Addressing the neglect of agriculture in Asia and the Pacific

In the last decade, developing economies in Asia and the Pacific doubled in size, growing over seven per cent on average. This growth has garnered much attention and plaudits. Yet, 641 million of the world’s poorest – nearly two-thirds of the global total – live in the Asia-Pacific region. Other statistics are equally shocking. Ninety-seven million children remain underweight. Four million children die before reaching the age of five. Some 566 million people living in rural areas have no access to clean water. And less than a third of rural inhabitants have access to basic sanitation.
These fault lines question the sustainability and validity of the current development paradigm, which leaves millions of people trapped in extreme poverty when so much wealth has been generated in such a short time. Most of the poor are in the rural sector and agriculture is their main livelihood. And this is where the problem lies.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has carried out research which shows that persistent poverty and widening inequality in the region are the result of decades of neglect of agriculture. The analysis – contained in ESCAP’s flagship publication, the Economic and Social Survey of Asia and the Pacific 2008, launched today [27 March] throughout the region – shows that growth strategies and economic policies in the region have systematically overlooked the agricultural sector. And this is despite the fact that agriculture is the main livelihood of the poor and still provides employment for 60 per cent of the working population in Asia and the Pacific.

The tremendous potential of the agricultural sector to reduce poverty has been weakened by unfavourable macroeconomic policies that led to high and variable interest rates and inflation in the 1980s as well as the erosion of public services such as agricultural extension services since the 1980s; the failure of agricultural credit policies; and the massive scaling down of public investment in irrigation and rural infrastructure. The list goes on.
Official development assistance (ODA) has shown a similar disregard for the sector. Between 1983-1987 and 1998-2000, ODA for agriculture fell by 57 per cent to an annual average of US$5.1 billion. Lending for agriculture by multilateral lending agencies, such as the World Bank and the Asian Development Bank, trended downwards.
As a result, growth and productivity in agriculture have stalled. Alongside this, the decline in poverty has been slowing down in the region since the late 1980s. Our analysis also shows that the role of agriculture in creating jobs is diminishing in some sub-regions. In East Asia, South-East Asia and the Pacific, agriculture generates fewer new jobs these days.
In China, for example, half of the decline in poverty occurred in the first half of the 1980s when agriculture was given priority. We see this pattern repeat itself time and time again – when agricultural development was placed high on the development agenda, poverty declined rapidly in Vietnam, Thailand, Bangladesh, and many other countries in Asia and the Pacific.
The neglect of agriculture has put enormous pressure on farmers. Low yields, high input prices and low market prices for agricultural produce have led to a vicious cycle of low income and stagnation. Massive scaling down of public services, particularly in irrigation and agricultural extension services, has dealt a blow to the sector. The distress in rural areas is reflected in rising farm indebtedness and suicides in many countries, including China, India, Sri Lanka and Thailand. The figures are tragic and astounding – in India alone, almost 87,000 farmers committed suicide between 2001 and 2005.

Unless the neglect of agriculture is addressed, poverty will not be reduced significantly in the region, and inequalities will widen further. In turn, this will jeopardize the economic prospects of our countries and the social cohesion of our communities.
The Economic and Social Survey of Asia and the Pacific 2008 shows that improving agricultural labour productivity could have a profound impact on poverty reduction. For example, raising the region’s average agricultural labour productivity to the level seen in Thailand would take 218 million people – a third of the region’s poor – out of poverty. India, China, Bangladesh and Indonesia would gain the most. Large gains in reducing poverty are also possible through the comprehensive liberalization of global agricultural trade, with the potential to take another 48 million people out of poverty. Our research also shows that raising productivity in agriculture will reduce income inequality significantly.
If more reasons were needed for our call to focus on agriculture, then one need only look at the rising food prices that are being felt across the region. With the demand for biofuel apparently unstoppable, the region needs a renewed and urgent effort to revive its agricultural sector to increase food production and stop food prices from spiraling even further.
ESCAP’s Survey shows that the strategy required to make agriculture economically, socially and ecologically viable – and thus returning it to its rightful place in reducing poverty and inequality – is a straightforward one.
Quite simply, agriculture needs another revolution. Increasing agricultural productivity should be at the centre of this new approach. It is crucial that the sector’s productivity is improved through increased investment in research and development, human capital, extension services, irrigation and rural infrastructure. Land tenure systems need to be revamped, where necessary. The rural poor need to be better connected to cities and markets. Macroeconomic policies, credit instruments and crop insurance need to be made farmer-friendly. A market orientation with a focus on quality and standards would be part of this strategy. In
short, agriculture should be treated as a high-value added, diversified, marketable sector – not a charity case.
Given its natural limitations, agriculture alone cannot take the region’s 641 million poor people out of poverty. Therefore, a gradual transition from agriculture should complement productivity improvements – by empowering the poor, particularly women, with the skills to tap labour market opportunities and by promoting rural non-farm activities and regional growth centres.
The region’s agriculture sector faces serious challenges. Without the political will to revive the sector, it will only worsen. Governments have the opportunity now to help more than 200 million people of our region escape the shackles of poverty. This opportunity should not be missed.