Overcoming inequality in Latin America and the Caribbean

A young man works on his tomato plants in rural El Salvador. New bold policies are needed if Latin America and the Caribbean societies are to continue to move forward towards equality, social justice and inclusive, sustainable economic growth. ©IFAD/Carla Francescutti
A young man works on his tomato plants in rural El Salvador. New bold policies are needed if Latin America and the Caribbean societies are to continue to move forward towards equality, social justice and inclusive, sustainable economic growth. ©IFAD/Carla Francescutti

5 September 2016 - Over the last three decades, the countries of Latin American and the Caribbean (LAC) experienced a profound transformation which extended to rural areas.

This economic and rural transformation resulted in many benefits, especially between 2004-2013, when millions of people left poverty behind. Despite this success, over a quarter of the region’s population continues to live in poverty. Now, the economic downturn of most of Latin America’s economies over the last few years threatens to send millions more back under the poverty line.

Against this backdrop, new bold policies are needed if the region’s societies are to continue to move forward towards equality, social justice and inclusive, sustainable economic growth.

On 14 September IFAD launches its flagship publication, Rural Development Report 2016: Fostering Inclusive Rural Transformation. The report provides extensive insight into the future development of rural communities and brings together leading thinkers to analyse lessons learned from experiences across the globe.

In the run-up to the launch of the report, Joaquín Lozano, IFAD Director for LAC, explains the challenges and opportunities the region’s rural people face and how a more inclusive rural transformation is the first step towards ending inequality in the region.

Q: LAC rural areas have undergone a thorough transformation. What are its main features?

“Just 30 years ago, LAC countries were basically rural; now, most of their populations live in urban areas. Rural communities have diversified their income-generation activities and agriculture is no longer their only source of income. Bigger value chains in the hands of national and international corporations have replaced local markets; and the cultural and access to information gaps between the urban and rural population have blurred among the younger generation. Things are hugely different now for LAC’s rural people.”

Q: In this context, what are the greatest challenges for rural people?

“Inequality is the greatest challenge for the whole region. Despite a staggering reduction in poverty, the income disparity between the top tier of the population (2.7 per cent of the total) and the bottom tier (24.4 per cent) remains much bigger than in any other region of the world. Territorial inequality plays against rural areas. In Bolivia, for example, poverty declined nationwide from 61 per cent in 2005 to 39 per cent in 2013. However, in rural areas 60 per cent of the population lives in poverty and 39 per cent in extreme poverty.”

Q: Is this inequality aggravated by the land ownership structure in the region?

“Indeed. Let’s look at the example of Brazil. There, 16 per cent of the farms are owned by corporations which control 76 per cent of the land and produce 66 per cent of the agricultural GDP. On the other hand, 80 per cent of the farms are owned by family farmers who control only 19 per cent of the land and produce only 12 per cent of the agricultural GDP. Nonetheless, family farmers are responsible for up to 70 per cent of the production of some staple foods. It is totally unbalanced.”

Q: Are there any opportunities for farmers? If so, what are they?

“We need to create an adequate environment to take advantage of the vast amount of knowledge and experience that family farmers have gathered through generations. Over the last few years, governments across the region have made efforts to reduce income inequality through cash transfer programmes to poor households and to extend public services to previously marginalized populations. Increased income and better services have resulted in healthier, more educated rural populations, providing stronger foundations on which to build development initiatives. Although this is the right path, much more needs to be done to even out intra-country disparities.”

Q: IFAD has emphasized the need for inclusive rural transformation to lift rural people out of poverty. What, in your opinion, should be the main features of rural transformation in LAC?

“The region’s governments and societies have to find ways to boost agricultural productivity, especially that of family farmers. A new green revolution is needed. Its main objective must be to remove the barriers in the way of family farmers’ access to technology, finance, knowledge and markets. This would invigorate the rural economy in general, including non-farming activities, and strengthen rural-urban links at many levels, particularly the link to national markets.”

Q: Do you believe a major shift in policies is needed to attain this inclusive rural transformation?

“Absolutely. Latin American countries need to expand the delivery of high-quality public services to rural areas. They have to maintain and make increased efforts to reduce inequality by formulating targeted policies and making investments to support marginalized groups, such as indigenous people, Afro-descendent communities, rural women and youth. In such a diverse region, policies to address inequality must include local authorities and civil society in the decision-making process.”

Q: Do you think  that increasing investment in rural areas within the context of declining economies could prove be difficult?

“Economic decisions tend to be tough, particularly in times of slowdown, but policymakers have to be brave enough to make this kind of investment. It is the only way to achieve equal, sustainable societies and to tackle a whole range of social problems that go beyond rural areas, such as migration, climate change, and violence as a consequence of inequality.”

Q: Could you provide examples of inclusive rural transformation you have seen in the field?

“On a recent trip to Brazil, I visited COOPERCUC, a women-led cooperative in Uauá, a small rural town in the state of Bahia in north-eastern Brazil. I was really amazed. They were inaugurating a plant with the capacity to process 500 kg. of fruit a day. The cooperative’s products are not only sold in Brazil but also in Western countries and over 2,000 families are benefiting from this project.

"The cooperative is chaired by Denise dos Santos, a 26-year-old woman whose parents were among the founding members of the cooperative. She has returned to Uauá after completing her degree in Business Administration because she wants to give back to the community. This is an example that proves that when family farmers are given opportunities, they are perfectly capable of turning them into success stories. This story of success was possible thanks to the combination of the talent of COOPERCUC’s women, IFAD’s technical and financial support and the Bahia government’s willingness to partner with us in favour of family farmers.”

ABOUT THE REPORT

The Rural Development Report, IFAD’s flagship publication, is a rallying call to policymakers and development practitioners to end poverty and hunger in all its forms everywhere. The report looks at how to bring rural people into the economic mainstream and how to transform rural areas so that development is not only inclusive, but also socially, economically and environmentally sustainable.

Stay tuned for the launch of the report on 14 September and follow the conversation online at #ruraltransformation.