This paper examines the role of the agricultural sector in poverty alleviation and in the sustainable economic growth and development of the least developed countries (LDCs). It sets out to provide up-to-date information and to generate debate that will help forge stronger consensus on actions needed for agriculture to be accorded its rightful place in the LDCs.
Agriculture is the mainstay of the LDC economies, underpinning their food security, export earnings and rural development. Yet, LDC agricultural production for the domestic and export markets has lagged behind, with growth in per caput output declining in the 1990s. Slow production growth and sharp annual fluctuations in output have continued to be chronic problems for the LDCs, constituting the main causes of their persistent poverty and rising food insecurity. The proportion of undernourished in the total LDC population increased from 38 percent to 40 percent between 1969-71 and 1996-98, while the absolute number rose from 116 million to 235 million. As regards trade, the LDCs have continued to be marginalised from world agricultural markets, accounting for only 5 percent of global agricultural exports in the early 1970s but barely 1 percent in the late 1990s.
The poor performance of agriculture in the LDCs is related to the many internal and external difficulties that these countries face as they seek to develop this sector and achieve their objectives of improving food security and increasing export earnings. Their internal difficulties include low productivity, rigid production and trade structures, a limited skills base, short life expectancy and low educational qualifications, poor infrastructure, and inadequate institutional and policy frameworks.
At the same time, with the growing integration of markets from globalisation and trade liberalisation, their economies have to operate in an increasingly competitive external environment. They continue to export a narrow range of primary commodities that are highly vulnerable to instability of demand and deteriorating terms of trade. In addition, external assistance to agriculture in the LDCs has declined, with average annual ODA falling 20 percent from 1981-90 to 1991-99. Their inability to compete not only on world markets but also on their home markets is reflected in their rising food import bills.
Reversing this decline and integrating the LDCs into the world economy represent enormous challenges: overcoming marginalisation from global markets; adapting to technological change; and coping with a new institutional environment. But most of the LDCs have enormous untapped agricultural potential to meet these challenges, with considerable scope for more effective use of resources and higher productivity. What is needed therefore is a renewed focus on agricultural and rural development. Significant progress in promoting economic growth, reducing poverty and enhancing food security cannot be achieved in most of these countries without drawing more fully upon the potential productive capacity of agriculture and its contribution to overall economic development. With the support of their development partners, the governments of the LDCs may need to rethink their agricultural and rural development strategies if they are to achieve their social and economic objectives, including that of reducing the number of undernourished by 2015.
The paper highlights elements of a strategy for action by the LDCs - with the support of the international community - that will help them exploit their agricultural potential by strengthening their supply capabilities and competitiveness, and thus take full advantage of the trading opportunities inherent in the multilateral trading system. Progress is crucial on three fronts: raising and sustaining productivity and competitiveness; diversifying production and trade; and improving access to foreign markets.
Recommendations for key actions to spur agricultural growth in the next decade are put forward for both LDC governments and their development partners, drawing upon past experience and success stories, and taking into account emerging domestic and global challenges. The critical strategy must be to recapitalize agriculture, investing more heavily in this sector and in programmes to develop rural economic and social infrastructure. Public investment needs to be directed in particular towards promoting agricultural research and extension, improving access to financial services, providing investment incentives, and increasing access of the poor to support services and productive resources.
The paper proposes the following priority measures: