Agricultural Policies for Poverty Reduction

A Synthesis

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This book synthesizes the findings of a longer work which sets out a strategy for raising rural incomes. It emphasises the creation of diversified rural economies with opportunities within and outside agriculture. Agricultural policies need to be integrated within an overall mix of policies and institutional reforms that facilitate, rather than impede, structural change. By investing in public goods, such as infrastructure and agricultural research, and by building effective social safety nets, governments can limit the role of less efficient policies such as price controls and input subsidies.


Input subsidies

Input subsidies have been suggested as a way of increasing agricultural production and thereby reducing poverty and improving food security. There has been a particular revival of interest in Africa, where sectoral performance has been relatively poor. The diagnosis has been as follows (see Wiggins and Brooks (2011) for supporting data). Food production in Africa has grown much more slowly than in Asia and Latin America. This has resulted in rising of cereals and other staples, and more people who are hungry and undernourished. Yields of staples have barely risen, largely since farmers have not applied fertiliser in sufficient amounts to take advantage of improved varieties. Farmers have not done so because inputs have been too costly and they have been too poor, with little or no access to credit. In order to break this impasse, it has been argued that it is necessary to subsidise the costs of inputs, thus creating a virtuous circle of higher yields, higher incomes, more food, and less hunger and poverty. Allied to this is the perception that a new generation of “smart” subsidies, such as those applied in Malawi, have managed to unlock this potential.


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