Aid and the issue of agriculture

Date: 2012
Topics:
Regions:
L'aide confrontée à la question agricole
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Article Index
The poor relation of bilateral aid?
Aid to agricultural production has remained…
Agriculture is not a strategic sector
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Box 1

Originally responsible for ensuring the continuity of colonial improvements and providing an auxiliary function in the cold war, official development assistance (ODA) underwent significant changes during the 1990s, when it had to acquire a new raison d'être in a period of extended globalization. International solidarity was reaffirmed in the objectives set jointly by donor countries, and in the growing mobilization of aid to enable developing countries to contribute to global policies that are in the process of implementation (infectious diseases, climate, etc.). Aid for agriculture is emblematic of these changes: it now presents itself as a contribution, sometimes to the global challenge of sustainable development, and sometimes towards solidarity (the fight against poverty, the reduction of hunger). Despite fluctuating opinions in the underlying discourse, agriculture occupies a prominent position in donor activities. While the general perception is that, regrettably, the last twenty years has seen a decline in aid, how has the situation actually evolved? From statistical data and a summary analysis of the strategies of major donors, this focus brings together some elements of analysis that nuance these perceptions.

The underlying basis of agricultural aid

Agriculture is a sector apart. This is due, firstly, to the place occupied by agricultural production in multilateral trade negotiations, which immediately poses a problem of coherence: can we provide support to an activity with one hand, while imposing diverse restrictions on the distribution of its products with the other? Secondly, particularly since the 1970s, food crises and their media coverage have stirred up public emotions, while simultaneously highlighting the limits of markets, both delocalized and abstract, and of public intervention.

Overall, while aid has been distributed since the 1970s according to a ratio of one third multilateral to two thirds bilateral, multilateral aid is proportionately more engaged in the agricultural sector, where its share goes up to 40% in a relatively stable ratio, despite the fluctuations (due to the fact that these are commitments and not disbursements). The main bilateral donors are Japan, the United States and France, which together have accounted for at least 50% of such aid over the last 15 years. While French support has remained stable at around 10% of total aid to agriculture since 1995, US aid has risen sharply from just over 5% to nearly 30%, while Japanese aid has gradually decreased from 40% to less than 15%.

The perception of a decline in aid to agriculture is not unfounded

The analysis of ODA

The ODA statistical analysis encounters several difficulties. Firstly, it only provides a partial vision of aid: the data do not include contributions from development banks, such as the World Bank, which play a prominent role. Secondly, the data are very general and do not provide details of the contribution forms for the identified sectors. Thirdly, sectoral data are based solely on commitments, which lead to disbursements that may be late, in amounts that are sometimes lower than expected.

statistics, based on the reference data of the OECD's Development Assistance Committee (DAC), enables some major trends to be highlighted.

The share of agriculture in total ODA has been falling steadily to a low point in 2007. This trend must be considered in comparison to those of other sectors: agriculture is a sub-sector of the productive sectors but it can benefit from infrastructure programmes, which are accounted for separately.

The evolution of these major sectors allows three periods to be distinguished. Until 1973, the sectoral distribution was unstable: initially high, the share of the productive sectors diminished in favour of investments in social services and infrastructure, and in "other" areas, a category including diverse activities that are difficult to allocate by sector. From 1973 to 1989, the dynamics were stabilized: investments in economic services and infrastructure increased. From the 1990s there was an increase in multi-sectoral and transversal operations and in social sectors, which preceded the formulation and then the adoption of the Millennium Development Goals in 2000, at the expense of the productive sectors and, to a lesser extent, of economic infrastructure and services, in accordance with the restrictions introduced by the Helsinki Agreement on aid related to these sectors (Pacquement, 2009).

The importance of the share of the "multi-sectoral/transversal" sector clearly demonstrates the uncertainty attached to sectoral distribution and leads to a major relativization of the decrease in aid to agriculture. Within the productive sectors alone, which may not encompass the entirety of aid to agriculture, the share of agriculture has been dominant since 1975, over 60% from 1983, increasing further until 1999 and then fluctuating to reach more than 70% at the end of the period. An analysis of the productive sectors that have benefited from aid directed towards trade policies, which seem to have partially gained from the sectoral reallocation, enables these fluctuations to be understood.

Conclusion

In total, while the statistical analysis struggles to show the sectoral components of aid over a long period, it does however reflect that agricultural aid is an extremely significant component of donor contributions: against a backdrop of decreasing aid to productive sectors, aid to agriculture resists this trend. In addition, its various paradigm shifts can help form links to different sectors. To hold the opinion, based on a cursory look at the statistics, that agriculture has returned to the agenda of aid agencies, is to ignore the inherent vagaries in the construction of the data; agriculture has always maintained favour with donors, for whom the rural world remains both an area of poverty and one that holds potential for development, potential that is even more interesting when results are more easily discernible in terms of foreign trade, for example.

What is aid to agriculture?

Aid to agriculture has two complementary forms:- Aid to the agricultural sector and to rural development, according to the usual methods of investment aid and project aid, for the financing of more general sectoral policies;- As an insurance mechanism to support the export incomes of agricultural products (to cope with price fluctuations and quantitative harvest deficits, resulting from a climate shock for example) with European aid (STABEX for the ACP countries and COMPEX for the others).Added to this are:- Contributions to international agronomical research either through national research centres (France, United Kingdom) or through the funding of international CGIAR centres, or through institutions such as the FAO and the World Bank, even if the latter's emblematic reports on global development have only addressed the issue on three occasions (1982, 1986 and 2007).- Contributions to market conditions, which are unaccounted for in aid, mainly from development banks (at the market conditions).

The poor relation of bilateral aid?

Agricultural and food aid have never represented more than 20% of the total bilateral aid allocated to developing countries. Since the mid-1990s, this proportion has stagnated at a particularly low level (less than 10% of the total). Since 2006, the slight increase that occurred in response to the food crises has not brought this proportion to over 8% of the total.
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Aid to agricultural production has remained relatively sustained

As a productive sector in which aid is in decline in favour of infrastructure and services, the agricultural sector has been relatively well sustained. Cooperation in terms of trade policy or tourism development, more recent subjects, remains in the minority.
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Agriculture is not a strategic sector

Aid to agriculture has never been a major and strategic investment for donors of bilateral funds; while aid for infrastructure, social and economic services has predominated for decades. The food crises of the mid-2000s have done little to change this situation.
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