Select Committee on International Development Fourth Special Report


From crisis response to food security and sustainable livelihoods

23.  If people and communities are to escape from poverty traps and move towards food securty and sustainable livelihoods, they must be enabled bothto cope with crisis-related risks and to make the risky investments which are needed to climb out of poverty. (Paragraph 103)

We agree. In Malawi, encouraging progress is being made on risk mitigation through crop diversification, promotion of supplementary irrigation and support to small enterprise development made possible through income from public works employment. The success of such efforts will depend on the extent of the government's commitment to sound governance and good macro-economic management. In other countries food for work and cash for work programmes may provide the opportunity to expose communities to more intensive agricultural production. Investments in small-scale irrigation supported by donors and NGOs are also being tested in Zimbabwe and Zambia. This is a beginning and it builds upon existing knowledge, but it will provide alternative income streams and nutritional sources for families in drought-prone areas. Basic infrastructure development and training as a component of drought relief programmes provides the initial investment that communities themselves are unable to supply while reducing the risk.

The role of agriculture in rural development

24.  DFID itself does not have a "strategy" for agriculture, because—DFID argues—"it is too diverse a subject", in relation to which developing countries must themselves take the lead. Instead, DFID has recently published an "issues" paper which discusses the role of agriculture in improving the livelihoods of poor people. We fail to see why agriculture is any different in this regard from other sectors such as education, and urge donors such as DFID to encourage their partner governments in southern Africa to take agriculture seriously, and to provide the necessary financial and technical support. Donors should not be active in all sectors—they should work to their comparative advantages—but given its considerable policy influence in the region, we believe that DFID has a responsibility to ensure that agriculture is not neglected by governments in southern Africa. (Paragraph 106)

DFID agrees that it is important that Governments give due attention to agriculture. Our approach to raising the overall profile of agriculture in PRSPs is set out in our response to Recommendation 62 below. DFID does not support the development of a DFID-specific agriculture strategy for Africa. Agriculture is defined and managed to national priorities which are quite different in neighbouring countries, who have very different contexts, potential and objectives. DFID's policy is to support these national priorities within the framework of Poverty Reduction Strategies rather than to earmark finances and develop donor strategies for specific sectors. Consistent with this, DFID bilateral assistance for education, health and agriculture in Africa is all programmed and discussed at the national level. Contrary to the implication of the Committee's Recommendation, that there are no overarching DFID strategies for education and health linked to bilateral priorities or expenditure in Africa.

25.  We disagree with DFID that meeting the needs of the rural poor does not necessarily mean focussing on their agricultural capacity. We believe there is a risk that agriculture—which is the key component of rural livelihoods for millions of people in southern Africa, and the basis for growth and development—will continue to be neglected. (Paragraph 108)

DFID agrees that agriculture is a key component of rural livelihoods in Africa and central to poverty reduction efforts but does not believe that meeting the needs of the rural poor can be achieved by focusing exclusively on their agricultural capacity. This approach is the basis of the DFID "Sustainable Livelihoods Approach" which looks holistically at the assets, opportunities, institutions and processes by which poor people make living. This approach shows that the ability of poor people to strengthen their livelihoods through agriculture is dependent on more than just improved agricultural techniques. This does not mean neglecting agriculture but, as DFID's Agriculture paper argues, donors can sometimes be more effective by tackling a range of legal, institutional and customary obstacles than by focusing on agricultural techniques. A good example is the poorest group in Africa — poor rural women. Women's rights to land tenure, their inability to raise credit in some areas, their time lost through disease, care provision or other burdens, such as water collection, are commonly greater constraints to their agricultural development than agricultural technology or extension services.

26.  If poverty reduction and food security is to be achieved in southern Africa, agricultural investment must not be neglected. Rather than despairing at the hitherto poor performance of agriculture, donors must help to put in place the institutional environment which is needed to support agricultural investment and make it deliver significant poverty-reducing returns. Donors should support the re-building of agricultural extension services which were undermined as donor support to agriculture decreased. (Paragraph 109)

We partly agree. Effective agricultural investment will be crucial to poverty reduction efforts and donors have a role in supporting efforts to increase such investment. However, the responsibility for developing an institutional environment supportive of such agricultural investment lies with national governments. DFID believes that each country should decide on its priorities to do this. The role of donors is twofold. Firstly, to help countries define priorities as part of Poverty Reduction Strategy Processes and, secondly, to provide support to respond to those priorities. In the case of agriculture, this wider approach is needed as, in many cases, the institutional barriers are not directly related to agriculture or food security. They include such issues as weak macro economic management, financial services and transport infrastructure. Donor supported national plans may well include rebuilding extension services. However, rebuilding government extension services will not always be appropriate or practical and should not be promoted as a universal solution. DFID's approach is therefore to support countries in making their own informed decisions and not to promote such specific solutions.

27.  The development of a cash-crop economy and export businesses can play an important role, not least in transferring technology to developing countries, but for widespread poverty reduction and livelihood enhancement the focus must be on small and medium scale agricultural producers. (Paragraph 110)

We agree. DFID believes that a sound development strategy can include developing both competitive large scale agribusiness as well as broad support for small and medium scale producers.

Safety nets and social protection

28.  We applaud DFID for its role in supporting the design of Malawi's National Safety Nets Strategy. We urge DFID to do its utmost to ensure that the strategy is put into practice, that the different elements of the strategy are integrated, and that, where appropriate, safety nets strategies are developed throughout the region. (Paragraph 111)

DFID continues to play a leading role in the roll-out of the Malawi National Safety Nets Strategy. Technical assistance, training and equipment is strengthening relevant central and local Government departments and improving coordination between them and donor and NGO partners. Although the suspension of Direct Budget Support has placed some constraints on funding through the Government budget, donors, including DFID, are continuing to support individual programmes that fall within the Safety Net Strategy. Agricultural input support, public works employment and humanitarian feeding are the most significant components. Direct welfare transfers to the most vulnerable are becoming more important as HIV/AIDS impacts on households increase and work is expanding on the issues of targeting and appropriate types of such benefits.

29.  We endorse the recommendations made by UN-OCHA, which as well as encouraging support for food-for-work and food-for-asset-creation programmes—include increasing support to school feeding programmes to reduce withdrawals of children and promote enrolment and attendance. (Paragraph 112)

We agree. DFID's supplementary feeding programmes at schools in Zimbabwe have been instrumental in ensuring that children remain at school. While this type of intervention has immense benefits during crises it can only be institutionalised as part of a wider PRSP or social protection programme targeted to vulnerable localities and groups. Where there is clear evidence of very acute malnutrition then UN-led interventions would be encouraged. In Malawi significant programmes have already started through NGOs and the Malawi Social Action Fund (MASAF), covering both food for work and food for assets, including agricultural inputs. These supplement existing cash for work programmes. School feeding programmes are also underway, but studies already show that these must be supported by improvements in teaching standards and school facilities if significant effects on attendance and performance are to be achieved. This may also provide an entry point for support to AIDS orphans.

30.  We consider that a general maize subsidy is likely to strike the wrong balance between short-term relief and longer-term development. [ . . .] In addition, given the likelihood of corruption in the sale of the Strategic Grain Reserve (SGR), and the possibility that a general maize subsidy might be diverted to buy votes at forthcoming elections or leaked through resale to neighbouring countries where prices are higher, we are not confident that a general maize subsidy is the most effective way of combating poverty and improving food security. It is essential that efforts to meet the short-term needs of communities do not undermine longer-term development. [. . .] Targeting assistance to the most needy is the most effective way of spending scarce resources, and is likely to minimise the risk of profiteering by elites. We remain concerned at the likely impacts of the general maize subsidy in Malawi, and share DFID's frustration at the World Bank's lack of consultation during the design of the scheme. (Paragraph 114)

We agree. DFID and other bilateral donors have expressed concern, at both country and headquarter level, over the failure of the World Bank and the IMF to take full account of donor views and of on-going technical work on targeting of subsidies and mechanisms for their implementation. The general subsidy has led to sale of less than 20% of the Government's commercial imports suggesting little positive impact on maize accessibility for the poor, The poor sales will have potentially serious impacts on the national budget due to lack of cost recovery. The remaining high level of stocks may also affect the maize market in the forthcoming harvest period.

31.  We are not a committee of inquiry into the complexities of the sale of Malawi's Strategic Grain Reserve, but such episodes do cast light on issues of governance and accountability. Greedy and corrupt officials in positions of responsibility must not be allowed to profit from the sale of a country's grain reserve. As such, we trust-—although the removal of Gilton Chiwaula from the Anti-Corruption Bureau does not fill us with confidence—that the continuing inquiries will uncover what happened in Malawi, and that appropriate actions will be taken. (Paragraph 115)

We agree. Results from the independent audit of the 1999-2002 grain sales should be available by early May 2003. These will supplement the efforts being made, with technical support, to develop more transparent systems for management of the Strategic Grain Reserve. The recent tendering of 50,000 tonnes offered to private sector traders was a model of transparency and provides hope that real progress can be made in Malawi.

32.  Properly managed grain reserves, coupled with the holding of options to purchase grain on commodity markets, must be part of future food security strategies in the region. Further—whilst it is important that the maintenance of grain reserves does not take too large a slice out of scarce governmental resources—we do not think it realistic to expect strategic grain reserves to operate on a full cost-recovery basis. (Paragraph 116)

State-operated grain and food reserves are subject to political bias and are used more often to manipulate markets than to ease shortfalls in supply. Where grain reserves are operating the ideal would be systems that are as cost effective as possible. However, it is recognised by those involved that full cost recovery is not likely and that some social costs to governments and donors will have to be accepted.

In 2002, the considerable grain reserves in private sector silos in South Africa acted as a regional reserve and were the prime source of most commercial purchases within the region. For countries in the Southern Africa Customs Union (SACU) these stocks provide a reserve at no cost to the governments. Sales from these private-sector reserves were transparent, market driven and imposed no financial burden on the state, unlike most parastatal grain reserves. As demand increased the private sector placed orders for yellow maize outside the region. The wider use of options and forward contracting on regional and national commodity trading exchanges will reduce the risk of regional shortages. However there is a desire amongst governments to control the grain trade rather than leave the function to the private sector. The grain trade is politically sensitive and is regarded by countries as a special case with private sector trading treated with suspicion. The expansion of food security related trade requires an enabling policy environment across trading partners. As the primary regional grain producer, South Africa has an interest in encouraging policy change. This is a high priority for SADC and the need for progress was again emphasised at a regional conference in Botswana in March 2003.

33.  Public works programmes must be designed carefully. [ ...] In many ways, local people, including intended participants and beneficiaries, may well be in the best position to advise on the most effective form of payment and should be involved fully in the design and implementation of such schemes. Public works programmes must take account of local situations and gender relations, and other measures must be taken to support those who cannot work. For instance, labour intensive public works programmes are entirely inappropriate for people living with HIV/AIDS, the infirm, and women with child-care responsibilities. But we believe that public works programmes provide an excellent way of linking short-term relief to longer-term development and urge DFID to support such schemes wherever communities in southern Africa have spare labour. (Paragraph 119)

We agree. In Malawi the experience from both NGOs and MASAF is contributing to development of programmes which combine the benefits of infrastructure improvement and increased earning power to provide both individual household earnings and local enterprise development. In Zambia, WFP and donor collaboration resulted in almost 500 000 people using some form of Conservation Farming on their own land. Where food was available it was provided to NGOs who used it as payment for work done but, more commonly, seeds and fertiliser were provided to those who had prepared part of their land using a range of conservation farming techniques. The impact this had on yields this year is being assessed but if successful such programmes, which directly benefit farming-families, will play a key role in any future food and cash for work programmes. Clearly those without access or unable to utilise land will not benefit from such schemes. They require a different approach within a wider social protection programme. In Lesotho, the EU are funding a cash for work road scheme. However, such schemes do take time to design and require intensive supervision.

34.  Targeted Inputs Programmes can play an important role in achieving food security. To do so they must be part of a longer-term rural development strategy which, over time and where possible, reduces dependence on free inputs, making inputs more affordable and accessible by raising rural incomes and promoting rural development. We urge DFID to continue its support for Malawi's Targeted Inputs Programme, and to work with other Governments to examine whether such schemes—with carefully planned exit strategies—might enhance their food security and longer-term development prospects. (Paragraph 122)

We agree. Comprehensive evaluation of the five years experience of input programmes in Malawi is feeding into the discussion of the future of such programmes, whether in Malawi or elsewhere. They have provided a cost-effective "kick-start" to agricultural recovery and intensification. However, they form only one of the range of interventions necessary for an integrated approach to rural poverty alleviation and food security. Their role is being incorporated into the forth-coming National Food Security.

35.  Donors and governments in southern Africa urgently need to find ways of making yield-enhancing inputs (fertiliser and seeds) accessible to smallholder farmers at affordable prices. The free distribution of inputs, whether universal or targeted, in Malawi or elsewhere, is a useful interim measure but does not provide an appropriate model for a sustainable long-term solution to food insecurity. An alternative proposal made to us by Stephen Carr, to amend the existing rural public works programmes so that participants are paid with vouchers for agricultural inputs, rather than in food or cash as at present, should be seriously considered. (Paragraph 123)

We agree. In Malawi, DFID and other donors are considering with Government, MASAF and NGOs how the local experience of "inputs for work" can feed into the evolution of existing input programmes. Key to these discussions is the implication of scaling up such a programme toward national coverage in the 32,000 villages in Malawi. This will require realistic assessments of availability of appropriate public works activities and of the institutional capacity for the management of both the public works and the voucher systems.

36.  Short-term assistance and focused safety nets must contribute towards longer term goals of improving governance, reducing dependency, nurturing functioning and equitable markets, developing infrastructure, and increasing agricultural productivity. Finally, effective social protection strategies, whilst addressing short-term needs, must—by including plans for the phasing out of certain forms of assistance such as free inputs programmes where possible—look to a future where such measures are employed less frequently and less widely. (Paragraph 124)

Agree. The development of the National Safety Net Strategy in Malawi may provide a useful experience. This was developed through wide consultation with stakeholders and recognises a need for a range of interventions for different categories of beneficiaries. As one of four pillars, it is firmly embedded within the Poverty Reduction Strategy, which ensures it priority for allocation of both donor and Government resources. DFID is leading in efforts to provide an effective institutional framework for implementation and for its evolution to respond to changes in local social and economic conditions.

Opportunity ladders

37.  We believe that the open-pollinated varieties (OPVs) which require few inputs, and which farmers can store and re-use, are more appropriate for poor smallholder farmers than hybrid and genetically-engineered varieties which require annual repurchase and could tie poor farmers into costly relationships with powerful transnational seed companies. (Paragraph 127)

We agree. The recent FANRPAN meeting in Botswana recognised the need to ensure removal of technical and regulatory constraints to the use of OPV seeds across the SADC region. Recommendations from the meeting will be laid before the Council of Ministers. DFID is providing technical and financial support to Malawi to help multiplication of such seeds, working with the Ministry of Agriculture, seed companies, NGOs and farmers, both commercial and smallholders.

Most farmers use their own retained seed. In several countries only hybrid maize can be sold commercially. In Zimbabwe, OPVs can be grown but can only be sold outside the country. These regulations effectively bar small-scale growers from selling clean tested but locally produced maize as seed, unless it has passed rigorous quality and purity tests The regional meeting in Gaborone recognised the need to ensure removal of technical and regulatory constraints to the use of OPV seeds across the SADC region. Recommendations from the meeting will be laid before the Council of Ministers. However several countries are likely to resist the move, influenced by local scientific opinion backed by the seed industry lobby, which sees the introduction of OPV as a retrograde step. DFID however, is providing technical and financial support to Malawi to help multiplication of such seeds, working with the Ministry of Agriculture, seed companies, NGOs and farmers, both commercial and smallholders. Elsewhere in the region DFID is willing to support the production of drought-resistant seeds such as sorghum and cowpeas as there is a shortage in the region at a time of increased interest amongst farmers.

38.  We would like DFID to explain its plans for making affordable fertiliser available to smallholders in southern Africa, in both the short and longer-term. (Paragraph 128)

DFID has no immediate regional plan to make affordable fertiliser available to farmers in southern Africa. The scale of need is beyond the ability of a single donor. DFID will however support efforts to expand cash crop production where appropriate, and adding local value, which can provide income for farmers to purchase inputs, including fertiliser. Research and pilot programmes have indicated that farmers will purchase fertiliser for food crops where it is packaged in small quantities. DFID will work with the private sector, governments and the NGOs in attempts to ensure that packaging is more appropriate for the small producer. DFID will also work to encourage price reductions through competition in supply. We will also continue our efforts to reduce distortions from production subsidies in Europe and North America. We will also continue assistance to reduce transport costs through road, rail and port improvements, eg the support given by DFID Malawi to the improvement of the Nacala trade route.

39.  Climatic uncertainty, drought or erratic rainfall, is an increasingly important source of vulnerability in southern Africa, and one which should be addressed by developments in irrigation. Just as price-smoothing in maize markets can reduce one form of vulnerability, making maize prices less erratic, more predictable and more affordable, so too can irrigation and "rainfall-smoothing" or "rainwater-harvesting" reduce vulnerability. (Paragraph 129)

We agree. Irrigation is being promoted throughout the region and several countries, including Malawi, have already developed national strategies. Successful expansion of irrigation will depend on adoption of a commercial approach to ensure the costs of water supply are recovered and therefore the supply is sustained. Unfortunately, large-scale schemes have too often been government controlled, heavily subsidised and dependent upon expensive pumping systems to supply water. Farmers were expected to grow uneconomic crops such as maize as a contribution towards national self-sufficiency rather than utilising scarce water resources to diversify into high value crops. Many of these schemes have fallen into disrepair as governments have reduced spending and farmers can no longer afford to maintain the system. Small farmer-managed schemes have been more successful and in Zimbabwe supported by a number of donors including DFID. Micro-irrigation systems suitable for small plots using treadle pumps have proven popular in east and central Africa and are being promoted by the private sector and NGOs across the region. Selection of appropriate cash crops and focus on marketing systems has been shown to be at least as important as the choice of technology.

40.  Historical imbalances in land ownership do need to be corrected, but land reform programmes must be planned and implemented carefully, legally, with adequate consultation, and as part of poverty reduction strategies. We strongly endorse DFID's support for a regional technical facility to take forward land policy issues at a regional level within SADC. (Paragraph 130)

We agree the case for land reform in Zimbabwe is overwhelming, and it is regrettable that there has not been greater progress since independence. The problems in Zimbabwe clearly indicate that orderly reform of land ownership depends on sound policies, founded on consultation with stakeholders, supported by political will to ensure the provisions of policy are applied equitably and with recognition of impact on the local economy. Although Malawi has developed a new Land Policy which has been widely recognised as fair and forward-looking, successful implementation with donor support will require strong political commitment to the provision of the policy.

41.  We agree with Christian Aid, that support should be provided to enable commercial and government credit institutions to provide rural credit, and urge DFID to increase the support it offers to this sector in southern Africa. There is a role too for farmers' associations such as National Smallholder Farmers' Association of Malawi (NASFAM) in improving smallholders' access to agricultural inputs and credit, provided they have the ability to reach and serve the very poorest farmers. (Paragraph 131)

Wide experience indicates successful, sustainable smallholder credit schemes depend on production and marketing of cash crops within a sound economic and political environment. There have been more failures in rural credit schemes than successes as drought or crop failures lead to non-payment and a build up in arrears. In addition, high interest rates combined with default have seriously undermined programmes in several countries in the region. Donors are considering expansion of support to farmer associations, which combine savings with credit, and which also organise farmers for input supply and marketing of production. The growth of NASFAM in Malawi, to serve over 100,000 small-holders offers a promising model.

42.  We support strongly Clare Short's efforts to reform the FAO, and in particular its approach to food security, but encourage the FAO's critics to be realistic in their expectations of what the FAO can do within its resource constraints. They should not undermine the important work which the FAO does in promoting and developing international standards, and in providing agricultural advice for hard-pressed developing countries. Nevertheless, if the FAO is not—in the absence of sufficient governmental capacity—the right organisation to be involved in agricultural extension, improving agricultural productivity and encouraging diversification, we wonder which organisation is. (Paragraph 133)

No single organisation can provide effective agricultural support services. These require co-operation between a range of civil society, private sector, NGO and Government bodies. Precise arrangements will vary between countries and should be developed locally, within the framework of a PRSP where possible. DFID's position is not to seek to undermine FAO's role but rather to persuade it to focus on its comparative advantage and remit. This lies in policy advice, standards and statistics not in the co-ordination and implementation of agricultural services. FAO can play an important role in improving information systems, based on its high level of both in-house and call-down expertise. This can support policy development, promotion of existing technologies, identification of new problems and strengthening of early warning and monitoring systems.

43.  Price stability and food security—enabling better management of the risks associated with crises—is fundamental to efforts to develop a sustainable market economy. Food—insecure households are risk-averse households; risk-averse households do not make the investments needed to move beyond subsistence. John Winter of DFID said: "We would, of course, like to see an open market in maize within the region." If the appropriate institutions were in place to ensure that sufficient maize was provided at prices which the poor could afford, we would agree. Currently, they are not. Without advocating any particular form of intervention, we believe that the principle of guaranteeing access to affordable food for the poor at all times is one that should be re-instituted and followed. (Paragraph 136)

We agree. Mr Winter was advocating transparency rather than the abolition of subsidies (and the response to Recommendation 44 confirms DFID's view that targeted subsidies are often justified). The risk that large scale subsidies pose are covered in the answer to Recommendation 30.

44.  The potential of using targeted food subsidies as an alternative to the unsustainable and inefficient consumer price subsidies of the past should be explored. DFID has recent experience with a pilot scheme of targeted "flexi-vouchers" in Malawi. Perhaps the lessons learned from this initiative could be expanded and incorporated into larger safety net programmes at the national or even regional level. (Paragraph 137)

We agree and will disseminate lessons as they emerge.

45.  DFID should support southern African governments and SADC in their efforts to encourage the emergence of new and more effective "hybrid institutions", which involve the state and the private sector in the regulation of staple food markets. It is not clear what sorts of systems might be able to deliver both price stability at appropriate levels, and the coordination and protection needed to nurture fragile market development. But it may be worth exploring the idea of private companies tendering for franchises to deliver specific services—including food supplies—at predetermined, and if necessary supported, prices. (Paragraph 138)

We agree, although how such systems will evolve will be country specific and will be adopted at different rates by countries in the region. Many governments view the private sector with suspicion and hostility and much needs to be done to overcome this before a true private sector/state partnership can develop.

46.  We believe that some diversification into production of cash crops for export is desirable and were pleased to hear in Malawi of DFID's support for efforts to develop export capacity and know-how through the Integrated Framework. There are however important limitations and obstacles. Cash crop production is not a panacea, particularly for land-locked countries such as Malawi. In addition, a shift to cash crops will not in itself guarantee food security—the fundamental basis for development beyond subsistence levels—for rural communities. (Paragraph 139)

Cash crops could provide an additional source of economic growth for Malawi, though its difficult transport links will limit this. We agree that cash crops alone will not, though, deliver food security in the foreseeable future.

47.  The major obstacle to export-led growth is of course that of limited market access and the highly hypocritical maintenance of export subsidy regimes in the EU and US. perhaps the best thing that developed countries could do to improve the prospects of developing countries such as those in southern Africa would be to practice what they preach, improving market access and eliminating export subsidies, at the same time as helping to build developing countries' export capacity. We urge DFID and the UK Government as a whole to step up its efforts to persuade our European partners that fundamental reform of the Common Agricultural Policy must to be a priority. In addition, consideration should be given to the role of a "development box" in allowing developing countries to maintain subsidies for essential food security reasons. (Paragraph 140)

We agree but note that several of the countries affected by the crisis have, in theory, already been granted duty and quota free access to EU markets for all exports under the EU Everything but Arms or "EBA" initiative. DFID supports the removal of EU domestic subsidy, improvement of EBA (e.g. through better rules of origin and harmonisation of EBA with other trade agreements) and removal of non tariff barriers such as inappropriately high EU import standards.


 
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