Hungry for change: LDCs need new policies to strengthen agriculture, UNCTAD report says

Last year´s food crisis highlighted weaknesses of a farming sectorthat is crucial to LDC economies

Geneva, 16 July 2009 -- The world´s 49 least developed countries (LDCs) must raise their investments in agriculture to reduce hunger and prevent future food crises, a new UNCTAD report says. It urges LDC governments to take steps leading to better crop yields, more local support for farmers (including women), more security for farmers´ rights to land, and better regional links that can boost agricultural markets.

Of the 31 countries worldwide currently facing food crises, 21 are LDCs. An estimated 1 billion people face chronic hunger worldwide. Inadequate investment levels today will mean low productivity tomorrow, the report says. With mounting demand for food, particularly in fast-expanding urban areas, LDCs risk being trapped indefinitely in a vicious cycle of poverty, hunger, and inadequate growth. Last year´s food crisis -- spurred by a tripling of prices for some staple crops -- exposed economic and political threats that could become the norm in many LDCs without a change of course. To redress shortcomings, LDCs must give much greater priority to agriculture in government policy, UNCTAD´s Least Developed Countries Report 2009(1) recommends.

The report, released today, is subtitled The State and Development Governance.

LDCs still rely heavily on agriculture for economic growth, employment, and export earnings. Two thirds of their labour force works in agriculture, and agriculture generates 28% of LDCs´ gross domestic product. Three quarters of the poor in these nations live in rural areas where farming is often the only means of livelihood. With the LDC population forecast almost to double -- from 670 million in 2000 to 1.3 billion by 2030 -- reforms are vital, as there will be many more people to feed, the report says.

LDCs currently are in a vicious circle of deficient food production, subsistence agriculture, low levels of productivity, declining investment, increasing scarcity of land and water, and rising rates of urbanization,. And agriculture will be on the front line of a series of interacting long-term challenges, including climate change, natural resource depletion, poverty, biofuel production, and population pressure. The study warns that LDCs are likely to suffer the greatest negative impacts from climate change. It says they risk higher levels of food insecurity in the future.

Breaking the cycle will require a more active government role than has been the case over the past 30 years. LDCs must be able to generate a growing agricultural surplus that is critical both to agricultural and non-agricultural development. Agricultural productivity must be improved, and steps should be taken by LDCs to diversify their economies so that there is less dependence on farming, the report says. It also is necessary to link economic sectors more effectively and to create non-agricultural employment opportunities. The report calls for a structural transformation of the agricultural sectors of LDCs to address such long-term challenges. Among its recommendations:

• 1. Increase investment in agriculture. LDCs not only have to reverse a cyclical downturn in investment in the agricultural sector but also mobilize new resources to foster long-term productivity growth. Increased public and private investment is needed to strengthen farmers´ capacities. Such investment also should foster the uptake of new technology and innovations; develop infrastructure (roads, warehouses, wholesale facilities, etc.); and create an enabling framework for rural development and poverty reduction. The development of a dynamic private sector in LDC economies which includes farmers and their organizations, and public-private partnerships, will be vital for boosting investment in productive sectors. Most of this investment will need to come from public sources, but contributions also will be needed from the private sector, non-governmental organizations (NGOs), and international foundations. Pro-investment macroeconomic policies will need to be combined with improved access to credit on affordable terms, particularly for small- and medium-sized farmers (see UNCTAD/PRESS/PR/2009/030).
• 2. Promote technological change to boost farm productivity. Governments need to take measures that improve small farmers´ access to agricultural inputs such as seeds, fertilizers and pesticides. After years of neglect of such research and development (R&D), LDC governments should actively promote innovation in technology through supporting R&D institutions to achieve higher farm yields. Increased efforts should be made to spread knowledge about effective farming and effective farm management. And information on innovative approaches and successful experiences in farming should be shared more effectively.
• 3. Enhance local agricultural capacities and institutions. Governments should encourage the involvement of strengthened producer and civil society organizations such as farmers´ cooperatives to manage agriculture and to respond to developments in farming. Governments also should recognize the importance of women, who play a major role in farming in LDCs. Another necessary step is better protection of smallholder farmers´ rights to land and other assets. And in the long term it is important to promote sustainable use of the natural resources of LDCs.
• 4. Support regional integration of LDCs. The report calls for a substantial investment in establishing effective economic links between LDCs and neighbouring countries. That can invigorate regional markets for farm goods. LDCs also should strive to ensure that these regional links have a significant impact on the livelihoods of rural populations. Currently rural farmers and their families are often disconnected from key regional markets.