1. Agriculture Renaissance
Making “Agriculture for Development” Work
Prabhu Pingali
Deputy Director
Agriculture Development
April 20th, 2010

2. Why Agricultural Development?
Agriculture is key to reducing Employment in Sub-Saharan Africa
hunger and poverty
• Most people living on $1 a day rely Farming Other labor
on agriculture for food and income
• In Sub-Saharan Africa, farming GDP in Sub-Saharan Africa
accounts for 2/3 of employment and
1/3 of GDP
• In South Asia, the rural poverty rate Farming Other labor
is still approximately 40%

3. The Transformative Power of
Agriculture
• Agriculture growth is 2–4 times For the poor, agriculture has special
poverty-reducing benefits.
more effective for the poor than 8
Expenditure gains induced by 1% GDP growth, %
non-agricultural growth
6
• Almost no country has Agriculture based
4
managed a rapid rise out
of hunger and poverty without 2
increasing its agricultural Non-agriculture
0
productivity
• Reducing hunger and -2
Lowest 2 3 4 5 6 7 8 9 Highest
poverty on a large scale Expenditure deciles
starts with improving
agricultural development

4. The Green Revolution
 We know progress is possible. Rural poverty in India
From the 1960s to the 1980s, Poverty rate, %
60
crop improvements in Asia and
Latin America helped:
• Double food production
• Save hundreds of millions of lives 50
20%
• Lay a foundation for growth in
countries like India and China
GREEN
REVOLUTION
PERIOD
40
1965
1970
1975
1980
1985
Nearly 20% reduction in
poverty in just two decades.

5. Green revolution impacts on
crop improvement
 Production
• Cereal output in
developing countries has
grown 2.8 percent
annually for three
decades
 Productivity
• Yields, not area, were
responsible for growth
• TFP grew along with
yields

6. Long run commodity price decline has had a
positive impact on food security and poverty
reduction
Real prices for commodity group

7. Investments in agricultural research
and development yield high returns.
 Agricultural research
and development (R&D)
yield returns of 40-50
percent.
 Returns are high in all
regions, including Sub-
Saharan Africa.
 Traditionally, public
research carried out in
OECD countries had
large spillover effects in
developing countries.

8. Kick Starting Agriculture Productivity Growth: Lessons from
Asia
 Policy and institutional reforms set the stage for success
• These accounted for the largest shares of both agricultural growth and poverty reduction over the six
Asian economies agricultural growth boom periods – Household Responsibility System in China and
Vietnam’s doi moi reforms
• Firming up property rights spurs investment and access to credit for business development
• Market-oriented liberalization improves market efficiency and resilience to demand and supply
fluctuations through price mechanisms –China and Indonesia developed their ag sectors with careful
planning in this area.
 Developing and implementing technological improvements essential
• The successful Asian economies built up world-class scientific research enterprises in agriculture. These
research institutes, universities and private firms developed new cultivars, agri-chemicals and farm
machinery and designs adapted to the needs of local farmers.
• Much of this research was accomplished through close interaction with key international partners such
as the agricultural research centres of the Consultative Group for International Agricultural Research
(CGIAR)
 Support for public infrastructure must be given a priority
• Improved rural roads, irrigation, electricity, rural health care and other public services accounted for
nearly 30%, on average, of agricultural output growth in the six Asian economies studied
• Government expenditure on agriculture averaged 15% of total government expenditure in Asia during the
boom years in the 1980s; African agriculture investment levels average currently around 5%.

9. Agricultural Transformation: a
Global Phenomenon
80 80
Low
Low Productivity Agriculture
Income High Human Development
Lower
70 70
Modernizing
Medium Human Development
Middle
Agriculture Income Low Human Development
Upper Middle
60 60 Industrialized Agriculture
Income
High Income
50
50
Share of Share of
Agriculture Agriculture 40
40 (% GDP)
(% GDP)
30
30
20
20
10
10
0
0 -1,000 4,000 9,000 14,000 19,000 24,000 29,000 34,000 39,000 44,000 49,000 54,
-1,000 4,000 9,000 14,000 19,000 24,000 29,000 34,000 39,000 44,000 49,000 54,000
GDP (US$ per Capita)
GDP (US$ per Capita)

10. Characteristics of Agricultural
Transformation
Traditional Modernizing Industrialized
Agriculture Agriculture Agriculture
Share of Ag
>30% 10%-30% <10%
in GDP
Share of Ag
>50% 15-50% <15%
labor in total
Market
Subsistence National International
Orientation
Output Food Staples Highly
Food Staples
Mix + Export Crops differentiated
Scale
Not Important Not Important Important
Economics

11. Developing world agriculture is
facing increasing divergence
 Low Productive Agriculture in the Least Developed
Countries
 Modernizing Agriculture in the Transforming
Economies

12. Low-Productivity Agricultural
Economies
 Generally the Least Developed Countries (LDCs)
 Ag has a large share of GDP yet productivity is low
 Low NARS capacity & low private sector interest
 Low prospects for reaching the MDG goals on
poverty and hunger & high levels of environmental
degradation

13. Low agricultural productivity in Africa is a
multi-faceted problem
Low investment in research Very limited access to markets
Agricultural research expenditures, 2000
Road access
$13.8 billion Metres road/capita
SSA
100% = $36 billion per year 1.5
ME and 1.5 21.4
N. Africa
2.6
LATAM
62% 38% Developing
countries
Asia-Pacific 8.2 1.4 3.0
Although these regions
Developed have abundant
countries potential (e.g., Nigeria India USA
Developing
Of the ~$36 billion spent on agricultural countries sunlight, labor, water,
research in 2000, only ~$1.5 billion (~4%) knowledge),
was spent on SSA productivity is low,
which represents both
a huge need and
opportunity. Poor policy and regulatory environments
Low input usage and yield levels
Policies, such as trade and investment, towards the
developing world often contradict and counteract official
Fertilizer use Average cereal yields by development assistance
kg/ha arable land, region, 1960-2003
Net ODA and Subsidies to Domestic Agriculture
2002 mt/ha Producers ((Avg. 2003-2005)
101 3.0%
4 ROW Producer subsidies
2.5% for agriculture
2.0% Net ODA
% GDP
1.5%
9 SSA
1.0%
0.5%
SSA World
0.0%
Japan US EU
Source: FAOStat; IFDC; World Bank

14. Implications for Agricultural R&D:
back to basics?
 Focusing on productivity improvement but with the
benefit of modern science and 40 years of lessons
learnt on trade-offs.
 Dealing with the “Changing Locus of Agricultural
Research” -- Public to Private Sector
 Going further down the impact pathway than in the
past
 Building local capacity for R&D

15. Transforming Economies
 Dietary transformation fueled by economic
growth and demographic shifts
 Organizational changes in retail,
wholesale, processing, and procurement
 Tremendous heterogeneity observed w/
respect to participation and distribution of
benefits

16. Dietary transition in Asia: an
overview
 Reduced consumption of rice
 Increased consumption of wheat and wheat
based products
 Rise in high protein and energy dense diets
 Increased consumption of temperate zone
products
 Rising popularity of convenience food and
beverages

17. Rising GDP per capita is associated
with a larger share of supermarkets
in food retail
100%
80%
Share of Supermarkets in Food Retail
60%
40%
20%
0%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
GDP per Capita, PPP, 2002
Source: data from Traill (2006) and World Bank World Development Indicators (2006)

18. The Changing Food System
Individuals Enterprises
Primary Processing Distribution
Inputs and retail Consumption
production and
packaging
Transport Services
Governed by Institutions:
Rules and regulations
Markets (Contracts)

19. Transforming Economies:
implications for R&D
 Sustaining and enhancing staple crop productivity
gains
 Making domestic agriculture globally competitive
 Diversifying agricultural systems & household
incomes
 Reducing rural poverty & malnutrition, especially in
marginal environments

20. Industrialized Economies
 Low share of agriculture in GDP
 Productive agricultural sector
 High yet declining protection to agricultural sector
 Emergence of markets for non-commodity roles of
agriculture

21. IMPACTS
Food Price Crisis of 2007-2008
900
800
700
Real
prices 600
(USD per
metric 500
ton)
400
300 Rice
Wheat
200
Maize
100
0
Source: IMF Commodities database

22. Determinants of Future Food Prices and
Food Security
◊ Demand side determinants ◊ Enabling Policy Environment
• Population growth & • Infrastructure development
Urbanization • Agricultural R&D
• Income elasticity of food • Macroeconomic & trade policy
demand
• Feed & bio-fuel demand ◊ Climate Change Risks
• Long term productivity impacts
◊ Supply responsiveness • Volatility in supplies
• Area expansion possibilities
• Increased Intensification
• Reducing the yield gap
• Input price trends

23. Thank You
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