Agriculture can bring development to countries only if the governments reversed years of policy neglect and remedied investment strategies in the sector.

Nearly a quarter century after it last published a similar report, the World Bank has come up with the World Development Report 2008 “Agriculture for Development”. Sadly, not much has changed in this period. Three out of four people in the developing countries live in the rural areas. About 2.1 billion people live on less than $2 a day and 880 million on less than $1 a day, almost all of them depend on agriculture for their livelihood. Hunger hotspots dot the global map (mainly in Asia and Africa) while nutrition insecurity threatens to undermine the health of a large number of women and children. So, what’s new?

The World Bank has once again helped push agriculture to the centre-stage of economic growth and social development in the developing economies, without which the Millennium Development Goal of halving poverty and hunger by 2015 would remain a pipedream. Admittedly, agriculture alone is not enough to alleviate poverty, but it is an essential component of development strategy for most countries on the growth curve. It is not that there has been no change in the last couple of decades. While land and water resources continue to be scarce, new technologies (especially agricultural biotechnology) have evolved. There is renewed awareness about sustainability even as climate change begins to threaten farming activity. Biofuels have added a new dimension, pushing food prices to levels unaffordable for a majority of the poor in import-dependent countries. No wonder, the “food versus fuel” debate is beginning to simmer. Thus, the present context of the report is in some sense different. Importantly, rapid economic growth and burgeoning population have helped shift the focus to the Asian region, which is emerging as a major contributor not only to global food consumption, but also output. The World Bank firmly believes that agriculture can bring development to countries only if the governments reversed years of policy neglect and remedied their investment strategies in the sector.

Articulating a new role for the State, the report points out that market failures have been pervasive, especially in agriculture-based countries, and there is a need for public policy to attain desirable social outcomes. The State has a role in market development — providing core public goods, improving the investment climate for the private sector — and in better natural resource management by introducing incentives and assigning property rights. As a transforming country, India is at the crossroads. Rapidly rising urban-rural income disparities and extreme rural poverty (including agrarian distress and suicides) are causes for social and political tensions. Addressing income disparities requires a comprehensive approach that pursues multiple ways to fight poverty — shifting to high-value agriculture, decentralising non-farm economic activity to the rural areas and providing assistance to help move people out of agriculture.

Issues of agricultural development and policy prescriptions are well-delineated. Public investment needs to be stepped up. While monitoring and evaluation has been lackadaisical, lack of effective governance has failed to convert outlays into outcomes. It is time policymakers woke up to the ground reality and put the house in order.

(This article was published in the Business Line print edition dated October 23, 2007)
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