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Agriculture – Pathways to Prosperity in Asia and the Pacific, March 2011

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In Asia, 70 per cent of the poor live in rural areas. Although every region of Asia has made considerable progress in reduction of rural poverty in the last decade, the problem remains acute. The problem has been exacerbated due to the Triple-F (food, fuel and financial) crises and this has made meeting of MDG 1 of halving extreme poverty by 2015 more challenging. While a considerable number of rural households are chronically poor, there are many more who move in and out of poverty. From a policy perspective, it is important to distinguish between the transient and persistently poor households, as the latter require massive transfers sustained over long periods. Moreover, poverty is a multi-dimensional concept and must not be viewed only in terms of income deprivation. In several parts of Asia and elsewhere, rural poverty is also reflected in several inter-locking non-income deprivations in education, health and sanitation, among others. Further, within rural societies, women, youth and indigenous people are often disproportionately affected by disadvantages that tend to make mobility out of poverty even harder.

What causes income poverty? Despite wide-ranging diversities, many poor rural people in Asia and the Pacific Region are either landless or own a limited piece of land, possess large families, lack education and have limited access to markets, credit and technology. A stylized fact about rural poverty is that the poorer rural households derive the highest proportion of their incomes from farming and agricultural labour, while the better-off households derive the most from non-farm activities. In addition, lack of market information, business and negotiating experience and collective organisations deprive them of the power to compete on equal terms in the marketplace.

Poverty, however, is not just a matter of deprivation but also of vulnerability to exogenous shocks. Shocks can trap people in poverty by eroding their assets and capabilities to a point that they are unable to accumulate enough to move out of poverty. These shocks include natural disasters, climate change, pest outbreaks (e.g. avian influenza), vulnerability to food price fluctuations, illness, and death. The region is also highly vulnerable to fluctuations in energy prices due to its high dependence on fossil fuels. This worsens food insecurity. Rural communities and households have a range of mechanisms for coping with downturns. As risk-coping mechanisms, households generally resort to selling productive assets, borrowing, depleting savings, migrating, and reducing expenditure on food, healthcare and education (notably affecting women and children). Although segments of rural population have developed relatively strong risk-management and risk-coping strategies, vulnerability remains high. Some parts of the region (e.g. Afghanistan, Sri Lanka, Nepal, Bangladesh, and Pakistan) are also affected by instability and conflict, or have recently recovered from conflict. The policy emphasis has to go beyond augmenting incomes to risk mitigation and coping.

Volatile food prices pose a threat to the rural poor. Domestic food prices have been less volatile in Asia and the Pacific due to more stable supplies and regulated markets (for instance, in India,
Indonesia and Bangladesh). However, some of the poorest countries (e.g. Cambodia) experienced severe hardships. In general, there are six domains to be taken into account to reduce food price volatility: addressing supply-side constraints (e.g. policies that support access to credit); management of and control over natural resources; and access to research and extension services; supply-management and price stabilization policies; safety net programmes; value-addition for agricultural products: redressing price information gaps and asymmetries; and provision of storage facilities combined with access to credit for smallholder farmers.