Bank’s approach to agriculture under fire

22 September 2009

By Rachel Whitworth, Bretton Woods Project

The World Bank and the IFC have committed to increase funding to agriculture to help tackle the food crisis, but their enthusiasm for agribusiness has been questioned by academics who suggest the benefits will not reach the hungry.

As the number of chronically hungry people in the world surged to over 1 billion this year, in July the G8 endorsed the global partnership for agriculture, food security and nutrition and pledged $20 billion for agriculture over the next three years. But there is a clash taking place between the World Bank and UN food agencies who are vying for the role of primary institution for delivery. The two institutions take fundamentally different approaches to investment in agriculture. Despite its poor track record on support for agriculture (see Update 61, 58), donors appear to favour the Bank. More may become clear when US secretary of state, Hillary Clinton makes a speech on this issue at the UN at the end of September.

the benefit of linking agribusiness to smallholders is in doubt

The World Bank Group articulated its approach to agriculture in the 2008 World Development Report (WDR), which promotes trade liberalisation and linking small farmers into global supply chains. It argues that agribusiness can be an instrument to increase incomes in developing countries. Responding to the food crisis, the International Finance Corporation (IFC), the World Bank’s private sector arm, has announced a plan to boost lending to agribusiness by 30 per cent in the next three years starting with a record $2 billion in the 2009 fiscal year. In June, an IFC official indicated that they wanted to double their investment in African agribusiness by 2011, bringing it to 10 – 15 per cent of their entire portfolio.

The World Bank Group’s focus on investment in agribusiness contrasts with the approach of the UN secretary general’s high level taskforce on the global food security crisis. The UN food agencies, including the Food and Agriculture Organisation, back the approach taken by the international assessment of agricultural knowledge, science and technology for development (IAASTD) agreed in April 2008 (see Update 61). The IAASTD emphasised food security, environmental sustainability and traditional knowledge as the right approach to solving the food crisis and stressed the need to preserve policy flexibility in the agricultural sector instead of trade liberalisation.

Academics slam the Bank

Hannah Bargawi, from the Centre for Development Policy and Research at the University of London summarises a range of academic critiques of the Bank’s ‘agribusiness for development’ agenda in a briefing released in September. Researchers Kojo Sebastian Amanor, Philip McMichael, Carlos Oya, Matteo Rizzo and Philip Woodhouse all agree that the Bank’s description of agribusiness as an entity that would share risks and profits with smallholders is far from the reality.

McMichael criticises the Bank’s concept of ‘new agriculture’ articulated in the WDR, which argues that corporate management of market integration is a condition for the elimination of smallholder poverty. Instead he argues that “the Bank’s claim to place agriculture ‘afresh’ at the centre of development reunites Bank development discourse with recent transformations in the corporate food regime, licensing more of the same.”

McMichael suggests that the dispossession of rural populations in the name of new agriculture, non traditional exports and corporate value chains are “geared to provisioning the monetised segment of the world’s population.” He illustrates this with the profits recorded by corporate agribusinesses in 2007, which benefitted from higher prices during the food crisis.

In an attempt to rebuff such criticism, the WDR placed renewed importance on the state as a vehicle for establishing a more conducive environment for agribusiness in low-income countries. Woodhouse and Oya, however, have pointed out that strengthening the state to invest in public goods without addressing the underlying inequity of agribusiness would be likely to disproportionately benefit the retail end of agricultural value chains. For this reason the alleged ‘win-win’ scenario of linking corporate agribusiness to smallholder producers, is cast into serious doubt.