Investments in agricultural research and development have high returns. They help farmers directly and benefit consumers by increasing overall food supply.
Photo: J. Boethling
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The basic role for agricultural policies consists of providing the core investments and services that farmers need to develop their operations into viable farm businesses. Focusing on the sector’s enabling environment benefits both agriculture and the wider rural economy, facilitating the construction of diversified rural economies. Such policies are likely to be more effective in the long term than subsidies or market interventions, which have the opposite tendency.

The agricultural sector has a central role to play in generating the income growth poor countries need to banish poverty and ensure food security. Yet for the best part of 30 years, agriculture was effectively discriminated against by developing country policy-makers and neglected by donors. One reason was low rates of perceived success, compared with investments in areas such as health and education. Another was the combination of falling real agricultural prices and, in successfully developing economies, a declining share of agriculture in GDP and employment. These changes were often misinterpreted as “declines”, when in fact they were signs of development success, with productivity growth bringing prices down and permitting labour and other resources to be allocated to other sectors. In recent years, thinking has come full circle, and the importance of investing in agriculture is now widely recognised. But, in re-emphasising the importance of agriculture, it is essential that policy-makers and donors do not go to the other extreme of prioritising agriculture exclusively, at the expense of balanced rural and economy-wide development.

Approximately two-thirds of the world’s poor live in rural areas, where agriculture is the dominant sector.

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