STRUCTURAL DIMENSIONS OF LIBERALIZATION ON AGRICULTURE AND RURAL DEVELOPMENT A Cross-Regional Analysis on Rural Change SYNTHESIS REPORT OF THE RURALSTRUC PROGRAM FINAL DRAFT JUNE 2010 TABLE OF CONTENTS TABLE OF CONTENTS .............................................................................................................................. I ACKNOWLEDGMENTS AND AUTHORS ............................................................................................ IV EXECUTIVE SUMMARY ........................................................................................................................... I CHAPTER 1. SETTING THE SCENE AND SELECTING THE TOOLS .........................................1 1 A QUICKLY EVOLVING AND DISCONCERTING GLOBAL CONTEXT .....................................................2 1.1 The “Starting Point” ....................................................................................................................2 1.2 The “New Events” ........................................................................................................................3 1.3 Which Role for Agriculture?.........................................................................................................5 2 MAIN OBJECTIVES AND HYPOTHESES OF THE PROGRAM: RECONNECTING THE DOTS ........................7 3 GENERAL DESIGN OF THE PROGRAM: COUNTRY CASE STUDIES, REGIONAL SURVEYS, AND COLLABORATIVE PROCESSES .................................................................................................................... 10 3.1 A Comparative Approach ........................................................................................................... 10 3.1.1 Country Selection ............................................................................................................................ 11 3.1.2 Operationalizing the Comparative Work ......................................................................................... 13 3.2 Regional Fieldwork .................................................................................................................... 14 3.2.1 Design and Limitations ................................................................................................................... 14 3.2.2 Selection of the Surveyed Regions and Value Chain Reviews ........................................................ 16 3.3 The Partnership at Work ............................................................................................................ 18 CHAPTER 2. THE CHALLENGES OF STRUCTURAL TRANSFORMATION ........................... 20 1 STRUCTURAL TRANSFORMATION IN AN OPEN GLOBAL ECONOMY .................................................. 20 1.1 The Process of Structural Transformation: a Refresher............................................................. 20 1.2 The New Demographic Pattern and its Challenges .................................................................... 21 1.3 Is the Historical Sequence of Structural Change still viable today? .......................................... 25 2 THE DIFFERENT POSITIONING OF THE RURALSTRUC COUNTRIES .................................................... 28 2.1 General Overview ....................................................................................................................... 28 2.2 The Specific Role of Agriculture in SSA’s Economic Transition ................................................ 31 CHAPTER 3. RURAL REALITIES: AGRICULTURE AND POVERTY IN THE SURVEYED REGIONS 34 1 THE REMAINING CENTRAL ROLE OF AGRICULTURE ........................................................................ 34 2 A WIDESPREAD RURAL POVERTY .................................................................................................... 38 2.1 Average Incomes and Poverty Levels ......................................................................................... 38 2.1.1 Overall Presentation ........................................................................................................................ 38 2.1.2 Characterization of the Surveyed Regions....................................................................................... 40 2.1.3 Distribution of Rural Incomes ......................................................................................................... 44 2.2 Fine-Tuning the Income Groups ................................................................................................. 48 2.2.1 Improving the Comparability by using Adult Equivalent Ratios ..................................................... 48 2.2.2 Are Farm Households Better-Off or Worse-Off? ............................................................................ 51 2.2.3 The Wealth Status of Female-headed Households .......................................................................... 52 2.2.4 Viability of the Low Income Level Households and Food Insecurity ............................................. 54 3 EXISTING LIVELIHOOD STRATEGIES ................................................................................................ 59 3.1 Following the WDR08’s Typology ............................................................................................. 59 3.2 Moving Forward ......................................................................................................................... 61 CHAPTER 4. EXPLORING THE RURAL NON-FARM ECONOMY ............................................. 63 1 THE EXISTING QUESTION OF DIVERSIFICATION ............................................................................... 63 1.1 The Rural Non-farm Economy: A Brief Overview of the On-going Debate ............................... 63 1.2 How to Classify Rural Non-farm Activities and Incomes ........................................................... 65 2 THE REALITY OF THE RURAL NON-FARM ECONOMY IN THE SURVEYED REGIONS ........................... 68 2.1 Importance of Off-farm Activities and Incomes .......................................................................... 68 2.2 Nature and Combination of Off-farm Activities and Incomes .................................................... 70 2.2.1 Off-farm Activities: Widespread, but Generating Uneven Incomes ................................................ 72 2.2.2 Other Off-farm Incomes: A Substantial Complement ..................................................................... 80 2.3 Summary of Off-Farm Income Analysis: Far from the Buoyant Rural Economy ....................... 86 CHAPTER 5. SEARCHING FOR NEW PATTERNS OF AGRICULTURAL SPECIALIZATION 87 1 GENERAL BACKGROUND: THE BIG RESTRUCTURING ...................................................................... 87 1.1 The Main Processes of Change Underway ................................................................................. 87 1.1.1 Market Liberalization ...................................................................................................................... 87 1.1.2 The New Agrifood Markets ............................................................................................................. 90 1.2 Expected Consequences of Restructuring for Farming .............................................................. 93 2 AN ELUSIVE NEW AGRICULTURE ..................................................................................................... 95 2.1 Characteristics of On-Farm Income ........................................................................................... 95 2.1.1 General Overview ........................................................................................................................... 95 2.1.2 Self-Consumption vs. Sales ............................................................................................................. 99 2.2 Regional Patterns of Crop Diversification ............................................................................... 103 2.3 Regional Patterns of Market Integration .................................................................................. 106 2.3.1 Traditional Marketing Prevails ...................................................................................................... 106 2.3.2 Underdeveloped Contractualization .............................................................................................. 108 2.4 Summary of OnFarm Income Anaylsis ..................................................................................... 113 CHAPTER 6. – REGIONAL PATTERNS OF DIVERSIFICATION OR SPECIALIZATION ... 115 1 UNDERSTANDING THE REGIONAL LEVEL OF INCOME ..................................................................... 115 2 FINE-TUNING THE REGIONAL PATTERNS ........................................................................................ 123 2.1 First overview ........................................................................................................................... 123 2.2 Characterizing the Trends ........................................................................................................ 124 2.2.1 “Country” and Regional Levels ..................................................................................................... 125 2.2.2 Household Level ........................................................................................................................... 126 2.2.3 The Diversification – Income Relationship ................................................................................... 128 3 REGIONAL SPECIALIZATION