Beyond Profit is reporting from the Clinton Global Initiative in New York City this week.
Thirty years ago, if you asked development experts how to move people out of poverty, they would tell you, “Invest in agriculture.” Today, if you asked development experts how to move people out of poverty, they would tell you, “Invest in agriculture.” The problem, according to Rajiv Shah, USAID Administrator, who spoke at the 2010 Clinton Global Initiative on Tuesday, is we haven’t done it to the extent that we should have. And, he says, USAID is as guilty as anyone. As a result, many African countries are falling behind, food inflation has been hitting developing countries in extreme ways, and more people are sliding back into poverty.
Why is agriculture development so important? By investing in agriculture, you can improve a country’s agricultural productivity, and in so doing, move many people up and out into new jobs. Not to mention, agricultural efficiency means lower food prices—and when you only have a dollar or two each day to make ends meet, and food makes up the majority of your expenses, lowering the cost of food allows for dramatic gains in family income. In fact, agricultural development is 3-4 times more effective in boosting an economy than GDP.
But, if it’s so easy, why haven’t we done it? It seems that we’ve forgotten the basics. Even USAID, once a huge proponent of agricultural investing, has cut its agricultural support by 85% over the last several decades.
An interesting model to turn to, says Shah, is South Korea, a country that just 3-4 decades ago lagged behind Kenya in food production. What a difference 30 years makes! South Korea has transformed into an Asian Tiger, and has one of the world’s fastest growing economies. Furthermore, this November, South Korea will host the G20 Summit, a sign of its agenda-setting power. How did South Korea turn itself around? Well, that’s a story for another time. The point is that the peninsular nation transformed itself from a rural, agricultural-dependent economy to an urban, industrialized nation over just a quarter century.
Unfortunately, there are no quick and easy solutions. Building struggling countries and their agricultural sector will require firm commitments to cut out inefficiencies in current agricultural systems, making some farmers lives easier, and making it possible for other farmers to move onto new vocations. In order for that to happen, developing countries and their partners will need to make it easier for new businesses to start and thrive. Donors like USAID must be held accountable. And on-the-ground partnerships must be established.
It doesn’t happen overnight. But, if we look to South Korea, we can see that it can happen in a quarter century—an absolute turn-around in 25 years. It is only by patiently building local, sustainable economies that we will be able to build viable long term economies.