Growth and Poverty Mailing List Archive

["Gareth Williams" <<address removed>>]

Growth and poverty discussion group - summary of discussions during the
final week

The final week of the growth and poverty group has been busy as usual, and
contributions have poured in right up to the finishing bell.  In order to
try to capture this I have decided to write a final weekly round up before
drafting the overall summary of the six week process.  During the last week
many contributors have given their thoughts to the role of DFID in promoting
agricultural development, and what DFID needs to do to implement the points
raised by this forum.  I will devote much of this summary to this topic, but
before doing so I will provide a quick round up of the some of the other
issues that were raised by contributors.

* The role of agribusiness

There has been a fascinating discussion about the links between agribusiness
and small farmers.  Several contributors point to the positive role of
commercial farms in providing a range of services to smallholders, including
input supply, credit, extension and marketing.  A number of contributors
have pointed to success stories.  Jonathan Innes (26 May) discusses the role
of sugar estates in Kenya, Swaziland and Uganda in providing employment and
social services, as well as a market for sugarcane purchased from
smallholders in the surrounding areas.  Vinay Chand (26 May) describes other
examples of outgrower schemes, including BAT in Indonesia and Del Monte in
the Philippines.   Martin Evans (25 May) distinguishes between several
different types of outgrowing arrangements.  Dick Tinsley (26 May) adds an
example of tea estates in Tanzania.  All of these contributors point to the
benefits of linking agribusiness to smallholders.  However, as Leonidas
Hitimana (26 May) has pointed out, we still do not know enough about what
policies are required to encourage such links.

Several arguments have been put forward concerning the logic linking
smallholders to agribusiness.  Vinay Chand (26 May) suggests that the key is
to organise a critical mass of small farmers to participate in service
provision and markets.  This relates to Dirk Bezemer's (18 May) earlier
point about the coordination problems that characterise rural transactions
and may result in market failures.  Martin Evans (25 May) suggests that
linking agribusiness to smallholders provides a means to fill the
institutional vacuum left by the withdrawal of state service provision.  By
connecting smallholders to export supply chains, agribusiness may also
provide a solution to Simon Maxwell's concern that the requirements of
supermarkets are increasingly driving small farmers out of export markets.
While agribusiness can provide significant opportunities to smallholders, a
key issue is whether the former have gained excessive market power.  In
order to achieve required economies of scale many agribusinesses have
effectively become local monopsonies (Martin Evans, 25 May).

The discussion of agribusiness has helped to throw light on the debate
between Simon Maxwell and Michael Lipton at the beginning of the forum about
the relative merits of a small farm or agribusiness development strategy.
The examples cited above suggest that the two sectors can be complementary.
Several contributors have called for a twin-track approach.  Martin Evans
(25 May) suggests that because the majority of farmers still operate as
smallholders, widespread increases in prosperity in the small farmer sector
will be the main driver of poverty reduction and growth. However, he also
states that "the underlying social and economic pressures of growth do
inexorably push farming towards larger, more capital intensive modes of
operation."  Julian Quan (28 May) makes a similar argument, but cautions
against overestimating the potential of corporate led, capital intensive
agricultural models to deliver employment, livelihoods and food security for
the poor.
While the assessment of agribusiness has been relatively positive, there
have been several voices of dissent.  Writing mainly from a Latin American
perspective, Lies Craeynest (26 May) argues that agribusiness has displaced
farmers from the land, generated migration to the cities, exposed
smallholders to highly fluctuating commodity prices, led to monoculture,
heavy use of chemical inputs and environmental damage, and created highly
exploitative labour practices.  Similar concerns about labour relations have
been raised by Ruth Segal (27 May).  Lies has called for national and
international regulation on the conduct of agribusiness in relation to
workers' rights, environmental protection and competition.

Jonathan Innes (28 May) has responded to these points arguing that good
labour relations are essential to successful agribusiness, and that the
environmental impacts of agribusiness compare well with smallholder farming.
Land concentration in Latin America is more an outcome of the land tenure
system than an inherent problem with agribusiness.  Vinay Chand (28 May) has
suggested that very large land holdings are relatively inefficient, and that
agribusiness is likely to be most profitable when it is focussed on service
delivery and procurement from small farmers.


* Agro-processing

Several contributors have emphasised the importance of supporting
agricultural processing as a means to add greater value close to the point
of production, and to respond to declining real commodity prices.  Vinay
Chand (22 May) discusses the example of coconuts and provides price
comparisons to illustrate that processing is potentially far more
remunerative than cultivation.  Lameen Abdul-Malik (24 May) argues that
processing "is where the real money is", but that substantial investment and
strategic thinking is required to challenge the dominant position of
multinational companies in agro-processing.  James Biscoe (24 May) suggests
that processing can help to promote diversification by creating a range of
by-products (e.g. coconut husks that can be exported as mulch).


* Community development

There have been a number of submissions on the theme of community
development.  In a series of contributions Per Eklund (19 May, 24 May)
discusses the elements of community empowerment.  He highlights the role of
external knowledge and technology in inducing local institutional
innovation.  A key requirement for community organisations is to develop
mechanisms to address collective action problems and elite capture.  There
are major constraints on the side of government in supporting community
empowerment processes.  However, development projects offer some good
practice - for example community participation in project design and
budgeting.


* Urban agriculture

Jac Smit (19 May) has provided a final contribution on the theme of urban
agriculture.  He comments on an earlier submission that explained the growth
in urban agriculture in Africa as the result of "wars, droughts and
disasters, lack of economic growth and retrenchment policies." (Diana
Lee-Smith, 15 May).  Jac argues that urban agriculture is not only a sign of
economic distress, but is also driven by opportunity.  Key factors
explaining the growth of urban agriculture include: (i) awareness and
communication (media, internet, word of mouth), (ii) policy change
(municipal, district and national), (iii) urban growth, (iv) new technology
(plastic, drip irrigation, improved seed) and (v) empowerment of women.


* HIV/AIDS

Stuart Gillespie (28 May) asks why there has been very little debate on
HIV/AIDS and agriculture.  He argues that in recent years the importance of
agriculture in addressing the causes and consequences of HIV/AIDS has become
clearer.  Agriculture is the main source of livelihood for the majority of
people globally affected by HIV/AIDS.  The sector is particularly threatened
by the pandemic, which is removing labour power and leading to a rapid
attrition of agricultural extension capacity. Studies have shown that
HIV/AIDS has a significant impact on all the major classes of asset or
capital, and on most institutions.

While mitigation strategies will be vital, agriculture can also play a role
in HIV/AIDS prevention.  Agriculture is closely linked to determinants of
infection risk, including migration and nutrition status.  There is also a
link between good nutrition and the efficacy of ARV therapy.  However, the
empirical basis on which to understand the links between HIV/AIDS, nutrition
and agriculture is still rather thin.

The contributor argues that DFID needs to apply an "HIV lens" to different
aspects of agricultural policy and to other policies affecting risk,
vulnerability and livelihood security.  This is particularly challenging
because HIV/AIDS is fundamentally cross-cutting.  Bridges need to be built
between social scientists, epidemiologists, public health specialists,
nutritionists and agricultural economists to fully map the interactions and
to integrate HIV/AIDS concerns into agricultural policy.



* Pesticides

Barbara Dinham (28 May) discusses the environmental and health hazards of
pesticides, as well their impact on farmer debt.  She points to alternatives
to chemical pesticides, such as integrated pest management.  A priority is
to regulate more effectively pesticide sales, distribution and use through
national legislation and international initiatives, such as FAO's
International Code of Conduct on the Distribution and Use of Pesticides.


* Population dynamics

Beier Kirchner (26 May) suggests that one issue that has not received
sufficient attention in the forum is the effect of population dynamics on
agriculture.  This includes the impact of migration, the difficulties of
service provision in the context of rapid population growth, and the complex
relationship between population pressure and natural resource management.


* Political dimensions of reform

Richard Bolt (24 May) has offered some observations on the analysis of the
political dimensions of agricultural reform.  The path of reform is often
uncertain and erratic because it involves trade-offs between different
interest groups at different points in time.  Richard identifies four
dimensions of reform trajectories: (i) time (this often involves short-term
costs for particular groups before wider benefits are realised), (ii)
distribution (between income and social groups), (iii) political-economy
(who are the gainers and losers, where are the vested interests, and can
losers be compensated?), and (iv) fiscal (net fiscal impact may change with
time).  There have been several calls for greater ex-ante assessment of the
poverty and social impact of proposed agricultural reforms.  Louis Bockel
(28 May) contends that this is a major weakness of many PRSPs.

*************

The role of DFID

There has been a good response to the call for suggestions on what DFID
needs to do to address the issues raised by this discussion group.  Several
contributors have submitted specific contributions on the role of DFID
(see, for example, James Biscoe, 25 May; Andy Bullock, 26 May; Beier
Kirchner, 26 May; Vinay Chand, 27 May; Sandeep Saxena, 27 May; Dave O'Neill,
28 May), while many others have included recommendations for DFID in their
discussion of particular topics.   In broad terms the suggestions made by
this discussion group can be grouped into three main areas: (i)
recommendations on the priority of agriculture within DFID, (ii)
recommendations on what aspects of agricultural development need to be
supported, and (iii) recommendations on DFID's way of working and how it may
need to change.

1)     The priority of agriculture within DFID

There is a general call for DFID to restate its commitment to supporting the
agricultural sector, which is seen as being fundamental to growth and
poverty reduction.  Andy Bullock (26 May) has called on DFID to recognise
the contribution of agriculture across all of the relevant MDGs.  Several
contributors have called for DFID to focus more explicitly on the MDG hunger
target, and to link this closely to an agricultural development strategy.
Greater investment in agriculture will need to be matched by efforts to
influence policy change.  Contributors have commented on the need to raise
the profile of agriculture, food and hunger issues in PRSPs, and to engage
with processes such as the Comprehensive African Agricultural Development
Plan (CAADP).  The potential role of the Commission for Africa in promoting
agricultural development has also been highlighted.

Many contributors have expressed a sense of frustration that while DFID
appears to acknowledge the importance of agriculture in its key policy
papers, this does not appear to have translated into fresh action.  In the
words of Beier Kirchner (26 May) "the crucial points are already well
formulated in the two DFID policy papers on [agriculture and] poverty
reduction . why we are still discussing about what so many of us have long
accepted as necessary action."  Some participants have pointed to an
ambivalence within DFID towards agriculture.  Dave O'Neill (28 May) suggests
that DFID has paid "scant regard to requests and justifications for
agricultural development projects in poverty eradication programmes
generated by African countries."  He questions why agriculture appeared to
drop off the agenda.

2)     What aspects of agriculture need to be supported?

Participants have provided numerous suggestions on what DFID needs to do to
support agriculture:

* Research and extension was a particular emphasis of contributors'
recommendations.  Suggestions included the need to focus on appropriate
technological development (e.g. LEIA approaches), to revitalise adaptive
research, to use a range of media in new ways to communicate extension
messages, and to reorganise extension services to support broader rural
enterprise development.  Some of these themes are also addressed by the
'science and technology group'.

* Technical assistance and capacity building for ministries of agriculture.
One participant recommended that DFID should establish a team of in-country
technical advisors.

* Invest in water management and irrigation as a means to boost productivity
and reduce vulnerability.

* Engage in land tenure reform issues.  DFID is in danger of losing capacity
on land tenure reform (see Julian Quan's 28 May contribution, which is
further discussed in the 'economic opportunity' group).

* Promoting access to agricultural credit

* Consider supporting an investment fund for agriculture and agricultural
processing

* New approaches to supporting agribusiness.  Recommendations have included:
(i) DFID to play a proactive role in promoting regulations for agribusiness,
(ii) strengthening incentives to support links between agribusiness and
small farmers, (iii) establishing a DFID team to promote agribusiness
development.  The final point is discussed in a contribution by Andrew
Beveridge (28 May) that suggests that DFID could establish new financial
instruments and institutions to catalyse private investment.

* Promoting urban agriculture

* Promoting agro-processing close to areas of production.

* Attending to marketing issues (e.g. market information, market research,
marketing services and technology).

* Waste management and recycling of organic wastes as fertilisers.

* Supporting rural business development services.

* Support exit strategies where farming does not have a viable future.

* Trade reform.  Various suggestions have been made within this group,
including improving market access to EU/US, promoting fair trade products,
introducing mechanisms to link retail prices in the EU more closely to world
price changes, and clarifying DFID's position on trade within the Public
Service Agreement and Service Delivery Agreement.  Some of these themes are
addressed by the 'global trade' group.

3)     Recommendations on DFID's way of working

Participants have pointed to several areas where DFID needs to change its
way of working in order to support a renewed focus on agricultural
development:

* Lesson learning and sharing best practice.  It has frequently been
emphasised that there are no ready solutions, and that agricultural
development is always a learning experience.  In order to support lesson
learning DFID needs to share best practice across country programmes.
Several contributors have implied that DFID and other donors are weak in
this regard, and that institutional memory is lacking.  Beier Kirchner
laments that "we could have access to a vast treasure of project progress
reports, internal, external and even impact and ex-post evaluations of every
kind of measure which show us what does work and why, and what does not. But
these treasures lie dormant on millions of computers, because we have not
found suitable methods to institutionalise learning processes."

* Partnerships.  Several contributors have emphasised the importance of DFID
working in partnership with a range of organisations (e.g. governments, EC
and EU donors, multilaterals, UN system, G8, research institutes) in order
to promote agricultural development.  The importance of DFID consulting with
a wide range stakeholders (especially NGOs - See Sandeep Saxena 27 May) on
new policy initiatives has also been highlighted.

* Taking account of political economy.  Andy Bullock (26 May) calls for DFID
to engage in countries with difficult governance given the high levels of
malnutrition often encountered in post-conflict countries.  Beier Kirchner
(26 May) takes a rather different line arguing that aid should be restricted
to countries demonstrating an "open and transparent political dialogue."

* Flexibility.  Beier Kirchner (26 May) comments that "predictions are
becoming much more uncertain. Donors will have to accommodate growing
uncertainty by [demonstrating] more flexibility and increasing the speed of
reaction to unexpected developments."

* Limited use of budget support.  There has been very little enthusiasm for
budgetary support instruments throughout the forum.  Vinay Chand (27 May)
argues that "budgetary contributions are generally a gift for politicians
and bureaucrats.  In most cases, but not all, it is better to follow a
project approach allowing enough time for the cycle and with all the
linkages."  Carlos Felipe Ostertag (27 May) also suggests that donor
agencies need to be more cautious and selective when handing funds to the
public sector.

* Getting money to reach the ground.  Vinay Chand (27 May) complains that
too much donor funding is absorbed by administration and consultants, or is
lost through corruption.  He criticises "the tendency to provide paper
solutions to paper problems", and calls for mechanisms to ensure that an
agreed percentage of donor funds are spent on frontline services.  This
would need to be supported by clear targets and monitoring indicators in
order to judge success in terms of raising farmer incomes.

* Investing in human resources.  Several participants have pointed to the
importance of staff training and directed learning to increase DFID's
capacity to support agricultural development.  Ruth Segal (27 May) and Vinay
Chand (27 May) have both warned of the pitfalls of DFID attempting to
disburse more money with fewer staff.

* Taking forward the findings of the forum.  Several contributors have
suggested that DFID should use the findings of this forum as a basis for
dialogue with governments and other stakeholders (James Biscoe, 25 May).
Sandeep Saxena (27 May) has suggested organising an online questionnaire or
competition to encourage grassroots organisations to comment on the findings
of this forum.


Gareth Williams



Rue des Pâquis 15
1201 Geneva
Switzerland

tel: 0041 22 732 2372
mob: 0041 78 611 8589

email: <address removed>
web: www.garethwilliams.info

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