World Bank Rural Week
Washington D.C., 29-31 March 2005
Introduction
In his introduction speech, the head of Agriculture and Rural Development (ARD) Mr. Kevin Cleaver said that the World Bank has subscribed to the MDGs; for Agriculture these are;
- Eradicate extreme poverty and hunger
- Ensure environmental sustainability
- Promote market access.
On eradication of poverty, Mr. Cleaver said studies have shown that there are high payoffs to investment in Agriculture and rural development (IFPRI studies by FAN et al).
On Environmental protection, there is need for environmental stewardship and higher productivity by way of technology intensification such as integrated pest management practices and improved reduced impact on forests, pasture and rangeland management.
On the market access, there is need for farmers to take advantage of the emerging markets and real discussion to take place on the role of Agricultural Subsidy and the trade reform.
The main challenge however, is to put Agriculture high on the agenda of the World Bank. This is important for IFAP members to continue the pressure at the National level as well. Though investments in rural investments increased from $5billion in year 2002 to $7 billion in year 03 and 04, this needs to be differentiated from the increase in rural components which went up but not to agriculture.
On priorities in the coming years for the division, it is noteworthy that one of them is to “Empower rural poor including farmers”. This proves some success of our lobby work with the Bank to include farmers and strengthen their capacity to take up the new roles.
To cover the wide range of topics there were different seminars and of importance was the seminar on “smallholders in the marketing chains” in which the IFAP president was a speaker.
Seminar: Small-holders in marketing Chains
The leading paper was given by Mr. Kees Van der Meer (He is part of the regoverning markets team of researchers) on “Exclusion of small-scale farmers from the coordinated market chain: Market failure, Policy failure or just economies of scale”.
Mr Meer observed that coordinated supply chains are rapidly increasing in importance in the global markets. They are commercial tools for competitive strategies, assuring quality food safety, and better logistics. They serve high-end markets, especially in industrial countries but increasingly also developing countries especially in urban areas with relatively higher income. However, the share of production in developing countries marketed through coordinated supply chains is still small. There is widespread fear that the small-scale farmers will be excluded. Empirical evidence is mixed; there are abundant examples of successful inclusion as well as painful exclusion. In some cases, economies of scale are such that only large-scale enterprises can compete successfully in the global markets. But, in many other cases there is no level playing field. Analysis of factors that contribute to inclusion and exclusion indicates that there are market failures and policy failures that contribute to relatively weak competitiveness of small-holder farmers. Hence, public intervention should be warranted.
On food market trends the study shows that rapid changes have taken place in the global food markets with increased consumer demands from safe food to social and environmental concerns. Food industries, supermarkets and food services compete for the market share and market power by trying to meet consumer’s preferences. These are normally higher than public- sector specifications. Information technology, logistics and advance in food processing and post- harvest handling have greatly enhanced the development of global sourcing and retailing and trade liberalisation has resulted in a rapid growth of international trade in food, especially for fruit, vegetables and fisheries. As there are important economies of scale in retailing, transport logistics and processing, there is clearly an important situation of concentration at the retail end of the food chain.
Currently, food safety has taken centre stage in food marketing with most companies treating food safety as an important commercial risk, but also as a subject with opportunities to distinguish themselves from competitors. They deal with this through increased control of the supply chain from farm to table. To achieve this, they turn to integrated or coordinated supply chains.
These trends in consumer demands, retailing and food safety management are more visible in the high-income industrialised countries but the same trends are rapidly developing in the developing countries. There is problem of exclusion of the small-holder farmers in developing countries.
Examples of how to involve small-holder farmers to benefit from the coordinated supply chain were shared by several speakers:
From, CIAT the Director while confirming the above trends said there are important tools small-holder farmers need to be able to compete; these are
- Access to information
- Appropriate technologies
- Institutional Innovation and capacity to organise
- Enabling policies and learning across experiences.
He concluded by saying if left alone the big producers will tend to win but given the above factors the small-holder farmers will compete.
Other presentations were given of partnerships between small –farmers and the private sector in Thailand and Colombia with good results.
In his presentation and in response to other speakers, IFAP president noted that if for the World Bank, Market Access is one way of achieving the millennium development goals then, farmers need more power in the supply chain. Currently, the processor has the quality standards, the traceability records and all that goes with production and marketing of farm produce. Mr. Wilkinson further noted that currently food safety has become the work of the supermarkets giving the illusion that some farmers are producing unsafe food and others safe food albeit in the same environment. This needs to change as consumers need to know all food in the market is safe and not food marketed by one retailer or the other.
The president further emphasised the need to focus on rural development as a whole as markets alone will not solve the great problems in developing countries. There is need for an integrated approach to development by investing in rural areas in services such as health and infrastructure as market alone is not sufficient. Further, the World Bank should use the supply chain to meet the MDGs by helping farmers’ organisations to get involved. (A few examples of banks work in this area in China were given with good success) In conclusion the president noted that governments must play a facilitating role to help farmers in the negotiations and also to put the require registration in place.
The seminar had a positive tone with donors asking how they could organise farmers in their work. The position of IFAP in organising farmers was explained and the need for other development partners to build onto what exists other than building new organisations for every initiative. As the World Bank has acknowledged the place of the farmers’ organisations to be involved and are clearly seeking ways to work with farmers’ organisations as a facilitator in emerging partnerships, and strengthen the capacity of farmers, IFAP offered to take a lead role in showing how to organise farmers as this work continues.