1. OBJECTIVE

The seminar’s purpose was to investigate the potentials and challenges that development policy and institutions in the food and agriculture sector of low-income countries face in poverty reduction. The majority of the poor in low-income countries depend directly or indirectly on agriculture for their livelihood. However, the lack of access to improved technologies, the high transaction costs in domestic as well as export markets, as well as inadequate institutions and infrastructure, constrain the poors’ production and income-earning opportunities in the food and agricultural sector. Many of the poor depend on unsustainable agricultural practices, leading to local as well as global environmental issues such as deforestation, biodiversity loss, soil erosion and desertification. The main objective of this seminar was to bring together economists and other scientists working in the field of rural and agricultural development in low-income countries in order to discuss the impacts on poverty reduction of research, development policies, and institutional change concerning food, agriculture, and the environment.

2. BACKGROUND

Since 1989, the European Association of Agricultural Economists (EAAE) organizes a seminar on a tri-annual basis that focuses on agricultural and rural development issues in the developing world. The last seminar was held in Florence in 2004, and featured the topic of Agricultural Development and Rural Poverty under Globalization. The current seminar heldOctober 2007 in Montpellier, focussed on pro-poor development policies and institutions in the food and agricultural sector that offer significant and untapped potentials for more equitableeconomic growth, particularly for the low-income countries of Africa, Asia and Latin America. In the past two decades, donors as well as national governments in low-income countries did not give sufficient attention to the potential of agriculture and rural areas, neither for poverty reduction nor for addressing the increasing environmental challenges such as desertification, deforestation, and biodiversity loss

3. PROGRAM

The seminar featured the presentation of forty-four contributed papers and eight posters. The papers were selected based on an anonymous peer review process, and were presented either in plenary or parallel sessions. The topics of the sessions included: (1) The role of farmers in supply chains, (2) Restructuring supply chains, (3) Agricultural trade, (4) The management and conservation of natural resources, and (5) Food security and productivity among poor smallholder farmers. Two miscellaneous sessions featured papers on the measurement of food security and poverty, and the participation of farmers in direct marketing to supermarkets, among other topics. A detailed program is attached to this summary. The final session of the seminar included a round table discussion that sought to identify lessons learned and implications for future research.

4. SUMMARY AND SYNTHESIS OF THE ROUNDTABLE DISCUSSION

The participants of the round table were asked to summarize the major lessons learned from the seminar, and identify implications for future research. Aad van Tilburg (WageningenUniversity, The Netherlands), Jean-Marc Boussard (Académie d’Agriculture, France), Luc Christiaensen (World Bank), and Jo Swinnen (Catholic University of Leuven, Belgium) served as participants.

Lessons learned

Most of the papers presented in the seminar built on the collection and analysis of primary data, and provided rich empirical evidence from all developing regions. As expressed by Jean-Marc Boussard, highlighting the strength of the seminar: “As agricultural economists, we still deserve Wassily Leontief’s praise (remember Leontief ‘s intervention in a congress of the American Economists Association at the end of the sixties) : General economists are frequently forgetting that their reasoning on models should be confronted with reality. They should imitate agricultural economists, who are anxious not to limit themselves with theory, and are not satisfied without having gone to the field”.

More than 40 percent of the papers presented at the seminar were on supply or value chains (la filière) for high-value agricultural products, as a way to alleviate poverty. Empirical studies from all developing regions were presented. The discussion focused on the role of (often) the weakest party in the supply chains: The papers featured insightful comparisons of different institutional arrangements for vertical integration of smallholders in high-value supply chains, for example through contract farming with either an agro-processing company or directly with supermarkets, and through cooperative models. Another achievement of the seminar was that some of the papers explicitly sought to measure the welfare effects of inclusion or exclusion into supply chains for different classes in society, such as landless people, smallholders and commercial farmers. Particularly striking were the emerging theoretical insights regarding the formation of different organizational structures governing the trade of staple foods and traditional bulk commodities such as coffee and cocoa, in spot as well as future markets, and high value crops (fruits, flowers, vegetables) in vertically integrated chains. It was hypothesized that an important reason for the emergence of vertically integrated chains in high value crops is that the high value of these crops permits firms to pay a "compliance premium" to induce self-enforcement of the contracts. There is now also more empirical evidence suggesting that poor smallholders may actually benefit from the evolution towards vertically integrated chains either as producer or as labourer. The latter is an important finding which deserves to be documented further. While value chains are performing rather well for high-value products, there is a increasing need to develop these also for basic foodstuffs, for example in view of the increasing food safety regulations by major importing countries in the developed world.

The seminar also featured a number of papers with the explicit incorporation of rural labour market characteristics in studying rural off-farm employment decisions and migration. Major results from the discussion of other papers were that biofuels may be a threat to food security rather than a blessing for the poor, and that quality standards as well as standards on social and environmental performance will remain an important issue not only for high-value products, but also increasingly for basic foodstuffs as well as fibers and biofuels.

While the individual constraints to participation in rural non-farm employment have been reasonably well documented in the literature, the processes and the underlying constraints of rural non-farm employment generation needs to be better explained. The majority of the papers in the seminar dealt with the micro-level, i.e. explaining the individual decision making of households or agribusiness companies. However, more research is also needed at the sectoral, macro and international level in order to address the following questions: Are there local economies of agglomeration? What is the role of secondary towns in fostering rural-urban linkages? How should investment in secondary town development be best financed?And most importantly, can agriculture still act as a source of growth in rural non-farm employment through consumption and forward linkages of smallholder food crop agriculture, as in the past in Asia? How is this affected by regional market integration (as for example in East Africa)?. Similarly, the economy wide effects (e.g. on food prices through substitution away from staple crop production, or on the labour markets) of expanding vertically integrated supply chains deserve more attention.

Agricultural economics as an applied science has traditionally relied much on methodological innovations (both theoretical and empirical) in the social sciences, and on the adaptation and application of these innovations through theory-guided empirical research. Future EAAE seminars should strengthen the focus on methodological innovations, for example on spatial interdisciplinary analysis of land use change, spatial econometrics, behavioural economics, and on the use of experiments for assessing adoption potential and impacts of alternative agricultural technologies and institutional arrangements. A greater emphasis by future research should also be put on building up panel data sets on farm and rural households in developing countries.

Finally, European agricultural economists should seek to better exploit the synergy that arises from closer cooperation of European research groups with the same or similar research interests. More critical mass in research will benefit not only individual researchers, but also the quality of the research groups that are involved. The tri-annual seminars of the EAAE on development issues, such as the 106th seminar held in Montpellier, are indeed a good platform to stimulate interaction between agricultural economists from the different European countries. The next seminar will be held in September 2010 at the University of Hohenheim, Stuttgart, Germany.

This report was written by Manfred Zeller (HohenheimUniversity) on behalf of the program committee.

PROGRAM COMMITTEE

J.M. Boussard , Académie d’Agriculture, France

Michel Benoit-Cattin , CIRAD, France

Andrew Dorward , ImperialCollege at Wye, UK

Franz Heidhues , Hohenheim University, Germany

Jonathan G. Kydd , ImperialCollege at Wye, UK

Arie Kuyvenhoven , WageningenUniversity, The Netherlands

Donato Romano , University of Florence, Italy

Aad van Tilburg , WageningenUniversity, The Netherlands

Eric Tollens , CatholicUniversityLeuven, Belgium

Manfred Zeller , Hohenheim University, Germany