Technical Paper: Issues and perspectives regarding development assistance to agriculture and rural development Chie Shindo1 Agricultural Development Economics Division Food and Agriculture Organization of the United Nations Rome, Italy October 2007 Abstract More than 10 years have passed since the World Food Summit, where world leaders adopted the goal of halving hunger no later than 2015. Since then, the international community has made many other commitments to address hunger and poverty and has reaffirmed various pledges and commitments to do so. However, progress to date in achieving the targets has been modest at best. This paper posits that one of the reasons for the poor performance in achieving the hunger reduction targets is the failure to translate these international pledges and commitments into concrete actions. It reviews pledges and commitments made at various high-profile international conferences relative to foreign assistance and examines trends in their implementation. The analysis shows that External Assistance to Agriculture (EAA) and Official Development Assistance (ODA) to agriculture and rural development have been declining and are insufficient, although recent positive trends deserve attention. Key Words: hunger reduction, official development assistance (ODA), External Assistance to Agriculture (EAA), World Food Summit, Millennium Development Goals JEL: F35 (Foreign Aid), Q19 (Other) 1 The author is grateful to Prabhu Pingali, Kostas Stamoulis, Margarita Flores, Mark McGuire, James Tefft, Gustavo Anríquez, Kristian Jakobsen and Mohamed Barre for their useful comments, to Andrea Stoutland for final editing, and for the support by the Government of Japan for this research through the Associate Professional Officers programme. Content and errors are exclusively the responsibility of the author and not the FAO or the authors’ institution. Author’s current contact is: [email protected] The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. 1 Introduction At the World Food Summit (WFS) in 1996, the participating heads of state and government or their representatives pledged their political will and common and national commitment to achieving food security for all with an immediate view to reducing the number of undernourished people to half the present level no later than 2015.2 Along the same lines, the Millennium Summit in 2000 adopted the Millennium Development Goals (MDGs). One of its targets is to halve the proportion of people who suffer from hunger between 1990 and 2015. World leaders have adopted other commitments that encourage the international community to increase their efforts to achieve the WFS target and MDGs, in part by increasing assistance to developing countries. Developing countries have also committed to increasing their own contributions to agriculture and poverty reduction through various fora. However, despite these commitments and efforts, little real progress has been made towards the objective of halving hunger in the world before 2015.3 The objective of this working paper is to examine the trends in development assistance to agriculture and rural development to better understand the implications of actual contributions relative to the stated commitments of reducing hunger in the world. This paper posits that one of the reasons for the poor performance in achieving the hunger reduction targets is the failure to translate international pledges and commitments into concrete actions, especially for the most undernourished people in the world. The paper first provides a review of the world food security situation to set the context for the various commitments and pledges for which it will be argued that action is lacking. It then discusses key terms used in the paper, especially External Assistance to Agriculture (EAA) and Official Development Assistance (ODA) to agriculture and rural development; because the terms used to describe development assistance are themselves a source of confusion. This is followed by a discussion on the role of development assistance to agriculture and rural development as a means to assist developing countries in addressing food insecurity. The paper then presents a synopsis of the main conferences on development and examples of developing-country initiatives, especially relative to ODA and EAA. A discussion of some of the reasons for the gap between commitments and actual contributions follows, although an in-depth analysis of the cause-and-effect mechanisms between development assistance and hunger reduction performance was beyond the scope of the paper. The final section provides some concluding remarks and recommendations. 2 Overview of world food insecurity Ten years after the WFS, the number of undernourished people in the world remains high. The Food and Agriculture Organization of the United Nations (FAO) estimated that there were still 854 million undernourished people worldwide in 2001–2003: 820 million in the developing countries, 25 million in the transition countries and 9 million in the industrialized countries (Figure 1).4 When compared with 1990–1992, the number of undernourished people in the developing countries declined by only 3 million as of 2001–2003. 2 FAO, 1996 3 FAO, 2006c 4 FAO, 2006b - 1 - Figure 1: The number of undernourished people in 2001–2003, by region Near East and North Africa Latin America and the Caribbean 52 million (6%) 38 million (4%) Sub-Saharan Africa World: 854 million 206 million (24%) Developing world: 820 million Asia and the Pacific 524 million (62%) Countries in transition 25 million (3%) Developed market economies 9.3 million (1%) Source: FAO, 2006a FAO’s projections indicate that the WFS target will likely be missed. On the other hand, the MDG on hunger reduction could be met: the proportion of hungry people in developing countries could decline from 20 percent in 1990–1992 to 10 percent in 20155 (Figure 3). 6 Although the MDG target may be achieved by the developing countries as a group by 2015, current population projections suggest that there will still be 585 million undernourished people, far more than the WFS target of 412 million. Figure 2: The number of undernourished people and the World Food Summit target (millions) 900 800 1990-92* 700 1995-97 600 2001-03 500 WFS target 400 300 200 100 0 Developing Asia/ Latin America/ Near East Sub-Saharan Transition World Pac if ic Caribbean and Africa countries North Africa Source: FAO, 2006b Note: * for the transition countries: 1993-95 5 FAO, 2006b 6 MDG 1, Target 2: Halve, between 1990 and 2015, the proportion of people who suffer from hunger - 2 - Figure 3: Proportion of undernourished people and MDG 1, Target 2 (%) 40 1990-92* 35 30 1995-97 25 2001-03 20 MDG 15 target 10 5 0 Developing Asia/ Latin America/ Near East Sub-Saharan Transition World Pac if ic Caribbean and Africa countries North Africa Source: FAO, 2006b Note: * for the transition countries: 1993-95 3 Definitions used in this paper It should be noted that information on financial commitments such as ODA and EAA is a sensitive issue for many governments and therefore it is difficult to obtain complete data on every country’s domestic expenditure and multilateral ODA commitments by sector. This paper uses two major definitions and sources of information, updated to August 2007: FAO’s data on External Assistance to Agriculture (EAA)7 and the Organisation for Economic Co- operation and Development (OECD) data on Official Development Assistance (ODA) to agriculture, forestry and fishing (abbreviated to “ODA to agriculture”). The two concepts are slightly different because: i) the scope of agriculture, forestry and fisheries of EAA is wider than that of ODA to agriculture, e.g. environment protection is included only in EAA; and ii) while EAA consists of concessional and non-concessional commitments, ODA to agriculture consists of concessional commitments only.8 4 Roles of development assistance to agriculture and rural development in developing countries There is ample evidence that combating hunger and extreme poverty requires a renewed and expanded commitment to agriculture and rural development in developing countries. Seventy percent of the world’s hungry people in developing countries live in rural areas. Agricultural growth is essential for reducing hunger and poverty and is one of the driving forces of the rural economy.9 7 There is both a broad and narrow definition of EAA; this paper uses FAO’s broad definition of EAA. 8 See Annex for more details on the differences between EAA and ODA. 9 Pingali, Stamoulis and Stringer, 2006; Anríquez and Stamoulis, 2007 - 3 - Figure 4 groups countries by prevalence of undernourishment and shows the percentage of agricultural employment as a share of total employment in those countries.10 Those countries with the highest percentage of undernourished population (greater than 35 percent) have the largest share of agricultural employment (almost 70 percent). Figure 5 presents the share of agriculture in total gross domestic product (GDP) by groups of countries classified by undernourishment prevalence. Those countries with the highest percentage of agriculture GDP as a share of total GDP are also the countries with the highest levels of undernourished (over 25 percent). Figure 4: Agricultural employment Figure 5: Agricultural GDP and and undernourishment in 2001–2003 undernourishment in 2001–2003 Percentage of population undernourished Percentage of population undernourished <5 <5 5-19 5-19 20-34 20-34 ≥ 35 ≥ 35 0% 20% 40% 60% 80% 0% 10% 20% 30% Agricultural employment as a share of total employment Agricultural GDP as a share of total GDP Source: FAO Source: FAO These two figures show that the most severely undernourished populations depend more on agriculture than the less undernourished populations, both as a source of food and for income and employment.