Global experience demonstrates the importance of agricultural growth for poverty reduction in poor rural areas, but also identifies the limitations of agriculture in delivering poverty reduction, and the need for complementary growth in the nonfarm sector. Contrary to the thinking that dominates much of current development policy, subsidies need to play a crucial part in 'kick starting' food grain supply chains if increased smallholder productivity is to drive rural non-farm growth. Establishing the base conditions for such subsidies to work, designing and implementing them to be effective, and then phasing them out as soon as they have done their task, are major challenges facing policy makers concerned with reducing poverty in rural areas where most of the world’s poorest people live.