Agriculture can be the main source of growth for
the agriculture -based countries and can reduce poverty and
improve the environment in all three country types, albeit in
different ways. This requires improving the asset position of
the rural poor, making smallholder farming more competitive and
sustainable, diversifying income sources toward the labor market
and the rural nonfarm economy, and facilitating successful
migration out of agriculture.
Increase access to assets
Household assets are major determinants of the
ability to participate in agricultural markets, secure
livelihoods in subsistence farming, compete as entrepreneurs in
the rural nonfarm economy, and find employment in skilled
occupations. Three core assets are land, water, and human
capital. Yet the assets of the rural poor are often squeezed by
population growth, environmental degradation, expropriation by
dominant interests, and social biases in policies and in the
allocation of public goods.
Nowhere is the lack of assets greater than in
Sub-Saharan Africa, where farm sizes in many of the more densely
populated areas are unsustainably small and falling, land is
severely degraded, investment in irrigation is negligible, and
poor health and education limit productivity and access to
better options. Population pressure together with declining farm
size and water scarcity are also major challenges in many parts
of Asia. Enhancing assets requires significant public
investments in irrigation, health, and education. In others
cases, it is more a matter of institutional development, such as
enhancing the security of property rights and the quality of
land administration. Increasing assets may also call for
affirmative action to equalize chances for disadvantaged or
excluded groups, such as women and ethnic minorities.
Land.
Land markets, particularly rental markets, can
raise productivity, help households diversify their incomes, and
facilitate exit from agriculture. As farmers age, as rural
economies diversify, and as migration accelerates,
well-functioning land markets are needed to transfer land to the
most productive users and to facilitate participation in the
rural nonfarm sector and migration out of agriculture. But in
many countries, insecure property rights, poor contract
enforcement, and stringent legal restrictions limit the
performance of land markets, creating large inefficiencies in
both land and labor reallocation and reinforcing existing
inequalities in access to land. Safety nets and access to credit
are needed to minimize distress land sales when farmers are
exposed to shocks.
Land reform can promote smallholder entry into the market,
reduce inequalities in land distribution, increase efficiency,
and be organized in ways that recognize women’s rights.
Redistributing underutilized large estates to settle
smallholders can work if complemented by reforms to secure the
competitiveness of beneficiaries something that has been
difficult to achieve. Targeted subsidies to facilitate
marketbased land reform are used in Brazil and South Africa, and
lessons must be derived from these pioneering experiences for
potential wider application.
