Another food crisis looming - Says a new report

The Evaluation Cooperation Group (ECG), a network of independent evaluation units of multilateral development banks (MDBs), released on February 1, 2011a synthesis evaluation on MDB assistance to Agriculture and Agribusiness.

The evaluative lessons assume special significance today as the world faces the possibility of another food crisis, as food prices rose to a record in December on higher costs for sugar, grain and oilseeds.

The overarching message in this context concerns the urgency to raise productivity all along the agricultural value chain. Growth in agricultural productivity suffered a slowdown as investments by developing countries and donors declined sharply in the last two decades - the bilateral and multilateral assistance alone to the sector fell by some 40 percent by the early 2000s from its peak in the mid-1980s.

“This slowdown has been especially felt in Sub-Saharan Africa, where productivity has been the lowest and where the vast majority of the population depends on agriculture for their livelihood,” ECG said on Tuesday.

Today, the renewed attention from governments and the donor community to agriculture is reflected in a notable increase in official development assistance, which rose to over $8 billion in 2008 from an average of $3.5 - $4.5 billion per year between 1998 and 2004. The evaluation finds that while the increase in investments is timely, that alone does not assure results on the ground. The key challenge is in ensuring that increased investments are accompanied by policies that will result in improvements in productivity.

In view of the complexity of the agricultural production chain, a multi-faceted approach is key to raising productivity. The ECG report, based on evaluations of ECG members and relevant research literature, identifies six areas where the MDBs and the countries can take action.

Research and extension

Investment in research can yield the highest returns but for it to be effective, the appropriate technology must reach farmers and be adopted for use within the different farming systems. In India public investment in agricultural research accounted for nearly 30 percent of the sector’s growth. International institutions can play an essential part in facilitating better outcomes from research and extension.

Access to water

Effective water management and irrigation can drastically increase productivity, however, to date only a small percentage of agricultural land is irrigated for much of the developing world. In Tanzania, of the 44 million hectares suitable for agricultural production, only a mere 2 percent is irrigated for cultivation. Addressing inefficient management practices in water use and rain-fed agriculture is vital for the growth of the sector.

Access to credit

Inadequate incomes and limited access to credit impede growth, especially in agriculture-based economies. International institutions have played a significant role in facilitating access to credit through rural finance programs but sustainability beyond project duration remains a challenge. Going forward, it will be crucial to also leverage private initiatives in this area.

Access to land and land rights

Land tenure gives farmers rights to an important asset with two critical benefits: it encourages long-term investment in land and facilitates credit access by providing collateral. Uncertain land tenure or limited private use rights greatly restrict the efficacy of rural development activities.

Roads

The greatest returns for agricultural productivity often result from investments in roads. In Ethiopia access to all-weather roads decreased poverty by some 7 percent and increased food consumption by nearly 17 percent. Today there continue to be large differences in road accessibility across regions. Inadequate maintenance of rural roads hinders the growth of productivity.

Policies, markets and agribusiness

Increased productivity largely depends on enabling frameworks and policies for agribusiness, agro-industry and improvement of markets. Market failures have been acute, especially in rural Africa. International institutions can play a more prominent role in facilitating the improvement of markets and supply chains, while better leveraging the role of the private sector.