Agriculture: Sector Results Profile
An Engine for Sustainable Growth and Poverty Reduction
April 2, 2014
The future needs an agricultural system that produces about 50 percent more food to feed the world’s 9 billion people by 2050; that provides food for adequate nutrition; that substantially raises the levels and resilience of incomes and employment for most of the world’s poor (75 percent of which live in rural areas and mostly rely on agriculture for their livelihoods); that provides environmental services, such as sequestering carbon, managing watersheds, and preserving biodiversity; and that uses finite land and water resources more efficiently. This system can be achieved with more and better investment in the sector, with more attention to addressing cross-sectoral linkages between agricultural actions and outcomes for economic growth, livelihoods security, the environment, nutrition, and public health. Such linkages were addressed in depth in the World Development Report 2008, Agriculture for Development (WDR 2008), which was prepared in consultation with a wide range of academics, policymakers, civil society, and international and local organizations from around the world.
More recently, the already urgent need for action in agriculture has been amplified by recurrent spikes in global food prices, increasingly variable climate, shrinking global stocks of key grains in exporting countries, underperformance of the Millennium Development Goals (MDGs) related to nutrition and the associated risk of social and political tensions. Yet investment returns in the sector can be high. Income gains in agriculture are no more costly to achieve than income gains in other sectors, and the associated growth originating from agriculture has been 2-4 times more effective at reducing poverty than growth originating from other sectors.
The World Bank Group, in consultation with its clients, has committed to a significant expansion in support of agriculture. As of December 2013, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) loans, credits, and grants to the agriculture sector have a commitment of $16.8 billion, through 298 projects in 92 countries. Of these IDA commitments are $10.2 billion, through 208 projects in 65 countries.
The World Bank Group Agriculture Action Plan; 2010-2012 sought to implement the strategic framework for agriculture laid out in the WDR 2008. The Bank is continuing to implement the WDR 2008 though an Agriculture Action Plan for the fiscal years 2013-2015. The Action Plan for 2013-2015 maintains the strategic focus of the previous Action Plan on five key thematic areas to help clients improve sustainable agricultural growth, incomes, nutrition, and their resilience to climate change via: (i) raising agricultural productivity and its resilience through support to better land and water management and improved technologies, including through CGIAR (formerly known as the Consultative Group on International Agricultural Research) and greater IFC support for critical inputs, such as fertilizer and farm equipment; (ii) linking farmers to markets and strengthening value chains through support to improve infrastructure, post-harvest handling, trade, and access to finance; (iii) facilitating rural non-farm income through improving the rural investment climate and skills development; (iv) reducing risk and vulnerability through support to risk management mechanisms, and greater transparency in food markets; and (v) enhancing environmental services and sustainability, including support to manage livestock systems, forests, oceans, and to enhance carbon capture in soils.
Successful implementation will continue to require addressing local, national, regional and global governance issues in agriculture. While, the new Action Plan maintains the strategic focus identified in the WDR 2008, it responds to the evolving global context with more emphasis on climate smart agriculture, private sector responses, agriculture risk management, nutritional outcomes, landscape approaches to agricultural production, and governance issues. These areas of emphasis are described in more detail in the “Moving Forward” section of this note.
Since 2008, the Global Food Price Crisis Response Program (GFRP) alone reached 66 million people in 49 countries. In its broader regular agricultural program, the Bank has supported longer-term investments, such as in agricultural research and extension, and improved water management with measured progress on irrigated areas (supported about 4.1 million hectares with new or improved irrigation or drainage services in projects approved in 2004-2013), and adoption of new technologies (2.6 million farmers adopted new technologies in 2004-2013). All these investments contribute to increasing the resilience of the livelihoods of smallholder families.
Some examples of projects supported by IBRD include:
Morocco: The Morocco Irrigation-Based Community Development Project improved the quality of life of 58,800 inhabitants of poor rural communities in remote upland areas through the rehabilitation of medium-scale irrigation schemes and related community infrastructure. Over the cropping seasons 2004-05 to 2007-08 there was a shift from lower-value cereal crops toward higher-value horticultural and tree crops. Over the same period, average net revenues doubled in constant value, from US$1,051 to US$2,095 per ha. Altogether, 11,022 ha of irrigation schemes were improved; 209 km of rural roads were built and journey times fell by two-thirds; and 48 drinking water schemes resulted in halving the time spent fetching water and contributed to halving the incidence of water-borne disease. In addition, 117 schools and 20 health centers were built. As part of institutional strengthening, 69 water user associations were formed and all of these contributed in cash or in-kind to the financing of project investments.
Mexico: The Mexico Community Forestry Project (FY 2003) assisted indigenous communities and ejidos that own forests in priority regions of Durango, Guerrero, Jalisco, Michoacán, Oaxaca and Quintana Roo to improve the management and conservation of their forest resources and to generate alternative sources of income in a sustainable manner. Around 50 percent of the beneficiaries came from indigenous groups. As a result, over 760,000 ha of new conservation areas were designated through the zoning plans as either community conservation areas or wildlife preserves. Beneficiaries were trained to become better stewards for the conservation and sustainable management of natural habitats as well. The project facilitated and catalyzed the protection of about 50,000 ha of natural areas through payments for environmental services schemes. Significant results include 90,920 ha of forests certified as sustainably managed by independent parties, 41 associations and 179 community forestry enterprises strengthened and 913,000 ha of forest area under improved forms of management. Community planning tools mainstreamed through the project helped beneficiaries develop a broader vision for their own future. Consensus building and the participation of community members in decision-making to increase social capital helped to ensure the sustainability of the project’s actions.
Kazakhstan: The Kazakhstan Agricultural Competitiveness Project (FY05) contributed to the expansion of conservation agriculture/no-till crop management for wheat production as a result of the training and technical support of CGIAR and other partners. This climate-smart agriculture solution has contributed to increased wheat production by almost two million tons, an increase of $580 million in incremental income from 2010-2012, and sequesters annually about 1.3 million tons of CO2.
Some examples IDA-support projects include:
Niger: The Niger Private Irrigation Promotion Project (FY02) increased production and profitability of high-value, irrigated crops by private, smallholder farmers with simple, low-cost technologies. Some 30,826 farmers adopted at least one new technology promoted by the project and some 13,087 women participated in project activities. As a result, compared to a 2001 baseline, yield increases for four main crops at project closure ranged from 57 percent to 85 percent over a period of seven years. Profitability increases were in the range of about 200 to 2,000 percent in constant terms.
Afghanistan: The Afghanistan Emergency Irrigation Rehabilitation Project (FY03), despite numerous challenges, particularly in terms of security and constrained government capacity, helped rehabilitate multiple irrigation systems, benefiting over 600,000 households in all 34 provinces of the country. The project has introduced innovative ways of supervising schemes in insecure areas by, for example, using geo-referenced photos and videos to monitor and report progress.
Sri Lanka: The Sri Lanka Community Livelihoods in Conflict-Affected Areas Project (FY04) was designed to provide income generation opportunities for vulnerable people, including victims of conflict in Sri Lanka’s 30-year war between the government and the Liberation Tigers of Tamil Eelam, which devastated nearly two-thirds of the population of its Northern and Eastern provinces. At the end of the project, some 200,000 beneficiary families have seen their incomes increase by up to 50 percent, communities have invested in income generation activities within the village economy (total of US$5.5 million), communities have established revolving funds (total of US$7 million), and 1,568 youth received skills development training and are now employed.
West Africa: The West Africa Agricultural Productivity Program (FY07) works to generate and accelerate the dissemination and adoption of improved technologies developed by CGIAR centers, extension agencies, and universities, with a focus on countries’ top agricultural priorities. By September 2012, the program had reached 253,881 direct beneficiaries and 166,938 hectares of land had benefited from the adoption of improved technologies.
World Bank Contribution
Over the past ten years, IBRD/IDA commitments to agriculture have increased significantly (with some fluctuations) from US$1.5 billion in FY04 to a high of US$4.2 billion in FY12 and $2.5 billion in FY13 (In FY12 and FY13 IDA commitments to agriculture were $2.9 billion and $1.5 billion respectively.) While assistance figures increased steadily, agriculture’s share of total IBRD/IDA assistance remained the same, at 8 percent over the periods FY04-08 and FY09-13. The largest share of agricultural resources has gone to Sub-Saharan Africa (34 percent in FY09-13, up from 24 percent in FY04-08), while South Asia was the second largest beneficiary. Since FY04, irrigation and drainage, and general agriculture together represent about 51 percent of IBRD/IDA funding for agriculture (Figure 1).
IDA and the IBRD responded rapidly to the 2008/09 food price crisis through the World Bank's Global Food Crisis Response Program (GFRP). The GFRP has reached 66 million people in 49 countries through $1.6 billion in emergency support, including US$339.3 million in donor-supported trust funds.
The Bank’s strength lies in its capacity to back its financial support with other mechanisms designed to promote strategic focus, including capacity building, inclusive development, and coordination of investment and policy reform activities in client countries. Development policy lending to agriculture almost tripled from an average of US$491 million over FY04-08 to US$1,106 million over FY09-13. Development policy operations generally provide quick access to financial assistance in support of a range of development objectives that require underlying medium-term policy and institutional activity. This approach is critical in smallholder agriculture where a large number of actions need to occur in sequence to allow farmers to produce more and to sell into expanding, but more demanding, agricultural markets.
Interest in farmland is rising due to rising food and fuel prices, biofuel mandates, food security concerns, and worries about climate change effects on scarce resources. As a result there is a particular need to secure the assets of the poor. Inappropriate land policies are a serious constraint on economic and social development. Actions to improve security, access, and transferability of land increase the value of household assets, generate higher levels of investment and agricultural productivity, and facilitate access to credit. As of January 2014, 19 projects addressing these issues with net commitments of $771 million are under supervision.
To feed a growing population by 2050, the Food and Agriculture Organization (FAO) of the United Nations (UN) estimates private sector agricultural investment alone must rise by nearly 50 percent. Working with larger-scale farming systems is one of many tools to promote sustainable agricultural and rural development, but this must be done right. Large-scale land acquisitions should not disadvantage smallholder farmers who depend on land for their livelihoods, or compromise the rights of local communities.
The World Bank Group does not support speculative land investments or acquisitions that take advantage of weak institutions in developing countries or which disregard principles of responsible agricultural investment. The World Bank Group has actively supported preparation and endorsement (May 2012) by the Committee on World Food Security of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security. The Bank is also working to pilot the Principles of Responsible Agricultural Investment, which will contribute to the two-year consultation process of the Committee on World Food Security. More information on this issue and the World Bank’s response is covered in a separate brief, Land Policy: Securing Land Tenure Rights to Reduce Poverty and Promote Growth.
The evolving global context, with increased food price volatility and climate change, calls for stronger collective action to alleviate these impacts on the world’s poor. Some emerging issues of great policy and financial interest to clients transcend national or regional dimensions, and are consistent with the special role of the WBG as an institution that is multilateral, multiregional, multisectoral and multidimensional, offering both financing and knowledge products. This comparative advantage is relevant to cases as diverse as dealing with the drivers and impacts of the 2008 food price crisis, dealing with migratory fish stocks or inter-regional knowledge exchange as on food safety.
Some global partnerships focus on building technical consensus on how to proceed with large amounts of technical consultations and assistance, and others focus on increasing the financial input to specific types of solutions through recipient-executed projects. The World Bank Group has increasingly forged partnerships of both sorts to address global issues in agriculture that complement our country-level support through: provision of knowledge to help shape debate on global public goods (especially those that affect country-level programs); improved coordination of activities and knowledge with global partners; continued consultations across stakeholders; and additional resource mobilization. Some examples include:
Agricultural production and food security: In addition to the rapid response GFRP, the Global Agriculture and Food Security Program (GAFSP) was launched to address funding gaps in longer-term agriculture and food security strategic investment plans already being developed by countries in consultation with donors and other stakeholders. The GAFSP includes both a public and private sector financing window. As of January 2014, the public sector window has made allocations to 25 countries totaling US$912 million in recipient-executed grants plus supervision fees. The private sector window has awarded US$45 million to 11 investment projects and US$4 million to 17 advisory services projects. In addition, the World Bank Group is coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with non-governmental organizations, and supports the partnership for Agricultural Market Information System (AMIS) to improve food market transparency and help governments make informed responses to global food price spikes.
Nutrition: The Scaling-Up Nutrition (SUN) framework for action to address under-nutrition was endorsed by over 100 partners, including the World Bank. All new agricultural project proposals are being evaluated at entry for potential to include explicit nutritional outcomes.
Agricultural research: The World Bank supports critical global public goods by funding and collaborating with CGIAR, a global partnership that unites organizations engaged in research with the funders of this work to reduce rural poverty, increase food security, improve nutrition and health, and sustainably manage natural resources. CGIAR is a leader in climate-smart agriculture and produces cutting-edge science to develop innovative solutions, tools, and technologies to meet the needs of poor smallholder farmers in developing countries. CGIAR doubled its funding from $500 million in 2008 to $1 billion in 2013 (leveraging the World Bank’s contribution by a factor of 20).
Rural finance: The World Bank and the Bill & Melinda Gates Foundation established an Agriculture Finance Support Facility to support the replication or scaling-up of profitable rural finance business models and the generation of knowledge and learning about these models.
Marine fisheries: To improve governance and sustainable livelihoods in the fisheries sector, the World Bank, in association with key donors and stakeholders, established the Global Partnership for Oceans and the Alliance for Responsible Fisheries.
Animal diseases: To address the global impacts of emerging and re-emerging diseases of animal origin on public health, food security, trade and livelihoods, the World Bank is partnering with the World Health Organization, the World Organisation for Animal Health (OIE), and other partners to strengthen public health and veterinary systems worldwide to better prevent and control zoonotic diseases. Addressing animal disease and improved land tenure are two critical aspects of securing the assets of the rural poor.
Food safety: Globalization of the food supply has resulted in food safety risks being widely extended beyond domestic borders and has serious implications for public health and trade. Building on the work initiated under the Asia-Pacific Economic Cooperation Food Safety Cooperation Forum (FSCF), the World Bank Group is facilitating the creation of a new multi-stakeholder Global Food Safety Partnership (GFSP) to support food safety capacity building around the world. Key partners include international organizations (WHO, FAO, OIE, the UN Industrial Development Organization, the World Trade Organization), private sector firms and associations, technical service providers, and government agencies.
Forestry: The World Bank is working to coordinate partnership activities, in order to increase financing of and improve the governance and positive impacts of forest sector activities. The Bank is working closely with FAO on the new Forest and Farm Facility (FFF) partnership, which follows on the work of the Growing Forest Partnerships supported by the Bank. The FFF aims to promote partnerships among national governments, civil society organizations, development and financing agencies, and the private sector in support of sustainable forest management at the landscape level and create a platform for civil society to engage in national forest policy formulation. In addition, the World Bank participates in the multi-donor partnership Program on Forest (PROFOR) that implements cutting-edge analysis and partnership activities. The Bank also participates, as one of multiple multilateral development banks, in the delivery of Climate Investment Funds, such as the Forestry Investment Program, and hosts the Forest Carbon Partnership Facility.
In recognition of the evolving global context, the new World Bank Group Agricultural Action Plan gives more emphasis to:
- Developing climate-smart agriculture, within the theme of agricultural productivity growth, including increasing the share of IBRD/IDA/IFC agriculture lending and investments that supports climate change adaptation and mitigation, such as development and adoption of more drought and flood tolerant plant varieties; and support for animal and forest management systems that reduce greenhouse emissions;
- Facilitating private sector response, including, but not limited to, increasing IFC’s agribusiness investments;
- Pursuing agriculture risk management more explicitly, including increasing the number of country-level agriculture sector risk assessments, and continued development of new market-based risk hedging instruments for farmers;
- Giving greater attention to nutritional outcomes of agricultural actions, including increasing the share of agriculture projects with an explicit focus on nutrition;
- Increasing the use of landscape approaches, including increasing the number of projects that combine agriculture, water, forestry, and biodiversity complementarities; and
- Working on governance, including strengthening analytical work to understand the nature of political and institutional constraints to improving agriculture performance, and support to improve the governance of land tenure.
The World Bank plays a critical role in reaching the rural poor and hungry through using agriculture for development. A concrete example demonstrates what is at stake.
Malathi Devi is a 40-year old mother of five children, three sons and two daughters, from the village of Aima in Bihar (India). Like most women of the Musahar community, a landless group of people traditionally dependent on forests who now work as casual laborers, Malathi was married at around 10 years of age. Malathi used to cultivate her tiny land of 0.05 acres and worked as a wage laborer for farmers with large land holdings ─ her compensation was three kilos of grain per day of labor. But the farming season lasts for only about three months out of the year. During this time, Malathi’s responsibilities ranged from planting, weeding, cropping and beating the grains. During non-farming months, she would seek casual jobs on construction sites or brick making factories as most people from Musahar communities do. When a Village Resource Person of the Bihar Rural Livelihoods Project supported by IDA told Malathi about the System of Rice Intensification (SRI) ─ a scientific technique for increasing the productivity of irrigated rice cultivation by changing the management of plants, soil, water and nutrients ─ Malathi decided to give it a shot. With her hopes high, she also acquired 0.17 acres of additional land on lease to reap the benefits of SRI. Based on technical support from a non-governmental organization working in partnership with the Bihar Rural Livelihoods Project, Malathi chose better rice seeds and fertilizers. The yield was 60 percent more using SRI than the traditional method before. Now Malathi has food security year round and additional cash in hand.