© 2003 by CRC Press LLC Part Four Poverty and Equity © 2003 by CRC Press LLC Global Food Security, Environmental Sustainability and Poverty Alleviation: Complementary or Contradictory Goals? William B. Lacy, Laura R. Lacy and David O. Hansen* CONTENTS Introduction Dimensions of Food Security World Food Supplies Environmental Degradation and Poverty Poverty Alleviation: A Complementary Goal Agricultural Growth and Equity Agricultural Research and Technology Infrastructure and Policy Community Empowerment Conclusion Acknowledgment References INTRODUCTION One of the most significant challenges facing humanity during the 21st century will be how to pursue three key goals simultaneously: global food security, environmental * The first two authors are at the University of California, Davis, and the third author is at The Ohio State University. 22 © 2003 by CRC Press LLC sustainability and poverty alleviation. These goals, which have been described as the critical triangle (Vosti and Reardon, 1997), are not necessarily or always com - plementary. Thus, achieving them simultaneously cannot be taken for granted, par- ticularly in the short term. Hundreds of millions of people labor to produce food from already depleted soils, degraded hillsides, tropical rain forests and dry areas that are threatened by desertification. Their efforts further harm the environment, thereby worsening their poverty. This contributes to a vicious cycle and jeopardizes their precarious food security. The three goals of the critical triangle are inextricably linked and successful pursuit of each will require policies, institutions and technol - ogies that make them more compatible. DIMENSIONS OF FOOD SECURITY The first and continuing challenge is food security, or how to produce and ensure access to enough food to feed the still-growing population. Food security is a necessary, although not sufficient, condition for the well-being of a society. Recent archeological evidence demonstrates that ancient civilizations rose and fell based on their ability to maintain a secure, stable food supply. Conceptually, the problem of food security has been with us at least since Malthus. In the previous century, the frightening specter of population demand’s outstripping the food supply arose at least once each decade. Food security has been defined in many ways. For example, the Food and Agriculture Organization’s World Food Security Compact (1985) states that the “ultimate objective of food security is to ensure all people, at all times, are in a position to produce or procure the basic food they need and that it should be an integral objective of economic and social plans.” For the purpose of this chapter, food security is viewed broadly to include at least three important dimensions: availability, adequacy and accessibility (Lacy and Busch, 1986). Some view availability simply in terms of sufficient production. Availability should encompass the concept of food sufficiency to sustain human life for the entire population in the short, as well as the long term. Availability also implies that food production and supply are dependable in the face of possible production shortages due to general causes such as climatic changes, natural disasters and civil disturbances. In addition, availability concerns go beyond the immediate feeding of the population to include issues of natural resource preservation, regen - eration and sustainability for future generations. Consequently, embedded in this concept is concern for the long-term ecological balance of natural systems. Food security requires that concerted attention be given to conservation and enhancement of the natural resource base for food production. The dimension of adequacy refers to differing nutritional needs of various segments of the population. It can be conceptualized in terms of balanced diets and having a variety of foods throughout the year. Also, an adequate food supply must include concern for the long-term health effects of continuous, and largely unmon - itored, changes in the types and supply of food available to a population. A third essential element in food security is accessibility. It encompasses not only transportation and marketing, but also the means by which food is acquired. © 2003 by CRC Press LLC Producing an adequate food supply is not enough. Consumers must be in a position to purchase or obtain the necessary food. For people in poverty, markets are not an effective means for distributing food. Food security for the poor requires a careful examination of prevailing societal values and commitment to providing all its mem - bers with fair access to the food supply. WORLD FOOD SUPPLIES Despite frequent concerns about famine and starvation, the performance of our food and agricultural system has been rather phenomenal over the past 200 years. During this period, there has been a sixfold increase in the world’s population. At the same time, global agricultural production has generally kept pace. Falling real grain prices during most of the 20th century are evidence of this remarkable success. Factors contributing to this increased food production have changed over time. During the 19th century, increased output was achieved primarily by expanding the land area under production. This additional land was mainly located in newly settled areas of the Americas and Australia. During the 20th century, new mechanical, chemical and biological technologies produced a science-based agriculture that led to dramatic increases in yields in certain parts of the world and to substantial increases in food production. For example, from 1960 to 1990: (1) global cereal production doubled; (2) per capita food availability increased by 37%; (3) per capita calories available per day increased by 35% and (4) real food prices declined by 50%. Even in countries like India, where severe famine was predicted, food grain production increased from 50 million tons in 1947, at the time of independence, to 200 million tons in 1998–99. Agricultural production in the decade ending in 1991 increased by 125% and India’s per capita food production rose steadily during the later part of the 20th century despite significant increases in population during that period (McCalla, 2001). These increases in global food production were not, however, common to all regions in the world. Significant regional differences have occurred. In sub-Saharan Africa, for example, per capita food availability decreased between 1960 and 1990, with a 1% annual decline of annual grain output during that period. Droughts during the mid-1980s have resulted in approximately one fifth of Africa’s people being sustained by imported grain. ENVIRONMENTAL DEGRADATION AND POVERTY At the same time, significant environmental degradation is occurring worldwide, in part due to the use by farmers of inappropriate agricultural practices. Two billion hectares of land, an area the size of North America, have experienced severe envi - ronmental damage in the past 50 years, with 5 to 10 million hectares worldwide becoming unproductive every year because of severe degradation. In sub-Saharan Africa, natural resource degradation is advancing at a startling rate, particularly in the form of desertification in dry land areas, soil erosion and deforestation on hillsides, biodiversity losses, increased siltation and flooding and loss of soil fertility in many cropped areas. Some estimates suggest that land degradation affects two © 2003 by CRC Press LLC thirds of the total cropland of Africa and one third of the pastureland. Much of this degradation is irreversible, or can be reversed only at very high cost. Food security and agriculture also depend on genetic diversity and water resources. However, it is estimated by some scientists that 40% of the world’s species could be extinct within 25 years. Furthermore, increased intensification of agricul - ture, which has resulted from expanded use of irrigation, has been a major factor in increasing production in certain areas. Nonetheless, these productivity increases may be difficult to sustain because of increased competition for water and salinization and waterlogging of irrigated soil that result in yield stagnation or land’s being removed from production. Equally important to considerations of environmental sustainability for food security is the extent and depth of poverty in both the developed and developing world. Globally, 1.3 billion people, nearly a quarter of the world’s population, live in absolute poverty. They earn the equivalent of only US$1 per day per person or less, and must use this meager income to meet their food, shelter and other needs. Not surprisingly, hunger, malnutrition and associated diseases are widespread. More than 840 million people lack access to sufficient food to lead healthy, productive lives. Every second person in Africa and sub-Saharan Africa is absolutely poor. In most of the developing world, poverty is a rural phenomenon. Approximately 70% of the poor live in rural settings and a majority of these individuals are involved in agriculture. In many sub-Saharan African and Asian countries, over three quarters of the poor live in rural areas. Latin America’s higher urbanization rates have led to a greater prevalence of urban poverty, but, even in this region, the majority of the poor are rural. Literally millions of small subsistence farmers live in poverty. Even when the rural-based poor are not engaged in their own agricultural activities, they rely on nonfarm employment and income that are in one way or another linked to agriculture (McCalla, 2001; Pinstrup-Andersen and Pandya-Lorch, 1995). These conditions dictate that policy makers around the world and in particular in developing countries, are faced with a need to simultaneously meet three inter - related and challenging goals — global food security, environmental sustainability and poverty alleviation. Agriculture and food production must continue to expand to keep up with rapidly increasing populations. At the same time, this growth must not jeopardize the underlying natural resource base but instead should enhance its sustainability. This process must also be equitable if it is to help alleviate poverty and food insecurity. POVERTY ALLEVIATION: A COMPLEMENTARY GOAL Poverty alleviation is an essential component of any successful strategy to achieve food security and environmental sustainability. Poverty undermines development and enhancement of the environment, threatens a steady and reliable food supply, destabilizes communities and regions and ruins lives. Poverty-alleviation strategies, policies and activities need to be undertaken with a clear understanding of (a) the characteristics of the poor, (b) the causes of their poverty, (c) where they are located and (d) their movement into and out of poverty. This approach requires a sound understanding of the multifaceted nature of poverty. Being impoverished may include © 2003 by CRC Press LLC inadequate access to food, housing, clothing, education, meaningful work and health care, as well as a general diminution of the quality of life. Alleviating poverty is a highly complex process that requires multiple approaches and policies. It varies by location and culture. While opportunities for progress on these three goals depend considerably on specific social, economic and agro-ecological circumstances, much more remains to be learned about how these three critical and interrelated goals are linked and about the factors that condition these relationships. Links between poverty and the environment are often more complex than previously described. For example, many farmers are poor because they do not own farmland. They depend on the commons (open-access land such as rain forest) for their livelihood. Barring access to the commons will reduce environmental degradation but hurt the poor. Another example of how complex these relationships are can be seen in the use of agricultural chemicals and intensive grazing systems for animals. Alleviation of poverty through these methods may not prevent degradation and may even increase it, because richer farmers tend to use more agricultural chemicals than do poorer ones and rich landholders often hold a greater proportion of wealth in cattle, thereby creating pressure to turn forested land and hillsides into pasture. Many factors affect the relationship among these three goals. Policies, technol- ogies, institutions, population, agro-ecology and climate change can all modify the links among environmental sustainability, food security and poverty alleviation by affecting the choices of rural households and communities and the context in which these choices are made. The interrelationship between natural-resource management, agriculture and poverty alleviation is illustrated by new research projects on gender, poverty and water management recently initiated in six countries by the International Water Management Institute (Cleaver, 1998). This gender, poverty and water initiative explores how irrigation development, improvement and reform can result in gendered poverty alleviation in rural areas of the developing world. The central assumptions are that water and irrigated land are major assets with which poor women and men can improve their well-being and that agencies can alleviate poverty more effectively by targeting their support to the poor. Such inclusive intervention methods primarily strengthen the rights to water and irrigated land of poor people. Poor cultivators who obtain access to water and irrigated land tend to make highly productive use of these resources under most conditions. Consequently, poverty alleviation through improved resource rights of the poor can also be a viable path to agricultural growth and environmental sustainability. AGRICULTURAL GROWTH AND EQUITY Several leading authorities have argued that agricultural growth is key to meeting the challenges of food security, environmental sustainability and poverty alleviation. Hazell (1999) has proposed that a high degree of complementarity among these three goals is more likely when agricultural development and food security are: a) broadly based and involve small and medium-sized farms, b) market-driven, c) participatory and decentralized and d) driven by technological changes that enhance © 2003 by CRC Press LLC productivity but do not degrade the natural resource base. Food security pursued in this manner can reduce real food prices while increasing farm incomes. It is employ - ment-intensive and increases the effective demand for nonfood goods and services, particularly in small towns and market centers. By reducing poverty and promoting economic diversification in rural areas, this strategy can also relieve livelihood demands on the natural resource base. During the 1970s and 1980s, policy makers and development experts learned that agricultural development could be used to both reduce poverty and increase food security while contributing to economic growth under certain circumstances. Hazell (1999) characterized “lessons learned” as six equity modifiers for agricultural growth. First, agricultural growth needs to promote broad-based agricultural devel - opment through a focus on small producers. Few economies of scale for agricultural production exist in developing countries. Therefore, targeting family farms was attractive on both equity and efficiency grounds. Indeed, Manning, in his book Food’s Frontier: The Next Green Revolution (2000), has documented through accounts from Ethiopia, Zimbabwe, Uganda, India, China, Chile, Brazil, Mexico and Peru that improvements in the food, environment and poverty triangle seem most likely to be achieved in the developing world when alternative methods and philosophies based on indigenous knowledge and native crops, as well as on cutting-edge technology are all considered. His case studies and stories indicate that in these places, information and knowledge often do not flow from top to bottom, but rather originate in and reverberate through every part of the system. Alex McCalla (2001) has pointed out that 90% of the world’s food production is consumed in the country where it is produced. As a consequence, to be effective, most food production increases need to occur within the countries experiencing population increases. Thus, in the next 25 years, most of the food needed to meet increased demand must be produced in tropical and subtropical farming systems, where rapid population growth will occur. This will be difficult, because these farming systems are complex, highly het- erogeneous, fragile, generally low in productivity and dominated by small-scale, resource-constrained farmers. To support the necessary improvements, priority must be given in publicly funded research and extension to the issues of small and medium-sized farms in these locations, building on indigenous knowledge and adopting heterogeneous approaches. Hazell’s other five “lessons learned” about agricultural growth are summa- rized below. The second lesson learned about utilizing agricultural development to reduce poverty is to undertake land reforms where necessary. This was par - ticularly important where productive land was too narrowly concentrated among large farms. Successful approaches could include securing farmers’ property rights and privatizing common property resources or, where this was not desir - able, strengthening community management systems. A third lesson is to invest in human capital through such means as rural education, clean water, health, family planning and nutrition programs to improve the productivity of poor people and increase their opportunities for gainful employment. Fourth, the agricultural extension and education system as well as credit programs assisting © 2003 by CRC Press LLC small businesses need to be organized to reach rural women, because women play a key role in farming and auxiliary activities. Fifth is the need to involve all rural stakeholders, not just the rich and powerful, as participants in setting priorities for public investments that they expect to benefit from or finance. Finally, Hazell observes that it is important to actively encourage the rural nonfarm economy. This economy is not only an important source of income and employment in rural areas, especially for the poor, but also benefits from powerful income and employment multipliers when agriculture grows. Free zones, which have been established in many central American and Caribbean nations, are good examples of how this type of employment opportunity can impact agriculture, rural poverty and related natural-resource management. Although past patterns of agricultural growth and development have sometimes degraded the environment and exacerbated poverty and food insecurity among rural people, this is not an inevitable outcome of agricultural growth. Instead, these negative effects are usually the product of (a) inappropriate economic incentives for managing modern inputs in intensive agricultural systems, (b) insufficient investment in many heavily populated less-developed areas, (c) inadequate social and poverty programs and (d) political systems that are biased against rural people. With appro - priate government policies and investments, institutional development and agricul- tural research, agricultural development can provide a triple-win situation by con- tributing to poverty alleviation, food security and improved natural-resource management and environmental sustainability. Pinstrup-Andersen and Pandya-Lorch (1995) have argued forcefully and persua- sively that agricultural growth is the key to poverty alleviation in low-income devel- oping countries. They note that very few countries have experienced rapid economic growth without agricultural growth either preceding or accompanying it. Further - more, economic growth is strongly linked to poverty reduction. In most low-income countries, agricultural growth is a catalyst for broad-based economic growth and development. Finally, poverty is the most serious threat to the environment in developing countries. Because they lack the means to intensify their agriculture appropriately, the poor are often forced to overuse or misuse the natural resource base to meet their basic needs. AGRICULTURAL RESEARCH AND TECHNOLOGY Pinstrup-Andersen and Pandya-Lorch (1995) further maintain that agricultural research and technological improvements are crucial to increased agricultural pro - ductivity and financial returns to farmers and farm labor, thereby reducing poverty, meeting future food needs and protecting the environment. Accelerated investment in agricultural research is particularly urgent for low-income developing countries, partly because they will not achieve reasonable growth and poverty alleviation without increases in agricultural productivity and partly because comparatively little research is currently undertaken in any of these countries. Ironically, many poor countries that depend the most on productivity increases, grossly underinvest in agricultural research. Per capita agricultural research expen - ditures in low-income countries are one tenth of those in high-income countries, © 2003 by CRC Press LLC despite the fact that agriculture accounts for a much larger share of average income in these low-income countries. For example, in sub-Saharan Africa, which desper - ately needs increases in agricultural productivity, there are fewer than 50 agricultural researchers per million individuals employed in agriculture. This is in sharp contrast to industrialized countries, where there are over 2,400 agricultural researchers per million economically active persons in agriculture. One new research area in particular, agricultural biotechnology, is seen as presenting opportunities for reducing poverty, food insecurity, child malnutrition and natural resource degradation. Pinstrup-Andersen and Cohen (2000) observe that developing countries are faced with many problems and constraints that biotechnology may actually help to resolve. They acknowledge that agricultural biotechnology is not a silver bullet to achieving food security and, to date, has not focused on these broader environmental and societal issues. However, when biotechnology is used in conjunction with traditional knowledge and conventional agricultural research methods, it may be a powerful tool for addressing food, environment and poverty issues. Consequently, policies must expand and guide traditional research and technology development, as well as the new sciences, to solve problems of importance to poor people. At the same time, adequate attention and policy development must be given to the wide range of environmental, biosafety, social and value concerns associated with these new technologies (Lacy 2000a). Manning (2000) concluded that the “prime directive for those who would help the world’s poor ought to be ‘first do no harm.’þ” Research should focus on crop and animal production relevant to small farmers and poor consumers in developing countries, such as bananas, cassava, yams and sweet potatoes, rice, millet and certain livestock. Failure to significantly expand agricultural research in and for developing countries and to invest in agricultural development will make poverty eradication and alleviation a more elusive goal (Pinstrup-Andersen and Cohen, 2000). Peter Senker (2000) reminds us that major multinational corporations do not pursue the objective of alleviating world poverty because they are essentially market-creating and -satisfying organizations. They neglect the poor basically because they do not offer attractive markets. Companies are motivated to seek profits from rich markets in the developed world rather than moved by a drive to feed the hungry. Given the current emphasis on using these new biotechnol - ogies to develop proprietary products, there is a strong potential that genetic engineering will further increase poor farmers’ dependence on the corporate sector for seeds and agricultural inputs and on associated chemical herbicides and fertilizers. Strong public-sector investment in biotechnology, therefore, has an important role to play. Pinstrup-Andersen and Pandya-Lorch (1995) observe that much of the research needed to reduce poverty is of a public goods nature. The benefits of such research are not easily captured by individual farmers or firms but extend to society as a whole and, as a consequence, are unlikely to be undertaken by the private sector. Thus, the research institutions of these developing countries should receive substantial public investments and be further supported by the international research community. © 2003 by CRC Press LLC INFRASTRUCTURE AND POLICY Research and technology alone will not drive agricultural growth, environmental sustainability and poverty alleviation. The interaction between technology and policy is critical and the beneficial effects of the research will occur only if government policies are appropriate. Distortion of input and output markets and of asset own - ership as well as other institutional and market conditions that adversely affect the poor must be minimized or eliminated. Access by the poor to productive resources such as land and capital needs to be enhanced. Zeller and Sharma (1998) note, for example, that microfinance institutions designed to finance the poor, such as the Grameen Bank in Bangladesh, offer services proven to alleviate poverty that the marketplace is not willing to provide on its own. Sharma (2000) also observes that the impact of microfinance on poverty alleviation continues to be substantial, but is conditional on access to other complementary inputs such as seeds, irrigation water or market access. Further, rural infrastructure and economic, legal and governmental institutions must be strengthened. An insightful study by Fan, Hazell and Thorat (1998) exam - ined government spending, growth and poverty in rural India. The study showed that government spending on productivity-enhancing investments, such as agricul - tural research and development, irrigation, rural infrastructure including roads and electricity and rural development initiatives targeted directly to the rural poor, have all contributed to reductions in rural poverty and most have contributed to growth in agricultural productivity. They conclude that, to reduce rural poverty, the Indian government should give priority to increasing its spending on rural roads and on agricultural research and extension, investments that have both a large impact on poverty and the greatest impact on agricultural productivity growth. In addition, human resources must be improved through standard investments in education, health care, nutrition and sanitary environments. The director of the Harvard Center for International Development, Jeffery Sachs, has proposed that malignant poverty may be primarily the product of wretched public health (Birch, 2000). He and his colleagues have joined health advocates to lobby the world’s pharmaceutical companies to develop vaccines against tuberculosis, AIDS and malaria, some of the world’s biggest killers. Finally, the policy environment must be conducive to analyzing the complex factors affecting poverty and must be supportive of actions to alleviate poverty and implement sustainable management of natural resources. Although the focus of this chapter has been on the interrelationship among food, environment and poverty, a similar, more general relationship has recently been proposed between enhancing economic growth and productivity and fighting poverty. In May 2001, U.S. Treasury Secretary Paul O’Neill criticized the World Bank for digressing from its core purpose, which he defined as raising productivity and increasing income in developing countries. The World Bank responded that signif - icant attention to the distribution of income to benefit the poor was a proper priority for the Bank. Anthony Lanyi, director for economic policy at the IRIS Center of the University of Maryland, argued in response (2001) that these are not mutually exclusive, but [...]... 10, 11 Pinstrup-Andersen, P and M.J Cohen 2000 Agricultural biotechnology: Risks and opportunities for developing country food security International Journal of Biotechnology, 2: 1-3 , 14 5-1 63 Pinstrup-Andersen, P and R Pandya-Lorch 1995 Agricultural growth is the key to poverty alleviation in low-income developing countries International Food Policy Research Institute 2020 Vision Brief, 15: 1 -4 Senker,... Report 200 0-2 001: Attacking Poverty Oxford University Press New York © 2003 by CRC Press LLC 24 Microfinance, Poverty Alleviation and Improving Food Security: Implications for India* Richard L Meyer CONTENTS Introduction Changing Perceptions of Poverty and Finance Financial Services and Food Security Microfinance: A Win–Win Proposition Microfinance in India Improving Microfinance in India Adjust Interest... credit, to liberalize the financial sector and to strengthen it by reorienting banks and other financial institutions toward a market-based financial system by increasing competition and improving the quality of services Microfinance programs began on a large scale in the early 1990s and they are considered essential for the provision of working capital and financing nonfarm activities for the rural poor... especially in Latin America, operates on the so-called win–win proposition: when the poor can obtain financial services otherwise unavailable to them and benefit from these services, they are willing and able to pay high interest rates and fees that permit the MFIs to be sustainable (Morduch, 2000) Therefore, the MFIs that apply good banking principles are also expected to be those that alleviate the most... chapter discusses these roles and applies them to India It begins by summarizing the changes in perceptions about poverty reduction that have occurred during the past couple of decades Then there is a brief discussion of the relationship between finance and food security The following section considers microfinance as a win–win proposi* I acknowledge with appreciation the information and comments received... Interest Rates and the Use of Subsidies Broaden the Scope of Financial Services Evaluate the Long-Term Strengths and Weaknesses of SHGs Strengthen Alternative Institutional Forms Expand the Analysis of Microfinance Problems and Performance Conclusion References INTRODUCTION Analysts are becoming increasingly aware that microfinance can play multiple roles in reducing poverty and improving food security for... Agriculture and Human Values, 15 :4 © 2003 by CRC Press LLC Fan, S., P Hazell and S Thorat 1998 Government spending, growth and poverty: An analysis of inter-linkages in rural India IFPRI Environmental and Protection Division Discussion Paper 33: 1-2 8 International Food Policy Research Institute Washington, D.C FAO 1985 Report of the Tenth Session of the Committee on World Food Security Food and Agriculture... policies and programs The concluding section outlines ways in which microfinance could be strengthened to improve its contribution to poverty alleviation and food security in India CHANGING PERCEPTIONS OF POVERTY AND FINANCE Historically, poverty has been viewed mostly as a problem of the poor earning too little income, consequently consuming too little to attain a socially acceptable standard of living and. .. household’s productive human and physical capital Second, savings and credit services can increase a household’s risk-bearing potential, leading to the adoption of more risky but potentially more profitable income-generating activities The profitability and mix of * The flaws in the “supply-led” approach to agricultural credit, which dominated thinking in the height of the Green Revolution, ultimately... these broader poverty impacts FINANCIAL SERVICES AND FOOD SECURITY Critics of the directed credit approach frequently argue that an overemphasis on lending distracted attention from the fact that poor households need — and increasingly demand — a variety of financial services including savings and insurance A recent statement of these arguments, emphasizing how financial services affect household food . government, legal and financial institutions tend to disenfranchise the poor by restricting their entry into business, appropriating their property and weakening the quality of their health and educational. degrade the natural resource base. Food security pursued in this manner can reduce real food prices while increasing farm incomes. It is employ - ment-intensive and increases the effective demand. environmental sustainability. Pinstrup-Andersen and Pandya-Lorch (1995) have argued forcefully and persua- sively that agricultural growth is the key to poverty alleviation in low-income devel- oping countries.