in trade, improving market information and supporting rural enterprises.

And, yes, this may require also a certain degree of temporary and well targeted tariff arrangements or other measures in a distorted and unpredictable international market. Particularly for essential food products exposed to enormous productivity gap. In this regard, what can we learn from successful strategies in many Asian countries? In order to answer this question, we should all - and in particular in Africa - strengthen analytical and institutional capacities that could allow optimal use of the flexibility of the existing trade regime.

On this issue of regional market integration and common external tariff, we are following with great interest the ongoing work in the ECOWAS region that recently approved its common agriculture policy.

But a more open and equitable trade regime is not enough.

I would like to outline what is needed from the perspective of the smallholder farmer, who is to provide increased production to boost economic growth, higher standard of living and the employment opportunities which a still rapidly growing population requires for human dignity, hope and social cohesion to prevail.

First and foremost, the rural smallholder needs secure access to land and water, the key factors of production. Here small scale community based irrigation, that can be managed and maintained by the local community itself, is of key importance. Secure access to water is still for many farmers the biggest constraint, particularly in Africa.

Secondly technology whether in the form of higher yielding varieties, improved soil fertility, new cropping methods or locust control. Here research is key. IFAD is focussing on targeted research for the right technology for the small holder.

Dissemination is often the weakest link. Extension systems have been dismantled. Innovative methods of farmer field schools and farmer to farmer methods have shown great promises and these can be put to good use.

Financial services in rural areas are increasingly important and needed. Experience has shown that little agricultural investment and modernization can be expected in many countries without access to effective saving and credit services. This is a vital condition for the economic empowerment of smallholder farmers.

And rural poor people must have strong professional organizations and real political representation to ensure that their needs and interests are being met. No agricultural take off associated with broad based poverty reduction has taken place without strong associations or institutions that defend the interests of all of its members when it comes to input prices, common storage, marketing, financial services and political influences.

Rural development must start with the empowerment of rural communities, particularly women's groups, farmer's organizations and federations of these groups. Empowerment means supporting rural poor people to acquire the knowledge, skills and organizational capacity they need to access resources and services, negotiate in private-sector markets, and influence government policies and investments.

Politics are as critical to fighting poverty as economics. And this is why poor rural farmers need to be able to have a say in the policies that directly affect their lives. Farmers' organizations are an important way to ensure that poor farmers' voices are heard.

Look at the OECD countries in the 19 th century: These societies were largely agrarian and most of the poor population depended on agriculture for their survival - much like in Africa today. These farmers came together and got organized. They built strong associations and cooperatives. They created banks.

Today, farmers represent less than 5 per cent of the population in OECD countries - and yet they have some of the strongest political voices around. In Europe, commanding 50% of the European Union Budget.

There are many examples of poor people coming together - and changing their situation for the better. Many of these examples are happening in Africa today. IFAD is very happy to be able to provide funding for various African farmers' associations. We are reaching out to them and asking, “How can we support you? That is, how can we support you in a way that does not take away your genuine accountability to your members?"

And, more and more, these farmers are now able to improve their position in the marketplace. They are able to negotiate better prices for fertilizer - or negotiate better terms for a loan.

There is strength in numbers. Look at NEPAD, look at ROPPA, the West African network of farmers organisations. IFAD supported them - together with FAO - to coordinate with farmer organizations over the continent in the review of the NEPAD agricultural policy. This strengthens the ability of farmers to influence the decisions and policies that affect their lives.

Yes, Africa is changing - and most of this change reflects Africa's own understanding of how it can take charge of its own future. At IFAD, our experience has shown that countries - and indeed, local communities - need to be at the helm when developing poverty reduction strategies and agricultural policies are designed. And our goal is to work with local and national governments - in partnership - to help them respond more effectively to the needs of rural poor people.

Today, there are about 100 on-going IFAD-supported projects and programmes throughout the African continent. That accounts for about 50 per cent of our financing. These initiatives reach more than 50 million rural women, men and children. With over 3 billion USD in investment and an additional 500 million every year we want to be an active partner with Africa.

And we are increasing our commitment by expanding IFAD's presence in Africa. This will enable us to provide even better technical and policy support to African Governments as they work to achieve the MDGs.

In Uganda, for instance, we are helping the government build national partnerships with the private sector so that extension services can be more demand- and market-driven. Empowering farmers' groups to ask for the services they need is key in this process.

After all, development is about people. It's about families having a better life, a better income, better health. It's about having more dignity and a stronger sense of worth. It's about people coming together and becoming active participants in the process.

And as the international community continues to discuss ways to meet the MDG targets, we must remember: Poverty reduction is not something that can be done for poor people. But as members of governments, development organizations, civil society and the private sector, we can create better opportunities for rural poor people - opportunities that allow rural people to overcome poverty themselves.

IFAD's annual programme of work is growing - it has increased by 28 per cent since 2002. We want to see it continue to grow in the coming years. With your support, we will continue to mobilize financial resources and substantially increase our programme of work in Africa.

Thank you.