This paper analyzes the roles of agriculture in reducing poverty. Following the methodology proposed
by López (2002), three channels by which agricultural growth reduces poverty are tested: (i) its effects
on the real wage of unskilled workers (and/or its possible effect in reducing their unemployment); (ii)
the direct impact of agricultural growth on the income of poor farmers; and, (iii) the effect on real
food prices. The paper concludes that the pro-poor role of agricultural expansion is dramatic.
Agricultural growth tends to improve all measures of poverty significantly with head count falling
around 7.3% as a consequence of a 4.5% increase in agricultural output. An important result is that
while the economy-wide effects taking place via food prices and especially the labour market are
quantitatively important the direct income effects on farmers are almost negligible.
