NEGLECT OF AGRICULTURE CONDEMNS 218 MILLION PEOPLE TO POVERTY, ESCAP SAYS

Economic and Social Survey 2008 says that the region will weather sub-prime crisis

Chronic neglect of the agricultural sector in Asia and the Pacific is condemning 218 million people to continuing extreme poverty, and widening the gap between the region’s rich and poor, according to the Economic and Social Survey of Asia and the Pacific 2008, launched at multiple locations today throughout the region by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

“Governments must show greater political will to address decades of policy neglect and failure in the agricultural sector,” said Noeleen Heyzer, UN Under-Secretary-General and the Executive Secretary of ESCAP. “It is simply unacceptable that at a time when the economic growth of Asia and the Pacific has surpassed all expectations, we are not doing all that we can to improve the lives of more than 200 million people living in such poverty.”

Heyzer added that the recent sharp rises of food prices – which hit the poor the hardest – have simply reinforced the message ESCAP is sending out in the Survey, which she and India’s Minister for Commerce and Industry, the Hon. Kamal Nath, launched in New Delhi today.

The Survey is ESCAP’s flagship publication. It examines the Asia-Pacific region’s key short- and medium-term prospects and challenges in macroeconomic and selected social areas, especially from the point of view of minimizing human suffering; be it from economic hardships or social inequality. In addition, the Survey explores critical long-term development issues relevant to all developing countries in the region. This year’s issue also marks the 60th anniversary of the Survey, first published in Shanghai in May 1948.

This year’s Survey, entitled “Sustaining Growth and Sharing Prosperity,” says 218 million – a third of the region’s poor, largely living in rural areas – could be lifted out of poverty by raising agricultural productivity. The Survey also calls for a comprehensive liberalization of global trade in agriculture, as this would take a further 48 million people out of poverty in the region.

“Agriculture provides employment for 60 per cent of the working population, mostly poor, in Asia and the Pacific, but decades of neglect by policy-makers have weakened the sector’s capacity to lower poverty and inequality,” said Ravi Ratnayake, the director of ESCAP’s Poverty and Development Division, which produces the Survey. “Growth and productivity in agriculture have been slowing, and the ‘green revolution’ that boosted agriculture yields in the 1970s has bypassed millions.”

ESCAP’s focus on the agricultural sector comes amid signs of rising food prices, pressured by soaring demand for biofuels. The Survey says that biofuels are not only hurting poor consumers in Asia and the Pacific through high food prices, but they are also failing to help the region's poor farmers who do not have the resources to adapt their land to the biofuel crops.

The Survey proposes a strategy to ensure agriculture is both economically and socially viable, contributing to efforts to eradicate poverty in the region and returns agriculture to its rightful place in reducing poverty and inequality.

Agriculture needs revitalization. This requires a market orientation with a focus on improving agricultural productivity. Also needed are reforms in land policies, connecting the rural poor to cities and markets, and making it easier for farmers to access loans and crop insurance. Along with this approach, diversification of skills should complement agricultural development – by empowering the poor, particularly women, improving skills to tap labour market opportunities and by promoting rural non-farm activities and regional growth centres.

“Without these measures, the gap between rich and poor in the region will only get wider and millions will be condemned to lives of persistent poverty,” said Heyzer. “The cold, hard truth of the matter is that extreme poverty will never disappear without investment in agriculture.”

Healthy fundamentals will shield region, but concerns over US economy and food prices linger.

Looking at the short-term prospects of Asia and the Pacific, the Survey says that the region’s robust economic growth will continue in 2008 – despite economic uncertainties in the United States and the continued appreciation of regional currencies.

“It’s not all sunshine ahead, there are some dark clouds on the horizon, but the region has strong and healthy macroeconomic fundamentals and these will help shield it,” said Ratnayake. “Government budget deficits have gradually declined, there are no signs of excessive current account deficits as in the prelude to the 1997 Asian financial crisis, and countries have reduced their dependence on cross-border bank financing and have strengthened their banking sectors.”

The developing economies in the region are expected to grow at a slightly lower but still robust rate of 7.7 per cent in 2008, after having enjoyed the fastest growth in a decade in 2007. The region’s developed economies are expected to grow at 1.6 per cent in 2008, slipping from two per cent in 2007. The key economic drivers, China and India, are expected to grow at a brisk pace of 10.7 per cent and nine per cent respectively in 2008, boosting the rest of the region.

The Survey projects inflation at 4.6 per cent in 2008 for the developing economies of Asia and the Pacific, with currency appreciation cushioning high oil and food prices. Slower growth in the industrial countries is expected to ease pressures on oil prices.

However, the Survey sees rising food prices as a key challenge in coming months. Food price rises are a greater inflation challenge than oil prices as food accounts for a far higher proportion of consumer spending across the region. The shadow cast by the United States’ economic situation is a long one, contributing to the uncertainties that lie ahead. In addition to the effects of the subprime crisis, a significant slowdown of the United States economy and further turmoil in financial markets cannot be ruled out.

The Survey says that in a “worst case scenario” of a recession in the United States and a deeper depreciation of the dollar the impact on much of the region will be harsh. Countries which are strongly reliant on exports would be the most vulnerable. China’s economy would remain resilient due to its size, while the impact will be marginal on India because it has limited economic dependence on exports.

However, strong domestic demand – driven by private consumption and investment in fast-growing countries and by fiscal stimulus – should cushion the blow.

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Further information on the Survey can be found at: www.unescap.org/survey2008