7 Agriculture
55. The Departmental Report 2003 makes little specific
reference to agriculture. On the face of it this seems surprising,
given that the overwhelming majority of the world's poor live
in rural areas and are dependent on agriculture for their livelihood.
DFID's own issues paper cites a correlation between a 1 per cent
increase in agricultural productivity and a reduction by between
0.6 and 1.2 per cent in the proportion of people living on less
than $1 a day.[110]
The paper goes on to state that no equivalent relationship, on
this scale, has been found for manufacturing and services, in
either rural or urban areas. At least in sub-Saharan Africa and
south Asia, agricultural growth is pro-poor growth. But whereas
agricultural growth has reduced poverty in south Asia, in sub-Saharan
Africa agricultural growth has stagnated or been reversed. There
are some signs of improvement in parts of eastern Africa but overall
DFID believes that much effort and investment has been ineffective
owing to poor governance, poor public sector performance, declining
terms of trade, HIV/AIDS and conflict.[111]
56. Suma Chakrabarti accepted that there was a need
to improve agriculture if the required poverty reduction targets
were to be achieved. But agriculture has had to bear the burden
of too many past failures as a development intervention, particularly
as regards state involvement and subsidies which served to undermine
farm production. Perhaps understandably, in the face of such failures
DFID has moved on to a different approach—the livelihoods
approach. This is "a more holistic package"[112]
which aims to look at poor people's needs in the round in terms
of their needs in the rural sector. In addition, DFID has been
trying to heighten the profile of agriculture within PRSPs. Since
PRSPs are nationally-owned and are not sectoralised, DFID can
argue with some justification that it no longer spends bilaterally
on agriculture (or any other sector) but instead contributes increasingly
through direct budget support and follows the priorities set out
in each country's PRSP.
57. PRSPs may be locally-owned but they nevertheless
tend to reflect donor concerns and priorities. As Suma Chakrabarti
told us "as part of the PRSP process what we are trying to
do is get the (partner) governments concerned to focus much more
on sorting out—for the great day when the CAP is reformed—how
they would get their agricultural sectors to perform better".
[113]PRSPs are continually
evolving and we were pleased to be told by DFID that agriculture
has regained a high profile in African PRSPs. However, PRSPs need
to demonstrate more than a rhetorical commitment to agriculture.
DFID themselves cautioned that "strong statements [in PRSPs]
about the importance of agriculture to growth and poverty reduction
are not yet followed up with coherent plans and policy reforms
linking agriculture, infrastructure, trade and rural development".[114]
58. DFID has an historical strength in agriculture,
so we were encouraged to be told by DFID that it had created an
agriculture policy team to work on broader agricultural development,
trade and investment issues.[115]
The team will develop and feed practical ideas to those working
on PRS papers. We hope that these ideas will extend beyond the
usual wish list of improved research, marketing and extension,
all underpinned by a commitment to market-based approaches to
the supply of inputs to resource poor farmers. To be fair to national
governments, if donors are not willing to invest directly in agriculture,
there is little that PRSPs can do except enumerate a list of vague
minimalist interventions that do not require a heavy commitment
of (scarce to non existent) public resources.
59. DFID argues that it is seeking to create a climate
that encourages private sector investment in agriculture. But
the question remains of how this can be done in poor countries
that are unattractive to investors? What if that investment fails
to materialise? When we took evidence from CDC Capital Partners
in July 2002 they saw little role for commercial investment in
agriculture in Africa—at least until the CAP was changed—but
they did see a role for grant aid to fill the gap that the private
investor could not be expected to fill.[116]
Access to various markets—for inputs, produce (sales), and
food (purchases)—is a crucial determinant of poverty and
vulnerability. Parastatal marketing boards have in the past contributed
to agriculture's problems in many ways, including: under-payment,
and late payment of farmers; and subsidising food prices for urban
consumers which has undermined incentives to food producers. The
challenge now is to find ways of achieving the important food
security goals that parastatals were set up to achieve, without
the heavy costs and negative consequences associated with parastatals
and subsidies. Governments and donors need to address ways of
supporting private sector development within countries to reduce
the problem of profiteering or neglect of poor isolated communities
that has followed the removal or commercialisation of agricultural
parastatals. And in such contexts, how can a private-sector driven
approach be "supportive of pro-poor outcomes"?[117]
Because DFID's approach offers few answers to these scenarios,
the potential for this 'hands off' approach to deepen household
food insecurity is alarmingly high.
60. Poor farmers need access to markets, and inputs.
That means markets must function effectively and inputs must be
affordable. DFID maintain that their support these days is not
directed at raising agricultural/food production, but instead
at creating an enabling environment for agriculture to flourish,
by which they mean such actions as liberalising markets, building
farmers' associations, improving roads, and supporting the emergence
of private trader networks. So, in Ethiopia for example, DFID
is financing rural road expansion rather than the long-term development
of agriculture as such. In the light of the chronic food crisis
in many areas of sub-Saharan Africa, DFID needs to evaluate how
effective this strategy has been to date, and for how long they
plan to persist with it. While the amount of food aid increases,
agricultural productivity in sub-Saharan Africa continues to decline.
We believe that it may be more cost-effective to assist smallholders
to produce more food and other crops. This requirement is not
being adequately addressed by the range of policy instruments
currently deployed by national governments and international donors.
We hope that the establishment of the agricultural policy team
will mark a change in DFID's emphasis. Its work should not be
restricted merely to creating an enabling framework for agriculture,
but should encompass specific measures to boost smallholder production.
It is important that the team is built up to deal with Renewable
Natural Resources (RNR) as a whole, and should make use of the
experience already available among RNR advisers.
61. In their response to our Southern Africa report
DFID recognized that "agriculture is a key component of rural
livelihoods in Africa and central to poverty reduction efforts".[118]
Unfortunately, the response then repeatedly distanced DFID from
a policy of direct support to agriculture: "DFID does not
support the development of a DFID-specific agricultural strategy
for Africa".[119]
DFID appears willing to embrace many of the constituent parts
of an agriculture policy, provided it can re-brand it. DFID describes
the Targeted Inputs Programme (TIP) in Malawi as a social safety
net programme, not an agriculture project because DFID doesn't
"do" agriculture projects any more -- they just finance
TIP and inputs for work. So DFID agrees with—and supports—increased
agricultural investment, the Targeted Inputs Programme, inputs
for work, seed multiplication, cash crop production, irrigation,
and microfinance to farmers associations—but it disagrees
with the Committee's recommendation "to make affordable fertiliser
available to smallholders in southern Africa"[120].
This all appears to add up to a de facto DFID agriculture
strategy for southern Africa, but because it does not form part
of an overall strategy it remains piece-meal and incoherent, and
even internally inconsistent. DFID is in effect intervening (through
fertiliser subsidies and inputs for work) while insisting that
this is not their objective and that they favour private sector
development rather than direct government and donor intervention
in agriculture.
62. The question arises as to whether it matters
that DFID is providing de facto support to agriculture
without pursuing a specific agriculture policy. We believe that
it does. Contradictory messages are sent to farmers and traders
if donors are on the one hand encouraging the development of private
sector actors in agriculture production and marketing but are
simultaneously intervening by distributing thousands of tons of
fertilisers and seeds through "social safety net projects".
Secondly, there is a concern about sustainability. If the World
Bank and USAID consistently challenge free inputs distribution
programmes, or if personnel changes within DFID country teams
reduce the enthusiasm for targeted inputs then that source of
input will be turned off, leaving no well-developed input marketing
system for farmers to turn to instead. Farmers need to have choices
about which inputs to acquire, and when. A top-down discretionary
handout is all very well, but no farmer can plan on the basis
of inputs that might or might not be provided in the coming season.
The issue is which interventions in the agriculture sector are
most appropriate and consonant with the long-term goal of raising
agricultural yields sustainably. The establishment of an agricultural
policy team in DFID should provide an opportunity for serious
thinking about alternative routes to agricultural development
that are sustainable, give farmers choices, promote rather than
confuse private sector actors, and have an exit strategy for donors
like DFID.
110 "Better livelihoods for poor people: The role
of agriculture", para 10, DFID, August 2002 Back
111
Ev 53 Back
112
Q48 Back
113
Q49 Back
114
Ev 54 Back
115
Ev 53 Back
116
Minutes of Evidence taken from CDC Capital Partners, 2 July 2002,
Q40-1, HC 194 of Session 2002-03. Back
117
"Better livelihoods for poor people: The role of agriculture",
para 64, DFID, August 2002. Back
118
Fourth Special Report of Session 2002-03, Humanitarian Crisis
in southern Africa: Government Response to the Committee's Third
Report of Session 2002-03, HC 690,para 25 Back
119
Ibid, para 24 Back
120
Ibid, para 38 Back
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