Chair:

Simon Maxwell, ODI.

Speakers:

Colin Thirtle, Imperial College, London.

Joachim von Braun ZEF, Bonn.

Daniel Start, ODI.

1. Simon Maxwell introduced the series as a whole. Most poor people lived in rural areas, but rural development was in the doldrums and lending to the sector had fallen by 60 per cent. At the heart of the problem was the lack of a rural development 'narrative' that would propel the topic to the top of a development agenda focused on poverty reduction. A number of international agencies were addressing the challenge with new rural development strategy papers - the EU, IFAD, the World Bank, and FAO among them. ODI had contributed to all of these. The Meetings Series would pick up the key topics, and broaden the agenda to include food security, since this was the subject of an important international meeting to be held in Rome in November, marking the fifth anniversary of the World Food Summit. The first topic in the series was whether agriculture still mattered . . .

2. Colin Thirtle initiated the discussion of this topic. He reminded the audience of the theoretical case for the centrality of agriculture in the development of poor countries. Agriculture reduces poverty by providing jobs, keeping food prices down, generating demand in other sectors, and providing raw materials for industry. An increase in agricultural productivity can be the trigger for growth and poverty reduction, and clearly has been so, for example in the Green Revolution countries in Asia.
3. The relationships can be tested empirically. Thirtle demonstrated (and the paper provides more detail) that for forty developing countries, the headcount index of poverty (that is the percentage living on less than one dollar a day) fell by close to 1 per cent for every percentage increase in agricultural productivity. For a different (and larger) sample, the figure was close to two thirds of a percentage point. This was a higher figure than in other sectors. The evidence suggested, therefore, that investments to increase agricultural productivity (for example, research) would have high pay-offs.
4. Joachim Von Braun agreed with this conclusion, but, drawing on a background paper, reminded the audience that the beneficial effects of agriculture arose from many different pathways, and not just from food production: it was important to think of agriculture as a multi-product sector. The critics of agriculture sometimes argued that the sector would become irrelevant because of urbanisation and because of rapid technical change in the 'modern' economy. In fact, the evidence was that most urban growth would be in small towns, with strong rural links, and that technical change would be of great benefit to agriculture: in particular, new information and communicatio n technologies were leading to dramatic falls in transactions costs for farmers. New thinking was needed on rural development, with agriculture central, with greater attention to issues of governance, natural resource management, the provision of basic public goods, and the development of rural-urban
5. Daniel Start developed the idea of multiple pathways and addressed the issue of the rural non-farm economy (RNFE): was agriculture at the heart of the RNFE or were there better pro-poor rural growth engines? The evidence, set out in more detail in an accompanying paper, seemed to suggest that agricultural growth linkages could be strong, especially by virtue of increased incomes from agriculture being spent on goods and services produced locally (so-called consumption linkages). However, these links had often been over-estimated, and could be fragile, dependent on the 'protection' afforded by physical isolation. Non-agriculturally based RNFE could be more robust, but depended on the availability of natural resources (e.g. for tourism) or cheap labour.
6. 6. Too often, he argued, the RNFE was a 'residual' sector, absorbing surplus labour in very poorly remunerated activity. This reflected the very variable returns from a very variable 'sector', the highest of which have high 'entry barrier' and are captured by the rural rich, the lowest of which are saturated, often becoming imiserating or coping sectors for the poorest. The RNFE might help to reduce poverty and insecurity, but at the cost of increased inequality.
7. 7. What could planners do to help? Different interventions would be needed in different places and at different stages of rural development. Physical infrastructure, education and financial markets were a pre-requisite, followed by the provision of investment incentives and institutional innovations (e.g. to support industrial linkages, producers' associations and nascent industrial clusters)
8. In the discussion, a number of points were made:
   
   • The case for a positive role for agriculture in poverty reduction seemed strong, through the variety of different pathways discussed. Other sectors could (and did) make similar claims, however, so work needed to continue on the best options
   • The way to judge these options was not to be a sectoral fundamentalist, but an employment fundamentalist - the key question to ask was what impact alternative agricultural (and rural?) growth strategies would have on livelihoods
   • In this connection, most agriculturally-related jobs in future would probably be created in small towns, or otherwise outside agriculture - these linkages needed special attention.
   • The case for agriculture did not necessarily imply a case for large-scale public investment in agriculture. It might be better for governments to invest in infrastructure, and concentrate on creating an enabling environment, leaving farmers themselves to invest in farming.
   • Finally, it was important to develop different agricultural strategies in different places - for example, high and low potential areas needed to be treated differently