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Below is a posting I sent earlier today to the Science and Technology
list, that I think responds directly to Michael Lipton's challenge to
the Growth and Poverty group.
If DfID and other donors are to focus on raising the primary
productivity of the poorest people, one important tool will be the
introduction of new funding mechanisms. The "invention" of the CGIAR in
the 1960s was a great achievement that unlocked a lot of other funding
and delivered extraordinary results, but the subsequent decline in
support to agriculture tells us something important about the
limitations of the mix of institutions that are now available to donors.
To raise funding levels now, having a new and different way to reward
accomplishments would be helpful. My own proposal for a additional
funding mechanism that could complement other institutions, improve
effectiveness and raise funding levels is a way to pay "prizes" for
agricultural innovations. I won't explain the approach here -- a short
journal article is available on-line, at:
www.agbioforum.org/v6n12/v6n12a14-masters.htm
and there is also a two-page summary and a longer journal article
explaining the concept on my website:
www.earth.columbia.edu/cgsd/masters-news
<http://www.earth.columbia.edu/cgsd/masters-news>
Perhaps the growth-and-poverty list members would like to comment on how
a new funding device, perhaps prizes in particular, can help
re-invigorate support for what Michael Lipton quite rightly calls Plan
A.
Will Masters
-----Original Message-----
From: Will Masters
Sent: Wednesday, April 28, 2004 9:58 AM
To: <address removed>
Subject: "Demand-led" versus "supply-led" innovation
Colleagues, I'm glad that the science and technology portion of this
exchange is heating up! I would like to applaud Dana Dalrymple's latest
posting, and would add the following:
Ultimately, all successful innovation must fill users' needs, or else it
will not be adopted. But this does NOT mean that the users can or
should be "leading" the innovation, or even that users must participate
directly in the innovation process. Of course end-users must
participate in the final stages of refinement of any innovation, but to
the extent that the whole innovation process is made demand-led and
participatory, it will be pursuing approaches that are already known and
available to the users: in other words, it won't be as innovative as it
might be. One can think of a continuum, from what users know and can do
to what specialized researchers know and can do. It seems clear to me
that poor farmers know more than anyone else can possibly know about
their own circumstances: what they can't do is how to make large changes
in the available technology, through new crop genetics, new mechanical
devices, etc.
As I see it, the key question is whether specialist innovators have a
real incentive to meet users' needs. If they do, they will use their
specialized knowledge and skills to do something genuinely new,
something that the users can use but couldn't make for themselves. Dana
Dalrymple's "supply-led" innovators have been successful where users'
needs are relatively easy for outsiders to see. To make a gross
generalization, I think this was more the case for the large and
relatively homogeneous cultivation systems that benefited from the past
green revolutions, than it is for the patchy, agro-pastoral systems of
Africa and parts of South Asia, the Andes, etc. that have not yet
experienced a green revolution, and where it is not at all obvious to
anyone what technologies are likely to work best.
So, how to reward innovators to produce what users need, but can't make
for themselves? One proposal is to introduce some "pull" mechanisms for
the funding of research, to complement the "push" mechanisms by which
donors fund projects and programs. The terminology is due to Michael
Kremer, who considers pull mechanisms to be all payments that are tied
to adoption and impact: most notably that would be royalties from
patents, but it would also include "prize" payments paid for public
domain technologies.
The trick in designing a pull mechanism is how to compute the value of
payments, and make a low-transaction cost mechanism for donors to reward
innovators. A particular proposal for how to do this is detailed in a
recent journal article, available on-line at:
http://www.agbioforum.org/v6n12/v6n12a14-masters.htm
I won't go into details here -- there are also longer write-ups of the
proposal available on my own website, at:
http://www.earth.columbia.edu/cgsd/masters-news
<http://www.earth.columbia.edu/cgsd/masters-news>
I know that DfID has been interested in the pull mechanisms in the past
-- indeed their work with Michael Kremer stimulated the work that is
referenced above. I would be very keen to hear what the community is
now thinking about this kind of payment device, and its potential to
help answer the question of how to make R&D more demand-led, without
losing its innovative character.
Will Masters
------------------------------------------
William A. Masters
Center on Globalization and Sustainable Development,
The Earth Institute at Columbia University
http://www.earth.columbia.edu/cgsd/masters
<http://www.earth.columbia.edu/cgsd/masters>
Visiting Professor of International and Public Affairs,
Columbia University
Professor of Agricultural Economics,
Purdue University
------------------------------------------
-----Original Message-----
From: Michael & Merle Lipton [mailto:<address removed>
Sent: Wednesday, April 28, 2004 12:12 PM
To: <address removed>;
<address removed>
Cc: <address removed>
Subject: Fwd: Re: Agricultural e-forum
Dear all,
I have been following several of the Group discussion
fora with interest. There are many thoughtful, useful contributions. But
I am depressed by the fact that few contributors are following up on
what seems to me to be the main point, and the central lesson of history
for initial mass poverty reduction. It is that without sustained
initial, employment-intensive, smallholder-based yield growth in
agriculture, probably focusing initially on food staples - call it Plan
A - the remaining heartlands of world poverty will not reduce it much.
Hence the issue for development actions in general, and for UK aid
policy in particular - if these aim to cut poverty in its heartlands -
is what policies can implement Plan A. It is not what alternatives there
might be in la-la-land.
First, the central fact, and an important proviso.
Fact: over 90% of the dollar-poor are in sub-Saharan
Africa and S and E Asia, and over 70% are rural. Though almost all of
them obtain income from many sources, much the most important is
agriculture, and non-farm growth is seldom robust (or povery reducing)
until dermand from agriculture grows. Ravallion's projection is that
over half the world's poor will be rural until 2035.
Proviso: Non-farm expansion is increasingly the main way to
reduce, and fairly soon to remove, extreme dollar poverty where there
have already been 10-20 years of 3%+ agricultural yield growth (usually
starting with food staples) that is smallholder-based and
employment-intensive. Demand from small farmers and labourers, fuelled
by agricultural progress, in turn sets off rapid non-farm growth. This
has happened in large parts of East Asia and some parts of South Asia.
First, however, affordable demand for the labour of the rural
poor (accompanying, of course, measures to raise their educational,
skill and health levels) are needed. The rural poor have multi-faceted
livelihoods, but, almost always, only yield expansion in agriculture -
overwhelmingly the main component of those livelihoods - can provide
such extra livelihoods initially where mass rural poverty prevails.
So: how can Plan A be implemented? Most of the remaining poverty
heartlands have little water control, especially in sub-Saharan Africa,
and have so far gained little from the Green Revolution. Aid to
agriculture, and (except in parts of Asia, and including within the CG
syastem) finance of public-purpose research aimed directly to improve
crop productivity and robustness, have collapsed. Staples yield growth
in the developing world has fallen from about 3%/year in the early 1980s
to around 1%/year recently.
So it will not be easy to revive agricultural growth in the
poverty heartlands, Yet, given agriculture's role in employment-income
and consumption for most of the world's dollar-poor, there is no hope of
meeting the MDG to halve poverty in 1990-2015 unless that happens. One
requirement - of course not the only one - is that aid to small-farm and
employment-intensive agriculture revives sharply. (All aid to
agriculture has fallen by over 60% in absolute terms since the late
1980s, folloowing a previous sharpl fall from the late 1970s; the falls
are mostly due to agriculture's plummeting priority within
sector-specific aid, not to the rise of structural adjustment
assistance). A UK lead, combined with the renewed concern of other
donors on this matter, could be crucial to the revival. Obviously, how
we do it is at least as important as that we do it. It is right that
these fora focus on the 'how'. Aid has to be is directed to the right
targets to benefit the poor (which include producing items in sufficient
demand, local or foreign); and aid has to be reasonably well based in
the will of recipient societies and governments, e.g. as expressed in
the (currently rather sector-free) PRSPs, so that extra aid claws in,
rather than drives out, domestic effort.But let's not be so concerned to
discuss and differ on the difficulties, that we lose sight of the
central point - the case for a DfiD focus on Plan A. This means dated
targets for reviving the proportion of aid from the UK, and if
attainable for EU and the World Bank, supporting - in a broad sense -
smallholder and employment-intensive farming.
Otherwise - without extra demand for the labour services of the
rural poor, which in the initial stages, and in the remaining
recalcitrant poverty heartlands, can come affordably only from
small-scale agriculture - there is little hope of big poverty reductions
in the parts of the world that have NOT, so far, had either poverty
reduction or substantial progress in farm income or in yields of food
staples.
The rising worker-to-dependent ratios in the poverty heartlands
in 2000-2040 can be a wonderful opportunity for a farm-income-led attack
on poverty, increasingly feeding into off-farm income diversification,
as happened in East Asia in 1970-90. Or, without sustained yield growth,
the opportunity can turn into an employment and poverty debacle.
Which will happen? It depends in large part on trade policies in
OECD, on domestic responses in the poverty heartland nations, and on the
priorities within farm science. But aid plays a big role, especially
since aid policy affects all these other things too. What should the UK
do in this context? How should it seek to influence EU and the World
Bank? How do we get to targets for aid to agriculture and farm research
over the next 5-10 years, and for steering that aid to the needs of the
poorest: policies that prioritise small farms and employment income,
water control and better seeds for more robust farming, and poor
people's access to bigger shares of farmland (including via orderly land
reforms) and farm water?
It would be useful if we could re-inject an emphasis on these
central points into the fascinating but, inevitably with many
participants and fora, perhaps not yet sufficiently focused discussions.
Best wishes for our work!
Michael Lipton
P.S. Here is a list of issues I have sent to Sarah Hartwell, for
the interview to which her Select Committee on DfID agricultural policy
has asked me. (Sorry for some overlap with the above.)
(a) 55-60% of the world's dollar-poor depend on agriculture for
their livelihood.
(b) Historically, almost all initial mass poverty reduction -
most recently and strikingly in large parts of Asia in 1965-90 -began
with big, employment-intensive productivity gains on small farms.
(c) Non-farm growth, while crucial to poverty reduction later,
first needs demand from small farms and so has hardly ever created
enough affordable workplaces to initiate early mass poverty reduction.
(d) A unique opportunity for accelerated poverty reduction - yet
also a great risk of an unemployment surge, deepening poverty - is
created by the rapidly rising worker/dependent ratios (due to sharp
post-1980 fertility falls) in Asia and Africa, and only small-farm
growth strategies are likely to seize the opportunity.
(e) Yet since the 1980s there have been sharp (and
non-coincidental) falls in
---yield growth in main food staples in developing counties;
---aid to agriculture;
---public-purpose research into raising productivity of main
staples; and
---the rate and spread of dollar-poverty reduction.
(f) These setbacks are despite big falls in price bias against
agriculture in many developing countries - and are partly due to OECD
policies on farm trade, aid, and science.
(g) The forms of aid required to improve the impact of
agriculture on poverty reduction are fairly familiar, but
little-discussed. Central issues include:
--possible need for specific commitments to raise volume, and
share, of UK aid reaching small-scale farming, given the above facts;
--the use of aid to address the water crisis, especially since
absence of water control is the main obstacle to progress on small farms
in Africa;
--how to steer more aid to agricultural (especially seed)
research that favours production and employment of the poor;
--how to increase UK aid's impact in improving the poverty
focus, and in raising the amount, of support for agriculture via
multilateral agencies;
--prospects for aid in support of well-conceived programmes to
redistribute, where feasible consensually, farmland and water to the
poor;
--how to use aid or other means to improve the prospects that
globalisation benefits, rather than harms, small and remote farms, given
the increasing role of supermarkets, horticultural multinationals, and
food and labour grades and standards; and
--how to ensure that aid complements, rather than drives out,
domestic private and public investment in agriculture.
Please visit dfid-agriculture-consultation.nri.org.