"Poverty Reduction and Food Security"

Statement to the Development Assistance Committee of the Organisation for Economic Co-operation and Development

Paris, France, 9 June 2000

Mr. Chairman,
Distinguished Members of the Development Assistance Committee,
Ladies and Gentlemen,

It is an honour and a privilege for me to be here today, and I wish to express my sincere thanks to Mr. Jean-Claude Faure for providing this opportunity to share with you FAO's views and main concerns with regard to poverty reduction and food security, which represent one of the major challenges of mankind as we enter the new millenium.

Last year the World Bank concluded that "in many developing countries, progress in the fight against poverty is likely to fall short of the goal set by the international community, which calls for poverty to be reduced by half by 2015". In FAO, we are also very concerned that most indicators suggest that we are also moving too slowly to meet the analogous target, set at the World Food Summit in Rome in 1996, of halving the absolute number of undernourished people by 2015. Our latest estimates suggest that the number of undernourished will fall from some 790 million in 1995/97 to 575 million in 2015, and only to 400 million by 2030.

We can interpret these estimates in various ways.

One option is to focus on the enormous increase in the absolute number of adequately fed people in developing countries. This figure is projected to rise from 3.6 billion to 5.2 billion (or from 82 % to 90% of the total population) between 1995/97 and 2015.

Alternatively, we can ask ourselves why we cannot do better? Do we really have to accept that targets set only 4 years ago - and judged by some to be too modest - are already unattainable? Is it not absurd that in an increasingly interdependent World, which is blessed with more than enough food for everyone, so many people should go to bed hungry every day? That millions of young people, denied adequate food in their infancy, either die before adulthood or never develop their full potential physical and cognitive capacities? That warnings of impending famine continue to go unheeded until we see the death throes of our fellow humans on CNN or the BBC? That people continue to die of deprivation in a world where others enjoy such affluence and extravagance?

It is, I believe, incumbent on us to face up to these difficult questions, to agree on practical solutions (for solutions there must be), and to implement them with resolve - and not mere rhetoric. In the area of food security this is a moral imperative, recognised internationally in the concept of access to adequate food as a human right.

I intend to speak only briefly today, preferring instead to pose and then debate a number of deliberately provocative questions on issues of development policy which have a major bearing on food security for this and future generations. If we accept that we are failing to meet the goals to which we have subscribed, then we must be prepared to question whether we are using the right instruments and applying them on the scale required. We must be open to new ways of doing business.

In this context, I would like to focus on a few major issues.

1. If we accept the view that undernourishment is usually a consequence of a person's inability to produce or buy adequate food, what kind of domestic policies are most likely to reduce malnutrition?

Until recently, it was conventional wisdom to accept that high rates of economic growth were a pre-requisite for reducing poverty, and that, as poverty fell, nutritional status would improve. There is growing evidence, however, to suggest that, except perhaps in well managed economies which are endowed with large reserves of mineral wealth, a high incidence of poverty and particularly of malnutrition constrains economic growth, through a reduction in labour productivity and life expectancy. Inadequate nutrition has been shown to be responsible for a shortfall of between 0.23 and 4.7 percentage points in the growth of GDP per capita worldwide.

The implication is that governments which adopt policies which reduce malnutrition are likely to attain more sustainable growth than those which go for growth with little concern for equity and adequate food consumption. Given that 70 % of the population of developing countries is still rural, and that poverty and malnutrition are heavily concentrated in rural areas, vigorous approaches to rural development must play a central role in fighting these two tragedies. Research shows that those countries which have adopted policies which combine increases in food production by small farmers with the provision of targeted nutritional safety nets have been those which have been most successful in reducing malnutrition. If the logic holds, these successes will be reflected in the medium term by robust, broad-based growth.

Such thinking lies at the heart of FAO's Special Programme for Food Security (SPFS) in Low-Income Food-Deficit Countries (LIFDCs), which is now being implemented in 60 countries. The assumption underlying the SPFS is that increased farm output by small farmers in LIFDCs is feasible (often using quite simple and low cost technologies) and can, under most circumstances, achieve the combined objectives of improving rural livelihoods, increasing food supplies within rural communities, having a multipler effect on economic growth, and reducing foreign exchange expenditure on food imports. Similar assumptions underlie the Sustainable Livelihoods Approach espoused by UK's Department for International Development, the Sasakawa Global 2000 programme and the Soil Fertility Initiative.

I believe that we have to ask ourselves why, if these assumptions are valid and the technical means exist for raising small farmer productivity (as they do in most cases), so few governments are yet throwing their weight behind such programmes to have them implemented on a scale commensurate with the problems they are designed to confront. Why, except in a handful of countries, are we seeing few signs that the commitments made at the World Food Summit are being followed up by large-scale determined actions aimed at improving food production and access? Might widespread subscription to policies which call for a less interventionist, more laissez-faire, role for the public sector inadvertently contribute to reduced interest on the part of governments in taking purposive action to address the critical problems of rural poverty and malnourishment, in spite of the success of pilot projects in showing the way?

2. How certain can we be that liberal economic management and trading policies, as now applied, contribute positively to poverty reduction and improved food security, especially in the LIFDCs?

Few people doubt the long-term benefits of more open and competitive markets, but is there not a serious danger that, at least during a transition period, many poor people - especially in rural areas - may become worse off and, by implication, more food insecure? The supply response of developing country agrarian societies to changing market opportunities can only be slow, given many small farmers' limited access to capital, technologies, market knowledge and extra land, and the general weaknesses in supporting institutions. In the meantime, vast numbers of such farmers find themselves pitted in increasingly direct competition with larger farmers in the developed world, whose more ready access to modern technology, various forms of persistent protection, and a progressive growth in farm scale has enabled them to withstand a secular decline in world cereal prices. Under small farm conditions in developing countries, falling cereal prices equate with a spiralling drop in rural incomes, reduced capacity to buy inputs and ultimately to a fall in production incentives - precisely the scenario that we all wish to avoid.

I believe that we must ask ourselves what options exist for managing global and national liberalisation processes, nationally and internationally, in ways which we can be confident will contribute to improved food security for both the urban and the rural poor in both the short and long term?

3. In spite of the emphasis given by all major donors, including all the international banks, to poverty reduction and the recognition that poverty is highest in rural areas, why does ODA for agriculture and rural development continue to drop year after year?

The Joint Forum on Development Progress, convened by the UN, OECD, the World Bank and the IMF, at its meeting earlier this year, deplored the fact that "aid has fallen significantly since 1992 - from one-third to one-quarter of one per cent of donors GNP", and argued that "the present level needs to be increased, to fund many worthwhile projects" which would contribute to the ability of developing countries to meet their poverty alleviation goals.

The drop in ODA for agriculture and rural development has been particularly marked, falling from around 25 to 30% of total ODA in the 1980s, to less that 15% in the '90's. And as with so much of aid, it is not necessarily targeted on those countries which are most in need.

I have noted that OECD transfers to the rural people living in developing countries amount to around US$10 billion per annum, compared to over US$350 billion to farmers in member countries.

If we look at Africa, the situation is particularly dismaying. For instance, over the past 3 years, total World Bank/IDA funding for agricultural and rural development for Sub-Saharan Africa has amounted to less that US$250 million per year, or less than US$1.40 per malnourished person in the Region - a mere drop in the ocean of needs.

What is at the heart of this? Is it a lack of viable investment opportunities? Or the poor track record of agricultural projects in the past? Or a lack of confidence in institutional capacities and national policies for rural development? An urban bias in resource allocations? Or perhaps that it is so much easier to invest in other sectors, where the results do not depend on the decisions of vast numbers of widely dispersed small farmers exposed to the vagaries of nature?

My own experience in searching for international funding on behalf of FAO's Member Nations who wish to embark on large-scale programmes for improved food security is that it is extraordinarily difficult to persuade donors to make the necessary commitments in spite of the priority that all claim to give to poverty alleviation and sustainable natural resource management.

If we accept that many of the poorest countries - such as those in the Horn of Africa now being studied by a UN Task Force set up by the Secretary-General under my chairmanship - will continue to be heavily dependent on external financing if they are to make progress in reducing poverty and improving food security, what can be done to reverse recent trends and thereby ensure that adequate funding is available for well designed programmes for achieving the goals to which both developing and developed countries have subscribed?

4. Does it really make sense that the bulk of public international funding available for poverty alleviation continues to be in the form of loans?

It would seem self-evident that we would make more headway in achieving poverty reduction and food security goals through the use of grant transfers rather than loans, if only by providing a stronger incentive to developing country governments to allocate resources for these purposes. Many bilateral donors have shifted their development assistance from loans to grants. Many poor developing countries tell us they do not wish to use borrowed funds for food security programmes as they cannot even pay the salaries of their civil servants, yet they cannot mobilise the necessary funding domestically, with the result that programmes seldom get off the ground on the scale required. While, as we have already argued, investing in improved nutrition makes economic sense, it may not quickly be reflected if fiscal revenues and foreign exchange reserves are used to service debt.

Given the progress being made in debt reduction through the HIPC Initiative can't we focus national Poverty Reduction Programmes - which will make large calls on resources - on food security projects together with health and education activities, and would you also agree that the time has come to look seriously and urgently at options to generate sufficient grant funds for an all-out attack on poverty reduction and improved food security in the world's poorest countries? Can the amazing coalition of public support which has contributed so much to bolster international resolve to reduce debt not also mobilise political support for an end to the further use of loans for funding poverty reduction programmes?

5. Is long-term world food security being endangered by gross under-investment in global public goods and lack of effective regulatory instruments relevant to food production and sustainable natural resources use?

There has been encouraging recent experience in global cooperation in environmental areas - such as in reduced production of ozone depleting substances, in the creation of a Global Environment Facility and in the negotiation (albeit not ratification) of the Kyoto Protocol. But we continue to witness the degradation of natural resources - marine fisheries, forests, agricultural lands and waters - on a massive scale; progress in the elimination of major transboundary livestock diseases is painfully slow, and there are dangers that - if left to market forces - there will be relative under-investment in new agricultural production technologies relevant to developing country farmers. (One example of the latter would be under-funding of research in biological nitrogen fixation, in spite of its immense potential economic and environmental benefits, given the threats that success would pose to established oil and fertiliser industries).

What steps can be taken to raise the level of investment and effort in such global public goods to ensure the adequate safeguarding of the world's scarce productive resources and enhancing their productive potential for future generations? Can the model which is now being applied in the quest for new ways of coping with AIDS and malaria be adapted to reinforce the supply of public goods in agriculture?

Ladies and gentlemen,

These are some of the serious questions. I could go on and pose many others on which I would welcome your advice - for instance on the linkages between poverty, food insecurity, conflict, migration and global prosperity; or on the exciting options for improving the cost-effectiveness of technical cooperation through tripartite arrangements in support of South-South Cooperation. But I would prefer to benefit now from your thinking on the major issues which I have raised because how we deal with them can have a fundamental bearing on the livelihoods of many of our fellow beings.

I would also ask you and your colleagues in the World Development Forum to make a point of including the target set at the World Food Summit of halving the number of undernourished people by 2015 amongst the set of International Development Goals supported by OECD, the World Bank, the IMF and UNDP. It is important to remind all involved of the central role that food security plays in poverty alleviation.

I remain firmly convinced that it lies within our collective capacity to ensure a well-fed world; and that it is in everyone's interest - rich and poor - that malnutrition should be banished from the face of the earth, and that its resources should be husbanded in a sustainable manner. But we must do better than we are now doing, if we are not to be accused by future generations of failing to seize the opportunity of universal food security which was, for the first time in history, within our grasp. This will require boldness (including a willingness to question conventional wisdom), commitment and generosity which have so far eluded us.

I invite your comments and suggestions on the way forward.

Thank you very much.