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Policies for enhancing access to productive resources and markets for inclusive growth and resilience – some
experiences and lessons
Bekele Shiferaw Partnership for Economic Policy
Strategies for Eradicating Poverty to Achieve Sustainable Development for All
Expert Group Meeting of the fifty-fifth session of the Commission for Social Development, United Nations, New York
1-3 June 2016
1
Agriculture key for poverty reduction: sectoral composition of labor and poverty across regions
Source: World Bank, Africa’s Pulse vol. 10. International Income Distribution Database. Notes: The numbers correspond to working age (15-65) population weighted averages of the most recent survey between 2002 and 2012. Average of 33 (20) SSA countries and 66 (41) other developing countries for total working (working poor).
59.2
35.0
8.7
24.1
32.1 40.8
Sub-Saharan Africa Other developingcountries
Total working
Agriculture Industry Services
78.2
59.7
5.4
18.5
16.4 21.8
Sub-Saharan Africa Other developingcountries
Working poor
Agriculture Industry Services
2
MACRO EVIDENCE: CROSS-COUNTRY REGRESSIONS ALSO SUGGEST THAT GROWTH PATTERNS MATTER FOR POVERTY REDUCTION
Africa: agriculture and services most poverty reducing
Source: World Bank, Africa’s Pulse vol. 10. Data from WDI (2014) on sectoral value added as a share of GDP and poverty data PovcalNet (2014) from 1990 to 2010. Note: The null hypothesis that the sectoral composition of growth does not matter is rejected at the 1% level for all the poverty measures (Headcount, Poverty Gap and Squared Poverty Gap). This is robust to the inclusion of controls .
Sub-Saharan Africa Other Developing Countries
VARIABLES Headcount Poverty Gap Sq. Poverty
Gap Headcount Poverty Gap Sq. Poverty Gap
Agriculture -0.668*** -1.025*** -1.322*** -1.224 -0.752 -2.411*
(0.209) (0.318) (0.417) (1.268) (1.799) (1.333)
Industry -0.086 -0.078 -0.115 -1.864*** -2.595*** -3.079*** (0.301) (0.371) (0.434) (0.483) (0.624) (0.787)
Services -0.963*** -1.233*** -1.493*** -1.881*** -1.899*** -1.195* (0.193) (0.254) (0.310) (0.507) (0.681) (0.683)
Observations 228 228 228 240 240 239 Countries 29 29 29 31 31 31 R-squared 0.280 0.309 0.319 0.367 0.344 0.377 Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1
Elsewhere: industry and services most poverty reducing
3
Access to productive assets and innovations for resilience
Access to Technologies (awareness,
knowhow, use)
Institutional innovations
(finance, markets,
insurance, social protection)
Access to land and other assets
(e.g. water, ecosystem services)
Resilience of farm households and agribusiness
to shocks
4
Access to integrated innovations for resilience
• Direct effect on sources of risk: − Production risk − Market risk
• Reduced vulnerability
• Increased livelihood resilience
• Stress tolerant modern varieties • Improved soil fertility and water
management • Crop diversification • Crop rotations • Legume intercropping • Conservation agriculture (reside
retention, reduced tillage, rotations)
• Policy and institutional innovations for better market access
Shiferaw et al. (2014) Weather and Climate Extremes 3: 67–79
5
1. Access to new technologies
Source: WDR 2008 – compiled from different sources 6
Maize yield (tons) trends in selected regions (2001 – 2010)
Source: USDA, 2010
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sub-saharan Africa with South Africa Sub-saharan Africa without South Africa
South Asia Latin America
China7
Adoption of sustainable agric practices – SAPs (% of households)
8
Malawi (N-892)
Ethiopia (N-898)
Tanzania (N-700)
Kenya (N-613)
Mozambique (N-510)
Maize-legume intercropping 30.7 19.3 66.2 71.9 68.6 Maize-legume rotation 40.1 32.7 32.0 83.2 7.8 Reduced tillage/zero-tillage 3.1 14.9 14.5 1.0 19.8 Crop residue retention 91.0 28.5 67.9 72.4 89.4
Fertilizer adoption 95.1 81.7 5.1 87.9 19.6
Manure adoption 33.8 58.2 32.5 65.3 9.0
Probability of joint adoption of SAPs (Ethiopia)
9
52.5
23.3
36.4
57.6 54.8 54.9
25.5
38
49.5
0
10
20
30
40
50
60
70
Seed only System diveronly
CT only Seed +system diver
Seed + CT Seed+systemdiv+CT
Systemdiv+Seed
CT+Seed CT+Systemdiver
Teklewold, Kassie, Shiferaw (2014) Ecological Economics 93: 85–93
10
Effect of adoption of integrated technologies on maize income (Ethiopia)
Shiferaw et al. (2014) Weather and Climate Extremes 3: 67–79
Why is adoption of SAPs low and slow?
• Conservation technologies – largely non-profitable in the short term – Labor intensive & largely
unproductive structural methods – Soil erosion control rather than
better water management and use – De-linked from income generation
and livelihood options • Profitable technologies: market
imperfections; policy and institutional failures – Information/extension, input markets,
credit, land policy, gender, etc – Poverty and time preferences
• Stepwise adoption of synergistic integrated innovations
11
What works for technology adoption in small family farms?
Shiferaw, B., Kebede, T., Kassie, M., and Fisher, M (2015): Agricultural Economics 46: 1–13
Shiferaw, B., Kebede, T.A., and You, Z. (2008): Agricultural Economics 39:1-15
Wagura, S., Kassie, M., and Shiferaw, B (2014): Food Policy 49: 117–127
12
Technology Adoption
• Drivers of variety adoption – High yields/low risks – Good market access – PVS with farmers – Seed availability and
affordability – Farmer awareness and
education • Key limiting constraints
– Information – Seed availability – Finance
Uganda: Groundnut
Tanzania: Pigeonpea
N % N % Want to adopt 777 82.2 135 56.3 • Adopted 555 58.7 81 33.8
• Lack seed supply 170 17.9 54 22.5
• Lack credit 52 5.5 0 0.0
Lack information 72 7.6 105 43.8
Do not want to adopt 96 10.2 0.0 0.00
Total Sample (N) 945 100 240 100.00 13
Prob of adoption of groundnut varieties in Uganda (Shiferaw et al. 2015)
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2
Prob
abili
ty o
f ado
ptio
n
Per capita farm size (ha)
Unconstrained: N=555
Credit constrained: N=52
Seed access constrained: N=170
Imperfect information: N=72
14 Shiferaw, B., Kebede, T., Kassie, M., and Fisher, M (2015): Agricultural Economics 46: 1–13
Gender issues and the unitary household model – who manages farm plots in Kenya (% of plots)
32.5 32.1
15
35.7 33.929.7 29.3
22
33
21.3
37.6 38.3
63
31.3
44.8
0
10
20
30
40
50
60
70
Maize (N=1497) Beans (N=1399) Pegion Pea(N=173)
Groundnuts(N=112)
Cow Pea (N=286)
Female Male Both equally
15
2. Access to markets
16
Market access in agricultural areas. Source: WDR 2008 – compiled from different sources
Market imperfections: Over extended supply chains and high marketing costs
Rural wholesaler
Transporter
Urban wholesaler
Processor
Cleaners
Rural assemblers
Brokers
Retailers
Consumer
Farmer Farmer
Segmented Segmented
17
1,710 2,070 2,520
3,150
4,050
05001,0001,5002,0002,5003,0003,5004,0004,500
0100200300400500600700800900
Buy
ing
pric
e
Tran
spor
t cos
ts
Buy
ing
agen
ts
Cle
anin
g, s
earc
h, p
acka
ging
, loa
ding
Sto
rage
cos
ts a
nd w
eigh
t los
s
Pro
fit
Bui
ng p
rice
Tran
spor
t cos
ts
Buy
ing
agen
ts
Cle
anin
g, s
earc
h, p
acka
ging
, loa
ding
Sto
rage
cot
s an
d w
eigh
t los
s
Pro
fit
Buy
ing
pric
es
Tran
spor
t cos
ts
Cle
anin
g, s
earc
h, p
acka
ging
, loa
ding
Sto
rage
cot
s an
d w
eigh
t los
s
Pro
fit
Buy
ing
pric
es
Tra
nspo
rt co
sts
Sto
rage
and
wei
ght l
oss
Cle
anin
g, s
earc
h, p
acka
ging
, loa
ding
Pro
fit
Nai
robi
con
sum
er p
rice
Rural Assembler Rural wholesaler Urban Wholesaler Urban Retailer
Pric
es (K
sh)
Cos
ts a
nd tr
ader
mar
gin
Build Up of Costs and Prices in Pigeonpea Markets in Kenya (KES/90 kg), 2007
Costs and margins Prices
Source: Shiferaw et al., 2008 18
Role of markets: Access • Transaction costs (TCs) of reaching
markets with outputs – The lower the TCs the more likely
farmers will adopt SAI • Transaction costs in input markets
(seed, fertilizer, etc) – Increase input prices – Reduce profitability of inputs – Labor-intensive intensification
• Improved market access is good for sustainable intensification – Improve supply of inputs at
competitive prices – Reduces self-sufficiency – Creates incentives for use of
commercial inputs
57.5
10.0 10.2
7.4
25.6
74.2
35.1
64.4
15.5
0
10
20
30
40
50
60
70
80
90
100
Malawi Ethiopia Zambia
Farmgate Village market Main/district market
19
Malawi: Maize Prices by point of sale (MK/kg)
31.4 31.3
35.4
32.8
29
30
31
32
33
34
35
36
Farmgate (N=441) Village market (N=57) Main/district market(N=269)
Total (N=767)20
Ethiopia Price of wheat by point of sale (ETB/100kg)
422.2
441.8 443.6
441.7
410
415
420
425
430
435
440
445
Farmgate (N=27) Village market (N=97) Main/district market(N=284)
Total (N=408)21
Zambia Price of maize by point of sale (ZMK/kg)
2,256.3
2,509.3
2,546.7
2,489.2
2,100
2,150
2,200
2,250
2,300
2,350
2,400
2,450
2,500
2,550
Farm gate Local market District market Total 22
Policy: Farmer organization and collective action
• Collective action crucial when: – Landscape-wide interventions – Resource use interdependence
(reciprocal externalities) – Remedy market imperfections
• But producer organizations can be costly and difficult to organize – Elite capture – Conflicting interest groups
• External intervention and supportive policies may be needed to – Organize users – Define ‘rules of the game’ – Ensure equity in benefit and cost
sharing
Buyer Season Point of Sale
Price (Ksh/kg)
PMG price advantage
(%)
PMG Soon after harvest
Farmgate
29.81 24.00
Broker 24.04
PMG 5 km
29.93 23.88
Broker 24.16
PMG 4–5 months after harvest
Farmgate
31.16 22.72
Broker 25.39
PMG 5 km 31.29 22.62
Broker 25.52
PMG = Producer marketing groups
Shiferaw et al. (2009) Af. J. of Agricultural and Resource Economics 3 (1): 1-19
23
Policy: Infrastructure
24
3. Access to finance
25
Access to finance in Bangladesh M. Jahangir Alam Chowdhury, Shabaz Amin and Tazrina Farah (2016)
• Only about 35% of women (aged 15 and over) participate in the workforce compared to 82% of men (Labour Force Survey 2013)
• Access to capital has been recognized as an important factor for improved household welfare.
• Formal sector loans – collateral requirements, credit rationing and lengthy bureaucratic procedures prevent most poor households from obtaining loans.
• Testing if microcredit programs through microfinance institutions (MFIs) would work to enhance access to finance and entrepreneurship.
26
Effect of microfinance for women in Bangladesh
• Access to microcredit increases self-employment in micro-business – 3.5% of women who have
access to microcredit are entrepreneurs, whereas only 1.3% of women who do not have access are entrepreneurs
– 39% of men who have access to microcredit are entrepreneurs, whereas 20% of men who do not have access to microcredit are entrepreneurs
• Likelihood of women becoming entrepreneurs increases by 4% when the women are members of MFI microcredit programs, but by 24% for men
• 1% increased in size of the loan increases prob. of owning a micro business by 3% (but by 14% for men)
• Female loans also increase male entrepreneurship in the household
27
Effect of business training on female entrepreneurship: experimental evidence from Peru (Valdivia, 2014)
• Millions of women in self-employment but with low productivity
• How to increase the profitability and growth potential of businesses owned by women for poverty reduction and gender equity.
• Evaluates the impacts of a business development services program serving female micro-entrepreneurs in Lima using RCT with two treatment groups: – One received only time intensive general training (GT)
delivered by experts, – Second group received GT plus technical assistance and
advisory services (GA+TA) 28
What works Effect of business training on female entrepreneurship:
experimental evidence from Peru (Valdivia, 2014)
• All treated showed increased sales revenues and self-reported adoption of recommended business practices, although timing differed.
• Full treatment (GT+TA) reported increased sales 4-7 months after training
• Women in GT only group were able to catch up about a year later.
• All those that were offered training increased business sales by more than 15%, about two years after the end of the training.
• Sales revenue effects from adoption recommended business practices
• Slow take up of the training may suggest some space to improve recruitment and delivery of good general business practices.
29
4. Access to land resources • Land is the key productive asset for rural households –
fundamental for livelihoods and poverty reduction • Shrinking size of most smallholder farms over time with rising
population pressure • Leading to more continuous cultivation of fields, contributing to
land degradation and unsustainable forms of agricultural intensification
• The rise of land rental and purchase markets and changes in land allocation institutions
• Limited access to irrigation and predominance of rainfed systems in SSA and depletion of groundwater resources in South Asia
• Challenges of agricultural transformation in Sub-Saharan Africa 30
1960-69 1970-79 1980-89 1990-99 2000-06
Ethiopia 0.51 0.45 0.36 0.25 0.20
Kenya 0.46 0.35 0.28 0.23 0.22
Mozambique 0.39 0.37 0.30 0.25 0.31
Rwanda 0.22 0.21 0.20 0.16 0.20
Zambia 1.37 1.07 0.90 0.78 0.68
Zimbabwe 0.73 0.66 0.58 0.53 0.43
Source: FAO Stat database : www.faostat.fao.org
Cultivated Land per Agricultural Person (ha)
31
Farm Size Distribution: Small Farm Sector in Africa
012345678
He
cta
res
bottom25%
2nd 3rd top 25%
RwandaEthiopia
MozambiqueKenya
Zambia
Rwanda Ethiopia Mozambique Kenya Zambia
Source: Jayne, Mather, Mghenyi, 2006
Rwanda – land scarcity
32
Ways to access land • Customary rights – based on affiliation to a given community • Land markets – purchase where land markets work • Land rental markets – Sharecropping or fixed rent tenancy • Lease market - through lease from state or owner • Land reform – reallocation through national governments,
often as a result of policies to correct historic injustices and to distribute land more equitably.
• Inheritance - gaining access to land as an heir. • Squatting illegally on land (e.g. open access or state property) • Claiming through “development” – e.g. investments or
clearing forests from open access or state owned land
33
Land rights may differ depending on property rights
• use rights: rights to use the land for grazing, growing subsistence crops, gathering minor forestry products, etc.
• control rights: rights to make decisions how the land should be used including deciding what crops should be planted, and to benefit financially from the sale of crops, etc.
• transfer rights: right to sell or mortgage the land, to transfer the land to others through market and non-market mechanims
34
Policy: Land reforms • Land redistribution, titling, registration and certification
– Radical change in land policy – Redistribution (e.g. Ethiopia) improved equitable access to land – Registration and certification also improve security of tenure
• More secure property rights and removal of restrictions on land markets have the potential to improve access and create both efficiency and equity benefits, but there are high risks of elite capture of large land areas with inefficient and inequitable outcomes.
• Success depends on political economy of land governance (transparency and accountability, equity, inclusion, community participation, land policy formulation processes) – Sequencing of land reforms – Land policy, Land laws – Land certification - youth, women, pastoralists – Good governance and administration – Rent seeking and elite capture
35
Land certification – need for more evidence
• Would improving land governance and registration enhance investments by small and medium farmers?
• Would certification per se improve equitable access – women, pastoralists, youth?
• Would certification for use rights improve security and rental markets – e.g. Ethiopia, but does not prevent fragmentation or increase sustainability investments?
• Lack of spatially explicit, reliable and current registration data for transferability and use of land as collateral
• Lowering costs of registration, transfer taxes and dispute resolution and market based transfers for equity and efficiency
36
Summary Policies for Land Governance
1. Understanding the landscape, diversity and the mixed story – e.g., growing land scarcity with narrative of land abundance in Africa
2. Current shift in policy to medium and large commercial farms (e.g. ‘land grabs’) reduced access to land by smallholders
3. Lack of clarity on the goal of land policy - disconnect and conflicts between equity, efficiency and growth objectives
4. Lack of models and evidence on linking large private investments and agribusiness with smallholder farmers (contract farming, out growers, finance, inputs, etc)
5. Need to vary land policy across countries based on land availability, customary rights, poverty reduction, food security and sustainability
6. Need for broad set of policies to address land scarcity, unemployment and insecurity of rights (e.g. non-farm options to curb migration and reduce youth unemployment)
37
Thank You
38
Challenges for future: Population growth
0
1000000
2000000
3000000
4000000
2010
2013
2016
2019
2022
2025
2028
2031
2034
2037
2040
2043
2046
2049
2052
2055
2058
2061
2064
2067
2070
2073
2076
2079
2082
2085
2088
2091
2094
2097
2100
Population projections Medium fertility scenario
East Asia & Pacific Europe & Central Asia Latin America & CaribbeanMiddle East & North Africa South Asia Sub-Saharan Africa
Source: adapted to World Bank regions using data from United Nations, Department of Economic and Social Affairs, Population Division (2013). 39
Conclusion Access to technologies
• Smallholders face major challenge in adopting and adapting SAI – Weak extension and inadequate
information – Markets to access key inputs/technologies – High input costs and credit constraints – Poor market linkages and seasonality of
prices – Weak rural institutions
Policies and institutional innovations
– Improve access to information (extension) – Improve markets and value chains to
enhance access to technology and inputs that make SAPs attractive
– However, market access is necessary but not sufficient for SAI
– Complementary policies to remedy market failures and synergistic use of technologies
– Targeted and time-limited subsidies with high net social benefits can induce SAI
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
Area
har
vest
ed a
nd P
rodu
ctio
n
Yiel
d
Area, production and yield of maize in Ethiopia (1961 - 2011)
Yield (tonnes/hectare)Area Harvested (million Ha)Production (million tonnes)40
Smallholder Market Participation
18
46
32
4
0
10
20
30
40
50
% h
ouse
hold
s
Sell only Buy only Both NeitherSource: ICRISAT Data, 2005, Eastern Kenya (N=400)
41
Property rights to land • Common property – regulated access by
community • Open access – unregulated access to all • Private ownership (freehold with title deeds) • Leasehold or usufruct property – leased or use
rights on state owned land with limited rights for transferability
• State property (e.g. wildlife reserves, parks, lakes, rivers, forests, etc.)
42
Land certification – does it work? • In Ethiopia, radical land reform (1975) - all land is state owned and farmers have
use rights only
• Holden et al. (2009) use three rounds of panel data to assess whether certification has resulted in more investment and higher land productivity in the Tigray region in Ethiopia, seven years after land certificates were received.
• After controlling for endogeneity in the allocation of certificates, they find that receipt of land certificates has resulted in better maintenance of soil conservation structures and more planting of trees on certified land in Tigray. They also find that land productivity has increased 40–45% on certified land, a sign of land use intensification.
• Similarly, Deininger et al. (2011) find that land certification has enhanced tenure security and investment in the Amhara region in Ethiopia. The strong observed effects in Ethiopia are likely to be due to high tenure insecurity invoked by the previous radical land reform, with weak user rights and frequent land redistributions.
43