IFAD Asset Request Portlet

Asset Publisher

Statement by President Båge to the Stakeholders Seminar

Location: Ottawa

17 October 2001

Ladies and Gentlemen,

I am very happy to address you today on the subject of Rural Poverty. Let me first say a few words about IFAD. The International Fund for Agricultural Development was set up in 1978 for lending to poor countries to fight poverty and hunger. Since then, the Fund has financed almost 600 programmes and projects. Over 200 of them are currently under implementation, reaching about 200 million people.

As all of us know, more than 1.2 billion people live on less than a dollar a day - what is known as extreme poverty. A global focus and consensus was reached at the UN Millennium Summit in September 2000, when 147 Heads of State and Government established seven international development goals, one of which was to cut poverty in half by 2015. Such a global consensus was unprecedented. At the same time, the current rate of poverty reduction is less than a third of what is needed to achieve this target. In fact, at the current rate, the majority of the poor will continue to be so for several decades.

What we must bear in mind is that three quarter's of the world's poor, or about 900 million people, live in the countryside - about 44% of them in Asia and 25% in Sub Saharan Africa alone. Therefore, we must focus our efforts on them. We must also remember that the rural poor are highly diversified and include smallholder farmers, artisanal fisherman, pastoralists, indigenous people, wage laborers, the landless and female-headed households.

IFAD's Rural Poverty Report 2001 examines the challenges and the opportunities the rural poor face in improving their living conditions. It also examines the elements that governments and the international community must face if we are to help the poor lift themselves out of poverty.

Since the rural poor depend on agriculture and agriculture-related activities for their livelihoods, sustainable poverty reduction would depend on the growth of the rural and agricultural sectors. Viewed from this perspective, there are four elements that are essential for poverty reduction: assets, technology, markets and institutions, all of which need to reflect the critical role of food production in the livelihoods of the rural poor. Let's not forget that staple food crops provide the greater part of the poorest with most of their work, income, consumption and calories. I would like to take a few minutes to talk about these four elements.

Access to assets - whether they are physical, natural, human or financial - empower the rural poor by increasing their incomes, protecting them against shocks and providing them with choices to escape from harsh or exploitative conditions. For the majority of the world's poor, particularly for women, land and water assets are most pressing.

People without assets tend to be consumption-poor because they rely mainly on selling their labor in poorly paid markets or to the landed class, because they have nothing to sell or mortgage in hard times, and because they are economically dependent and politically weak. Without secure property rights, farmer lack the incentive to invest in land management.

The Report emphasizes a number of pro-poor asset policies. First, land redistribution, which is a powerful weapon in the fight against poverty and is essential for fast progress in very unequal rural areas with limited options. Second, policies should increase poor people's control over water-yielding assets so they can improve their returns from the land, meet family needs for drinking water and reduce the incidence of water-borne diseases. Third are the human assets - health, education, information and communication skills. These have an intrinsic value in raising capabilities and well being, and an instrumental value in raising income. Efforts to enhance these assets cannot be ignored.

The rapid reduction in poverty in the next 20 years also requires technical progress. Sadly, poverty is often concentrated in areas where the technology to improve the production of staples has not yet been introduced. This condition argues first of all for more effective use of existing technologies. Their potential to achieve high yields and sustainable development is far from exhausted. What often impede this potential are institutional factors such as lack of water and extension or adequate support services. And new technologies are not panaceas for such obstacles.

Bioagricultural innovation certainly offers scope as well as concern. Bioagricultural research can help the poor by developing crop varieties that are water-stress tolerant, high yielding and pest-resistant. However, there are potential risks to human health and the environment, and the Report stresses a cautious approach. Risks need to be evaluated against the prospects of eliminating hunger and malnutrition. In the evaluation process, the experts, civil society and the poor all have important responsibilities. New technologies must be capable of benefiting the mass of rural poor, whatever their status. They must be field tested and cleared with the knowledge and participation of the poor. In fact, the poor have to be involved in determining the need, evaluating the responses and options, and in selecting production strategies. Unless they have the power to participate in deciding their use of technology, it is unlikely that they will benefit from it.

This brings me to the third element: markets. The rural poor need access to competitive markets, not just for their produce but also for inputs, assets and technology, consumer good, credit and labor. The problem of market access has three dimensions. This first is the distance of the poor from the markets themselves. The second is the inability of the poor to influence the terms upon which they participate in the market. The third is the lack of market intermediaries. All of these must be tackled if the measures are to have the desired effect on productivity, output or incomes.

Under globalization, market access becomes even more important, as only those who have it can exploit the new opportunities available. Without market access, the potential benefits of high product prices and lower input prices are not transmitted to poor households.

The recent "Everything but Arms" initiative of the EU to allow duty-free imports from the least developed countries is welcome, but this should be regarded as only the first step towards making the next Trade Round into a true Development Round. The elimination of trade restrictions and the reduction of subsidies in agriculture could significantly enhance exports by developing countries. It also allows them to diversify their agriculture and become beneficiaries of globalization, rather than its potential victims. We have to work together to continue the elimination of international trade distortions penalizing small agricultural producers in developing countries.

Poverty can be reduced as the poor acquire access to wider market exchanges, but there are a number of provisos. The first is that mass poverty is normally first reduced by the acquisition of land assets to enhance the production of local staples. The second is that the progress of the rural poor through market development must be complemented by asset redistribution. If the rural poor have some control over land and human capital, they will be more willing to rake the risks required in involving themselves in expanded markets. The third proviso is that globalization risks importing a number of fallacies: that the further away one trades or invests, the better; that local linkages are second-best; and that it is acceptable to subsidize trade and exchange.

The final element of the Report analysis relates to institutions. One question arises immediately: How can the poor benefit from institutions that were initially controlled by the rich and powerful and run mainly in their interests? It is paramount that the poor participate in building institutions that are responsive to their needs. Cultural biases, illiteracy and other barriers towards effective participation in institution-building have to be removed. It is the poor who need to be given power and voice to be able to set up institutional frameworks that will work best for them.

We place emphasis on strengthening institutions for the rural poor. This involves supporting decentralization initiatives to bring decision-making closer to the rural poor. It involves promoting better governance. It involves supporting farmers' and water users' groups, and working with civil society in general to create enabling conditions for the poor. Institution-building in a democratic and transparent way in not a quick process, and in most cases it slows down the implementation of projects. Nevertheless, it is essential, and we must pursue a policy of delicate balance between the rich and the poor. Most importantly, our partnerships must be built with the rural poor at the center.

Before closing, I would like to bring up one more subject: financing for development. An unequivocal "verbal" commitment to reducing poverty was articulated at the UN Millennium Summit. However, the financial commitment is not in evidence. Despite the global goals and targets established, the real value of aid fell between 1988 and 1998. And the real value of aid to agriculture contracted. The rural sector has largely remained neglected, even though it has the greatest concentration of poor people.

If global interest and commitment is to be genuine, financial resources, particularly domestic ones, have to be reallocated to the rural poor. The rural agriculture and development sector must take the spotlight. It is inefficient as well as inequitable to exclude people from schooling or from managing productive assets because they are too poor to borrow; or because they are born in villages and hence lack urban facilities; or because they live in remote areas with limited access to markets. If anything, these are the people whose needs are the greatest.

Of course, reviving agriculture is still only a part of the answer to end rural poverty. Agricultural change can work to reduce poverty, but only when it is linked to social changes that give the poor greater power over the social factors and shape and, far too often, circumscribe the horizons of their possibilities. But if the agriculture sector does not receive its share of development finance, the process of poverty reduction will find itself in front of an insurmountable roadblock. We cannot allow that to happen.

Our experience in IFAD has repeatedly shown that even the poorest groups, whenever offered the opportunity, eagerly seize the chance to raise their incomes and output and to build more secure and productive lives for their families. The imperative is to give the rural poor that opportunity.

Thank you.