IFAD’s Operational Program during the Eighth Replenishment Period

Kevin Cleaver Assistant President, PMD

22-23 April 2008

8th Replenishment

Responding to the “triple scourge” will be the focus of IFAD’s operations from 2010-2012

Rising global food prices, caused by a rapidly rising global and local demand for food, combined with a slowing of the increase in supply (from global food glut to global deficit)

Supply problems due to - lack of agriculture investment and consequent reduction in productivity growth

- ODA going to agriculture declined from 18% in 1979 to less than 3% last year - Cereal yields increasing at 1-2% p.a now, compared to 3-6% pa in the

1960s -1980s (April 2008, Economist)- fuel and input price increases- land degradation and climate issues- substitution of bio-fuels for food

Rural poverty and hunger is increasing in much of sub-Saharan Africa and some other low income countries in Latin America and Asia

- 800 million hungry; 1 billion people living on less than $1 per day

Climate change will exacerbate the slow food production response, and exacerbate rural poverty in many poor countries

The agriculture price issue

Data quoted in April 2008 Economist:

- Cereal import bill forecast to rise 56% in 2008 (FAO)

- April Economist estimates food purchase spending power down 20% in 2008

- 48 countries have imposed price controls, consumer subsidies, export restrictions, lower tariffs on food (World Bank)

January 2007 index

April 2008 index

Rice 100 280

Wheat 100 180

Maize 100 150

The green revolution of Asia and Latin America did not come to Africa because

- Less government taxation of agriculture in Asia and Latin America than in Africa

- More government resources allocated to agriculture in Asia and Latin America

- Better local governance in Asia, reflected in better performing programs

- Green revolution technology focused more on cereal monocultures and higher potential areas, especially those suitable for irrigation; an Asian advantage

- Accompanying investment climate, infrastructure more poorly developed in Africa

- Civil strife more common in Africa

- In some African countries more difficult natural constraints; sustainability of investments is most difficult

Expansion of IFAD’s operations would help confront the problem of declining ODA and investment in agriculture and rural development

With proposed replenishment, program would be about $ 3 billion for 2010-2012

- Compares with $ 2 billion during the 2007-2009 period

IFAD plans to match its own resources with equal cofinancing, helping other donors re-engage with agriculture

Compared to demand for funds for agriculture and rural development, IFAD plus cofinancing is small

- UN MDG1 working group estimates aid needs for African agriculture and rural development alone at $7 to $8 billion p.a.

IFAD’s focus on the poorest regions and poorest people addresses the most vulnerable and neglected

IFAD allocates 40-50% of its resources to sub-Saharan Africa

IFAD’s program tailored to address each of the causes of inadequate green revolution take-up in Africa, through

- a combination of investment, grants to NGOs, agriculture research, and policy advice based on IFAD and international experience

And by partnering with NEPAD, African Development Bank, World Bank, FAO, WFP, African governments and key bilaterals to help them re-engage in agriculture

How? IFAD approaches include:

Empowerment and capacity building for farmer organizations, Water User Associations, herders associations, trade associations, women’s groups

National and international agriculture research; is a co-sponsor of CGIAR

Supports agriculture services (agricultural extension, veterinary, planning, standards…) targeted to productivity improvement*, and with special focus on women

Land tenure security and redistribution (community based land reform, land registration and titling)

Nutrition and household food security interventions to address vulnerability, including that brought on by climate change* and price increases

Rural finance

Agro industry, marketing and input supply by private sector, cooperatives, governments (includes seed and fertilizer)

Rural roads and other infrastructure

IFAD approaches continued

Small scale irrigation and drainage, and rural water*

Recovery and rehabilitation of farmland*

Manages Global Environment Fund resources, focusing on investment in protected areas, combating soil degradation and desertification, adaptation to climate change*

Conservation of coastal marines, small scale local fisheries, aqua-culture

Supports cross border initiatives, for example NEPAD in Africa

Agriculture policy

All of the above often through territorial development, through sector wide approaches or through regional or national projects

(* denotes relevance for adaptation to climate change)

Can IFAD deliver quality? IFAD’s internal operational improvements are delivering quality

Country strategy and project design processes are results-basedExpanded and better managed IFAD country presence, to facilitate policy dialogue, donor coordination, search for innovation and knowledge-sharing based on field experience

IFAD now supervises its own projects, with a view to problem-solving

IFAD has results targets and a monitoring and reporting system for resultsIFAD partners well with other donors, foundations, and private sector, as well as with in-country institutions and farmers groups; getting good grades for adherence to Paris agenda

- Co-chairs Global Coalition for Rural Development- Co-chairs Reform Program of CGIAR- Sponsors Farmer associations globally, regionally and nationally- Co-chairs International Land Coalition- Hosts Global Mechanism for fight against desertification - Executing agency for Global Environmental Facility- Indigenous peoples forum

Mechanism in place for deepening reforms

Expected impact of IFAD’s program

Expanded farm and non-farm rural income is the main solution to rural poverty and hunger (migration is only a partial solution)

- IFAD’s 2010-2012 program will benefit directly about 50-60 million poor rural people (compared to 800 million hungry), by expanding their food production and income

Expanding food and agriculture production is the medium-term solution to increasing food prices and food scarcity

- number of indirect urban and rural beneficiaries will be larger, due to food availability, employment effect, and food price effect

Adaptation to climate change will be through- Agriculture services targeting adaptation of agriculture to climate change- Water and irrigation infrastructure to adjust to vulnerabilities brought

on by climate change- The vulnerability of the rural household to climate change will be addressed

through income generation, food security, nutrition, and insurance mechanisms- Forest components and land reclamation will help mitigate climate change

Agricultural growth in sub-Saharan Africa already reflecting changed situation: now better than in rest of world

(FAO Summary of World Food and Agriculture Statistics, 2005)

Agricultural GDP growth

1983-1993(% p.a.)

1993-2003(% p.a.)

World 2.2 1.7

Developing countries

3.1 2.5

Sub-Saharan Africa 2.9 3.9