apr workshop 2010- s&s cooperation-public services and agricultural development-ifpri
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Public Services and Agricultural Development: Challenges, Policy Options, and a Case Study
Kevin Z. Chen, Ph.DSenior Research Fellow & China Program Leader
International Food Policy Research Institute (IFPRI)
Presented at Seminar on Comprehensive Agricultural Development and Poverty Reduction
China-IFAD South-South CooperationNanning, Guangxi, China, November 4-6, 2010
IFPRI
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Agricultural Development Challenges and Inadequate Public Investment on Agriculture
Feeding the Hungry People- Are We on Track?
Source: Fan (2010)
Malnourished People
China: 127
million
India: 252
million
Brazil: 12
million
Rest of World:
482 million
2004-2006
China: 178
million
India: 210
million
Brazil: 16
million
Rest of World:
442 million
1990-1992
Source: FAO (2009)
Rising Global Food Demand
FAO projects that food production needs to almost double by 2050 to feed a world population of 9 billion
Source: Chen (2010)
Agricultural Success Is Essential
Rising Productivity in agriculture provided the foundation for economic success in the vast majority of the economies
The World Bank’s World Development Report 2008: Agriculture for Development points out that GDP growth from agriculture has been shown to raise the incomes of the poor 2-4 times than GDP growth from non-agriculture
Past Methods of Production - Not Sustainable
Past Growth of Population and Agricultural Production
Production Increases of the last half century have been achieved at considerable ecological cost and only with heavy use of energy and oil inputs
A report by the Centre for Food Policy at City University, London, Towards a National Sustainable Food Security Policy
Source: Chen (2010)
Investment Gap on Agriculture
Source: Fan (2010)
Public Expenditure on Agriculture1980 1990 2000 1980 1990 2000
North Africa 3.96 3.79 5.89 14.7 8.7 11.3
Sub-Saharan Africa2.33 4.10 3.10 4.8 3.7 2.9
Asia 63.19 95.34 137.00 9.0 8.6 8.8
LAC 16.11 6.74 7.22 13.2 5.0 5.8
Total 85.58 109.12 153.21 9.5 8.0 8.3
1995 international dollars, billion Percentage share of agriculture GDP
1980 1990 2000 1980 1990 2000 1980 1990 2000 1980 1990 2000
Agriculture 6.1 5.3 5.5 5.7 5.0 2.7 14.4 12.3 9.5 7.9 3.2 2.1
Education 11.0 15.8 19.2 12.6 13.8 11.2 13.8 17.4 18.4 15.3 14.1 19.4
Health 3.0 3.4 14.6 4.2 5.9 7.3 5.3 4.3 5.0 4.1 5.0 7.5
T&C 3.5 3.8 5.1 9.6 4.4 4.1 11.8 5.2 4.0 11.4 4.6 3.2
Social Security 7.4 10.9 7.2 2.3 2.5 5.1 3.7 3.0 4.9 18.7 18.2 25.9
Defense 11.6 10.9 9.5 14.1 17.0 8.0 17.5 12.8 13.5 7.2 5.8 5.2
Other 57.3 49.9 39.0 51.4 51.4 61.7 33.5 45.0 44.7 35.5 49.1 36.6
North Africa Sub Saharan Africa Asia Latin America
Source: Fan (2006)
IFPRI
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Priority Setting on Public Agricultural Investment
Rationales of Public Investment
Market Failures
Distribution and Poverty Reduction
Enabling the Investment Environment
Yield Gap
Source: Chen (2010)
Food Waste
The Stockholm International Water Institute recently estimated that the world wastes about half the food it grows.
For poor countries, waste could be curbed through investment in transportation, storage and distribution systems.
For rich countries, it is about our habits as consumers: buy only what we need, eat less, and move away from the built-in waste endemic in our food distribution systems.
Source: Science (2010)
Changing Diets
Source: Chen (2010)
Rural Urban Disparity in China(Income and Health)
19. 2
4. 9
35.0
17. 3
0
5
10
15
20
25
30
35
Urban城市 Rural农村
19922002
10.1
3.1
20.0
9.3
0
5
10
15
20
Urban城市 Rural农村
19922002
Nonfarm Income in China, 1983-2008
The total amount of labor force on nonfarm activities is estimated to be 230 million in China in 2009, which is about 47% of the total labor force in rural China
Source: China Annual Statistic Book (2009)
Growth and Rural Poverty Pathways of Public investment
Agricultural Production
Other Exogenous Variables -Population Growth -Agroecological Conditions -Urban Growth -Macro and Trade Policies -Asset (Land) Distribution
Rural Poverty
Food Prices
Wages Nonfarm Employment/migration
Finance -Political -Economic -Governance
Total Government Spending
Spending Allocation: Education/Health, Infrastructure, Technology
Spending Outcome: Education/Health, Infrastructure, Technology
Efficacy -Governance
Non-farm Production
Impact Pathways for Specific Public Service
Agricultural research and extension services
Irrigation Rural roads Rural transportation
and telecommunication
Markets
Rural financing Rural electrification Agricultural
subsidies Agricultural and
rural education Rural health Safety nets and
targeted transfers
Returns to Rural Investment, India
Returns in Rupee per Rupee Spending
Number of Poor Reduced per Million Rupee
Spending
0 5 10 15
R&D
Irrigaiton
Roads
Education
Power
Soil and Water Conservation
Health
Anti-poverty Programs
0 50 100 150
R&D
Irrigaiton
Roads
Education
Power
Soil and Water Conservation
Health
Anti-poverty Programs
Effects of Rural Investment, China
0
2
4
6
8
10
0 2 4 6 8 10 12
yuan per yuan spending
No. of poor reduced /10,000 yuan
R&D
Education
Roads
Phone
Irrigation
Power
Loans
Regional Effects, China
0
24
6
8
1012
14
Coastal Central Western
R&D
Irrigation
Roads
Education
Electricity
Telephone
0
510
15
20
2530
35
Coastal Central Western
R&D
Irrigation
Roads
Education
Electricity
Telephone
Poverty loan
Returns in Yuan per Yuan investment
Number of poor reduced per 10,000 Yuan invested
Effects of Rural Investment, Uganda
0
5
10
15
20Agricultural R&D
Education
Feeder Roads
Health
Returns in shilling per shilling Investment
Number of poor reduced per million shillings investment
0
50
100
150
200
Agricultural R&D
Education
Feeder Roads
Murram Roads
Tarmac Roads
Health
China India Thailand Vietnam Uganda
Ranking of Returns in Agricultural Production
Agricultural R&D 1 1 1 1 1Irrigation 5 4 5 4Education 2 3 3 3 3Roads 3 2 4 2 2Telecommunications 4Electricity 6 8 2Health 7 4Soil and Water Conservation 6Anti-Poverty Programs 5
Ranking of Returns in Poverty Reduction
Agricultural R&D 2 2 2 3 1Irrigation 6 7 5 4Education 1 3 4 1 3Roads 3 1 3 2 2Telecommunications 5Electricity 4 8 1Health 6 4Soil and Water Conservation 5Anti-Poverty Programs 7 4
Ranking of Investment Effects
Effects of Low and High Quality Roads, China
00.5
11.5
22.5
3
High Quality
Low Quality
0123456
High Quality
Low Quality
No. of Urban Poor Reduced per 10,000 Yuan
No. of Rural Poor Reduced per 10,000 Yuan
Highlights of Results The three most effective public spending items of
promoting agricultural growth and reducing poverty:» Agricultural research and extension» Education» Rural infrastructure
Government spending on antipoverty programs such as safety nets or food subsidies generally has a small impact in reducing poverty and growth mainly because of inefficiencies in targeting and misuse of funds.
Initial subsidies in credit, fertilizer, and irrigation might have been crucial for small farmers to adopt new technologies. But as more and more farmers have adopted new technologies, continued subsidies have led to inefficiency of the overall economy.
Reforming Institutions: PPP
Public and Private Partnership (PPP). Public sector will be still the major player in providing infrastructure services in rural areas
But privatizing certain component can improve efficiency and service
“Unbundling” is a necessary part of privatization
Feasibility of Private Sector Delivery
Sector/type of servicePotential
for competition
Characteristics of good/service
Potential for cost recovery
Equity concerns
Marketability index
TelecommunicationsLocal servicesLong distance
medium
high
privateprivate
highhigh
medium
few
2.63.0
PowerThermal generationTransmissionDistributionGas production/ transmission
highlow
mediumhigh
private
clubprivateprivate
highhighhighhigh
fewfew
manyfew
2.62.42.43.0
TransportRural roadsPrimary/secondaryRoads
low
medium
publicclub
low
medium
manyfew
1.02.4
IrrigationPrimary/secondary networksTertiary (on farm)
low
medium
club
private
low
high
medium
medium
1.4
2.4
Unbundling and Degree of Competition Industry Generation/
storage Transmission Distribution/retailing
Power / energy
Competitive
Monopolistic
Competitive
Large scale irrigation
Monopolistic/ oligopolistic
Monopolistic
Competitive
Medium scale irrigation
Competitive
Monopolistic
Competitive
Small scale irrigation Competitive
Monopolistic
Competitive
Telecommunications
Competitive
Monopolistic
Competitive
Rural roads
Monopolistic
Centralization vs. Decentralization
Scale of economy New technological innovations Community and user’s association Strengthening public institutions Improving human capitals
Policy Options – Business Unusual
Source: Fan (2010)
Public Service Delivery in Rural China Agriculture: To reach a grain output of 500
million tons by 2010 through government subsidies, agricultural construction and industrialisation projects. A particular focus is put on the construction of water-saving farmland irrigation systems.
Rural infrastructure: providing safe drinking water for all by 2013. Additional 1.2 million kilometers of rural roads aims to connect all townships and villages. Internet access in all townships.
Health care: The new rural co-operative medical scheme (NRCMS) to 730 million residents and 86% of counties. By 2010, the standard for financing might be raised to CNY 100 per person, with central and local government contributions to be raised to CNY 80.
Social security: a rural social security system to cover all needy people in rural areas under a subsistence allowance programme (dibao).
Education and training: the realisation of free nine-year compulsory education in rural areas by exempting rural primary and junior high school students from tuition fees and other educational expenses.
Financial services: strengthening the role of the Agricultural Bank of China (ABC), the Agricultural Development Bank of China (ADBC) and the China Postal Savings Bank (CPSB) in serving the sannong sectors as well as promoting new types of rural financial institutions and reforming rural credit co-operatives (RCCs).
IFPRI
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
A Case Study – Delivering Agricultural Extension Services in China
Agricultural Extension in the World The large population countries, such as China and India, established their
agricultural extensioto realize their national food security goals (Swanson, 2006; Umali and Schwartz, 1994; 1997; Hu et. al., 2009). n system
Government support for public research and extension in most developed and developing countries began a slow decline since the late of 1980s (Swanson, 2006; Huang et. al., 1998; 2003).
The budgetary challenge made many countries start to reform their public agricultural extension system during the 1990’s (Feder et. al., 1999; Umali and Schwartz, 1994).
While privatizing agricultural extension services was conducted in some industrialized countries in Europe, North America, and Oceania counties, the decentralization or commercialization of agricultural extension services had been conducted in some developing counties (Feder, 2001; Umali and Schwartz, 1994; 1997; Anderson and Feder, 2003; Rivera, 2001; Hu et. al., 2009).
However, a number of studies indicated that the privatization reform made agricultural extension services inaccessible for smallholder farmers (Cary, 1998; Lindner, 1993; Umali and Schwartz, 1994; 1997; Feder et. al., 1999).
Agricultural Extension in China A rather ‘complete’ national agricultural extension system
» The number of public extension staff is 1,008,000 » China has 720,000 villages
Top-down model and government-led agricultural extension service
Government failures led to ineffectiveness» Information inadequacy, incentive measure, competency,
political interests and bureaucratic system Led to a number of extension reforms in the country
» A concern over exclusion of small farmers in the reformed extension system has been raised
Challenges in China’s Agricultural Extension
Dominance of scattered small farmers
Rapid rise of urbanization and agricultural industrialization
Demands for sustainable agricultural development
Ongoing reform of government structure and administration
“Three Dissatisfactions” with the Current Public Agricultural Extension Service
Farmers’ dissatisfaction: close to 80% farmers surveyed in ten villages at two counties in Sichuan and IMAR had never seen extension staff in 2005
Government dissatisfaction: extension staff don’t do or cannot do the extension job but get the salary
Extension staff: low salary, no incentive for good performance, no adequate operating budget
Intervention Strategies Set up an inclusive public agricultural extension
system which meets demands of farmers
Promote the establishment of market-driven agricultural extension system
Adopt participatory agricultural extension approach to improve the efficiency
Policy Experiment on Public Agricultural Extension Reform
Objective is to introduce and experiment a farmer need based extension system
Key organizations involved: Agricultural Committee, the People’s Congress National Agricultural Technology and Education Service Center
(NATESC), Ministry of Agriculture (MOA) Center for Chinese Agricultural Policy (CCAP), Chinese Academy of
Science (CAS) Agricultural bureaus at counties Township level extension workers China Canada agriculture development program
Initial Pilot sites: 5 villages at Wuchuan, IMAR and 5 villages at Pengzhou, Sichuan
Duration: from April 1st 2005 to August 30th 2008
Characteristics of Policy Initiative
Changing role: a shift from meeting demands from government to farmers’ needs
Bottom-up model: to deliver technologies demanded from farmers instead of government
Responsibility system: one staff in charge of 1 or 2 villages
Accountability: to respond to the requirements from farmers
Incentive-based: to be more pro-active
Key Approaches Identification of experiment villages and selection of
township level responsible extension workers Identify the responsibility of the chosen extension agents
and link the performance with the payroll The number and extent of visits to farmers, the number
of problems solved, deal with emergent issues, farmer field schools conducted, nurturing the lead farmers, and performance related bonus
At village level Identify the technique needs from farmers, new
technique workshop, new technique experience sharing, and farmer field school
Rapid Rural Appraisal
Responsibility System for Township Level Agricultural Extension Agent
Farmers New Technique Sharing – Farmer Field Schools
Outputs of the Policy Initiative
Learn farmers’ diversified needs, met farmers’ needs and benefited farmers
Improved role of extension staff Setup of a functional incentive mechanism Introduced an effective monitoring & evaluation
system Proposed a way to deal with issues of incapable
staff
Initial Evaluation: Farmers’ Access to Extension Staff in Pilot Villages
2006» Pengzhou: 100% in two villages , 95% in another
two villages and one village 50%» Wuchuan: 100% in one village, 95% in two villages,
and 90% in another two villages
2007» Pengzhou: 100 % in one village, 94 % in another
village, 80 % in five villages and 70 % in two villages
» Wuchuan: 100 % in one village, 93 % in two villages, 85 % in three villages, and another 68 %
Scaling Up
The number of villages was increased from 5 villages to 15 villages for the INC initiative
The Government of Pengzhou extended the modified model to 130 villages in 2006
The MoA also extended the modified model to 25 counties in 25 provinces in 2006
Differences between Pengzhou and INC Initiatives
First, the extension agents are responsible for identifying the farmers’ needs based on their own individual informal survey rather than the use of RRA.
Second, the target group is farmers selected for technology-demonstrating purpose.
Third, the maximum year-end bonus is 3,000 yuan.
Differences between the MOA and INC Initiatives
First, an attempt is made to include the county level extension agents in the reform initiative. Separate service contracts are designed for the county and township level extension agents with the MoA initiative.
Second, a questionnaire is designed to identify farmers’ technology needs in the beginning of the year rather than the RAA method.
Third, the target group is the model farmers selected for technology-demonstrating purposes.
Forth, local government provides extra operation funds to encourage agricultural extension agents to go to the villages. In Pixian, for example, an operational fund in the amount of 5,000 yuan per year is provided for each responsible agent.
Fifth, extension agents are assessed jointly by their work units and the selected farmers.
Questions
Whether farmers see more agricultural extension agents due to the reforms;
Whether farmers accept more services from the agents due to the reforms;
Whether the number of farmers who accept the services is increased due to the reforms;
Whether farmers adopt the services from the agents due to the reforms;
Whether the number of farmers who adopt the service from the agents due to the reforms.
Our Own Policy Experiment - INC Treatment
» The “INC initiative” reform programs were initially introduced in Pengzhou county, Sichuan and Wuchuan county, IMAR in 2005. In each county, five villages were randomly selected as pilot sites in 2005, additional five villages were added in 2006, and additional five villages were added in 2007.
» Five technicians at the township level for a given county are randomly selected to as the RESPONSIBLE AGENTS. As a result, one technician is responsible for one village in 2005, for two villages in 2006, and for three villages in 2007.
Control» In order to evaluate the effects of INC reform initiatives, 15 non-reform
villages in the neighbor of the reform policy pilot villages as a control group each county.
» The neighboring villages were chosen to control the effect of other factors than the reform program.
Pengzhou Government Initiative
Treatment» Fifteen villages out of the total 130 villages under
the Initiatives were randomly selected by researchers to assess its effectiveness.
Control» Because Pengzhou government reform initiative
are located at the same county as our INC reform initiative, Pengzou initiative based on the same 15 villages as a control as the INC Initiative.
The MOA Policy Initiative Treatment
» Pixian and Kalaqing are chosen out of 25 counties under the Initiative. Pixian is chosen to match Pengzhou in Sichuan, while Kalaqin is chosen to match Wuchuan, IMAR
» 15 villages each were randomly selected for Pixian and Kalaqin, respectively.
» For the MOA programs, no specific extension staff was allocated to specific villages. Rather a team from township extension station was made responsible for meeting the extension needs in the villages.
Control» Two neighboring counties - Doujiangyan in Sichuan and Songshan
County in IMAR were selected as control counties. » Fifteen villages were randomly selected at each of the two counties
as the control group.
Data Collection The survey questionnaire was designed to collect
information on the farmers’ access to technology services during the years 2005 to 2007.
A team of four trained enumerators conducted a random survey in IMAR and Sichuan at the end of 2007 and the beginning of 2008.
A total of 1350 farmer households from 135 villages at 6 counties were selected and interviewed.
Relevant information was collected for 2005, 2006, and 2007 when available (Only collected information in the reformed year).
As a result, the final sample consists of a total of 2,730 observations.
Table 4. Services Received and the Number of Techniques Adopted by Farmers
AVAILABLE:Have met the
agents (%)
ACCEPTANCE:Services received
ADOPTION:Techniques adopted
Percents (%)
Numbers Percents (%)
Numbers
The INC reform initiative and control non-reform comparison
Wuchuan, IMAR
INC initiative (reform village) 91.0 84.2 1.82 80.1 1.67
Non-reform (control village) 19.5 18.8 0.22 17.9 0.22
Pengzhou, Sichuan
INC initiative (reform village) 84.0 79.0 2.30 74.3 1.93
Non-reform (control village) 36.7 34.6 0.76 35.5 0.73
The Pengzhou initiative, the MoA reform, and control non-reform comparison
Pengzhou, Sichuan: INC initiative 68.3 57.2 1.28 56.8 1.23
MoA
Reform county: Kalaqin, IMAR 89.7 84.5 2.57 83.2 2.25
Control non-reform county: Songshan, IMAR 67.9 64.2 1.56 63.0 1.50
Reform county: Pixian, Sichuan 43.4 36.1 0.60 35.1 0.46
Control non-reform county: Doujiangyan, Sichuan 27.0 25.0 0.39 22.7 0.33
Source: Authors’ survey
Key Observation
Comparing to farmers in the control non-reform villages, it appears that more farmers in each extension reform initiative villages have seen extension agents, accepted the agent’s services, and adopted the services provided by the agents.
Major Conclusions
First, the introduction of all reform initiatives considered under the study increases the farmers’ access, acceptance and adoption of agricultural advisory services from extension agents.
Second, the farmers under the small farmer inclusive reform initiative are more likely to receive, accept, and adopt the agricultural advisory services than those under other reform initiatives considered under the study.
Promoting Extension Service of the Third Parties and Private Sectors
The new system provides incentives for local extension agents to work with the third parties such as cooperatives and private sectors to deliver the extension service
Company-led agricultural extension service
Farmer organizations and cooperatives take the leading role in extension service
Challenges for Scaling-up
High monitoring cost
Budgetary issue with bonus payment
Lack of operating budget for the extension agents
Conflicts between the agents in the new and old systems
Difficulties to deal with incapable extension staff
Policy Impacts
Provincial-wide: The revised model had been extended to 35 villages in 5 counties at Chengdu, Sichuan and 12 villages in 10 counties at IMAR in 2007
National-wide: The revised model had been extended to 25 counties in 25 provinces in 2006
Key elements of the model had been adopted in the National Agricultural Extension Policy issued by the State Council in 2007
Policy consultation with Agricultural Committee at the People’s Congress on the revision of existing Agricultural Extension Act in April, 2008
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