How Can We Best Support Smallholder Farmers for Poverty Reduction? Discussion at Carnegie Endowment for International Peace April 8, 2009

Starting Point MDG1: Halve poverty and hunger by 2015 Trade has been and continues to be a generally positive part of poverty reduction. Poor are hungry, non-poor are generally not hungry so eliminate poverty, eliminate hunger Poor are net food producers and net food consumers (urban, landless, very small farms) The recent food crisis highlighted how higher food prices lead to increased poverty and suffering – worldwide, over 100 million people driven into poverty Crisis also highlighted that higher prices are not enough for many smallholders to increase incomes

Will higher food prices in developing countries reduce poverty and hunger? For the net producers who generally are not the poorest – yes. For the those who are in towns and cities – no For the those who are workers on farms, depends on how much wages increase for farm workers. Overall, higher food prices are likely to hurt more poor than they help in developing countries, but there is room for different outcomes in different countries.

Other reasons to be careful with protectionist responses Special assistance mechanisms tend to be captured by wealthier, not poorer groups in developing and developed countries – better to target direct assistance as can be much more transparent. Increasing food prices does not necessarily lead to improved prices at farm gate.

However, much more must be done to support poor farmers High share of the poor with limited alternative livelihoods in short term Smallholders are generally most productive producers in their context Without support to intensify, increasing mining of resources – deforestation, soil degradation, water New opportunities emerging

If not protection, than what? Invest much more in research, knowledge transfer, farmer organizations, rural infrastructure, rural finance. Strengthen land tenure and legal frameworks that dont just work for the rich and powerful. Ensure womens literacy and participation in agricultural innovation Reduce/eliminate protectionist policies in richer countries which discriminate unfairly against poorer country farmers Strengthen consumer demand for Fair Trade and other features which ensure that markets value the role of smallholder farmers

Some initial analysis of what increases food and reduces poverty Maros Ivanic and Will Martin Scenario Rise in developed countries protection Rise in developing countries protection Rise in global agricultural productivity Rise in developing countries agric productivity Policy change needed, % Global agric export price, % Agric output (given), %1.0 Developing countries,% Food consumption,% Developing countries, % Welfare change ($bn) Developing countries

Poverty Impacts at country level (in pct points) Increasing food production through protection requires v large increases in protection Raising protection in industrial countries has little impact on poverty Protection in developing countries raises poverty Raising farm productivity helps reduce poverty The favorable impacts are much bigger if productivity rises in developing countries

Concerns of possibly higher and more immediate impact on poor farmers Very large scale plantation investments in biofuels and food crops – land conflicts? Implications of global food safety response for smallholder agriculture Need to better understand what is happening in food markets and assess the actual and potential gainers and losers of these trends for both producers and consumers Are smallholders positioned to adapt to climate change?

Some thoughts… Poverty and hunger, while steadily declining, remain our major challenge as long as one person is poor and one person goes hungry. Raising food prices in poorer countries, in most cases will likely worsen poverty, with some exceptions Smallholder farmers and food supply will benefit much more from increasing public investment in agriculture, eduction and stronger land tenure and legal rights. Nonetheless, there is need for more research into what is happening in the organization of food markets – supply and demand trends - and how it impacts everyone and in particular the poor.