Rural Poverty, Food Security, and Rural Poverty, Food Security, and Trade Liberalization: Exploring the Trade Liberalization: Exploring the

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WTO Symposium on Trade and Sustainable WTO Symposium on Trade and Sustainable DevelopmentDevelopment

10- 11 October, 200510- 11 October, 2005

John NashJohn NashAgriculture & Rural Development Dept / Trade DeptAgriculture & Rural Development Dept / Trade Dept

The World BankThe World Bank

This presentationThis presentation

What’s the problem?What’s the problem? Rural povertyRural poverty HungerHunger

What’s the way forward?What’s the way forward? Trade policyTrade policy Behind the borderBehind the border

Why is agriculture so important for Why is agriculture so important for

developing countries and the rural developing countries and the rural poor?poor?

63 percent63 percent of population live in of population live in rural areasrural areas

73 percent73 percent of poor live in rural of poor live in rural areas, and most depend on areas, and most depend on agriculture as producers or agriculture as producers or workersworkers

Agriculture and agro-Agriculture and agro-processing account for processing account for 30-60 30-60 percentpercent of GDP in developing of GDP in developing countries, and an even larger countries, and an even larger share ofshare of

Even with rapid urbanization, Even with rapid urbanization, more than 50%more than 50% of the poor will of the poor will be in rural areas by 2035, and be in rural areas by 2035, and depend significantly on depend significantly on agricultureagriculture

Poverty is disproportionately Poverty is disproportionately ruralrural

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Rural 51 46 68 50 71 66 80 61 47 34 67 40 57 33 70 10 51 69 45 44 27

Urban 17 16 25 24 62 52 56 48 37 27 55 21 26 39 49 12 57 31 31 23 15Difference 34 30 43 26 9 14 24 13 10 7 12 19 31 -6 21 -2 -6 38 14 21 12

Poverty Rates

Poverty Rates from PRSPs

West Africa

Southern AfricaEast Africa

Central AfricaNorth AfricaNear East

South AmericaCaribbean

Central AmericaNorth America

Other South AsiaIndia

Southeast Asia

China*Other East Asia

Proportion of Undernourished (%) Number of Undernourished (millions)

60 50 40 30 20 10 0 0 50 100 150 200 250

*includes Taiwan Province of China

Hunger is a Continuing ProblemHunger is a Continuing Problem

Number and Proportion of Undernourished, 1999-2001

Source: FAO

Improving Improving food food security security and and reducing reducing rural rural poverty poverty are closely are closely related related goalsgoals

Food AvailabilityFood Availability Depends on Depends on globalglobal agricultural productivity agricultural productivity International and national market and distribution systemsInternational and national market and distribution systems International and national trade policy: make sure food International and national trade policy: make sure food

is available to all at a reasonable costis available to all at a reasonable cost

Food AccessFood Access Poverty reduction: hunger is a result of poverty, so Poverty reduction: hunger is a result of poverty, so

whatever reduces poverty reduces hungerwhatever reduces poverty reduces hunger Food (processing and storage) marketsFood (processing and storage) markets

Food UtilizationFood Utilization Nutrition education (promotion of breast feeding in women, Nutrition education (promotion of breast feeding in women,

child care, sanitary conditions, child care time to free child care, sanitary conditions, child care time to free women’s time)women’s time)

Nutrition interventions to supplement food (vitamin A,Nutrition interventions to supplement food (vitamin A, iodine, iron, etc), or provide food supplements (for calories, iodine, iron, etc), or provide food supplements (for calories, protein)protein)

Health careHealth care Safe water provisionSafe water provision SanitationSanitation

Trade liberalization enhances Trade liberalization enhances food security through many food security through many

channelschannels

Increases rural growth and reduces rural Increases rural growth and reduces rural povertypoverty

Increased Trade is the Best Increased Trade is the Best Lever for Enhancing Lever for Enhancing Agricultural GrowthAgricultural Growth

Sustained trade reforms doubled growth in Sustained trade reforms doubled growth in agricultural sector (Michaely, Choksi, Papageorgiou)agricultural sector (Michaely, Choksi, Papageorgiou)

Agricultural trade liberalization gives much higher ag Agricultural trade liberalization gives much higher ag growth rate – 5.7% vs. 1.1% (Valdes)growth rate – 5.7% vs. 1.1% (Valdes)

SSA – countries with large improvement in macro/ SSA – countries with large improvement in macro/ trade policies had higher ag growth rate -- 3.5% vs. trade policies had higher ag growth rate -- 3.5% vs. 0.3% for those with deterioration (World Bank)0.3% for those with deterioration (World Bank)

Huge amount of evidence that global trade reforms Huge amount of evidence that global trade reforms can have big poverty-reduction effectscan have big poverty-reduction effects

Trade liberalization enhances Trade liberalization enhances food security through many food security through many

channelschannels

Increases rural growth and reduces rural Increases rural growth and reduces rural povertypoverty

Keeps food prices affordableKeeps food prices affordable

Improves access to imported agricultural Improves access to imported agricultural technology, mostly embedded in inputstechnology, mostly embedded in inputs

Provides cash to buy inputsProvides cash to buy inputs

Production of export and non-food Production of export and non-food crops can enhance food crops can enhance food

production…production…

Production Growth Rate , 1980- 2000Food vs. Non-Food

Low Income Countries with Agr/GDP > 20%

-1

0

1

2

3

4

5

6

7

-5 0 5 10 15 20Non-Food

Food

Y = 2.13 + 0.22 X

( t =3.66) R 2 = 0.46

Production of export and non-Production of export and non-food crops can enhance food food crops can enhance food

production…production…Production Growth Rate, 1980- 2000

Food vs. exports Countries with Agr/GDP > 20%

-1

0

1

2

3

4

5

6

7

-10 -5 0 5 10 15 20 25 30

Agr. Export Growth (Annual 1980-99)

Food Pro. Growth (Annual 1980-99)

Y = 2.58 + 0.14 X ( t =3.99) R2 =

National National policies to policies to reduce reduce rural rural poverty and poverty and food food insecurity insecurity

Incorporate policies on food security, Incorporate policies on food security, hunger and nutrition into PRSPshunger and nutrition into PRSPs

In countries where agriculture is In countries where agriculture is dominant, increase agricultural dominant, increase agricultural expenditure (from very low 1-4% of expenditure (from very low 1-4% of government spending in many government spending in many countries)countries)

Avoid policies which target self Avoid policies which target self sufficiency: trade and investment sufficiency: trade and investment policies should be aimed at raising policies should be aimed at raising rural incomes, not food productionrural incomes, not food production

Lower barriers to South-South tradeLower barriers to South-South trade Finance nutrition interventions explicitlyFinance nutrition interventions explicitly

Actions by Actions by international international donors and donors and financial financial institutionsinstitutions

Reform food aid mechanisms: Reform food aid mechanisms: make them quicker and less make them quicker and less disruptivedisruptive

Improve donor coordination of Improve donor coordination of agriculture, nutrition, and rural agriculture, nutrition, and rural development programs development programs

Reduce industrial country Reduce industrial country agricultural tariffs and subsidiesagricultural tariffs and subsidies

Pay more attention to closing Pay more attention to closing technology gap between technology gap between industrial countries / large industrial countries / large middle income countries and middle income countries and low income countrieslow income countries

Agricultural Trade Reform and Agricultural Trade Reform and the Doha Development Agendathe Doha Development Agenda

Kym Anderson and Will Martin (eds.),, Washington DC: Kym Anderson and Will Martin (eds.),, Washington DC: World Bank, forthcoming but chapters now available on World Bank, forthcoming but chapters now available on World Bank website at: World Bank website at:

http://web.worldbank.org/WBSITE/EXTERNAL/http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/TRADE/TOPICS/TRADE/0,,contentMDK:20366035~pagePK:210058~piP0,,contentMDK:20366035~pagePK:210058~piPK:210062~theSitePK:239071,00.htmlK:210062~theSitePK:239071,00.html