Over three quarters of the extreme poor in the world live in the countryside. Reducing rural poverty will therefore require significantly higher rural incomes. Since most rural incomes are related to agriculture, raising agricultural productivity can help raise rural incomes all round.
In the 1960s and 1970s, many governments invested a great deal to increase agricultural, especially food production. In the second half of the 20th century, agricultural productivity rose rapidly. However, intense price competition reduced farmer incomes, with consumers benefitting more from productivity gains – thus helping to reduce poverty more generally. Meanwhile, transnational agri-business has profited greatly from innovations in agricultural production, credit, processing and marketing chains in recent decades.
More recently, food prices have gone up again as productivity and production have risen more slowly than before, partly due to reduced public investments in recent decades, slower productivity increases in the last decade, as well as recent increases in demand for food crops, including for bio-fuels and more animal feed.
Supply and demand
Recent food price increases have been associated not only with significant supply and demand changes, but also biofuel mandates and subsidies as well as much greater commodity speculation. But if food prices start going down again after the recent price rises, food would become more affordable, while reducing farmer incomes and the incentive to produce more food.
Experiences since the mid-20th century remind us that increasing food production alone will not be enough to eliminate poverty and hunger in the world.Jomo Kwame Sundaram
Poor countries are doubly handicapped by their limited tax capacities, resulting in low tax rates on low incomes. While there is little excessive taxation of small farmers these days, there are also modest significant urban-to-rural resource transfers through the fiscal system or other transfer arrangements.
Government spending in rural areas and on agriculture has generally been motivated by political considerations, especially the desire to secure rural political support, not least by raising agricultural output, productivity and incomes. However, with a few notable exceptions, most government spending on agriculture is not biased to the poor.
Instead, such public expenditure tends to benefit the relatively better-off in agriculture. This is generally true with improved rural infrastructure or social services, including health and schooling, as well as agricultural support in the form of subsidized fertilizer or other agricultural inputs – usually distributed according to the amount of land owned.
Closing the gaps on food security
While agricultural taxation is generally proportional to land cultivated or output, much government rural or agricultural spending has benefited plantations and larger farmers more than smaller smallholders, tenants or sharecroppers. Nevertheless, the poor may have benefited in so far as the rising tide of greater output or productivity lifts all boats.
The Green Revolution of the 1960s and 1970s mainly involved wheat and rice – neither significant food crops in sub-Saharan Africa (SSA) – and, to a lesser extent, maize. Closing the productivity, output and income gap with the rest of the world will require appropriate measures, addressing the disincentives to greater food investments in the continent.
Undoubtedly, increased food production can enhance food security, reduce hunger and improve nutrition in SSA for the farmers themselves. But food security has been undermined by trade liberalization and export promotion in the last three decades. The recent purchase or long-term lease of choice African agricultural land by foreign interests to produce food for export is therefore problematic.
Experiences since the mid-20th century remind us that increasing food production alone will not be enough to eliminate poverty and hunger in the world. After all, there is currently enough food produced to feed everyone. The problem is that most of the poor and hungry cannot adequately feed themselves. They need the incomes or other means to do so.
As many hundreds of millions – if not more – are so deprived, and likely to remain so for a long time to come, especially with the likelihood of a prolonged economic slowdown, there is no other way to overcome poverty and hunger except with some basic social provisioning, e.g. by establishing the social protection floor.
FAO’s approach is to accelerate the transition ‘from protection to production’, and thus ensure sustainable means to overcome hunger and poverty. With the growing consensus, momentum and commitment to eradicate world hunger by 2025, it will be necessary to deploy all the necessary instruments as soon as possible.
Jomo Kwame Sundaram is the Assistant Director-General, Economic and Social Development Department, U.N. Food and Agriculture Organization, Rome. In 2007, he was awarded the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. During 2008-2009, he served as adviser to Father Miguel d’Escoto Brockmann, President of the 63rd United Nations General Assembly, and as a member of the [Stiglitz] Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System.