Institutional Learning and Change Initiative of the CGIAR 1

The new dynamics of poverty and the role of science in

poverty alleviation

Javier M. EkboirILAC coordinator

April 2011

Institutional Learning and Change Initiative of the CGIAR 2

Content of the presentation

What is poverty alleviation?

The dynamics of poverty today

The role of research in poverty alleviation

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What is poverty alleviation?

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Measuring poverty alleviation

Poverty alleviation has two benchmarks:

Food security can be improved by higher yields of staples, lower food prices or higher incomes

Affording a healthy life can only be achieved with higher incomes

Achieving food security and affording a healthy life

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Where can these additional incomes come from?

People living with 2.5 US dollars/day are still poor but have more food security

Extreme poverty is now defined as living with less than 1.25 US dollars/day

If yields of staples increased threefold, small farmers would still be poor

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Where can these additional incomes come from? (2)

This is being increasingly recognized in the field of development

Higher yields of staples can reduce labor requirements and allow farmers to undertake new income generating activities

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Then

Does poverty alleviation mean increasing food security or affording a healthy life?

Can agricultural research help achieve food security?

Can agricultural research help poor households to afford a healthy life?

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The dynamics of poverty today

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Six trends are shaping the dynamics of poverty today

Globalization

Urbanization

Migration and remittances

Increasing number of poor live in middle income countries

Faster rate of technical change in agriculture

Foreign investment in agriculture

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Globalization is changing the markets for staples

Local and global markets for staples became more integrated after 1982

Profitability of small farms fell as well

Price of staples in areas that were close to import markets fell

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Globalization is changing the markets for staples

(2)Contrary to most expert forecasts, production of staples in small farms did not disappear

The price elasticity of food production in small farms is low and decreasing

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Globalization is opening high value (HV) opportunities

International markets for HV products expanded

Easier access to technical and commercial information

Easier access to equipment and inputs

But only a few farmers could take advantage of the new opportunities

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Urbanization

More than half of the world population now lives in urban areas

The “supermarket revolution”

Consumption patterns are changing

Domestic markets for agricultural products (staples and HV) are expanding

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How do small farmers participate in HV agricultural markets?

• HV export markets are mostly supplied by large farmers

• HV domestic markets are mostly supplied by larger, better endowed small farmers

• Few small farmers can survive in these markets

• Many small farmers participate as laborers

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Technical change and HV markets

Most of the technologies used in HV markets were developed by private firms, ARIs and NGOs

International and public research institutes contributed little to the process

Some international research institutes participated in the development of niche markets

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Technical change and HV markets (2)

But their effect on poverty was limited

Are these institutes still relevant?

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Migration and remittances

Local and distant labor markets also became more integrated

In 2006, 150 million international migrants sent home US$ 300 billion

Easier travel and improved financial services meant that people from rural areas could work in distant locations and send remittances back home

The average remittance in LA was 300 US$/month

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How are remittances used? (IFAD, IADB)

• Education and health (i.e., human capital that can be used in off-farm employment)

• Housing

• Only a small proportion goes to productive activities, including agriculture

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What is the role of agriculture in diversified rural livelihood

strategies?In some areas (LA), the proportion of income rural households derive from agriculture is less than 30%

In other areas (Africa, China) it is still more than 70%

Agriculture serves as a retirement strategy

But the trend is clear: the importance of agriculture as a source of income is falling for most poor rural households

Rural households are increasingly consumers and less producers

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Where do the poor live?

• In 1990 two thirds of the poor lived in low income countries

• In 2007 three quarters of the poor lived in middle income countries (especially China, India, Indonesia, Nigeria and Pakistan)

• The other quarter lives mostly in Africa

• The change occurred because several large countries grew very fast, increasing income disparities

• These countries are supposed to be able to take care of their poor

• Some are building their research capabilities but mostly outside agriculture

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The role of research in poverty alleviation

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What is an innovation?

Anything new successfully introduced into an economic or social process

The vast majority of researchers do not innovate

They invent

Inventions only become innovations when they are used in social or economic processes

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The importance of innovation capabilities

Not all people can innovate

There is a limit to how much they can be strengthened

Innovation and entrepreneurial capabilities are strongly determined by innate factors

They are weakly related to education

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Poor households are heterogeneous

Households with innovation capabilities who are operating commercially

Households with innovation capabilities who are not operating commercially

Households without innovation capabilities

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Households with innovation capabilities who are operating

commercially (5%)

They are integrated into innovation or market networks

Most of their technologies are imported by private firms, NGOs or farmer associations

Private standards are increasingly important and influence technical change

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Households with innovation capabilities who are operating

commercially (5%) (2)

International and public research institutes are marginal suppliers of scientific information for these markets

Public institutes should develop capabilities to research local issues that cannot be solved with foreign information

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Households with innovation capabilities who are not

operating commercially (5 to 10%)

Their most pressing need is not production techniques

They need social and human capital to integrate into innovation and commercial networks

Also need access to efficient output and input markets

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Households with innovation capabilities who are not

operating commercially (5 to 10%) (2)

Innovation brokers and NGOs are needed to help these farmers integrate into more dynamic markets

Because there are no universal recipes on how to do it, new social science research is needed

Researchers should help to understand how these households can be identified and how they can be integrated into innovation and commercial networks

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Households without entrepreneurial capabilities

(80 to 90%)These households have diversified livelihood strategies

Improved seeds and management techniques can increase food security

They need skills to make a living not as farmers

Researchers can provide new techniques for orphan crops, help to manage on-farm conservation, increase food security

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Recent trends in the organization of science

Research teams are increasingly inter-disciplinary, inter-institutional, short-lived

Research is increasingly conducted by networks of actors, often including non-researchers

Research is often not conducted in research laboratories, but in private firms and fields

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ConclusionsPoor rural households are becoming more consumers and less producers (importance of global food supply rising)

Increased productivity of staples will increase food security

But will have a limited impact on poverty

High value markets will reduce poverty mainly by creating employment in rural areas and mobilizing the rural economy

The major impact on poverty will come from migration and remittances

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Conclusions (2)Agricultural development requires new types of research

With new partnerships

International and public research institutes are not prepared for this type of research

Changing international and public research institutes is very difficult

Agricultural and research policies have to be targeted to specific groups of rural actors

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Thanks