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Revitalizing Agriculture and Rural Development to Sustain Growth and Reduce Poverty
Dina Umali-DeiningerLead Agriculture Economist, World Bank
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Most of South Asia’s poor are in rural areas
Where are South Asia's Poor?
73%
27% 23%
77% 84%95%85%
95%
16%15% 5%5%
0%
20%
40%
60%
80%
100%
Bangl
ades
h 200
5
India
2004
/05
Nepal
2003
/04
Pakist
an 20
04/05
Sri Lan
ka 20
02
Bhutan
2000
Rural Poor (%) Urban Poor (%)
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Most of rural people and poor depend on agriculture
Agriculture in the Economy
80%
52%58%
14%
81%
40%34%
60%
93%
0%
20%
40%
60%
80%
100%
Agriculture as % of GDP 2003/06
Share of Labor Force in Agriculture 2000-03
0.0 50.0 100.0 150.0
ChhJhaBih
MPOrisRaj
TNMah
UP
GujKarAP
All India
AssUttnWB
HarKerPun
Labor Productivity, Rs 000/worker
Non Ag
Ag
India: Low labor productivity contributes to rural povertyAgriculture a major employer in South
Asia, but contribution to economy is shrinking
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New opportunities: A “new agriculture” with dynamic demand
0
200
400
600
800
1000
1200
1400
1600
1800
Meat & MeatProducts
Fruit &Vegetables
Coffee & Tea Fish & FishProducts
Ex
po
rts
, $
mil
lio
n (
20
00
pri
ce
s)
19902006
Rising consumer demand for highvalue crops and animal products
Rising high value crops and animal products in exports
0%
5%
10%
15%
20%
25%
30%
35%
Ric e W heatproduc ts
V eg &Fru its Meat,Milk,Fis h,
Eggs
Sh
are
in H
ou
se
ho
ld E
xp
en
ditu
res
,%
1980/81 2002
Sri Lanka India
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Challenges in Agriculture in South Asia
• Slow down in agricultural productivity growth– < 3% per year, in context high rural poverty rate– Climate change: droughts, cyclones, floods– Leading to rising rural-urban & regional income disparities
• Increasing land and water scarcity– Land degradation: erosion, over-extraction of groundwater, waterlogging
• New demands on agriculture: – strict sanitary and phyto-sanitary standards
• Health epidemics linked to agriculture– Avian flu, mad-cow disease
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India: Slowdown in yield growth and large yield gaps in many states
With large gaps between potential and actual
yields (2003-05)
• Wheat: 6% (Punjab) to 84% (M.P.)
• Rice: Over 100% in Bihar and UP
• Maize: 7% (Gujarat) to 300% (Assam)
• Soybean: 7% (Rajasthan) to 185% (Karnataka)
• Sugarcane: 16% (A.P.) to 167% (M.P.)
Technology Index
70.0
90.0
110.0
130.0
150.0
170.0
190.0
1980
-81
1982
-83
1984
-85
1986
-87
1988
-89
1990
-91
1992
-93
1994
-95
1996
-97
1998
-99
2000
-01
2002
-03
Slow down in progress in yields for 10 major crops
Need invest more in research Need invest more in extension
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Strategic priorities for Agriculture
INCLUSIVE GROWTH & POVERTY
REDUCTION
Improving agric productivity and competitiveness
Sustainable Natural Resource Management
Rural Livelihood
Development
Ag Technology Water use
Enabling policy environment
Markets
LandWaterSocial empowerment
Skills development
Income generation
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A. Improving agricultural productivity & competitiveness
1. Rationalizing role of government Promoting more effective public expenditures
Towards productivity enhancing investments: research, extension, irrigation, roads, electricity, markets, education
Improving policy and regulatory environment Promoting PPP
0
1
2
3
4
5
6
7
1975-79 1980-84 1985-89 1990-94 1995-99 2000-02
Perc
ent of A
g. G
DP
Public Expenditures India
Subsidies 75%
Public investments 25%
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A. Improving agricultural productivity & competitiveness
2. Technology, innovation & markets Effective agricultural research and extension systems
increase agricultural productivity and enable diversification to high value products (F&V, livestock, fisheries) by small farmers
Link farmers to market, Promote value addition and value chain development Invest in rural infrastructure: roads, electrification, markets Foster producer associations, agribusiness development services
3. Water/Irrigation management Better irrigation service delivery
Farmer participation in management thru WUAs, pricing, water regulatory authority
Reduce losses better O&M of irrigation system, technology—drip irrigation
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B.Sustainable Natural Resource Use
Watershed Management Participatory and holistic approach to soil
and water conservation at watershed level
LandReforming of land ownership and tenancy
policiesImproving land administration systems
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C. Rural Livelihood Development
Promote growth of Rural Non-farm economyPromote employment and investment opportunities
improve rural investment climate, public-private partnerships
Develop skills of rural people for employment in RNF Education, vocational training
Help labor out of agriculture: requires massive investment in human capital
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Challenges to making this happen
• Government failures– Lack of financial resources– Inadequate capacity to implement programs
effectively– Political economy: vested interests against reforms
• Market failures: high costs of working with small/marginal farmers
• Lack of awareness/knowledge of new approaches
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Conclusion• Agricultural growth is critical to
promoting rural growth and to reducing poverty in rural areas
• Making this a reality requires commitment of all stakeholders—government, farmers, private sector, civil society