Growth and Poverty Mailing List Archive

["Vinay Chand" <<address removed>>]

Gareth Williams points to dimensions emerging in this Consultation. I would 
like to share initial thoughts on the political dimension of agricultural 
reform. The first thing to recognise is that the situations vary very greatly 
by country and my personal exposure is greater in Asia than in Africa.

Farmers are a very important voting group in all democratic developing 
countries and politicians and bureaucrats ignore this fact at their peril. My 
experience is that there is a growing appreciation of this aspect as well as 
the importance of the sector to rates of economic growth. However, distributors 
and industry are normally better organised as a political lobby not forgetting 
that they too are tied to the welfare of farmers but with different priorities.

Politicians and bureaucrats claim in most cases to have a political will to 
effect beneficial change but nearly everywhere have not been able to influence 
developments enough. In as far as they would like to, their intentions are not 
different from those of the farmers or aid donors. Many have had to act to 
protect farmers from blatant exploitation and countries like India have a far 
reaching regulatory regime developed for this purpose a long time ago but now 
often in the way of further development. Equally there are many countries where 
intervention has been to protect the interests of distributors and buyers 
rather than the farmers, no matter what the justification was when they 
intervened. There are also cases where a regulatory regime was introduced 
ostensibly to help farmers but in reality to collect taxes and we all know how 
difficult it is to raise taxes from the sector.

A common aspect for all stakeholders is that they need money. Politicians 
everywhere have to raise money to help gain power. Bureaucrats have to justify 
budgetary allocations and need to use whatever is in the popular mindset to do 
so. Control over expenditure gives them power and wealth. Vested interests 
don't wish their position to be eroded but are always looking for state 
intervention to assist them to make more money. Farmers are not only poor but 
getting poorer by the day in comparison with other sectors as well as the 
development divide.

 There has been a sea change in global attitudes in the last two decades in 
favour of liberalisation and against what we could loosely categorise as 
central planning and socialist measures. Developing countries too have been 
influenced by this change but probably not as much as the development banks and 
some bilateral donors. In fact, we now have a global trend towards a more 
moderate position on the debate.

In this context it is important to tread carefully in changes we advocate and 
how we channel aid. It is not very fruitful to take on vested interests 
powerful in the country in a head on confrontation. Let me give an example. In 
India produce can only be sold through designated markets and there is a market 
tax. This was to protect farmers. However, it impedes direct procurement for 
processing and exports, contract farming and higher value, more efficient 
distribution. The Government is in the process of modifying legislation to 
allow parallel trading and for those states who want to modify or abolish the 
market tax. It is a good idea to encourage states to forego the revenue 
whenever possible but in the knowledge that it is a successful way of raising 
badly needed agricultural tax revenue. There is a vast private sector that has 
plays a vital role within that regime and understandable reluctance to change. 
But it is not very smart to declare the reform policy totally inadequate and 
demand further immediate radical change as one development agency is doing. In 
such a case, it is wiser to direct aid money to the development of parallel 
systems and seek policy changes only as far as they will not impede that.

There are also too many stalled institutions out there. Too much of any money 
given can end up on institutional survival and this is something that is 
understood by many politicians and bureaucrats. This applies to some 
development agencies as much as anyone else. There is not enough consideration 
of how much aid money reaches the ground. If a million dollars is given by DFID 
to an aid agency and only 30% gets through (I have personally seen it happen), 
then DFID would be financing the development business rather than the 
development process. Equally, giving ten million to a Government or a region 
without sufficient control may just end up meeting a very small part of their 
administrative needs with a paltry contribution reaching the ground (We have 
all seen it happen). Both, administrators of aid agencies and bureaucrats in 
developing countries too often have the same survival and career orientation 
and are often interchangeable.

The incentives operating inside donor agencies need to be focused on targeting 
small farmers effectively rather than on volume of money spent at the lowest 
cost on paper. Who are we seeking to help? and why? and how much of what we are 
trying to do is getting through? Instead of political correctness, we need to 
understand motivations of the actors in a particular situation and work with 
those of them who are trying to relatively sincerely achieve the same results 
that we seek. Then we need to channel it in a way that takes into account 
obvious leakages. When the intention is to strengthen an aid agency or 
institution, money can be given them directly. When intended to help farmers, 
planning, monitoring and evaluation must ensure it reaches them.

The dynamics of change require understanding situations as they have evolved 
and seeking to loosen controls to allow choice and flexibility. Using India as 
an example again, the country has poor productivity, terrible infrastructure, 
many stalled institutions and much double speak but is also the second largest 
horticultural producer in the world. There is a creaky inefficient system that 
badly needs reform but delivers affordable food to the second largest 
population in the world. There are 120 million small decision makers out there 
who do this without much assistance from anybody getting through to them. I 
personally think that even well meaning politicians and bureaucrats end up 
being out of touch with the small farmers as much as the donors.
   


Best wishes,

Vinay Chand,
230, Finchley Road,
London NW3 6DJ, UK
Tel: 44-20-7794 5977
Fax: 44-20-7431 5715
<address removed><mailto:<address removed>>