63492 1 Farming Systems and Poverty IMPROVING FARMERS' LIVELIHOODS IN A CHANGING WORLD John Dixon and Aidan Gulliver with David Gibbon Principal Editor: Malcolm Hall FAO and World Bank Rome and Washington D.C. 2001 The designations employed and the presentation of the material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations or the World Bank concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. ISBN 92-5-104627-1 All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of material in this information product for resale or other commercial purposes is prohibited without written permission of the copyright holders. Applications for such permission should be addressed to the Chief, Publishing and Multimedia Service, Information Division, FAO, Viale delle Terme di Caracalla, 00100 Rome, Italy or by e-mail to copyright@fao.org © FAO 2001 PREFACE ••• Small farmers produce much of the developing world's food. Yet they are generally much poorer than the rest of the population in these countries, and are less food secure than even the urban poor. Furthermore, although the majority of the world's population will live in urban areas by 2030, farming populations will not be much smaller than they are today. For the foreseeable future, therefore, dealing with poverty and hunger in much of the world means confronting the problems that small farmers and their families face in their daily struggle for survival. Investment priorities and policies must take into account the immense diversity of opportunities and problems facing small farmers. The resources on which they draw, their choice of activities, indeed the entire structure of their lives, are linked inseparably to the biological, physical, economic and cultural environment in which they find themselves and over which they only have limited control. While every farmer is unique , those who share similar conditions also often share common problems and priorities that transcend administrative or political borders. These broad patterns of similar production systems, practices and external conditions are used in this book as a basis for defining more than 70 major farming systems throughout the six developing regions of the world . While recognizing the heterogeneity that inevitably exists within such broad systems, it is a central tenet of this book that the farming systems approach, as used here, offers a useful framework for understanding the needs of those living within a system, the likely challenges and opportunities that they will face over the next thirty years, and the relative importance of different strategies for escaping from poverty and hunger. To offer a basis for comparative analysis, this book looks in detail at some 20 farming systems that are judged to have the greatest potential for poverty and hunger reduction and economic growth in the next few decades. They are considered in the light of five possible broad household strategies for escape 1I1 FARMING SYSTEMS AND POVERTY from poverty and hunger: (a) intensification of production; (b) diversification of agricultural activities for increased output value; (c) increased farm size; (d) expansion in off-farm income; and (e) complete exit or departure from the farming system. The book asks the crucial question: What are likely to be the most successful strategies for small farmers in each system, and what sort of initiatives can best help farmers to realize them? The material for this book is derived from a study originally undertaken at the request of the World Bank in order to provide a specifically agricultural perspective to the revision of the Bank's Rural Development Strategy. It has drawn on many years of specialised work within FAO and the World Bank, as well as in a number of other national and international institutions. Findings were supported by more than 20 case studies from around the world which analysed innovative approaches to small farm or pastoral development. This book is intended for a wider audience than the original study, and it is hoped that policy makers, researchers, NGOs and the agribusiness sector will all find its conclusions and recommendations interesting and thought provoking; and that they will carry the analysis further by applying the approach at national level to assist in the formulation of rural development strategies. Jacques Diouf James D. Wolfensohn Director-General President Food and Agriculture Organization World Bank Group of the United Nations IV I ACKNOWLEDGEMENTS ••• The preparation of this book was carried forward by FAO under the overall co-ordination of E. S. Funes (Director, Rural Development Division) and the technical leadership of J. Dixon (Senior Officer, Farming Systems, Farm Management and Production Economics Service, Agricultural Support Systems Division) and A. Gulliver (Senior Economist, Investment Centre Division), with support from D. Gibbon (consultant). This work was conducted to contribute to the preparation of the World Bank Rural Development Strategy, Reaching the Rural Poor, which was prepared under the leadership of Robert L. Thompson. The research benefited from the guidance of D. Forbes Watt (Director, Investment Centre Division), J. Monyo (Director, Agricultural Support Systems Division), A. MacMillan (Principal Adviser, Project Advisory Unit, Investment Centre Division) and D. Baker (Chief, Farm Management and Production Economics Service, Agricultural Support Systems Division) in FAO and of C. Csaki (Senior Advisorffeam Leader-Rural Strategy) and S. Barghouti (Research Advisor) of the Rural Development Department, World Bank. The authors wish to acknowledge the major contributions made by the persons principally responsible for the six regional analyses, the results of which were originally issued as separate documents, and on which the current regional chapters are based . Africa - A. Carloni (Investment Centre Division); Middle East and North Africa - D. Gibbon; Eastern Europe and Central Asia - S. Tanic (Sub­ Regional Office for Central and Eastern Europe) and F. Dauphin (Investment Centre Division); South Asia - J. Weatherhogg (Investment Centre Division), J. Dixon and K. d'Alwis (Consultant); East Asia and the Pacific ­ D. Ivory (Regional Office for Asia and the Pacific); and Latin America and Caribbean - A. Gulliver, J. de Grandi, C. Spehar, G. M The designations employed and the presentation of the material in the maps 4 . Horticuhure mixed D Waler Bodies -..J do not imply the expression of any opinion whatsoever on the part of FAO Notes: S. Large scale C8rea~vegeta~e ?~ Irrigated areas in rainfed farming systems » concerning the legal or constitutjonal status 01 any country, territory or saa Projection = Geographic (LaVLong) _ 6. Small scale cereal-Irveslock L...J Country Boundaries area, or concerning the delimitation of frontiers. Major Farming Systems ." '" C1:J ,. > EASTERN EUROPE AND CENTRAL ASIA 3 Z Cl I> ~ '" -< ~ '" -I m 3 > Z o "'0 o < ,. m -I -< / ,/". Farming System 7. Extensive cereal-livestock _ 1. lfrigated 8 . Pastoral _ 2. Mixed _ 9. Sparse (cold) FAO Ol.clalmer _ 10. Spa,.., (arid) 3. Forest based livestock The clesignations empk>ye ubhumld India, although there is a small area in Cultivated area (111 hal 87 Northern Sri Lanka. The system is not supported by any large irrigation Irrigated area (m hal 14 system, but in many instances Bovine population (m) 126 relatively small areas irrigated from tanks reduce vulnerability to drought and permit dry season cropping. This traditional tank-based supplemental system has been further enlarged in recent decades by the use of tubewells. Overall, however, being mostly dependent on rainfall , the system faces relatively high levels of risk, and introducing new technology is therefore difficult. Crops 201 FARMING SYSTEMS AND POVERTY grown within the system include wheat, barley, vegetables and fodder crops in the cooler northern areas, while maize, sorghum, finger millet, vegetables, chickpea, pigeon pea, green gram, black gram and groundnuts are more common in the warmer climates of Southern India. Smaller areas of soybean, rapeseed, chilli, onions and sesame are grown mainly as cash crops. Double cropping is possible only where irrigation is available. In Southern India and the Dry Zone of Sri Lanka~ where land holdings are smaller, farmers prefer to grow wetland rice on any irrigated land available, as well as in the poorly drained valley bottoms during the wet season. The above-mentioned coarse grains, pulses and oilseeds are grown on the upper parts of the landscape. Some fruit trees such as mango are grown in home gardens. Box 5.12 describes a typical household in this system . Box 5.12 A Typical Household of the Rainfed Mixed Farming System A typical rainfed mixed poor farm household with six family members cultivates 3 ha of land in Madhya Pradesh. India. The crops include one ha sorghum (post-rainy season) with a yield of 1.3 tlha. about 0.5 ha of chickpea yielding 0.85 tlha.0.2 ha of pigeon pea yielding 0.5 tlha. 0.3 ha of groundnuts yielding 0.6 tlha. 0.2 ha of rapeseed yielding 0.7 tlha. The household owns two head of cattle. several goats and some poultry. It has a combined average income just beneath the international poverty line. and it is also vulnerable to crop failures. Livestock are an important part of the farming system - which supports the largest share of cattle, sheep and goats in the region - and they usually provide the major part of the farm family's cash income, particularly through sales of adult animals or young stock, since most areas are too remote for commercial milk production . As infrastructure improves, however, dairy production is becoming more important in some areas. While the total area covered by the system is larger than the preceding Rice­ Wheat Farming System, the heavy reliance on rainfed agriculture imposes a much lower population density - about half that of the latter system. A large proportion of the rural population in the Rainfed-Mixed Farming System lives in chronic poverty, aggravated by periodic drought-induced severe transient poverty (see Box 5. 13). Agriculture is oriented towards subsistence; while most areas are poorly served by infrastructure and services, and are remote from markets. Agricultural extension services in these areas are typically weak. farmers mostly use tradit,ional t.echnology with a strong bias towards risk avoidance. Land tenure is often an issue and farmers may not have sufficiently clear titles to their land to be able to use it as collateral for obtaining institutional credit. 202 I SOUTH ASIA I Box 5.13 Seasonal Vulnerability I Seasonal vulnerability is a critical dimension of livelihoods in the Deccan Plateau and is sometimes considered as one measure of poverty. Crop failure is more likely than in any other major cropping area in South Asia, but traditional coping mechanisms have weakened. New forms of risk reduction for smallholders, such as rainfall insurance, may offer promise. TRENDS AND ISSUES IN RAINFED MIXED SYSTEM Enterprise patterns have been changing fairly rapidly, despite only moderate market access. Vegetable and dairy production have expanded where tank irrigation is available, driven by market forces. There has also been a boom in oil seeds, fuell ed by significant production subsidies 43 and this growth is likely to continue. It is expected that there will be increasing scarcity of fresh water resources as agricultural and urban demands expand. Land degradation, including soil fertility decline, is expected to intensify. Food crop production will increase and the use of hybrid sorghums and millets will become more widespread . Soybean and mung beans may, to a significant degree, replace traditional pulses. The system is expected to become more commercial, with a modest increase in the use of externa'l inputs and further mechanisation. Livestock productivity is expected to increase through the spread of stall-feeding and in response to better market access. Although household food security will improve, there will still be food deficits in drought years. With regard to the external environment, some improvement of transport infrastructure and social services is expected. Government agencies will decentralise to a significant degree and the role of women in local decision making may be strengthened in some countries. Whilst the scope of public sector research and extension ,viII contract, there will be a greater role filr farmer organisations in the provision of agricultural services. Limited expansion of the off-farm rural economy is expected . PRIORITIES FOR RAINFED MIXED SYSTEM In order to make substantial progress in reducing poverty in this system, the fO'llowing household strategies to escape poverty neecl to be supported (in order of importance): diversification; then inte nsification, increased off-farm income and exit from agriculture (all of equal importance) and finally increased farm size. Little can be done to significantly reduce poverty within the Rainfed Mixed Farming System without increasing the overall water security of the farm 43 Gulat, and Kelley 1999. 203 I FARMING SYSTEMS AND POVERTY household, which not only underpins intensification and diversification, but also greatly improves the quality oflife of the household. In the past, this has generally entailed improving the availability of water for drinking and irrigation by repairing existing tanks, improving diversion works from streams and increasing the scale of water harvesting, as well as acquiring more low-lift pumps and tubewells. These improvements will require social mobilisation and participatory planning if they are to be sustainable. However, in future the emphasis must shift to the maximisation of moisture and soil conservation for increased production. Conservation agriculture will also reduce the impact of climatic risk. The approach includes measures such as timely cultivation, minimum tillage, rapid seeding with early-maturing varieties, mulching and - where the low opportunity cost of labour in the dry season and the nature of the soil make it an option - bun ding and tied ridging. In this area new technology is being adopted slowly at best. More sophisticated methods, such as the use of plastic film for water conservation, are absent altogether. 'Where adequate and secure drinking water is available, one good entry point is the improvement in livestock production through planting of fodder grasses and stall feeding . This in turn can lead to a build-up of fertility, better rain fed crops and more arable by­ products for animal feed . Box 5.14 outlines the potential of water harvesting which is discussed further in the accompanying case study. Box 5.14 Water Harvesting 44 In semiarid and subhumid areas water harvesting offers millions of poor people a pathway to water, food and economic security. Successful cases show how improved water management provides increased domestic water and crop income. This in turn permits increased livestock numbers and ultimately expanded tree crop production. In the process, the status of natural resources and the watershed are improved, and village income can double. Experience shows that community organisation is an essential pre-requisite for successful water harvesting. I Since the farming system depends for its survival on rainfall and possibly groundwatel~ appropriate measures are required in the upper catchments to make sure that tree cover is adequate to reduce run-off and to encourage infiltration and percolation that can recharge local aquifers. Improvements to the system will require inputs from a spectrum of disciplines, including irrigation engineering, forestry, fodder production, livestock husbandry and horticulture, in addition to traditional arable crop agronomy. The introduction of horticulture and fruit crops has historically been constrained by remoteness from markets. This can be overcome in areas where there is some comparative advantage for fruit and vegetable production, if private sector interest in establishing processing plants can be generated. 44 Abstracted from Case Study 4, Annex I . 204 SOUTH ASIA Some research stations claim to have developed packages of practices suitable for this rainfed farming system. In general, adoption of these recommendations is disappointingly low, but this can be explained by farmer's aversion to risk, or by shortage of labour or other resources to implement improvements. Successful projects or programmes of assistance need to have a wider focus, rather than merely being concentrated on agriculture-related measures. Provision of reliable drinking water is generally the first priority need in these areas. Other social services including health clinics and primary schools, are also normally lacking. The development of markets is less important than in the Rice-Wheat Farming System. However, access by poor households to land, water and forest resources will be a critical issue. Similarly, access to sources of information is important for the intensification and diversification of these systems. Conversely, the expansion of information dissemination systems will be important and is expected to accelerate the diversification of part of the system towards high value enterprises - after food needs are met. STRATEGIC PRIORITIES FOR SOUTH ASIA South Asia's total agricultural population is second only to East Asia and the Pacific, yet it is experiencing a much higher population growth rate. Compared with several other regions, South Asia has relatively little high potential land with fertile soils plus good irrigation or rainfall. The region has a long history of intensive agriculture, which has led to substantial resource degradation in some locations. During tlle past 30 years - against all odds - the research and agricultural support services of the system have generated growth in food · production in excess of population growth, and reduced the proportion of people living in poverty. The opening of the region's economies has had a profound effect on farming system dynamics in the past decade. Farming systems in the region are likely to evolve rapidly during the coming 30 years, as technologies, institutions and markets change, and the pace of change is expected to accelerate. Available projections suggest some improvement in indicators related to hunger and poverty in coming years, albeit at a slower rate than those implied by the international development goals for halving of hunger and poverty 45. In order to meet these goals, increased effort by public and private organisations and farm communities is required. Table 5.4 indicates the potential for growth and poverty reduction within each of the farming systems in the region. Although the free Crop System, with its focus on relatively high value products with considerable scope for productivity gains, has perhaps the highest potential for growth, major gains in 45 AO F 2oooa. 205 FARMING SYSTEMS AND POVERTY Table 5.4 Potential and Relative Importance of Household Strategies for Poverty Reduction in South Asia Strategies for poverty reduction Farming System Potential for Potential for Intensi- Diversi- Increased Increased Exit from agricultural poverty fication fication Farm Size off-farm Agriculture growth reduction Income Rice Moderate Moderate 2 3 0.5 2.5 2 Coastal Artlsanal Low Moderate 0 3 0 3 4 Fishing Rice-Wheat Moderate High 2 3.5 2.5 - high Highland Mixed Moderate Moderate 3 0 2 4 Rainfed Mixed Moderate Moderate 2 3 2 2 Dry Rainfed Moderate Moderate 2 4 2 - high Pastora. 1 Low Low 2.5 4.5 Sparse (Arid) Low Low 0 0 2 7 Sparse (Mountain) Low Low 0.5 1.5 0 3 5 Tree Crop High Moderate 2 3 1.5 2.S Urban Low Low 3 2 4 0 Average for Region 1.8 3.1 0.8 2.3 1.9 Sourc e: Expel-t ludgement Note: Total score for each farming system equals 10. Assessments refer to poor farmers only. Average for region weighted by agr j c u ~ ura l populations of systems denved from Table 5.1 poverty reduction are more likely to come from the Rice-Wheat System where poverty is widespread and severe. Table 5.4 also indicates the relative importance of five household strategies for escape from poverty. Clearly, given their importance across many different systems, strong support will be needed both for small farm diversification and for growth in employment opportunities in the off-farm economy. Measures that assist farm households to leave agriculture will be an important third priority, and would need to include improved rural education and vocational skills training. There is also substantial potential for poverty reduction by means of intensification of existing production patterns, largely through improved ,vater management and adoption of improved technologies. Given the pressure on land" there is only limited opportunity for poverty reduction through the expansion of the farm or herd size of poor households. The following sections summarise the strategic 206 I SOUTH ASIA priontles for actions, uncler the areas of policies, markets, information, technologies and natural resources. POLICIES, INSTITUTIONS AND PUBLIC GOODS Most countries in the region have policies that effectively favour urban areas and the manufacturing sector rather than rural areas and the agricultural sector, i.e. there are national trade and price distortions with a negative impact on the commercialisation of farming. For example, the need to maintain food prices within the reach of the increasing, politically articulate, urban population causes some governments to keep inter-harvest food prices artificially low by releasing stocks of grain as prices rise; thus adversely affecting farmgate prices. Because the m. comm. The approach of improved watershed management combined with income generation (which was effectively applied in Tunisia. as described in Box 3.6 of Chapter 3) was pioneered through a global network w hich included one successful pilot project in the Highland Mixed Famning System in Nepal. Some aspects of thIS approach could enrich the existing participator y approaches to watershed management in the region. 212 I SOUTH ASIA transplanting - which the state-managed surface irrigation schemes often cannot guarantee - which boost the yields of rice and the following crop. Very significant changes can be anticipated as realistic water chargers are introduced. These will involve a wide range of water management techniques including laser levelljng of irrigation basins, sprinkler and trickle irr.igation; and the introduction of greater moisture conservation, including zero tillage, mulching, windbreaks and relay cropping. The high potential areas will also need considerable attention to better soil management. In the Rice-Wheat Farming System, where intensive cultivation and unbalanced fertiliser applications have led to a deterioration in soil structure and fertility, solutions are now being developed to tackle the immediate problem. However, it will be important to develop a range of technologies for sound soil management under highly-intensive, continuous, irrigated cultivation. The need for precision management of fertiliser nutrients is a closely related issue, not only from the point of view of efficiency in use for grain formation, but also to minimise groundwater pollution . Improved pest management will also be necessary, and it is expected that this will be biologically oriented for most crops and, increasingly, for livestock. While these areas will remain quite highly specialised in cereal production, there will be a degree of diversification into high value enterprises - including orchard crops and livestock. Household livelihoods will also diversify, and an increasing share of off-farm income is expected for smallholder households. The low potential areas, such as the Rainfed Mixed, Highland Mixed and Pastoral Farming Systems, are intrinsically less able than the lowland areas to provide production responses in food crops. Sustainable resource management with water harvesting is required to underpin diversification into high-value produce as market access spreads. The severe poverty prevalent in these areas will probably lead to continuing seasonal and permanent migration, thereby limiting the increase of population pressure on the resource base. However, there are some significant possibilities for development. A community-based micro-watershed approach, such as that which is succeeding in parts of India, would form a sound basis for the development of the Rainfed Mixed Farming System. Conservation agriculture should be introduced; including the greater integration of livestock and trees into the farming systems ­ with fodder trees, catch crops and green manure crops. Such programmes would include the introduction of cash enterprises, such as dairying or orchard crops, wherever market access is feasible. Greater attention to soil and water conservation should also form a vital element in such programmes; including zero tillage, mulching, relay cropping, windbreaks and on-farm tree planting, I' Development of sound and sustainable agroforestry and forestry operations, with participatory management for much of the forest area, will be important in maintaining a good forest cover in the upper catchments, as well as on the large areas of wasteland that currently exist in the region. 213 FARMING SYSTEMS AND POVERTY CONCLUSIONS Agricultural development will remain an important component of poverty reduction programmes for the foreseeable future in South Asia. There are some major resource degradation challenges, as well as linkages to the off-farm rural economy, to be taken into account. The main source of reduction of hunger and poverty would be diversification to high value enterprises, including local processing. Increased off-farm income and intensification of existing production patterns are next in importance, followed by exit from agriculture. Increased farm size is expected to be of lesser importance. Four broad strategic initiatives are proposed : Improved water resource management. Improved water management is essential to support the intensification and diversification of production and to reduce resource depletion, for both surface and underground water schemes. Components include: efficient technologies; conjunctive use; water charges and other regulatory measures; water users' associations; and watershed protection. Strengthened resource user groups. Strengthening resource user groups is one way to redress the extensive land and water degradation in plains and hills, and protect watershed resources. Components include: resource management groups for watershed management in hill and mountain areas; range management groups in pastoral areas; and policies to encourage effective common property resource management. Re-oriented agricultural services. The re-orientation of agricultural research, education, information and extension systems to involve farmers fully will underpin the drives for intensification and enterprise diversification and promote sustainable resource management. Components include: models for joint public­ private service provision; pluralisitic advisory services; Internet based delivery of market and technical information to small farmers; and the incorporation 111 higher education systems of interdisciplinary learning and approaches. Improved rural infrastructure. Returns to transport and health investments are high and beneficial to the poor, especially in low potential and highland areas in the region. Components include: roads; drinking water; schools; health facilities; and effective models for private sector participation. 214 EAST ASIA AND PACIFIC ••• REGIONAL SETTING CHARACTERISTICS OF THE REGION The East Asia and Pacific region l contains 1836 million 2 people Uust over one-third of all the inhabitants of developing countries), of which 62 percent (I 124 million) are directly involved in agriculture. Considerable variation exists among countries in terms of size and density of population, and the overall proportion living in rural areas. Most people are concentrated in just two countries: China (with I 278 million inhabitants or 68 percent of the region) and Indonesia (with 205 million inhabitants); respectively the first and fourth most populous countries in the world. Very high population densities occur in some rural areas, for example in Eastern China and the islands ofJava and Bali in Indonesia. The total land area of the region is I 639 million ha. Forest cover is estimated at 380 million ha (23 percent of land area), of which 170 million ha are considered as dense forest. Cultivated land is estimated at 232 mil1ion ha (15 percent ofland area) and the remainder consists of grasslands, wastelands, mountains, urban areas and waterbodies. Some 278 million people 3 (15 percent of the total regional population) are living in extreme poverty, with daily incomes of less than US$I . A quarter of these impoverished people live in China, but significant numbers are found in almost all countries in the region. About 240 million people 4 (13 percent of the total population) are undernourished. Poverty in rural areas is approximately twice as See Annex 3 for a list of East Asian and Pacific Island countries Included in the region. Note that Hong Kong. Australia. J apan. New Zealand. Singapore and Taiwan are excluded. FAO STAT. World Bank 2000a. FAO 2000a. 217 FARMING SYSTEMS AND POVERTY high as in urban areas 5 . The incidence of rural poverty ranges £i-om 4.6 percent in China to 57.2 percent in Vietnam. With the exception of China and the Republic of Korea, the economies of the region are strongly agrarian. Although the average contribution of the agricultural sector to total CDP is 13 percent, this figure is heavily influenced by China (] 7 percent)6. In the Republic of Korea, the agricultural sector's added value is only 5 percent, while in Laos, Myanmar and Cambodia it is over 50 percent. MAJOR FARMING SYSTEMS IN EAST ASIA AND PACIFIC Eleven broad farming .systems have been identified 7 , based on criteria discussed in Chapter I. They are listed in Table 6. 1 and their geographical location is indicated in the accompanying Map. Lowland Rice Farming System This farming system is found in both humid and moist subhumid agro-ecological zones in well-watered mainly flat landscapes 8. It covers an estimated 197 million ha and, with an agricultural population of 474 million, it is the most populous system in the region. Cultivated area is 71 million ha, of which about 45 percent are irrigated. Large areas of this system are found in Thailand, Vietnam, Myanmar, South and Central East China, Philippines and Indonesia. Smaller areas are located in Cambodia, Korea DPR, Republic of Korea, Laos DPR and Malaysia. The larming system is dominantly rice-based, with cropping intensity dependent on rainfall distribution, length of growing season and the availability of supplementary irrigation. Important subsidiary crops include oilseeds, maize, root crops, soybeans, sugarcane, cotton, vegetables and fruits in all areas, while wheat is significant in Central East China. Both livestock and off-farm income contribute to household livelihoods. Regional food security depends upon the production from this system. The prevalence of poverty is moderate overall, although it is extensive in Mynamar and Cambodia. Tree Crop Mixed Farming System This farming system is found mainly in the humid agro-ecological zone, but also extends into moist subhumid areas, principally on flat to undulating landscapes with poor soils where paddy rice cannot be intensively produced. Total system area is 85 million ha, with an agricultural population of 30 million. Cuhivated area is See W or'ld Bank (2000a). DPR of Korea. Republic of Korea. Myanmar and Papua New Guinea are excluded due to a lack o f the poverty da ta in the report. W orld Bank 2000f. See Chapter I for an explanation of the approach followed for delineation of the fanming systems. See Annex 5 for an explanation of agro-ecological zones and length of growing period. 218 Major Farming Systems EAST ASIA AND PACIFIC Farming System ~\ y,_ ~'. , . lowtand rice 2. Tree crop mixed 3. Root-Iuber :' ~ 8 4 . Upland intensive mixed 5. Highland extensive mixed 4 r ·,. ....... .. 4. 6. Temperate mixed 8 .~ m » on 7. Pasloral 8. Sparse (forest) - t .. 4, ... . \, -i » ''I!I."'' . . L 9. Sparse (arid) Country Boundaries " '"""'-~ " ...... " 4 2 r".... » » I z o \{ ~ Notes : Spartial dalasets not available tor some small Pacific Countries. FAO Disclaimer The designations employed and the presenlation of the material in the maps 3 -l . ~ <1"1 •• ." » n Projection = Geographic (LaVLong) do not imply the expressIOn of any opinion whatsoever on the pari of FAO ~~ ~ <.0 Map Production - Data Aquisition and Spartial AnalYSIS Team. concerning the legal or constitutional status of any country, territory or sea n UN-FAOiWorld Bank Global Farming System Study area , or concerning the delimitation of frontiers . ! EAST ASIA AND PACIFIC Table 6.1 Major Farming Systems in East Asia and Pacific Farming Systems Land Area Agric. Popn. Principal Prevalence (% of region) (% of region) Livelihoods of Poverty Lowland Rice 12 42 Rice, maize, pulses, Moderate sugarcane, oil seeds, vegetables, livestock, aquaculture, off-farm work Tree Crop Mixed 5 3 Rubber, oil palm, Moderate coconuts, coffee, tea, cocoa, spices, rice, livestock, off-farm work Root-Tuber 2 ubhumld Mongolia (see Box 6.9). It contains a Cultivated area (Ill hal 31 total population of 247 million, of which 162 million are classified as Irrigated area (Ill hal 12 agricultural. The climate of the zone Bovine population (m) II is mainly dry subhumid (120 to 179 growing days) . The transitional boundary between this system and lowland rice-based system is not easily defined in Central China. Throughout the system, average incomes are low with modest poverty levels. Some 31 million ha are under cultivation, with wheat being the dominant crop . Other major crops include rice, maize, soybeans, sweet potato and rape, as well as citrus and some temperate fruits. Irrigation covers about 12 million ha within the system. The preferred food staple throughout the region is wheat noodles. There are two main sub-systems: the Loess Plateau Sub-System, involving mixed farming of both summer and winter crops; and the Northern Sub-System, in Northeast China, Korea OPR and restricted parts of Mongolia where the climate only permits cropping during the summer. Both are characterised by rainfall being concentrated in the summer months and by severe frosts in winter, particularly in the northern areas. Average farm size ranges from as little as 0.3 ha in the Loess Plateau of China to several hectares further north, where it gradually blends into the Pastoral Farming System. Average household size is approximately four to five persons. In the Loess Plateau of China, wheat and rape are the main winter crops; while maize with rice, cotton, soybeans and sweet potato and the main summer crops. Cropping intensity is about 150 percent. Crops are grown under both irrigated and rainfed conditions. Wheat yields averaged about four t/ha in 1999. Yields have risen dramatically since 1970 and even in the last decade have achieved 2.7 percent annual growth. In the Northern Sub-System (Northeastern China, Korea OPR and Mongolia), because cropping is possible only during the summer, wheat (0.5 m ha in Korea OPR and Mongolia) and other cereals are grown concurrently and compete for cultivated land . Yields are lower in these zones due to adverse climatic conditions, and cereals may be supplemented by cold-resistant crops such as potatoes and cabbage. The higher yields in China are due to crops being grown with high organic and inorganic 249 FARMING SYSTEMS AND POVERTY Box 6.10 ATypical Household of the Temperate Mixed Farming System I A typical wheat farm household with four family members cultivates 0.55 ha of land (60 percent being irrigated) in Shandong Province, China, with a cropping intensity of Iw ­ poultry moderate Source: FAO data and expert kn owledge. Note: Prevalence of poverty refers to number in pover ty, not depth of poverty. and is a relative assessment for this region. 265 FARMING SYSTEMS AND POVERTY cultivated land, although there is only negligible irrigation. The impetus for growth has come from demand for such crops as wheat. soybean and sunflower as well as horticultural production for Buenos Aires and Montevideo. The agricultural population is now estimated at almost seven million, and further intensification of production is expected within the system. Poverty is generally low. Dryland Mixed Farming System Due to its location near the coast of Northeast Brazil and in the Yucatan peninsula of Mexico, this large system of nearly 130 million ha has a well-established economic and productive structure and an agricultural population of about 10 million , but faces severe moisture and soil quality constraints. Despite frequent droughts, little more than two percent of the 18 million ha of cultivated land is irrig·ated . It is a system with extensive and severe poverty among small-scale producers, who exist alongside large-scale extensive ranches, and often depend on seasonal migration and wage labour for survival. Land degradation is a serious problem. Extensive Dryland Mixed (Gran Chaco) Farming System: Stretching from North-central Argentina, through Paraguay and into Eastern Bolivia. this system of 70 million ha has only recently been economically developed and still has a rural population of less than two million. Total cultivated area is estimated at under eight million ha, and irrigation is negligible. Unlike the Cerrados and Llanos areas, the growth potential of the Gran Chaco is severely limited by soils and moisture. Extensive poverty is found among the small colonists. High Altitude Mixed (Central Andes) Farming System Again divided into two distinct sub-systems, the Central Andean system covers 120 million ha and has a total agricultural population of over seven million . Through most of Peru the system occupies the steep valleys ofthe high Sierra, while from Southern Peru through Western Bolivia into Northern Chile and Argentina, the altiplano is the predominant landform. Throughout the zone the key characteristics are production at an altitude of more than 3 200 m, a dependence on indigenous grains, potatoes, sheep and llamas, and a very strong indigenous culture. Where altitude and moisture permit, the same temperate crops are cultivated as in the Northern Andes. More than a third of the total cultivated area of 3.1 million ha is irrigated. Poverty is extensive and often very severe in this system. Pastoral Farming System As the Pampas extend southwards, they become drier and cooler, merging eventually into the very sparsely poplliated plains of Patagonia, covering some 67 million ha, where sheep and cattle ranching is the only widespread agricultural activity. Cultivated area is negligible, and there is no reported irrigation in the system. Poverty is low to moderate among the agricultural population of less than one million. 266 I LATIN AMERICA AND CARIBBEAN Sparse (Forest) Farming System At the southern end of the Andes, lower temperatures combined with continued high altitudes, render cultivation generally sub-marginal. The agricultural population which number no more than a quarter of a million (almost 150 ha per person) is largely dependent upon livestock grazing, forestry and tourism for income and cultivate less than 0.5 percent of the land area. Poverty is low to moderate, reflecting the low population densities. Urban Based Farming System In common with all other regions of the world, specific peri-urban and intra-urban agricultural systems have developed to serve major conurbations and population centers throughout the region. Focusing on perishable products with high levels of demand but only l,imited space requirements, these urban-based systems typically include horticulture, poultry and dairy, but off-farm income is usually also integral to the family unit, with many members engaged in agriculture on a part-time basis. An estimated three percent of the agricultural population lives within this system. REGION-WIDE TRENDS IN LATIN AMERICA AND CARIBBEAN The following section summarises regional trends with reference where appropriate to the position of the region vis a vis aU developing countries 12. After outlining selected projections with regard to population, hunger and poverty, the following section lists some key trends affecting farming systems in the areas of: (i) natural resources and climate; (ii) science and technology; (iii) trade liberalisation and markets; (iv) policies, institutions and public goods; and (v) information and human capital. Population, hunger and poverty During 2000-2030, population is expected to increase 40 percent to reach 725 million 13. This is lower than the overall 47 percent rate projected for developing countries as a whole, but higher, for example, than East Asia. In fact, the rate of regional population growth has declined dramatically in the last 40 years; from 2.8 percent per annum in the 1960s to about 1.6 percent in the 1990s. The proportion of total population living in rural areas l4 is projected to decline from 25 to 17 percent over the next 30 years, leaving rural populations marginally lower than at present (from 128 to 121 million); but significant 12 Unless otherwise stated. historical data is taken from the FAOSTAT statistical system. while future projections are largely extracted from FAO (2oo0a). 13 United Nations Population Division 1999. 14 Rural is defined to exclude cities with a population of more than 50000 inhabitants. and peri-urban areas with densities of more than I 000 personslkm 2 Thus small towns would be included in the definition of rural. 267 FARMING SYSTEMS AND POVERTY sub-regional differences are anticipated. The poorer countries are expected to maintain high rates of overall population growth, resulting in an absolute increase in rural populations in such areas as Central America, Bolivia, Paraguay and Haiti. On the other hand, countries such as Argentina and Brazil are likely to experience declines in rural population of20 percent or more. In general, those countries with projected overall population increases of 50 percent or more to 2030 will see increasing rural populations. During 2000-2030, the average per capita daily nutrient intake within the region is expected to increase by [Q percent from 2791 to 3080 calories, which will maintain average intake in LAC above the developing world average to 2030. This increase in calorie intake is expected to derive principally from meat and vegetable oils (33 percent each) and dairy (18 percent). Roots and tuber consumption is expected to decline. The number of people suffering from undernourishment ­ currently 53 million - is projected to decline to 32 million by 2030. This represents a drop from 11 percent of the population to 5 percent, but is only half the current international target. Natural resources and climate Cultivated land has expanded by 47 percent since 1961, but cropping intensity increased only one percent during this period. During 2000-2030, it is projected to expand a further 20 percent (depending on the evolution of farming systems); one third of the 40-year historical trend rate of 1.76 percent per annum. However, this rate may be underestimated, given the enormous potential for agricultural expansion in the Cerrados, Llanos, Chaco and Amazon basin 15. During 2000-2030, the irrigated area is expected to increase from 18 million to 22 million ha, but remain constant in relative terms at 14 percent l6 of cultivated land. Irrigation efficiency is low, and only 8.5 million ha of the installed area is thought to be in use. Surface irrigation accounts for almost 90 percent of all irrigated areas. During the period 2000-2030, only minor increases in water use and efficiency are expected. Over the ten year period 1982/1984-1992/1994, the area under pasture and grazing land increased by a total of three percent in South America and 6.2 percent in Central America to reach 600 million ha l7 . Pasture lands in Guatemala increased . by an astonishing 65 percent (albeit from a small base) to 2.6 million ha. At the end of the 1980s, the deforestation rate was estimated at 7.4 million ha per annum, equivalent to 0.8 percent per annum l8 . This rate has since appeared to decline in South America, but accelerated in Central America - to 1.3 percent per annum. 15 This expansion may not be sustainable. however. unless careful resource management practices are followed. 16 FAO 20OOc. 17 World Resources Institute 2000. 18 FAO 1995. 268 LATIN AMERICA AND CARIBBEAN Recent experience has shown how vulnerable considerable parts of the region are to climatic variations; including hurricanes in Central America, flooding and loss of fisheries in Pacific South America and drought in Northeast Brazil. Climatic changes discussed in Chapter 1 are likely to exacerbate these risks and even reduce potential yields. However, it is still impossible to predict specific impacts in different geographical regions with any degree of confidence, given that the influence of climatic change is by no means uniform. Science and technology In the last 20 years, the value of regional agricultural production has grown at 2.8 percent per annum. However, due to the slowdown in total population growth, and a relatively low income elasticity of demand, the growth in demand for food and raw materials has been declining in recent years and for the next 30 years it is estimated at no more than 2.4 percent per annum . Table 7.2 shows the historical rate of growth of the major crops of the region . The major cereals have all grown strongly in the last thirty years - almost entirely due to yield increases - and the region now accounts for more than one quarter of the developing world's output of maize. Cereal output is expected to continue to expand, albeit at a slower rate than in recent decades. Fruits and vegetables have also exhibited strong growth; the area dedicated to fruit has expanded faster than for any other crop category in this period. Table 7.2 Trends in Crop Area, Yield and Output in Latin America and Caribbean, 1970-2000 Harvested Yield Production Average Annual Change Crop Area 2000 2000 1970-2000 (%) 2000 (m ha) (tlha) (m tons) Area Yield Production Wheat 9 2.7 24 0.4 2.1 2.5 Rice 6 3.6 23 -0.1 2.3 2.2 Maize 28 2.7 76 OJ 2.1 2.3 Roots & Tubers .. 12.6 S3 -0.1 0." 0.2 Oilcrops 32 0.5 16 3. 1 2.4 5.7 Fibres 2 0.7 2 -3.8 2.8 -1.1 Vegetables 2 14.2 32 1.3 1.8 3.3 Fruits 7 1".2 99 2.8 0.1 Source: FAOSTAT. 269 FARMING SYSTEMS AND POVERTY The strongest performing crop category, however, has been the oilcrops, especially soya and sunflower. Production of oilcrops has increased from three million tons per annum in 1970 to almost 16 million tons in 2000 - a rate of growth of almost six percent per annum. Since 1961, more than three quarters of all developing country growth in soya production, and over 40 percent of increased world output, has originated in the region. Growth in output is expected to continue to 2030. Among the major crop categories, only fibres (principally cotton) have show an absolute decline - despite significant yield increases - but this trend is projected to reverse in the coming decades. Overall crop production growth to 2030 is projected at 1.7 percent per annum Expected strong gains in cultivated area will be associated with a slow rise in cropping intensity - only an II percent increase to 2030. During 2000-2030, average crop yields are forecast to grow by less than 50 percent and reflects the greater expansion in cultivated area compared with other regions. The 356 million cattle within the region constituted 26 percent of the developing world total and have increased by 1.6 percent per annum in the last three decades, faster than developing countries as a whole. In contrast, growth in other species has been slower. However, the rate of increase in aU species has declined in the past decade. The cattle population is forecast to grow at 0.9 percent per annum to 2030, while the population of sheep and goats will expand by 0.7 percent per annum . Numbers of pigs and pou'ltry are expected to grow by 0.9 and 1.6 percent per annum respectively. From 1970 to 1990, agricultural labour productivity increased at about two percent per annum compared with developing country averages of between Table 7.3 Trends in Livestock Populations and Output in Latin America and Caribbean. 1970-2000 Species Million Head 2000 Ave Annual Change 1970-2000 (%) Cattle 356 1.6 Small Ruminants 119 -0.8 Pigs 75 0.6 Poultry 2396 4.9 - - ---l Product Output 2000 (million tons) Ave Annual Change (%) Total Meat 31 3.5 Total Milk 60 2.9 j Total Wool 0.2 -2.0 Total Eggs 5 4.3 I Source: FAOSTA1 270 I LATIN AMERICA AND CARIBBEAN 3.5 and 4.5 percent 19. The slow growth in labour productivity in the region only partly reflects the abundance of land. Growth rates have been particularly low in areas, such as the Andes and Central America, where a higher concentration of small farmers exists. During the past decade, fertiliser consumption has expanded at the rate of 2.1 percent per annum, to reach 88 kg/ha of nutrient; close to the average rate for the developing world 20. Fertiliser use to 2030 is projected to increase slowly - at about one percent per annum. Trade liberalisation and market development Average agricultural tariffs in 1995 (from 10 to 20 percent) were considerably lower than ten years previously (20 to 60 percent). Nevertheless, the position of the different countries and products varies widely. The region currently accounts for a significant portion of world trade in a number of commodities including: coffee (Brazil, Colombia, Central America); orange juice (Brazil); bananas (Ecuador, Honduras, Costa Rica); table grapes and contra-seasonal temperate fruits (Chile) ; vegetables (Mexico); cut flowers (Colombia, Ecuador); pineapples (Costa Rica, Guyana), and shrimp (Ecuador, Honduras). Strong growth is foreseen in products that are currently significant in industrialised countries; either due to rising land and labour costs (sugar, cotton, citrus juice, vegetables) or to perceived environmental costs (pork, mushrooms, and possibly chickens). During 1995-1997, the region had an annual net trade deficit in cereals of 16 million tons and this is projected to double by 2030; a decline in self-sufficiency from 90 percent to 87 percent. However, it is the only developing region with a net positive livestock trade (874000 tons per annum) and livestock exports are expected to triple by 2030, in contrast to other developing regions. Current net imports of 6.3 million tons of dairy products are expected to grow by 2030, in line with population increases. The broad shift to the free market in the last decades of the 20th century has freed many constraints on rural labour markets in Latin America (less so in the Caribbean) . Consequently, the share of off-farm income in the household livelihoods of poor farmers has been increasing; a trend that is expected to continue to 2030. In more densely settled farming systems, household members work in the i local area, whereas , n remote or extremely poor areas farm people are often (orced into seasonal migration in search of work. The possibility of a reversal of trade liberalization exists, in which case countries would shift agricultural and food policies towards support for self-sufficiency, including high tariff barriers for basic grains and other staples. The opening up of agricultural frontier lands, which is in great measure a response to the liberalisation 19 Many industlialized countries have shown growth in labour productivity as high as SIX percent per annum for periods of 20 years or more. Indeed, this is also the case for the Pampas, Southern Brazil, and the low valleys of Colombia. 20 World Bank 200ar. 271 FARMING SYSTEMS AND POVERTY of markets, would slow down or even reverse. The shift away from production of basic staples - by small-scale producers in systems affected by poverty - would also be in doubt, since domestic prices for these products could be expected to rise. On the other hand, if trade liberalisation is accelerated, adjustment within farming systems would be even more difficult, poverty would likely increase rapidly and out­ migration to urban areas would further accelerate. In fact, poverty figures suggest that this has already been the case since the mid-1990s. However, further trade liberalisation would boost the development of frontier lands and accelerate shifts in cropping patterns towards products still protected in industrial countries, such as sugar cane, cotton, orange juice and tobacco. Policies, institutions and public goods Nowhere in the developing world has the logic of structural adjustment and economic liberalisation been carried forward faster, and more profoundly, that in Latin America. Starting with Chile in the 1970s, the region has seen the privatization of large areas of national economies previously under government control; including banking, telecommunications, energy, transport and of particular importance here, agricultural marketing and finance. Ministries of agriculture in many countries - previously often major bureaucracies employing many thousands of staff - were ruthlessly cut back. Services to the sector, such as extension and research, were also significantly reduced. In theory, such reductions should have been met by an increase in the role of the private sector. However, only those products associated with major international commodities, such as bananas, coffee, and citrus, have found it relatively easy to attract private sector research and development. Crops of interest only to smaller producers, or without significant extra-regional demand, have found little private sector support, although several international agencies 21 have maintained programmes related to basic crops ­ mainly cassava and potato. It appears unlikely that the trend towards reduced public sector participation in agriculture will be reversed soon, as budgetary constraints limit the ability of governments to assume the enormous recurrent costs - and consequent fiscal deficits - that were once accepted. However, two factors may ease the situation in future. The first is the probable transition of many small producers towards export and market-oriented crops where more private sector interest exists. The second is the mounting evidence that scope exists for effective public/private partnerships in the provision of agricultural support services. A second major trend that has emerged in the F decades of the 20th century is ast that of decentralization. Closely linked to the process of structural adjustment, decentralization has often been used primarily as a way of shedding fiscal responsibilities to local or regional levels of government. Nevertheless, the process 21 These include the International Center for Tropical Agriculture (ClAT). the International Potato Center (ClP) and the International Maize and Wheat Improvement Center (CiMMYT). 272 LATIN AMERICA AND CARIBBEAN of decentralization may yet have far reaching impacts on the pattern of rural development within the region, by transferring decision making to levels much closer to the rural poor and affecting the delivery and financing of services to producers. It will also require considerable strengthening of local government and community level capacity in planning, implementation and financial control. Whether or not the trend towards decentralization will endure through the next three decades is difficult to predict. Real centralization implies a considerable reduction in power at central government level, and may be resisted by existing power structures when and if it is apparent that the process is more than cosmetic. Local elites may also capture a high proportion of the benefits, rendering decentralization ineffective. Information and human capital Latin America and Caribbean faces many of the same challenges with respect to information and human capital as other developing regions - perhaps more so, given the market-orientation of the region as a whole. Market requirements are becoming more exacting, technologies are changing more rapidly, and skills development is progressively more vital. Historically, a high proportion of resources within the region has been devoted to secondary and tertiary education, benefiting largely wealthier urban populations. By contrast, rural primary education, communications and information services have been weak or absent. However, in the last three decades there has been a significant improvement in educational attainment in many rural areas, and literacy has increased noticeably, although rural education budgets are still extremely limited. The transition process being brought about by globalisation will penalise small farmers who are not prepared to respond, and this realization is beginning to influence educational and information priorities at national level. In fact, the privatisation of telecommunications has probably done more to expand information linkages into rural areas than any other policy decision taken in recent years. Pri\'a~ized energy provision is also accelerating rural electrification, an essential precursor for many modern services. It is likely that wealthier farming systems, such as the Intensive Mixed Farming System in Brazil, will be among the first to benefit from new information technologies, but whether they will reach poor farming households in Guatemala, Haiti or Bolivia in the next few decades remains to be seen. Selection of farming systems for analysis Four of the systems delineated above have been selected for more detailed analysis - using selection criteria based largely upon the prevalence of poverty, population and growth potential - are described in more detail in the following sections of the Chapter. Within the region there are three farming systems clearly associated with extensive and often severe poverty, namely: 273 FARMING SYSTEMS AND POVERTY • Dryland Mixed Farming System of Northeast Brazil and Yucatan; • Maize-Beans Farming System of Mesoamerica; and • High Altitude Mixed Farming System of the Central Andes. An additional farming system was also selected, as it represents one of the major agricultural frontiers left in the developing world, namely the: • Extensive Mixed Farming System of the Cerrados and Llanos. EXTENSIVE MiXeD (CERRADOS AND LLANOS) FARMING SYSTEM CHARACTERISTICS OF THE Box 7.1 Basic Data: Extensive Mixed SYSTEM (Cerrados & Llanos) Fal-l1ling System The Extensive Mixed Farming System Toral populat ion (rn) 24 covers about 230 million ha, of which Agl'icultural population (Ill) 10 some 190 million ha , known as the TOIAI ,1rea (m hal 233 Cerrados, are in Central Brazil, and a Agro-ecological zone Moist subhumid further 40 million ha - the Llanos ­ extend across parts of Guyana, Cultivated area (m hal 32 Southern Venezuela and Eastern Irrigated area 1m hal 0.4 Colombia. The total system population CatLie population (rn head) 60 of 24 million is approximately 40 per­ cent agricultural 22 . The zone has a subhumid tropical climate (rainfall from · 1 000 to 2000 mm per annum) with a clearly defined dry season, although the Llanos tend to be more humid than the Cerrados. Natural vegetative cover ranges from open grassland through woody savannah to gallery woods along rivers . Historically, the frontier savannah areas - with their isolation from the cities of the coast, acidic nutrient-poor soils, and lengthy dry seasons - were judged suitable only for extensive ranching. At the beginning of the 1970s only three percent was under cultivation. Since then, however, growth has been rapid, especially in the better soils of the Cerrados. Upland rice is often the first crop to be planted , and is still dominant in Llanos. In the Cerrados, however, soybeans and maize have now assumed greater importance. Total cultivated area within the system is currently estimated at over 30 million ha, including permanent crops. However, an estimated 40 million ha of the Cerrados have been severely degraded by poor land management. These are predominantly areas established ~2 The proportion of non-agricultural population within the system IS higher than may be expected due to the presence of Brasilia. which lies w ithin the system. 274 I LATIN AMERICA AND CARIBBEAN in the early years of Cerrado settlement, using upland rice and Bmchiaria sown simultaneously. Large farms (larger than 500 ha), often with absentee owners, have traditionally dominated the Cerrados and Llanos and still account for approximately ten percent of holdings. The vast majority - an estimated 70 percent of all production units in the Cerrados and probably higher in the Llanos - still have ranching as their primary activity. This accounts for 40 to 45 million ha of pasture and 60 million head of cattle across the farming system. Despite the predominance of ranching, there are a growing number of 'large mixed and arable farms in the Cerrados zone, which comprise many of the 50 percent of holdings that fall within the 10 to 100 ha size range (see Box 7.2). These mid-size units tend to employ considerable seasonal labour. Already the Cerrados account for some 20 percent of the national output of beans - a major staple in Brazil- while coffee production is expanding in the East. Other significant contributions to national agricultural output from the Cerrados include 34 percent of soya production, 21 percent of maize and 21 percent of rice. The importance of agriculture is, however, much more restricted in the Llanos. Although still less than one percent (0.4 million ha), the use of irrigation is expanding. Box 7.2 A Typical Household of the Extensive Mixed (Cerrados & Llanos) Farming System The 50 ha family-operated farm in Northern Goias State, in the heart of the Cerrados, was created and registered some 20 years ago, and may well have been purchased from a large rancher with a long-established presence in the region. A large portion of the (ann is still dedicated to grazing a herd of 40 beef cattle, but annual cropping of beans (4 ha), maize (4 ha) and rice (two ha), plus vegetable production for family use, are important activities. Fertilizers have generated reasonable crop yields, but soil hardpan formation is becoming an increasing problem. The family of six relies almost exclusively on the farm for their income, as there is little regular off-farm employment available. Casual labour may be hired at peak harvest periods. Marketing and the purchase of Inputs is one of the bigger problems faced by the family as the nearest town is 40 km away, and the roads are in poor condition, especially during the rainy season. It is thus not feasible to produce perishable products. Because of the isolation, education and health care are serious concerns for the family. Poverty is not a major problem. The role of medium-sized farms appears to be growing in importance in both the Cerrados and the Llanos. Evidence from the Llanos indicates that in the period from 1961 to 1997, holdings over I 000 ha fell by more than a third, while the number of holdings under 20 ha also declined. Similarly, fewer than 10 percent of holdings in the Cerrados are under 10 ha, and there is evidence from some states that the number has declined since 1970, suggesting land consolidation is underway. 275 fARMING SYSTEMS AND POVERTY Studies of agricultural potential for the Cerrados estimate total land area suitable for cultivation in excess of 100 million ha. The Llanos, with more serious soil suitability problems, could provide perhaps an additional 10 to 15 million ha. This represents three times current cultivated land use. The rapid expansion of agriculture within the system has, however, caused considerable soil degradation and a reduction in native biodiversity. The overall level of poverty in the system is much less severe than in the semiarid Dryland Mixed Farming System which borders the Cerrados. Two-thirds of the farms are owned, while only a small percentage are rented. The number oflandless labourers emigrating into the Cerrados is increasing, however. Some degree of bankruptcy among farmers has also been recorded. The historically low population density in the Extensive Mixed Farming System has meant that infrastructure development has been limited, and costs for transportation and storage have been relatively high in comparison to more settled agricultural areas. The high cost of inputs, low soil nutrient levels, and low land prices, is reflected in low land productivity. Yields of major crops tend to be lower than national averages (80 to 90 percent for soya and maize, but as low as 50 percent for rice in the Cerrados). Investment in education, training and other government services within the system has been poor. TRENDS AND ISSUES IN EXTENSIVE MIXED (CERRADOS AND LLANOS) SYSTEM The current growth of the Extensive Mixed Farming System is expected to continue and even accelerate over the coming years, although growth rates will be closely linked to market access and demand for soya, beef, cereals and other crops. Total cultivated area can be expected to approach 70 million ha by 2030, or over 100 million ha including pasture. Livestock will no longer be the dominant activity. Land speculation may become a problem. Data from 1995 for the Llanos zone already indicate a 12 percent annual turnover of farm properties; considerably higher than the national average of 3.5 percent for Venezuela as a whole. The structure of farms within the system in the future will have a major impact on the nature of development. If ownership stays predominantly with the large haciendas, considerable poverty may develop within the system. If, however, land distribution becomes more equitable - as current trends suggest may be happening - this is unlikely. Intensification could also be expected to occur more quickly. Considerable investment can be expected in transportation systems, storage facilities , social infrastructure, and processing - partly financed by the private sector. These changes are expected to reduce transaction costs, increase farm income, facilitate diversification and expand off-farm employment (attracting still more immigrants to the system), Given the current rate of population growth and 276 I I LATIN AMERICA AND CARIBBEAN migration, it is expected that the total population of the system will double in the next 30 years. However, agricultural populations will probably increase at a slightly slower rate. Good potential exists for agricultural diversification into such activities as acid­ soil tolerant fruits (pineapple and passion fruit), mango and avocado. Dry-season food crops such as pigeon pea and pearl millet are also expected to expand in the Cerrados . . Both of these categories may be attractive, especially to smaller producers. However, as cropping intensities rise, increasing demands for irrigation water will require effective planning and if this is poorly managed, could lead to conflict. The key trend for annual cropping in the Cerrados is likely to be the adoption of no-till cultivation methods. Already practised over several million ha, it is expected to grow rapidly in the future. The main advantages of this system include: (i) more timely sowing; (ii) improved yields; (iii) earlier harvesting that permits a second (cover) crop; (iv) conservation of soil organic matter; and (v) reduced production costs. However, not all experiences with no-till agriculture have been successful. Inappropriate herbicide application, lack of suitable technologies for smaller farmers, and poor training of extensionists have all caused problems. Field level research undertaken by the Brazilian Agricultural Research Corporation (EMBRAPA), indicates that substantial gains in crop and livestock yields are technically feasible over the next thirty years if environmentally sustainable production approaches are widely adopted. Maize and field bean yields have the potential to increase by over 100 percent (to 5.5 tlha and 3.2 tlha respectively), rice by 75 percent (to 2.8 tlha) and soybean by 40 percent (to 3.5 tlha). Meat off-take from beef cattle would increase by a projected 300 percent, reaching 0.2 tlha per annum. The projected increases would derive exclusively from improvements in production systems, not improved varieties, while the strong increases in annual livestock of-take per ha assume the recovery of large areas of degraded pasture land. In summary, key issues facing the frontier savannah farming system over the next 30 years include: • The distribution of farm sizes and ownership within the system, and the impact of that distribution on poverty and production intensification; • The creation of a wide range of infrastructure to support the accelerating economic development of the zone; • Achievement of further agricultural expansion without damaging the relatively fragile soils of the savannah zone; and • The ability to reverse degradation of large areas of poorly managed pasture lands. 277 FARMING SYSTEMS AND POVERTY PRIORITIES FOR EXTENSIVE M'IXED (CERRADOS AND LLANOS) SYSTEM The main strategies for poverty reduction in this system are intensification of production - coupled with improvements in infrastructure - and an increase in farm size among smaller producers. Secondary sources for poverty reduction are enterprise diversification and increased off-farm income. In order to respond to the challenges described above, a series of priorities are indicated. These include the development of mechanisms to promote the expansion of small to medium sized production units, together with strengthened technical assistance services to smaller producers, tax regimes favouring holdings under 100 ha, financing for land acquisition, and the promotion of co-operative and other forms of joint services for input and output marketing. New agro-industries and post-harvest operations (at family, co-operative and corporate level) should be facilitated in order to create new demand opportunities and off-farm employment. It is important to validate and disseminate information on intensified integrated production systems and diversification options - especially for smaller farmers ­ including effective water use, no-tillage methods and integrated crop-livestock systems. To be effective, this requires improved communications with farmers and their participation in adaptive research and trials. Efforts should be focused on restoring the estimated 40 million ha of degraded pasture lands - larger than the current total cultivated area - in order to channel agricultural growth to existing areas and reduce pressure for clearance of new savannah lands. Specific interventions can be expected to change significantly over the next 30 years. However, innovative technologies and approaches already exist for reversal of degraded pasture lands (see Box 7.3). While mainly tested on large holdings, these approaches are also relevant to smaller producers and have resulted in dramatic increases in sustainable stocking capacity. Box 7.3 Achieving Sustainable Productivity Increases in the Extensive Mixed Farming System 23 I The tendency to operate non-rotational systems of production. whether livestock or crop­ based, has contributed to serious degradation of soils over as much as 40 million ha of the system and is causing concern in terms of pest and disease problems. Research and field trials have clearly shown the significant benefits ariSing from mixed crop-livestock production systems. The introduction of soybean. other crops and undersown pasture species into ranched areas (typical for large farms), can permit land recovery and subsequent higher stocking densities on a rotational basis. while stocking of dual-purpose cattle in smaller holdings which previously have been largely crop-based can also bring benefits. I 2:1 Spehar 2000. 278 LATIN AMERICA AND CARIBBEAN As moisture availability in the system varies, different crop combinations prove optimal. These include many crops that are still little known in the savannah context, such as castor beans, pearl millet, grain amaranth, kenaf, pigeon pea and quinoa. The integrated production systems tested have reversed soil degradation and achieved significant yield increases. Field data indicate that beef production can increase 300 percent (on a per ha basis) across the system, while maize and beans outputs rise over 100 percent. Net average incomes per ha for participating farmers have increased from US$200 to US$350. While larger farmers may need little support for investment, the adoption of mixed cropping technologies among smaller farmers requires assistance. The agricultural potential of the system justifies increased field work in applied research, seed multiplication and integrated pest management systems. Potential may exist for utilisation of these technologies in the Llanos and also in the West African savannahs. DRYLAND MIXED FARMING SYSTEM CHARACTERISTICS OF THE SYSTEM Box 7.4 BaSIC Data: Drylan d Mixed Farming System The Dryland Mixed Farming System Total population (m) 27 includes two principal areas within Agricultural populaCion (m) II Latin America: (i) the Northeast of Total area (m/ha) 127 Brazil, comprising about 20 percent of Agro-ccologlcal zone ["' y - moist the country or 110 million ha; and ', ubhumid (ii) the Yucatan peninsula of Mexico, Cultivated ~rea (m Ila) 18 extending into the Northern Peten Irrigated area (m hal 0.4 zone of Guatemala, covering about 17 million ha. The agricultural popu­ Cattle pOpuiaCiOfi (Ill head) 24 lation of the system is estimated at about 500000 in Yucatan and almost II million in Brazil (see Box 7.4). As much as half of the rural population of Brazil live within this system 24 . Annual precipitation in Northeast Brazil varies from 400 to 600 mm in the drier west of the Brazilian system, to I 000 mm in the East. In the Yucatan, the average range is 600 to 1500 mm. In both regions, soils are mainly shallow and stony with areas of low forest vegetation and elevations are low to moderate. Good quality agricultural land is scarce and there are few erosion control measures. About 18 million ha of the semiarid area are subject to severe desertification in Northeast Brazil. The long dry season, frequent droughts and uncertain patterns of precipitation typical of the system , make farming a highly uncertain process for the vast majority of producers without access to supplemental irrigation. In both zones, more than 24 This fa rming system boundaries has been defined to exclude the heavily urbanised coastal zone of N ortheast Brazil. 279 FARMING SYSTEMS AND POVERTY 80 percent of farmers practise semi-subsistence production (see Box 7.5). Crop failure - especially in maize and rice - is common if rains are late. In Yucatan, shifting cultivation is a traditional subsistence practice of the Mayas that is still widely used today. This form of agroforestry is a succession of two components: the cultivation phase (rnilpa) where maize, beans and squash are grown together, and the resting phase (acahual) where wild brush and trees take over and replenish the soil. Cultivation traditionally lasts two or three years and fallow between five and twenty years, depending on soil, vegetation and land availability. Land distribution is strongly bimodal. In Northeast Brazil, there are about two million farmers within the system, cultivating an estimated area of 15 million ha. However, more than half (59 percent) have holdings of less than five ha and account for only 6.1 percent of the total arable area (another 22 percent have holdings from 5-20 ha). At the other extreme, only 8.2 percent have holdings over 50 ha, but these account for 61 percent of all land 25. Larger holdings are concentrated very heavily on maize (often for feed), sugar cane towards the coast, and livestock - with 49 percent of farmers registered as producing beef: 55 percent dairy and 40 percent poultry. In the Yucatan, each ejidatario 26 usually has between three and eight ha under cultivation with an average 4 to 4.5 ha. Total sown area in Yucatan in 1995 was 1.1 million ha. Just over half (58 percent) of Northeast Brazilian farmers are owners, although this is skewed towards the larger landholders. Sharecroppers and tenants account for a further 17 percent, and the remaining 25 percent are informal occupants. Box 7.5 A Typical Household of the Oryland Mixed Farming System With a holding of 3.5 ha in Piaul State in Northeast Brazil. the family of seven produces mostly beans (1 .5 ha). maize (one ha) and cassava (0.5 ha) under a rental or share cropping agreement with a local landowner.Yields are low. and reflect the poor soil quality. lack of soil moisture and low input use (no seed is purchased). Given the high proportion of output going to the landlord. available money is better spent on other things and only one-third of family income comes from cultivation activities. Most farming tasks fall to the wife and children. as the husband is often working off-farm. either as a local labourer or in employment involving seasonal migration. A recent period of labouring on a coastal sugar estate has allowed the family to enjoy the luxury of a milk cow which. together with the two goats. is fed on crop residues and roadside vegetation.There are also a few chickens.The family has never received a visit from an extension officer and the rudimentary schooling and health facilities often stop functioning due to lack of operating budget. I 25 26 Instituto Brasileiro de Geografia e Estatistica 1996. An ejidQ(io is a member of a community managed, state·owned ejido, or area of land, that bestows inheritable user rights. but not ownership, to its members. Since 1992, howevec liberalisation of legal contro ls on ejidos has meant that more and more ejidarios have converted their use rights into private ownership. 280 LATIN AMERICA AND CARIBBEAN Small producers within the farming system have become poorer in the last few decades. More than 50 percent of rural families in Northeast Brazil live in chronic and severe poverty, with an average family income of only US$366 per annum (compared with a national average of US$938, and US$1744 for the south)27. Farmers normally do not use improved seed, fertilisers, pest and disease control or mechanisation. Crop yields reflect this low level of technology and inputs. Average yields across the system are: maize (one tJha); beans (0.45 tJha); cassava (9.9 tJha); and, rainfed rice (1.59 tJha). Nevertheless, Northeast Brazil accounts for more than 30 percent of national production of beans and cassava 28. In the 1996 Census, 20 million ha of native pasture and 12 million ha of improved pasture were recorded for the northeast, only about 15 percent of which was found on holdings of less than 50 ha. These pasture areas are thought to have increased significantly since the census. Irrigated agriculture is poorly developed; partly as a result of shortage of water availabi'lity, partly due to poor soil conditions, and partly because of investment requirements beyond the reach of most small producers. In Yucatan, there were only an estimated 47 000 ha of irrigated crop production in 1995 - less than 5 percent of the total cropped area - while in Brazil the total is under 400000 ha. By contrast, there are abundant water conservation measures in place, including reservoirs, retention barriers desalinisation, etc., but none work well during periods of severe drought. Frequently, the installed technologies are not understood by those they are supposed benefit. Infrastructure throughout the marginal drylands system is poorly developed. Public services such as health and education are only available in some locations and are generally insufficiently funded to be operated effectively. Poorly maintained and unsurfaced roads and a low degree of market development add to the problems facing economic progress in the region. In Yucatan a crisis has arisen, as increasing population pressure has forced a reduction in the fallow period of the shifting agricultural production pattern. As a result, insufficient time is given to the rniljJQ land to recover its fertility after the cultivation period. Yields, and the ability to resist drought, have been reduced, lowering levels of food security in rural communities. The rapid growth of tourism in the coastal zones of Yucatan, and its consequent demand for labour, has also had a profound direct impact on the structure, makeup and economic status of the farming system. Many families have migrated permanently to the state's new coastal cities such as Cancun and Cozumel 29 . A similar pattern of migration is also occurring in the Brazilian northeast. Because of the marginal nature of the area and the recurrent droughts faced by producers, the rural population has become very dependent on periodic government assistance. Since '27 2H Instituto Brasileiro de Geografia e Estatistica 1996. 29 Superintendency for the Development of the Northeast 1999. Tonres 1997. 281 FARMING SYSTEMS AND POVERTY no long-term solution has been developed, this population represents a migratory time-bomb, with some estimates placing the number of potential migrants at 8 to 13 million. TRENDS AND ISSUES IN DRYLAND MIXED SYSTEM The key sectors that offer potential for regional income growth are tourism, services and agro-industry. By year 2030, the productive structure of this farming system will probably be more concentrated than today, as many sub-marginal producers will have left. There is a low probability that the system will be able to finance its own development, so it will continue to depend on government resources. Total population is projected to grow at one percent per annum. Income distribution will continue to be highly skewed and any decrease in poverty will rely heavily on government action programs. The operating capacity of public institutions, including the research and extension sector, is expected to increase. However, improved response to small farmer needs, and expanded co-operation with the private sector, is unlikely to occur unless significant measures are undertaken to restructure the organisation and management of research organisations. On the other hand, the organisation and democratisation of society will be stronger. Drought effects are likely to be aggravated over the years, as climatic instability increases and degradation of natural resources reduces the capacity of the system to resist long clry periods. The impact will be high, further degrading soils and vegetation and increasing population outflow. These negative effects will be mitigated by growing irrigation activities - with an expected 0.5 million ha of new irrigated land. Much of this irrigation will be devoted to the production of tropical fruit for export, creating nearly an estimated 300000 jobs. A key constraint is the widespread perception that lack of water is purely a result of limited natural resources. In reality, it arises largely from inequitable land distribution, inappropriate technologies, and poor resource management. Land degradation in sub-marginal holdings further exacerbates the problem, although opportunities do exist for low water-demand production systems (e.g. cashew). Yucatan faces a particular challenge with respect to the sustain ability of shifting cultivation practices. Technical changes within the milpa system are limited to the introduction of external inputs such as herbicides, improved varieties and, to some extent, fertiliser. Crop diversification, or changing the cropping cycles on the same milpa, are possible adaptations. However, if fallow periods continue to decline, the only possible outcome will be serious soil and vegetation degradation and drastically lower yields. This may well happen, unless out-migration occurs at a faster rate than population growth. Other important issues to be considered are: • reform of the existing system of agricultural land to permit consolidation of holdings and increased efficiency; 282 LATIN AMERICA AND CARIBBEAN • control of desertification in the driest areas; and • using ecotourism potential to create employment opportunities. PRIORITIES FOR DRYLAND MIXED SYSTEM In contrast to other regions of the world that have already made the transition to modern agricultural practices, the Dryland Mixed Farming System has failed to undertake the necessary changes to stimulate a broad and equitable process of agricultural and socio-economic development. Even major advances in technology will not permit a poor agricultural population of 10 million people to escape from poverty over the next 30 years, given existing resource constraints. If farm populations can be reduced, and a more equitable land distribution achieved, then the possibility exists for increased earnings for those remaining ­ together with a halt to the ever-increasing degradation of the natural resource base . Two major strategic approaches to poverty reduction can thus be proposed : (i) alternative livelihoods, principally through exit from agriculture within the system; and (ii) increased off-farm incomes. In addition, agricultural growth through increased farm size, diversification, and some intensification of production will contribute to the reduction of poverty. Provision of alternative livelihood opportunities to sub-marginal farm families within the region would include incentives for the creation of agm-industry alld other rural occupations, such as training of workers and tax benefits. Assistance in relocating sub-marginal farmers to areas of agricultural expansion (i.e. the Cerrados) is also important; possibly including compensation for exit Ii'om currently occupied lands and access to finance to buy land in expansion areas. A further element in this strategic approach is the provision of skills training and infrastructural improvements to facilitate the movement of people (especially youth and women) into regional urban areas. The second strategic approach consists of providing those remaining on-farm .1 with the pote ntial for increased earnings through land purchase and diversification into higher value crops (possibly directed at the tourist sector). This may exclude many renters who have no initial land base from which to expand. Experience 111 a number of countries has shown, however, that financing land purchase costs alone is not enough. Any programme of this type must also address: (i) on-farm investments and working capital requirements; (ii) dissemination of technologies that improve productivity in relation to moisture constraints - including development and dissemination of drought resistant varieties and species and encouragement for the replacement of maize; and (iii) zero-tillage technologies appropriate for small producers; small-scale irrigation where feasible . 283 I FARMING SYSTEMS AND POVERTY Introduction of farming practices that reverse the degradation of the natural resource base should also receive a high priority. These practices include: (i) the expanded utilisation of legumes and fodder crops (e.g. Mucuna pruriens and Canavaiia ensiJo17nis) ; (ii) zero or limited grazing systems for small-stock; and (iii) greater attention to the potentials of native vegetation. Land use planning should also be given priority to improve the identification of areas under risk. Meteorological research leading to specific drought forecasting all over the region would also be valuable. In addition to these major strategic approaches, public financing must be shifted away from emergency drought relief and similar programmes into activities that provide hope for future avoidance of these conditions. MAIZE - BEANS (MESOAMERICAN) FARMING SYSTEM CHARACTERISTICS OF THE SYSTEM Box 7.6 Basic Data: Maize-Beans (Mesoameric:m) Farming System The Maize-Beans (Mesoamerican) Total population (m) 77 Farming System extends over an area Agricu ltural population (m) II of approximately 65 million ha. It Total JreJ (m ha) 65 occupies mostly upland areas from the Agm-ecologlca l zone Dry - mO ist Panama Canal to the highland plateaux subhurnid of Guatemala and Central Mexico. The Cultivated area (nl h.l) 6 system is distinguished by: (i) the Irr igJ ted lreJ (m In) 2 significant proportion of indigenous population 30; (ii) the central role, both C attle POpubtlOIl (m head) 14 agriculturally and culturally, of maize and beans; (iii) the small size of holdings - typically under five ha and in EI Salvador, less than two ha 31; (iv) the high degree of on-farm consumption of production (over 65 percent in Honcluras) 32; and (v) the importance of seasonal migration of wage labour to lowland agricultural and coffee estates. Coffee, and intensive small-scale irrigated vegetable production (in areas close to roads and urban centres), are important income sources and often critical in determining the degree of poverty within a community. Cultivated land may extend as high as 3 500 m above sea level in the Guatemalan hlghlands, but the majority is between 400 and 2000 m, with a precipitation from :W Indigenous people account for 66 percent of total population in Guatemala and 29 percent in Mexico. but are lower in other Central American countries, Within the system itself. the proportion can be estimated at 60 to 80 percent. ~I '1') Comite de Accian para el Desarrollo Social & Econ6mico de CentroamericaiEuropean Commision 1990, , - Comlte de Accian para el Desarrollo Social & Econ6mico de CentroamericaiEuropean Commision 1990, 284 I LATIN AMERICA AND CARIBBEAN 1 000 to 2000 mm per annum. There is extensive irrigation, much of it under the control of larger farmers, although small-scale systems play an important role in horticulture. Most soils are of volcanic origin, and relatively fertile, but on slope lands tend to be thin and subject to erosion 33. FAO studies from the 1980s estimated severe erosion on as much as 45 percent of all land in EI Salvador and 25 to 35 percent in Guatemala 34. Forest cover was severely reduced during the 20th century, leaving large areas of contiguous forest only in inaccessible areas and in National Parks. A distinctive sub-system in Central Mexic0 35 shares the cultural and agronomic elements of the main system, but is agro-ecologically different, consisting of high altitude plateau (2 000 to 3000 m elevation) with lower temperatures and poorer soils. The system has an estimated agricultural population of some 11 million people, half of them in Mexico 36 . This ranges from about 50 percent of national agricultural population in Guatemala to less than 20 percent in Honduras, while arable area within varies from 40 percent (EI Salvador) to 10 percent (Panama) of national totals 37 . In 1989, it was estimated that there were 1.4 million producers of basic grains in Central America 38, the vast majority of whom would be included in the system. Large-scale estates, frequently in excess of 100 ha, are interspersed throughout the system. Often controlled by absentee landlords or corporations, these estates have traditionally been dedicated to the commercial production of coffee and beef although more recently rubber, cut flowers and foliage production have increased in importance. In addition, commercially-operated family farms created by European settlers are clustered in the more fertile valley areas of the system, and often produce vegetables and dairy products as well as coffee. Most indigenous producers control their family parcels under customary arrangements but lack legal title , rendering access to formal credit sources very difficult. (see Box 7.7). Yields tend to be low; with maize averaging 1 to 2 t/ha 39; by contrast average maize yields in Sinaloa State, where irrigation is widespread, reach 6 t/ha while system yields of beans (0.6 to 0.9 t/ ha) are lower than the Mexican national averages of over 1 t/ha 40. Nevertheless, small-scale indigenous producers are important contributors to national output of these crops. In 1999, over 50 percent of the area sown to maize in Mexico was within the system boundaries. In total, some 33 FAO I 999a. 34 :15 MAG/FAO/ClP/IiCA 1996, p.63. Comprising much of the states of Hidalgo,Tlaxcala, Guanaj uato, Queretero, and Mexico. :J6 37 Instituto Nacional de Estadistica Geograftca e Informatica 1995. MAG/ FAO/CIP/IICA 1996. 38 Comite de Acci6n para el Desarrollo Social & Econ6mico de CentroamericaiEuropean Commision 1990. 39 Yiel ds in the altiplano area of Central Mexico tend to be higher (from 2 to 2.5 tlha) renecting proximity to urban markets, 40 Secretaria de Agricultura, Ganaderia. Desarrollo Rural, Pesca y A limentaci6n 1998. 285 i FARMING SYSTEMS AND POVERTY Box 7.7 A Typical Household of the Maize-Beans (Mesoamerican) Farming System A farm household in Quiche Department. Guatemala might have traditional control of a total of 3.5 ha. some 1.5 ha of which are dedicated to maize. and 0.75 ha to beans. A low yielding second harvest may be possible on part of the holding. depending on soils and slope. Coffee. the principal cash crop. occupies less than 0.5 ha. while tree fruits and vegetables for household consumption and possibly local sale perhaps a further 0.5 ha. The household occupies the remaining space. If the household is wealthy. or receives remittances from abroad. it may have a cow for milk and draught, plus some chickens.The household head could well be an indigenous woman. especially where there has been armed conflict or extensive out-migration. When there is a male head of household. he will often be seasonally absent providing income from wage labour on the coast. Input use is low (although normally will be used for the coffee) and there will be no access to formal credit. although itinerant buyers may advance funds to regular clients.There may be a primary school within reach. but probably no year round access by road to the community. I 6 to 7 million ha of maize are harvested annually within the system 41 . The importance of the system is even more pronounced for coffee. which requires altitudes over 500 m for proper development and fruiting. Almost all regional coffee production derives from the mesoamerican system area . However. large cotlee estates account for much of that output. Extensive poverty is present throughout the system, reaching levels as high as 80 percent in the Guatemalan Departments of Huehuetenango and Quiche. A regional average of 60 percent was estimated by I1CA in 199142. Malnutrition is also widespread, especially in the period before harvest. Returns per unit of land tend to be greater - but population densities much higher and holding sizes smaller - in areas where coffee production is practised. Food insecurity is exacerbated by significant variability in coffee prices from year to year. Public infrastructure is sparse or completely absent away from local administrative centres, especially in those areas where there has been prolonged armed conflict in recent decades (Chiapas in Mexico, Guatemala, El Salvador and Nicaragua), and many indige nous communities are several hours from the nearest road. Similarly, the availability of education, health care and other services is minimal. To compensate, many indigenous communities have high levels of social .cohesion, enabling community mobilisation for a wide range of tasks. Community controlled forest areas are also common, but tend to be very fragmen ta ry. 41 42 Secretaria de Agricultura. Ganaderia, Desarrollo Rural, Pesca y Alimentacion 1998. FAO 1999a 286 LATIN AMERICA AND CARIBBEAN TRENDS AND ISSUES IN MAIZE-BEANS (MESOAMERICAN) SYSTEM Fragmentation due to inheritance and other causes has increased the number of holdings and decreased the average size over recent decades. The number of holdings with maize in Guatemala more th an doubled, from 321 000 to 667000 between 1964 and 1996, (however not all may be within the system)4'1. This is faster than the rate of population increase. Although urbanisation rates are also increasing, projections indicate no significant decline in rural populations in Me xico and Central America over the next 30 years. This suggests that pressure on access to land- an underlying cause of so much of the civil conflict in the region in th e last 20 years - will continue. With so little unexploited land available, existing trends are likely to continue: (i) exploitation of ever steeper slopes; (ii) intensification of traditional production systems; and (iii) diversification of production. Expansion onto steep slopes will generate only short-term gains, as underlying soil structure is difficult to maintain and erosion will increase. In addition, increasing climatic variability resulting in torrential rainfall and flooding, is already believed to be responsible for major damage to many degraded areas. This trend will probably intensify. The positive relationship between population density and yield levels in Central America 44 suggests that yields of both maize and beans are likely to increase over time, perhaps by 50 to 100 percent. However, a downward trend in farmgate prices for basic grains is likely to increase pressure on semi-subsistence farmers. Falling international prices, which are projected to decline even further over at least the next ten years 45 and trade liberalisation, have eroded the degree of protection previously enjoyed by national producers. Although major advances in maize yields may well occur in industrialised countries in the future, the reliance of farmers on self-produced seed, plus widespread soil limitations, would likely limit the benefits to system farmers . Increased diversification will offer some compensation . National urban populations with increased incomes will demand more high value products, and improved technologies in post-harvest handling will continue to expand speciality markets in industrial countries. Many of these products are labour intensive and can be well suited to family labour. Diversification has already occurred in horticultural and fruit production in peri-urban and other favourable areas throughout the mesoamerican system and will likely accelerate over the next 30 years . Four principal development household strategies are thus foreseen for small producers within the mesoamerican system. Firstly, those with favourable resource 4 :1 Comite de A ccion para el Desarrollo Social & Economico de CentroamericalEurop ean Co mmision ( 1990). p. 17 for 1964-1 979 data; 1996 data from: Unidad Sectorial de Planificacion Agropecuari a y de A limentacion (1996). H In 1985 Panama, with a populatio n density o f 28 personslkm2 recorded average maize yields of 0.93 tJha while EI Salvador, with a populatio n density of 265 personsJkm 2 recorded 1.84 tJha. O ther Central Ame,'ican countries fell between these points. 45 World Bank 2000e. 287 FARMING SYSTEMS AND POVERTY endowments (including the possibility of irrigation), location, and human capital will probably emerge from poverty as specialist suppliers of export-oriented products, despite their small holding sizes (see Box 7.8). Other cases of diversification into intensive horticultural and fruit production include sweet onions in Nicaragua and chilli peppers in Belize. Maize and beans will continue to be grown for household consumption only, but perhaps with dramatically higher yields, as this group will have the resources to adopt new technologies. However, it is not believed that this strategy will ever represent a viable option for more than a relatively small percentage of mesoamerican system smallholders - perhaps 15 percent or less. Secondly, a larger proportion of smallholders are likely to continue to rely on the farm for their basic sustenance, but turn increasingly to off-farm employment as a means of earning the income needed to finance basic household expenses (medicine, education, clothes, etc.). This income may also finance greater input use, Box 7.8 Private Sector Support for Small Farmer Dlversification 46 The key role of the private sector in supporting diversification and income generation among indigenous smallholders in the highlands of Guatemala demonstrates the potential for effective co-operation between the private sector and traditional farmers.Although snow peas and broccoli were pioneered in the early I970s by agribusinesses. within 10 years production of these perishable commodities had shifted entirely to smallholders. Despite little if any external assistance. by 1996 these crops had grown to support more than 21 000 Indigenous families through an estimated US$33 million in additional annual gross income; equivalent to US$I SOO per family; More than 2 SOO further jobs are estimated to have been created in associated post-harvest and marketing activities. Expansion is continuing. as new non­ traditional crops such as raspberries gain importance. High labour requirements and the need for intensive management leads to average crop areas of only 0.24 ha per family. ensuring dispersion of benefits. and demonstrating that smallholders can achieve a competitive advantage for this type of product. It is argued that the rapid expansion of smallholder production. and the high proportion of final price (47 percent) accruing to the producers). is a direct result of the competitive market created by the many small and medium-scale marketing enterprises active in the non­ traditional field. The success of these enterprises. in wm. owes much to generally supportive government policies. and in particular, to a dynamic business support organisation (GEXPRONT).This contributed significantly to reducing the barriers to entry for small enterprises. resolving key marketing bottlenecks and. more recently. brokering private-sector support to producers in applied research and extension. These results suggest that support for the private sector. if leading to more open markets and improved efficiency of operations. may be an effective strategy for supporting diversification among small producers. 46 Abstracted from Case Study 5. Annex I. 288 I LATIN AMERICA AND CARIBBEAN raising yields. The growth of export-oriented production on the part of commercial farmers and pioneer smallholders will create employment opportunities, both in agribusiness, as well as in services. Expanded tourism may also offer a source of employment. A third path will consist of families who abandon their holdings and move to urban centres. It is likely that. over the next three decades. this exit strategy will be followed by a sizeable proportion of the rural population, reaching perhaps as high as 20 to 25 percent for areas such as EI Salvador where population densities are high. The fourth path comprises those who neither benefit from the new developments nor migrate in search of work. This group will account disproportionately for the extension of cultivated area on steep slopes. risking severe environmental and human loss from flooding and landslides in search of increased production. Agricultural output will bring declining real income as relative returns diminish and with few resources to purchase inputs. yields will stagnate or decline. Poverty will worsen for this group, perhaps dramatically. Unfortunately, they are also likely to be the largest group, and may account for more as many as half the population III some zones. Throughout the system, public infrastructure and services are likely to continue to improve, especially as a result of significantly expanded post-conflict rural investment programmes in countries such as Nicaragua, EI Salvador and Guatemala. Private sector and civil society participation in rural areas is also expected to increase in importance. PRIORITIES FOR MAIZE-BEANS (MESOAMERICAN) SYSTEM The system is characterised by extensive and often severe poverty. Yet focusing attention on increasing yields of traditional products can produce limited poverty alleviation at best. The problem facing producers is not one of insufficient foodstuffs. but rather the need for higher cash incomes to meet household needs. Where no alternative sources of cash exist they are forced to sell output that would otherwise be consumed within the household, hence creating secondary malnutrition. For those producers occupying degraded or fragile slope land and unable or unwilling to return such land to forest cover, the priority must be to promote more sustainable patterns of production that can be readily adopted with few resources, and can provide rapidly realisable benefits in output or labour use. Specific interventions include: (i) permanent high value crops; (ii) reduced tillage; (iii) higher plant populations; (iv) contour cultivation; (v) improved varieties, (vi) live barriers; (vii) intercropping; (viii) dispersed tree cover; and (ix) mulching. The benefits of these technologies and the feasibility of their adoption have been clearly demonstrated by a number of innovative projects within the system. 289 FARMING SYSTEMS AND POVERTY However, while such practices can both increase yields and lead to more sustainable use of natural resources, they will have only limited impact on increasing household incomes unless integrated into diversification and marketing programmes, and can only be seen as part of any solution. Diversification offers the greatest potential rewards but, even among those who can make the transition, support will be needed. The private sector is best equipped to provide this, as entrepreneurs understand most clearly the needs and dema nds of the market. Nevertheless, a crucial role remains for Government in ensuring that the business environment is appropriate for small farmer-private sector interaction . Important measures include: (i) ensuring a competitive environment for enterprises, with low barriers to entry and controls over monopoly powers; (ii) promotion of farmer associations and small enterprise groupings, that can act as effective channels for financing, technical assistance and management training; and (iii) increasing the participation of producers and traders in the setting of policies and negotiation and monitoring of trade agreements. The development of land markets would accelerate the transition, permitting producers to buy-out less successful neighbours and form the nucleus of a commercial family farming sector. Off-farm employment and other rural employment may initiate an upward spiral of employment, earnings expenditure, and increased demand for goods and services among those unable to diversify production . Investment by medium and large scale agro-industries, assembly plants and tourism can be promoted by offering non-financial incentives. These could include: (i) public infrastructure provision in zones where companies are establishing operations; (ii) extension and organisational assistance to contract suppliers; (iii) training of company staff; and (iv) assistance in dealing with municipalities in land acquisition , local taxation, etc. The reduction of rural poverty among those unable to diversify production or obtain off-farm employment must focus on facilitating a successful exodus of people from these areas. Empirical evidence strongly suggests that the poorest segments of the population do not migrate as much as wealthier rural inhabitants; they lack the resources to do S047. An appropriate strategy would be to tackle this problem on two fronts - providing resources for migration and attempting to increase the probability of successful absorption at their destination . Start-up capital for migrants might be provided through: (i) payments for the transfer of customary land rights to groups interested in conservation and biodiversity, thus taking sub-marginal land out of circulation ; and (ii) financing the purchase of land rights by more successful small producers. Literacy and vocational training is also important for would-be migrants and their families, to provide basic employment skills. '17 Inter-American Development Bank 1999, 290 LATIN AMERICA AND CARIBBEAN HIGH ALTITUDE MIXED (CENTRAL ANDES) FARMING SYSTEM CHARACTERISTICS OF THE Box 7.9 Basic Data: High Alti tude SYSTEM Mixed (Centr'al Andes) Farmi ng System The High Altitude Mixed (Central Total population (m) 16 Andes) Farming System extends over Agricultur~1 population (111) 7 121 million ha from Cajamarca in Total area (m haJ 121 Northern Peru, through Bolivia into Agro-ecological zone Senll Jrid - dry Northern Chi'le and Northeast s'l bhumid Argentina (see Box 7.9). An estimated Cultivated area (m hal 3 40 percent of the territory of Peru Irngated area (m ha) and Bolivia falls within the system boundaries, as well as smaller portions Canle population (m head) 9 of Chile and Argentina. In the north a series of interwoven ranges dissected by longitudinal valleys make up the Peruvian Sierra. Further south, at about latitude 14 ° South, the Andes divide into two major ranges, enclosing the plateau or a.ltiplano of Peru, Bolivia and Northern Chile and Argentina. This vast treeless area of land is composed of undissected tableland above the level of 3 500 m and is characterised by interior drainage. Some of the agricultural land reaches 4 500 m 48 . Precipitation is concentrated within a single wet season of variable length and ranges from 150 mm in the western ranges to 1000 mm per annum in the eastern ranges. Although the soils, as well as their capability for agricultural production, are extremely diverse their fertility is typically low. All the lands in the system are affected by severe soil erosion. Agro-ecologically the zone is extremely complex 49. The great variation of soil types and the frequent sharp changes in altitude are accompanied by dramatic changes in temperature, humidity and rainfall. An aridity gradient exists from east to west across the Central Andes as well as from north to south along the length of the chain . Annual mean temperature varies greatly with altitude. Mean daily temperature is generally below 10°C and frost is common, especially during the dry season. Apart from altitude, other key features that characterise the Central Andean High Altitude Farming System are the overwhelmingly indigenous population, the virtual absence of large holdings - unusual in Latin America - and the low levels of external input use. Most of the system was originally part of the Inca Empire and has retained strong cultural elements inherited from that period, which have changed only superficially. Poverty within the system is extensive. In 1997, 48 The latitude limit to potatoes cultivation is 4 200 m at latitude I 50 South. 49 More than 60 biotic zones of the 103 found in the world are represented in the Central Andes and Altiplano near Titicaca Lake. 291 FARMING SYSTEMS AND POVERTY 68 percent of the total rural population of Peru fell below the national poverty line and this proportion is believed to be higher for Bolivia, although recent data are not available. According to the 1994 Census, almost 60 percent of holdings in the Peruvian Sierra were under 3 ha with \.5 to 2.5 ha cultivated (often in scattered parcels), while in the altiplano they reach 15 to 20 ha, with 1.5 to 2 ha cultivated. These small cultivated areas, combined with the poor productivity of such high altitude arid lands, result in endemic poverty, widespread soil degradation and erosion, and out-migration has become an important element of the system. There is an extensive flow of permanent and seasonal migration to the recently opened land on the eastern side of the Andes and to the Amazonian lowlands beyond. Nevertheless, despite out-migration, it is estimated that the rural population within the system grew by 1.6 percent per annum during the period 1960-1990­ this growth rate is expected to decline in future. The most densely populated areas of this farming system are the Peruvian Sierra with about 0.3 inhabitants per ha and the Bolivian altiplano where in certain parts, such as the areas surrounding La Paz, Cochabamba and Potosi, it can reach 0.4 inhabitants per ha. The remaining arid and subarid parts of Chile and Argentine are very sparsely populated. The average rural population density for the whole farming system is 0.06 persons per ha (17 ha per person). The cultivated area within the system is about 3.1 million ha and represents as much as a third of the national cultivated area of Peru and Bolivia. An estimated 1.2 million ha are irrigated, mostly in the arid western section in Peru. On the basis of statistical data from 1994, an estimated 1.2 million farms in Peru 50 and 0.6 million in Bolivia 51 , fall within the system. The total number of farms for the entire system would be over two million. Legal rights over property and other resources are not commonly established. In the Peruvian Sierra, approximately one-third of holdings are legally owned, while two-thirds are held under customary arrangements. There is almost no formal land rental, although there may well be informal arrangements. The agricultural population of some 7 million people, three-quarters of them in Peru 52, rely on a subsistence-based mixed production system including potatoes, pre-Colombian Andean crops (e.g. quinoa and chenopodium) and barley, maize, and lima bean. Sheep are important in the Peruvian Sierra, while the camelidae (llama, alpaca) dominate further South. Guinea pigs are also of major importance at higher altitudes. The potential for irrigation is reasonable. However, given the topography of the system, much of the water only becomes available on the lower flanks of the western ranges. In the Peruvian Sierra, typical land use patterns distinguish three major production systems according to altitude: (i) the valley floor where corn, quinoa, 50 Instituto Nacional de Estadistica e Informatica 1996. 51 Munoz 1999. 52 The system rural population is estimated at 40 percent of total rural population in Peru and 45 percent in Bolivia. 292 LATIN AMERICA AND CARIBBEAN chenopodium and potatoes are grown. Where water is available, small-scale traditional irrigation systems may make horticultural production possible; (ii) the intermediate slopes, where drier western terraces are dedicated to barley and grains and the better eastern slopes are dominated by tuber cultivation; and (iii) the high hills where the cultivation of more frost-resistant crops is combined with pastoral activities. In the altiplano sub-zone further to the south , the land use pattern chiefly depends on the gradient of rainfall. In the most humid areas agriculture is widespread, while under drier conditions extensive livestock production predominates. In some of the arid and semiarid areas, such as the 'Valles Altos' of Bolivia, extensive degradation of soils has caused major changes in prior production patterns, as traditional crops such as maize have become infeasible. Average system yields are constrained not only by agro-eco'logical conditions but also by the limited use of external inputs and the low productivity of family labour. In the Peruvian Sierra, less than 10 percent of smallholders are estimated to use purchased seed, but nearly 70 percent use organic fertiliser of one form or another. Maize yields typically do not exceed 1 t/ha, with quinoa yielding 0.85 t/ha and potatoes 10 t/ha. Other cereals (wheat, barley) average approximately 1 to 1.2 t/ha, but these yields may reflect the participation of larger producers. Further south, in the altiplano sub-system, yields drop further: potatoes from 4 to 5 t/ha; quinoa 0.6 t/ha and wheat and barley about 0.6 to 0.7 t/ha. During the mid-1980s and the beginning of 1990s, structural and sectoral adjustment programmes caused major changes in national economies. Food production grew at annual rates of three percent and five percent for Bolivia and Peru respectively 53 while agricultural exports expanded at an even higher rate; eight percent and nine percent respectively for the same two countries. Food imports also rose, but at a lower rate, resulting in a net improvement within the domestic agricultural sector. Nevertheless, the evidence suggests that most of these gains have been captured by the modern agricultural sector, bringing little I benefit to the producers of the high altitude system. The modern agricultural sector has also been the beneficiary of most public resources devoted to the rural . areas, including the development of improved agricultural technologies. The system is characterised by a widespread lack of basic infrastructure in such areas as education, health, roads, and markets. In Bolivia, the proportion of overall public resources devoted to the agricultural sector has not been consistent with the contribution of this sector to the economy. Agricultural GDP was 16 percent of the national total in 1999 but the sector received only six percent of the total public budget. The allocation of resources to the agricultural sector is more equitable in Peru, where both expenditures and agricultural GDP are around 7 percent. 53 The growth rate was calculated for the period 1985-1996 for Bolivia and 1990-1996 for Peru. 293 FARMING SYSTEMS AND POVERTY TRENDS AND ISSUES IN HIGH ALTITUDE MIXED (CENTRAL ANDES) SYSTEM Over the next 30 years, rural populations within the system are not expected to fall significantly. Pressure on access to land will persist as declining real prices for agricultural products drive producers to expand their cultivated areas and increase stocking levels. The low productivity explains the apparent contradiction between the low population/cropland ratio and the persistent high pressure on land. The widespread soil erosion occurring on the slopes of the Peruvian Sierra and the altiplano will likely worsen without substantial changes in cropping patterns and natural resource management practices. Strong economic growth nationally, and in the lower valleys and Amazonian lowlands in particular, may accelerate out­ migration. Although historically a relatively abundant resource, labour may join humidity, soils and slope as a limiting factor of production if this occurs. The evolution of land tenure and landholding distribution during this period is an extremely complex matter. It is expected to be mainly influenced by whether or not adequate land registration, financing, and market development for land will be achieved, requiring considerable legislative institutional reform 54. Although crop yields are low by regional standards, the adoption of available improved technologies requires levels of input use that are not feasible for most producers under current circumstances. In fact, natural resource degradation and possible labour shortages will increasingly challenge current production levels. Also, opportunities for crop diversification are more limited than in other zones, although expansion of irrigation and protected cultivation under plastic tunnels may provide limited opportunities. The best opportunities for many producers may lie in improved community organisation to benefit from the potential for added value in existing products. Stronger marketing linkages to end-users (supermarkets, institutions, and restaurants) and the processing of raw materials (milk, potatoes and grains) could significantly increase family earnings, while speciality products such as quinoa and camelidae wool may provide profitable export opportunities. Key issues that will have to be addressed if poverty reduction is to be achieved and economic growth promoted within the system, include: • Unsustainable natural resource management practices, resulting in soil degradation and erosion; • Low prices for agricultural outputs; • Lack of off-farm employment and income generating opportunities; • Low factor productivity, especially with respect to labour and land; • Inadequate public sector investment in infrastructure and agricultural services. 54 The present regulation of the land market was established in Peru by the land reform of 1953. which remains popular among small farmers. but restricts the consolidat ion of holdings. 294 : LATIN AMERICA AND CARIBBEAN PRIORITI,ES FOR HIGH ALTITUDE MIXED (CENTRAL ANDES) SYSTEM The extreme agro-ecological conditions, fragmented landholdings, poor soils and lack of off-farm employment opportunities have resulted in extremely high poverty levels within the Central Andean high altitude system and render the sustainable development of the system both a necessity and challenge. Soil degradation on the hillsides in the Peruvian Sierra and in the altiplano compromises the long-term potential for land productivity 55. Although poverty is recognised as a dominant force affecting soil dynamics in the mountainous areas, the manner in which it influences production systems is complex. Erosion control projects implemented within the system have had only limited success, and must recognise that purely technical responses will fail to resolve the problem. Instead, they must be better integrated with the creation of wider economic opportunities for small famers, while recognising the limitations imposed by low labour productivity and fragmented holdings. The concentration by smaB-scale producers on low value commodities for domestic markets has left them exposed to stagnant demand and with consumers who are unwilling to pay higher prices for such aspects as varietal improvements, post-harvest handling or packaging. Yet a number of the products grown within the system have significant potential for international specialist and niche markets. Anecdotal evidence suggests that major increases in prices can be achieved by tapping into these markets for llama and alpaca wool, quinoa, speciality potato varieties and similar products, especially if the potential exists for origin-labelling or control. Fair trade agreements may also offer income increasing opportunities, but are inherently limited in scale. Diversification for export markets will require improved producer organisation to co-ordinate and bulk voillmes required for export shipments; as well as efficient input supply mechanisms (including finance). Technical assistance would be needed to ensure adequate quality control, develop post-harvest handling and packaging, and I establish effective market linkages. Off-farm income, particularly related to agro-industry, can contribute significantly to rural development in small-farm areas. Agro-industry often induces rapid technical change among participating small farm ers, contributes to demand for local production 56 and creates ofl~farm employment (see Box 7.9). However, the imperfect functioning of markets has traditionally inhibited a broad expansion of small-farm oriented agro-industry. This is particularly true in relation to rural credit 57, land markets, insurance for agriculture activities, information , technology and specialised inputs. Agro-industries have developed a number of strategies 55 Morales and Knapp 1987. 56 Well documented in CEPAl, FAO & GTZ ( 1998). 57 Export-oriented agroindustri es frequently require products w ith higher input levels and costs t han traditional crops. 295 FARMING SYSTEMS AND POVERTY Box 7.9 Farmer Organisation for Income Generation, Off·farm Employment and Increased Value Added to Production 58 The grassroots rural dairy processing industry that has sprung up in the highland areas of the Peruvian Sierra demonstrates the potential for generad"l added income among poor farmers In the Central Andean Farming System. Although conventional agribusinesses play a major role in processing and supplying dairy products. a multitude of small farmers spread oYer the highland still produce and sell their products on a traditional basis. In 1987, in the Sierras of Chuqulbamba District, Peru, a group of 57 farmers, with the support of an NGO, decided to construct their own small-scale dairy plant. Mainly oriented to supply the neighbouring urban areas with cheese and yoghurt, production evolved rapidly from 91 t in the beginning to 639 t per annum in 1996.This experience was emulated by other communities and individuals across the region. From 1991 to 1995. 16 additional dairy plants were established in the region, showing c!assical'c!ustering' within a single district. At present, the 17 plants combined process almost II 000 t of milk per annum and provide an estimated US$6.6 million additional annual gross income to I 100 farmers, equivalent to US$O.33 per person per day. an improvement of 17 percent over current family incomes.An estimated 155 further direct and indirect Jobs have been created.The inYestment required to create a Job has been as low as US$I.ofOO per worker. Although this case highlights many positive aspects and promising perspectives for poverty alleviation among small farmers, a more comprehensive analysis is needed to ascertaln the long­ run viability of these rural small-scale dairy plants and their competitiveness in liberalised markets for dairy products. The intervention of NGOs has been critical in this experience through the provision of technical and financial assistance, as well as in upgrading human capital among the peasants, but is probably too limited for large-scale replication.To insure the long­ term growth of these small farmers' income generation initiatives, improved public policies and services are essential. to compensate for the effects of these imperfect market, including the provision of farmer credit, technology and inputs, as well as renting of land from small producers 59. Although it is difficult to develop recommendations for such programmes and policies outside the context of a specific activity, they would generally include the reduction of information costs and improved market linkages for producers in order to move toward assured market access and financing of production costs. The framework should include a strategy to strengthen technical assistance. The reduction of transactions costs arising in the first stage of the linkage between the 58 de Grandi 200 I . 59 A very innovative link between farmers and agro-industry has been established in the Ica Valley of Peru. Here a tomato paste processor rents land from local farmers. w ho work on their own land. but as employees ofthe processing plant. 296 LATIN AMERICA AND CARIBBEAN industry and farmers 60 is important, including rapid, simple and enforceable arbitrage mechanisms to resolve the conflicts that often arise between farmers and agro-industry in their transactions. Facilitating access to credit and removing legal and market constraints affecting small farmers with regard to enlarging their landholdings, are also of great importance. Similar priority should be accorded to reducing the costs of training - both to farmers and to agro-industry - as well as to supporting farmers' organisations. Increased land and labour productivity is a further priority area, as the High Altitude Farming System of the Central Andes is characterised by very low factor productivity. Average smallholding size is relatively large by the standards of many farming systems, but the very poor returns to land and labour leave producers l with Iittle benefit for their efforts. While low productivity is in part a result of unfavourable climatic and soil fertility conditions. it can be argued that the current system fails to utilise effectively those resources that are available. Priority must be given to participatory research and extension on adapted crop varieties for this high altitude zone (short season, drought tolerant, etc.). It is worth noting that successful trials have been made in promoting indigenous technologies - such as the use of large earth planting beds dissected with deep trenches that reduce frost damage by avoiding settling of cold air on growing plants - and more work would be worthwhile in this area. It is important to accelerate the regularisation and registration of farm ownership, the lack of which seriously hinders land market development and provide strategic support to land buyers - mainly information and notary services - including identifying of available land and the provision of more readily­ accessible mortgage facilities. The achievement of productivity increases is closely related to public investment in infrastructure and services. in improving human capital within the farm population through education and health care. provision of specific government programmes to promote the development of the agro-industrial sector, as well as the completion of the reforms in factor 61 markets. The conditions to achieve these objectives do not yet appear to have been met. At the root of any strategy for rural development is the premise that macroeconomic stability and more appropriate relative prices. are not sufficient by themselves to bring about large­ scale agricultural productivity growth. These must be complemented by government support, in particular in the form of more effective government investments in agriculture. Greater emphasis should therefore be placed on adequate public resource allocation to agriculture through suitable budgetary adjustments. 60 Agro -industries generally prefer to be linked to the commercial secto r, as transactions costs are lower than those incurred in the small farm sector. 61 Land market reform is unlikely in the medium term future as the necessary preparatory steps (as undertaken in Mexico as part of their land reform process) still have not been started ill Bolivia and Peru. 297 FARMING SYSTEMS AND POVERTY STRATEGIC PRIORITIES FOR LATIN AMERICA AND CARIBBEAN The following strategic priontles derive from the analysis of the four selected farming systems supplemented by expert knowledge of the other systems. It is believed that the conclusions with regard to poverty reduction and agricultural growth presented below will be broadly relevant across the region as a whole 62 . There is considerable scope for reduction of agricultural poverty in Latin America and Caribbean, through production intensification, diversification (including value added), expansion of farm size, off-farm employment and exit from agriculture 63 . Table 7.4 indicates the relative importance of each of these strategies as factors in reducing poverty within individual farming systems in Latin America during the coming decades. As can be seen, the importance of different household strategies varies significantly from system to system. In broad terms, lower potential systems derive a greater proportion of poverty reduction from farming system exit - migration to cities, abandoning farms for employment in the off-farm economy or moving to another farming system - than do higher potential systems, which tend instead to derive more benefits from productivity increases. Across all systems except the most remote, it is expected that diversification will be a major source of agricultural poverty reduction. Diversification would include a shift into higher value non-traditional crops as well as added-value activities, such as grading, packaging, and on-farm processing. Increased off-farm employment and income generation is also believed to be generally important. However, strategies such as the expansion of farm size among small farmers is important as a source of poverty reduction in only a few cases. Expected sou rces of poverty red uction have implications for the specific interventions in each of the five principal categories outlined in the introduction to this book. Each of these categories is briefly examined below: POLICIES, INSTITUTIONS AND PUBLIC GOODS Three key strategic areas are likely to dominate governmental and institutional roles within farming systems in Latin America over the next 30 years: (i) improving access to land and - to a lesser extent - water, in farming systems with extensive poverty and among poverty groups in more wealthy systems; (ii) promoting alternative occupations for the agricultural poor who do not have access to 62 There is also poverty reduction and growth potential within the Forest Based System. covering the majority o f the Amazon basin and adjacent humid areas. Clearly major economic growth - including agriculture· can be expected to occur within this system over the next 30 years. However, serious natural resource and political 63 constraints render its development highly controversial. See Chapter I for a discussion of these household strategies for escape from poverty. 298 LATIN AMERICA AND CARIBBEAN Table 7.4 Potential and Relative Importance of Household Strategies for Poverty Reduction in Latin America and Caribbean Strategies for poverty reduction Farming System Potential for Potential for Intensi- Diversi- Increased Increased Exit from agricultural poverty fication fication Farm Size off-farm Agriculture growth reduction Income Irrigated Moderate Low 4 3 2 0 Forest Based Moderate Moderate 3 3 2.5 0.5 - high Coastal Plantation Moderate Moderate 2 2 3 2 & Mixed Intensive Mixed Moderate low 3 2 3 Rice-Livestock Moderate Moderate 3 2 2 2 (Campos) - high Moist Temperate low low 3 3 0.5 2.S Mixed-Forest Maize-Beans Low- High 1.5 2 2.5 3 (Mesoamerican) moderate Intensive Moderate Moderate 2 2.5 2 2.5 Highlands Mixed Extensive Mixed High Low II 4 2 3 0 (Cerrados) Temperate Moderate low 3 2 0 2.5 2.5 Mixed (Pampas) Dryland Mixed Low High O.S 1.5 3 4 Extensive Moderate Moderate 3 3 2 2 0 Dryland Mixed High Altitude Low High 2.5 0 2 4.5 & Altiplano Pastoral low low 0 0 3 6 Sparse (Forest) Low Low 0 2 0 5 3 Urban Based Moderate low 2 3 0 4 Average for Region 2.4 2.1 1.5 2. 1 1.9 Source: Expert judgment Note: Total score for each famring system equals 10. Assessments refer to poor famrers only. Average for region weighted by agricultural popUlations of systems derived from Table 7.1. II But considerable poverty reduction potential exists for those migrants entering the system from other areas. 299 FARMING SYSTEMS AND POVERTY sufficient land and water to escape poverty; and (iii) strengthening public goods in rural areas. In all these areas government must inevitably play a major role, although preferably working in co-operation with civil society and private sector groups. In many farming systems, a small minority of large farmers occupy large areas of land, which are often utilised only at relatively low intensities, while most producers are confined to smallholdings which are increasingly less viable. Civil conflict has often been a direct result ofthis situation. For the Maize-Beans (Mesoamerican) and Dryland Mixed Systems (arguably less so for the Central Andean System), poverty levels are directly related to problems of access to, and control of, natural resources - primarily land. Effective land policies is also important in frontier areas (e.g. the Extensive Mixed system) where in-migration from neighbouring poverty systems could lead to conflict. Key strategic priorities include: (i) improved functioning of land markets , through acceleration of cadastral and titling procedures, conflict resolution mechanisms, and changes in land tax structures; (ii) land banks to buy both marginal and large holdings and resell land with the objective of consolidating smaller commercial holdings; (iii) fiscal disincentives to under-utilised holdings and incentives for sale to land banks; and (iv) supported exit for sub-marginal producers including, where feasible, negotiating the purchase of traditional rights to land. A vital aspect of policy reform is the enforcement of legislation prohibiting illegal seizure of lands and other resources. This applies not only to powerful interests capturing state land, but also to small producers illegally occupying private lands and colonists entering indigenous community lands. Where such risks are perceived to exist, land may not be put on the market or offered for rental due to the fear of attracting squatters. This has become a major issue in recent years in the coastal zone of Guatemala, for example. Despite the opportunities that may exist for diversification and increasing output value among small-scale fanners , there will inevitably be many marginal and sub­ marginal farmers who simply lack the human, financial, locational and natural resource assets to benefit from these opportunities. Two broad alternatives exist: local off-farm employment and outmigration. Off-farm employment offers a major route for escape from poverty in severely constrained farming systems. Policies, institutional support and public goods can all play a major role in promoting such employment. Natural resource-based industries offer employment opportunities, but the disadvantages of locating facilities in rural, compared with urban, areas must be overcome. National and local governments can co-operate with the private sector in the design of integrated programmes in which larger potential employers (agro-industries etc.) would be offered incentives to offset the perceived advantages of urban operations. Support measures might include: (i) improved infrastructure in the area of the plant and its suppliers, perhaps together with a long-term commitment from the employer to part-finance maintenance; (ii) provision of training for future staff of the employer; 300 LATIN AMERICA AND CARIBBEAN (iii) supply organisation among raw material providers (crops, livestock, etc.); and (iv) the creation of rapid, transparent and binding dispute arbitration and settlement mechanisms for suppliers and the employer. To promote the development of small-scale enterprises, key interventions would include: (i) simplification of small enterprise registration and approval procedures; (ii) assistance in preparing realistic business and investment proposals; (iii) training in simple accounting and administrative procedures; (iv) more rapid and flexible financing of investments; (v) priority in providing basic services (e.g. electricity, telephone, water, etc.); and (vi) encouragement and resource provision to associations representing small scale rural enterprises. Out-migration has been the traditional response for those who are not able to participate in diversification or off-farm employment activities. In recent years, the focus has been exclusively on retaining the rural population in situ, and discouraging out-migration. Yet, if little potential exists for substantial increases in quality of life within the system, this retention policy must be questioned. Indeed, it is timely to identify and implement measures to ensure that any process of out­ migration is a positive one, both for those migrating and for those remaining within the system. These would include innovative measures, such as targeted out­ migration incentives, to increase the human and financial capital of migrants and thus ensure better economic possibilities in the future. Such incentives could involve providing capital to departees who hand over control of lands currently occupied to the financing agency. Where these lands are sub-marginal for agricultural purposes they would be passed to conservation authorities for reforestation and watershed protection measures. Otherwise, land banks would finance their acquisition by more successful neighbours, thus contributing to land consolidation. Training - particularly of women and young people - in vocational skills of direct relevance to off-farm employment or migration, needs considerable strengthening throughout the region . This should be seen as second in importance only to basic primary education, as a social service in rural areas. One key area of public goods is infrastructure. A1though infrastructure is increasingly accepted as a largely private sector activity, such areas as rural roads, electrification and water capture and distribution for irrigation will have to remain public goods, and are critical for diversification and intensification activities in many areas. The withdrawal of the state from many rural institutional activities (banking, extension, marketing) renders strengthened support and oversight capacity for civic and private institutions essential. TRADE LIBEHALISATION AND MARKET DEVELOPMENT The liberalisation of trade and markets is probably the dominant force governing the evolution of farming systems, and thus rural hunger and poverty, within the 301 FARMING SYSTEMS AND POVERTY region. Imported products increasingly compete in national markets, often undercutting local producers - at least in easily-served urban markets. A rapid transition to free market conditions will increase the prevalence of poverty in the short term, as producers face declining prices for traditional products and difficulties in the transition to new higher-margin products. Those systems with severe poverty are most seriously affected, as they often lack the human, financial and technological resources needed to adjust. In the longer run, trade liberalisation should also create opportunities for market development and diversification, although not all system participants are likely to be able to benefit from such changes. Governments have legitimate roles with respect to markets and trade. However, experience has shown that many direct state-supported interventions merely impede the transition process while providing little real benefit to poor farm households. Instead, the most effective strategy is often to establish the conditions for an active and competitive private and civil sector in rural areas as outlined in the previous sub-section (see also the Maize-Beans [Mesoamerican] Farming System case study). Apart from creating an environment that is supportive of small business establishment and growth (see previous sub-section), such a strategy would comprise interventions to assist farmers to organise themselves to respond to new opportunities, including: (i) training group leaders in commercial management and administration; (ii) providing information, genetic material and technical assistance to promote the adoption of new crops; (iii) promoting value-added activities (selection, packaging, processing) through technical and financial assistance for quality standards, brand creation and targeted marketing; and (iv) improving access to financing for required investments. One traditional area of public intervention has declined in many farming systems as a result of restructuring and decentralization: setting and enforcing market­ related norms and standards. Activities in areas such as weights, measures, quality standards, disease monitoring and tracking, and phyto-sanitary controls are all vital public functions if market and trading systems are to function effectively. INFORMATION AND HUMAN CAPITAL Accelerated rates of change appear inevitable in traditional systems, and the process will require both improved information and humahl resources. Provision of information by the public sector involves substantial recurring costs and is frequently irrelevant to real market needs, so the service is best provided by private sector buyers and traders, or through trade or producer associations. Typically, the most effective support that Government can offer for information dissemination is the improvement of communications channels, whether they be cellular telephone networks, open licensing of local radio stations, or simply improved access roads to rural areas. 302 LATIN AMER ,ICA AND CARIBBEAN Human resource development should focus on vocational training, and numeracy. Literacy may not necessarily be the first priority. Not all rural inhabitants are farmers, and agricultural training should be only one possible training alternative, alongside skills such as sewing, mechanics, welding, cooking etc. These skills may be particularly important for future out-migrants (especially young people) in helping them to fin d employment at their destinations. Training should also be able to address the needs of specific employers in rural areas (whether agro­ industry or non-agricultural) as a way of removing disincentives to rural enterprise operations. Over a thirty year period, the use of new communications technologies, sllch as the Internet, may revolutionise the transfer of information and skills to poorer rural communities. However, considerable infrastructure development, as well as profound changes in government thinking about services and service provision, will be needed before the promised revolution can occur. SCIENCE AND TECHNOLOGY A number of pioneering projects have shown that a range of technologies already exist that can contribute to improved natural resource management and drought tolerance. These include (i) increasing soil organic matter content e.g. by legumes (Mucuna jJruriens and Canavalia ensifol'mis); (ii) no-tillage cultivation, multi-cropping and small-scale irrigation linked to terracing on lower slopes and in semiarid areas; and (iii) vegetative barriers, contour protection, permanent crops and agroforestry on steeper slopes. The zero or controlled grazing of livestock, especiatly goats, when combined with fodder crops and trees, is another promising technology improvement, as is the integrated management of fragile savannah soils. However, significant changes are needed in the field of applied agricultural research. Greater use must be made of participative approaches to areas such as improved varietal selection and field trials of new potential diversification crops. Achieving this will require considerable restructuring of national research organisations in many LAC countries, with particular emphasis on disbursement mechanisms for research grants and on staff training in participatory methods. Responsiveness of the research system to market demand must be increased. Although hybrid genetic material would be acceptable for diversification, it is likely II that material capable of on-farm multiplication would be a prerequisite for traditional crops. Increased research is required on short-season and drought-tolerant crops suitable for small producers, and in particular on technologies that increase labour productivity in systems with high levels of poverty. To increase the ability of smaller producers to compete effectively in growing international markets, research will also be needed in such areas as: (i) adapting existing and future post-harvest technologies to the needs of smaller producers; (ii) appropriate IPM and organic 303 I,' FARMING SYSTEMS AND POVERTY cultivation practices and tools (e.g. biological controls); and (iii) field testing of new varieties/species and determining optimal agronomic practices. NATURAL RESOURCES AND CLIMATE Many regional farming systems are experiencing increasing levels of natural resource degradation. In the absence of primogeniture or active land markets, fragmentation of holdings is a natura. consequence of population growth over time. Without appropriate policy incentives or technologies to increase yields and improve soil fertility, the result is soil mining and expansion of cultivation into sub­ marginal areas. Predicted population increases in 'poverty' systems - such as the Maize-Beans (Mesoamerican) System and the High Altitude Mixed (Central Andes) System - will only exacerbate these pressures. Frontier systems with lower population densities face a different set of constraints. Settlement in these systems has been historically sparse due, in part at least, to limitations in agricultural potential. Poor management practices can result in widespread damage and degradation to the natural resource base, as already recognised in the Cerrados (Extensive Mixed Farming System). Although the solution to these problems may lie partly in interventions described in other sub-sections - including increased off-farm incomes - specific responses appropriate to densely populated systems do exist. Among these, the development and implementation of effective, community-level natural resource management plans is extremely important. Such interventions must include technical assistance and incentives for adoption, plus an emphasis on demonstrating rapidly realisable benefits from watershed improvements, forestry and other resource management activities. Other promising interventions centre upon moisture conserving technologies in dryer areas to combat the droughts and desertification (e.g. North­ east Brazil and Central Andes), and effective watershed protection (Mesoamerica and Northern Andes). Both impacts are likely to become more common as a result of global climatic changes and risk reduction mechanisms will need to be strengthened. For frontier systems, intervention priorities include the development of a detailed knowledge base on natural resources and their characteristics within the system, and the linkage of this knowledge base to planning tools and appropriate resource management approaches. This would be backed by research on the development of crop varieties adapted to limitations of frontier zones (e.g. aluminum tolerance, post-harvest characteristics), and dissemination of results. Of fundamental importance, however, are land settlement and development policies which encourage appropriate patterns of land use, through the use of instruments such as land taxes (regional and municipal); land grants; facilitated credit for investment or working capital; and, eligibility for support services (marketing, extension, veterinary services, etc.). 304 I I r LATIN AMERICA AND CARIBBEAN Larger farms are clearly better equipped in terms of resources to aqjust to the new economic realities, but it should not be assumed that larger farms are always more competitive. The experience of Guatemala, for example, has shown that smallholders can be more efficient than commercial farms with respect to labour­ intensive crops. All farming systems have potential for competitive production by small farmers, as well as for increased ofT-farm income generation, although the proportion achieving these goals will vary substantially from system to system. Where agro-ecological conditions are favourable and markets easily accessible, for example in the Coastal Plantation and Mixed Farming System, a relatively high proportion of smallholders may be able to follow these strategies. However, where agro-c1imatic conditions and tenure patterns impose severe constraints, fewer producers may be able to make the transition, and system exit assumes greater importance. This is likely to be the case in the High Altitude Mixed Farming System of the Central Andes and the Dryland Mixed Farming System of Northeast Brazil and the Yucatan. Due to its abundant water and largely tropical and sub-tropical climate, the region is well endowed with high potential farming systems. However, many of the frontier areas - such as the Extensive Mixed Farming System of the Cerrados and Llanos, or the Forest Based System of the Amazon - possess fragile soils with nutritional limitations. And although development strategies will clearly be influenced by the agronomic potential of the system involved, the key role of land distribution in the region renders these difTerences less significant than in many other parts of the world. Even in high potential systems, improvements in yields or cropping intensity of traditional crops would have only a limited potential to reduce poverty among small farmers. By contrast, diversification and increased ofT-farm employment comprise essential strategic approaches for small producers in both high and low potential systems. CONCLUSIONS The Latin America and Caribbean region ofTers a sharp contrast between extensive frontier areas with low population densities and a high future growth potential , and established densely-populated systems - many with extensive poverty. Yet these two extremes share a number of common challenges that define a clear strategic focus for the region over the next thirty years, and although it is impossible based solely on the foregoing regional analysis to prescribe specific national actions, the overall situation demands a clear strategic focus for agricultural development and poverty reduction based on three, inter-linked, regional initiatives: Sustainable resource management. Sustainable management of natural resources and the reversal of resource degradation are of prime importance, both in established high population systems and in rapidly growing frontier areas. However, a clear 305 FARMING SYSTEMS AND POVERTY positive impact on producer incomes is essential if widespread adoption is to occur. Components include: dissemination of proven technologies for smallholders, notably green mulching, small-scale no-till, vegetative barriers, terracing and zero grazing; expanded attention to the selection, testing and dissemination of varieties appropriate for small producers, with an emphasis on permanent and tree crops; tinancing producer out-migration from unsustainable lands to permit reforestation; pl'Omotion of off-farm employment opportunities, so as to reduce pressure on densely populated areas; and, improving knowledge of frontier area lands and theil' frag'ile soils. Improved resource access. A fundamental precondition for development in the region is improved access to - and control over - land by poorer rural populations. Components include: strengthened cadastral, titling and registration services; dispute resolution services; land banks financing consolidation of smallholdings, as well as purchase, breakup and resale of larger holdings; improved management measures for communally owned lands, including protection from invasion and colonisation; and. taxation policies that provide incentives for sustainable land use. Increased small farm competitiveness. It is essential to increase the capacity of the smaller producers within farming systems, to respond adequately to trade liberalisation and market development. Components include: training of farmer groups in commercial management and administration techniques; improved technologies lor high value production; reduced barriers to entry for small enterprises. as well as the strengthening of enterprise associations; the facilitation ai' part financing of the development of rural market-related infrastructure such as roads, communications and market facilities; and provision of incentives for relocation of agroprocessing and other enterprises to rural areas­ including training of personnel, infrastructure provision and technical support to contracted producers. 306 I GLOBAL CHALLENGES, POTENTIALS AND PRIORITIES ••• Widespread and severe household food insecurity occurs in many farming systems and this is expected to remain a mqjor concern during coming decades. Indeed, available projections I point to a probable failure to meet the commitments made by the international community at the 1996 World Food Summit and in the Millennium Declaration to halve hunger and poverty by 2015. In all regions, poverty and household food insecurity are more prevalent and more severe in rural areas than in urban areas . Futhermore , food insecurity and poverty are interrelated. Poor households lack the purchasing power to ensure adequate nutrition, while food insecurity in itself causes poverty. Malnourished people, because of reduced intellectual and physical capacities, often suffer more illness, and have lower labour productivity and weak educational achievements. Whilst there is an urgent need for transitory measures to safeguard minimum nutritional and livelihood standards (e.g. safety nets), long-term programmes are required to support a sustainable process of pro-poor economic growth and development. In this Chapter various ways of closing the hunger and poverty gap, which exists between current projections (a business as usual scenario) and the international development goals of halving hunger and poverty by 2015, are examined . The Chapter commences by grouping the 72 farming systems identified in the six regions into eight broader categories. The relative importance of household strategies for escaping from poverty is then examined in relation to each category, in terms of: intensification; diversification; increased operated farm size; increased off-farm income; and exit from agriculture within the farming system . In order to shed further light on strategies for poverty reduction, the farming systems are then re-grouped according to: (i) resource potential, and (ii) agricultural intensity (as an indicator of access to services). Secondly, a global strategy for hunger and poverty reduction is defined, focusing on five areas ; the reform of the policy and institutional environment, measures FAO 20003. 307 I FARMING SYSTEMS AND POVERTY related to efficient markets, improving the availability of information and human capital, effective technology deployment and the application of sustainable natural resource management. SYSTEM CATEGORIES, ENDOWMENTS AND HOUSEHOLD STRATEGIES FARMING SYSTEM CATEGORIES The 72 farming systems identified in the six developing regions can be grouped into eight major categories (see Chapter 1 and Annex 2), based on the characteristics described in Chapters 2 to 7, in order to facilitate comparison and integration of individual system priorities into an overall global strategy for poverty reduction. These eight system categories, are: (i) irrigated farming systems; (ii) wetland rice based farming systems; (iii) rainfed farming systems in humid (and subhumid) areas; (iv) rainfed farming systems in steep and highland areas; (v) rainfed farming systems in dry or cold areas; (vi) dualistic farming systems with both large-scale commercial and smallholder farms; (vii) coastal artisanal fishing mixed farming systems; and (viii) urban based farming systems. Except in the case of the dualistic category, these system types are dominated by smallholder producers. The quality of underlying resources varies widely between farming system categories and differences can be noted even within a single farming system. Farming systems endowed with irrigation or humid climates normally have higher agricultural potential than systems in dryland areas. In addition, access to agricultural services - especially markets - has a major influence on the development opportunities of a farming system. Figure 8.1 shows the relationship of seven of the eight system categories in terms of these two important variables. The domains of each system category are relatively large because of the heterogeneity of their constituent farming systems and differences between farm household environments within a single system. In this connection, dualistic systems would tend to cover the entire Figure and thus were omitted. As can be seen from Figure 8.1 (and as discussed in earlier chapters), the irrigated, wetland rice based and, to a lesser degree, rainfed humid system categories tend to have relatively high average household resource endowments. However, their access to agricultural support services and markets varies markedly - from poor (towards the upper left corner of the Figure, e.g. Gezira Irrigation Scheme in Sudan) to good (in the upper right, e.g. Lower Nile Valley irrigation areas in Egypt). In contrast, often because of poor infrastructure, rainfed highland farming systems have restricted access to services but resource endowments can vary from fairly good (in the upper left corner, e.g. Upland Intensive Farming System in China) to poor (in the lower left corner, e.g. High Altitude Mixed Fanning System 308 GLOBAL CHALLENGES. POTENTIALS AND PRIORITIES Figure 8.1 Categories of Farming System by Resource Endowment and Access to Agricultural Services Household Resource Endowment ..c: t>O Irrigated I Rainfed Humid Rainfed Coastal Artisanal Highlands Mixed Access to Low High Agricultural Services Note: Dualistic farmi ng system category extends across much of the Figure and so is not displayed. in the Central Andes). Rainfed farming systems in dry or cold areas tend to have poor resource endowments and poor access to services (e.g. Pastoral Systems in all regions). On the other hand, Coastal Artisanal Farming Systems often have good access to services but the underlying resource base varies, placing the domain of this system on the right hand side of the Figure. Finally, Urban Based Farming Systems typically have good access to markets, but their resource base is typically quite restricted. The eight categories of farming system are further compared in Table 8.1, which shows the areas of total land, cultivated land and irrigated land, agricultural population and market surplus. The six irrigated and rice based wetland systems 2 contain an agricultural population of nearly 900 million people with some 170 million ha of cultivated land, of which nearly two-thirds is irrigated. There are three major classes of smallholder rainfed farming system (in humid, highland or dry/cold areas), which together contain an agricultural population of more than One irrgated fa mning system in Eastem Europe and Central Asia has relatively large famns and. for the purpose of t he present discussion. is included in the category of dualistic systems. 309 fARMING SYSTEMS AND POVERTY Table 8.1 Comparison of Farming Systems by Category Small- Wetland Rainfed Rainfed Rainfed Dualistic Coastal Urban Category holder rice humid highland dry!cold (large! artisanal based characteristic irrigated based small) fishing schemes Number of Systems 3 3 II 10 19 16 4 6 [ Total Land (m hal 219 330 2013 842 3478 3116 70 n.a. Cultivated Area (m hal 15 155 160 150 231 414 II n.a. CultivatedITotal (%) 7 47 8 18 7 13 16 n.a. Irrigated Area (m hal 15 90 17 30 41 36 2 n.a. Irrigated/Cultivated (%) 99 58 II 20 18 9 19 n.a. Agric. Population (million) 30 860 400 520 490 190 60 40 ~ric. Persons/Cult (plha) 2.1 5.5 2.S 3.5 2.1 0.4 5.5 n.a. Market Surplus high medium medium low low medium high high Source: FAG data and expert knowledge. Note: Cultivated area refers to both annual and perennial crops. n.'. Not available. 1400 million people with around 540 million ha of cultivated land. Dualistic systems comprising farms of mixed size contain a further 190 million farm people with a cultivated area of 11 million ha. Finally, two further minor classes of 'smallholder system - four coastal artisanal fishing mixed and six urban based systems - contain a combined total of about 100 million people. These eight categories of farming system are described in the following paragraphs. The three smallholder irrigated farming systems are dependent on large-scale irrigation schemes dominated by small-scale farming . Although this category contains only about 30 million women, men and children who farm about 15 million ha of irrigated land, it is important for national food security and export earnings in many countries. Although huge investments have been made in large irrigation schemes, most still face the challenge of improving water use efficiency in coming decades. In addition, many are now facing financial difficulties; notably in Sub-Saharan Africa, Eastern Europe and Central Asia. Environmental sustainability is also a concern in a number of cases 3 . Outside the context of large-scale schemes and wetland rice systems, small-scale irrigation supplements t.he livelihoods of many millions of rainfed farm households, and is considered an integral part of the particular farming system in which it is located. Box 2.6 recounts the poor water management. input supply and yields in the Gezira scheme. It IS also expected that some o f the large scale schemes in Eastern Europe and Central Asia which are not viable will be reduced In size or even closed. 310 GLOBAL CHALLENGES. POTENTIALS AND PRIORITIES The three wetland rice based farming systems of East and South Asia, which include a substantial proportion of irrigated land, support an agricultural population of around 860 million. Although bunded rice cultivation is the distinguishing characteristic of these systems, a wide range of other food and cash crops are produced and poultry and livestock are raised for home consumption and sale. These systems depend on the monsoon, but nearly 60 percent of the cultivated land is equipped with irrigation facilities. Relatively little grazing or forest land remains - almost half of land is under annual or permanent crops - and these systems suffer from intense human pressure on the natural resources base, with 5.5 persons per ha of cultivated land. There is a moderate degree of market surplus; these systems underly national food security in most Asian countries. The 11 minfed h.umid farming s)'stems are based on smallholder cultivation of root crops, cereals or tree crops. They often contain an important component of livestock and support an agricultural population of approximately 400 million. There is little irrigation. Pressure on land is typically moderate - only 2.S persons per cultivated ha on average - although there are some areas of intense pressure. There is a moderate, but varying, degree of market development and substantial opportunities for further development. The 10 smallholder rainfed h.ighland farming systems in steep and highland areas contain an agricultural population of more than 500 million. In most cases these are diversified mixed crop-livestock systems, which were traditionally oriented to subsistence and sustainable resource management. However, these days they are characterised by intense population pressure on the resources base, which is often quite poor - averaging 3.S persons per cultivated ha, aggravated by heavy grazing pressure on the four-fifths of the land which is not cultivated. Given the lack of road access and other infrastructure, the level of integration with the market is often low. The I 9 smallholder rainfed li'ly/cold farming systems in dry or cold low potential areas, cover an enormous land area - around 3.S billion ha - but support a relatively modest agricultural population of around SOO million. These lower potential systems are generally based on mixed crop-livestock or pastoral activities, merging eventually into sparse and often dispersed systems with very low current productivity or potential because of environmental constraints to production. Market development in these extremely low potential areas is limited. The 16 dualistic farming systems are characterised by significant contrast, i.e. a mix of large, often commercial, farms together with smallholder farms. This category contains an agricultural population of nearly 200 million and more than 400 million ha of cultivated land in a variety of ecologies, and exhibits diverse production patterns. Such systems are prevalent in Eastern Europe, Central Asia and Latin America, but can also be found in Africa. All except one are predominantly rainfed systems - the exception being the Irrigated Farming System in Eastern Europe and Central Asia, which is dominated by medium and large farms. 311 FARMING SYSTEMS AND POVERTY Four coastal artisanal fishing mixed fanning systems have been defined 4. The crop component of these systems is important for household food security, but the principal livelihood is inshore fishing, with a rapid growth in aquaculture in many parts of the world. Because of infertile soils crop yields are often low. The few areas with fertile soil often face serious risks of storms and floods - as occurs around the Bay of Bengal. Many systems include some tree crop production (e.g. coconut and cashew) and small livestock, especially goats, and poultry. Six urban based fanning systems have been identified, that are dynamic, market­ driven systems, typically focused on intensive, high-value horticultural and animal production. Urbanisation is increasing everywhere and these farming systems will assume even greater importance in the future. The analysis of the eight global categories of farming systems suggests significant differences in the relative importance of the strategies available to poor households for reducing poverty and hunger. Derived from expert judgement, Table 8.2 shows the relative importance of these household strategies - which also correspond to rural development strategies on a wider scale. The relative potential impacts suggest an optimal mix of strategies, required for closing the gap between the 'business as usual' projections of slow poverty reduction and the goal of halving hunger and poverty by 2015 in each of the major farming systems. Table 8.2 Relative Importance of Different Poverty Reduction Strategies by Farming System Category Poverty Small- Wetland Rainfed Rainfed Rainfed Dualistic Coastal Urban Reduction holder rice humid highland dry/cold (Iargel artisanal based Strategies irrigated based small) fishing schemes Intensification 3A 1.7 1.9 0.9 1.5 2.S 0.7 1.3 I Diversification 2.9 3.4 2.7 2.7 2.3 2.0 2.5 2.7 I Increased Farm Size 1.2 0.9 1.7 0.6 0.9 2.0 0 1.7 Increased off·farm Income 1.9 2.S 2.2 3.0 2.2 1.8 4.2 3.6 Exit from Agriculture 0.6 1.2 IA 2.S 3.1 1.3 2.6 O.S Source: Expert Judgement. Note: Scores for each farming system add to 10. The i1Tigated fa.rming .I)'stems have relatively low incidence of poverty and hunger, and are fortunate in having good prospects for halving existing poverty. It is judged that three-quarters of the reduction is poverty will be derived from farm improvement (intensification, diversification and increases in operated area). fully The Coastal Plantation and Mixed Farming System in Latin America has been characterised as a dualistic system. 312 GLOBAL CHALLENGES. POTENTIALS AND PRIORITIES one-third will be derived from production intensification - because growing conditions are so favourable in these schemes, productivity increases will arise from improved water, soil fertility and crop management - and diversification, often involving export cash crops with established marketing channels, will provide a further 30 percent. Nevertheless, increases in off-farm income, from both local and seasonal migration , are expected to contribute nearly 20 percent of aggregate reduction of poverty. The wetland rice based farming systems will be developed largely through farm improvement, which will contribute some 60 percent of the reduction of poverty ­ notably through diversification of crop, livestock and fish production. As one aspect of diversification, local processing of farm produce will also add value and income. Intensification is also important (especially in countries such as Cambodia and Myanmar), although less so than the expected one-third contribution from the increase in non-farm income. The importance of off-farm income reflects the strength of the rural off-farm economy in China, which accounts for nearly half of the farmers in this system category. The rainfed humid farming systems depend, to a significant degree, on all five household strategies for the halving of poverty. Among these strategies, diversification will contribute more than one-quarter of poverty reduction and increased off-farm income slightly less than one-quarter. In these crop-livestock systems, livestock will playa major role in diversification; and small scale farmer managed irrigation will contribute to both intensification and diversification. The rainfed highland farming systems offer fewer prospects for farm improvement, which accounts for about 40 percent of poverty reduction . The driving forces for poverty reduction will be increases in off-farm income and emigration (exit from agriculture), which both contribute about one third. Diversification, especially to high value products with relatively low transport and marketing costs, will also contribute significantly to poverty reduction. The rainfed dr),/cold farming systems have a similar pattern of poverty reduction to the highland systems, because of their low agricultural potential and the poor marketing infrastructure. Livestock and irrigation development will play important roles. The dualistic fanning systems will derive poverty reduction from all five household strategies, with more than two-thirds arising from farm improvement. Both intensification and diversification will be supported by irrigation and market development. Increases in operated farm size will contribute around one-fifth of aggregate poverty reduction. The coastal artisanal fishing mixed farming systems are heavily dependent on increased off-farm income for poverty reduction , with substantial contributions from diversification and exit from agriculture. The urban based fanning systems also depend for poverty reduction on increased off-farm income and diversification, with significant contributions from intensification and increased size of business. 313 FARMING SYSTEMS AND POVERTY IMPLICATIONS OF FARMING SYSTEM RESOURCE ENDOWMENTS Both existing livelihood levels and the potential for future improvement depend upon the quality and availability of natural resources ". The resource base of a farming system is best conceptualised as the average resource endowment of typical fa rm households. measured according to their productive potential when using existing technologies. With few exceptions. all farming systems can be classified in this manner. by taking into account both average farm size and the quality of natural resources. When approached in this way. resource potential can be viewed as a continuum running from systems situated in arid areas to those located in fertile. irrigated conditions. Examples of farming systems in low potential areas are: (i) the Agro-Pastoral Millet/Sorghum System in Africa; (ii) the Rainfed Mixed System in South Asia; and (iii) the High Altitude Mixed (Central Andes) System in Latin America. Farming systems in high potential areas include: (i) all Irrigated Systems; (ii) the Cereal-Root Crop Mixed System in the moist savannah of West and Central Africa; (iii) the Tree Crop System in East Asia and Pacific; and (iv) the Extensive Mixed (Cerrados and Llanos) System in Latin America. A summary of the contrasting characteristics of high and low potential farming syste ms situated at the two opposite ends of the spectrum is presented in Table 8.3. Table 8.3 Comparison of Farming Systems by Resource Potential Characteristic High potential Low potential Number of Systems 26 25 Agricultural Population (million) 1450 290 CultivatedlTotal Area (%) 14 6 Irrigated/Cultivated Area (%) 29 II Agricultural Persons/Area Cultivated (pers/ha) 2.8 1.0 Source: FAO data and expert knowledge. Note: Cultivated area refers to both annual and perennial crops. An additional nine systems were of indeterminate or mixed resow'ce potential. e.g. urban systems: and 12 systems of medium potential. More than 60 percent of the agricultural population of developing regions - or around I 450 million people - live in systems with relatively high potential for in creased productivity from the viewpoint of resources. Farming systems in higher JaLliry et 01 1992. 3 14 GLOBAL CHALLENGES. POTENTIALS AND PRIORITIES potential areas have greater average population densities and generally enjoy better economic and social infrastructure than low potential areas. However, these areas are not without constraints: in fact, many environmental and socio-economic factors impede agricultural development and extreme fragmentation of holdings may also be a problem. Moreover, contrary to popular wisdom, a significant proportion of the world's poor and hungry people is also found in areas with higher potential. Farming systems in low potential areas with low or erratic rainfall and poor soil fertility, tend to have relatively few agricultural development opportunities, and farmers may be more concerned with minimising risk than maximising fo od production or profit. Low potential areas tend to face higher risks, particularly in the distribution and amount of water available for farming needs. Other natural disasters, such as locust attacks, may also be important. Unfortunately, the range of options open to smallholders for livelihood improvement from off-farm employment in these low potential areas is also more restricted than in high potential areas as a result of limited market development. Poverty reduction in low resource potential systems therefore, often depends upon seasonal or permanent migration to seek employment as labourers in wealthier systems, or to urban areas. The need for alternative livelihoods is striking: exit from agriculture contributes almost one half of the poverty reduction potential and increased off-farm income around one quarter. In both cases, a substantial proportion of seasonal and permanent migration will be long distance and sometimes across national boundaries. Nevertheless, intensification, diversification and increased farm or herd size together contribute about one third to aggregate poverty reduction, largely centred on livestock or irrigation development. Relationships between household improvement strategies and resource potential are encapsulated in Table 8.4 below. Table 8:4 Relative Importance of Different Poverty Reduction Strategies by Farming Systems Resource Potential Characteristic High potential Low potential Intensification 1.9 0.9 Diversification 3.1 1.4 Increased Farm Size 1.2 0.9 I Increased off.farm Income 2.S 2.4 Exit from Agriculture 1.2 4.4 Source: Expert Judgement. Note: Scores fo r each farming system add to 10. 315 FARMING SYSTEMS AND POVERTY Farming systems in the high potential areas, by contrast, depend principally on diversification and off-farm income for poverty reduction, and together these factors contribute nearly 60 percent of the improvement potential. Intensification will also make a substantial contribution, but may be constrained by land fragmentation in some cases. The linkages to poverty reduction resemble those for the irrigated , wetland rice based and rainfed humid systems. Overall, high potential systems offer the principal hope for expanded food production in the future, and will thus justify a considerable proportion of rural investment funds targeted at expanding global food production. IMPLICATIONS OF AGRICULTURAL INTENSITY AND ACCESS TO SERVICES Within the range of fa.rming systems there is a gradation in the level of production intensity which is closely related to access to agricultural support services (see Table 8.5). Low intensity systems - including agro-pastoral, pastoral and sparse agriculture systems - support 350 million people but have scattered popu'l atiom., extensive land use practices, low levels of input use and \.ittle market surplus. These systems tend to coincide with the low resource pote ntial areas discussed above. Table 8.5 Comparison of Farming Systems by Level of Intensification Characteristics Low Medium Medium High intensity intensity. intensity, intensity food-oriented market-oriented Number of Systems 27 20 6 17 Agric. Population (m) 350 950 100 1140 CultivatedlTotal Area (%) 5 21 17 28 Irrigated/Cultivated Area (%) 9 14 10 54 Agric. Persons/Area Cult. (pers/ha) 1.0 2.1 1.0 4.8 Market Surplus low medium high medium -­ - - Source: FA.o data and expert knowledge. Note: Cuitlvated land refe rs to both annual and perennial crops.Two systems were omi tted from thi s classification. Medium intensity farming systems have evolved into two distinct sub-types - food oriented and market oriented - depending on the forces involved. Where population pressure on resources has been the dominant factor, systems have 316 I GLOBAL CHALLENGES. POTENTIALS AND PRIORITIES adjusted towards intensive food crop production - including root crops, plantains and cereals - often within a mixed crop-livestock system. Systems of this type cover more than 2000 million ha and support an agricultural population of about 950 million people; they include many of those systems most associated with rural poverty. A moderate level of market develop men t is evident, associated with higher intensity of external input use and greater intensity of land use . The second sub-type - market-oriented medium intensity - contains fewer systems and development has been driven principally by the existence of readily accessible market opportunities, whether local (typically horticultural) or international (often based on tree and industrial crops). With an agricultural population of only 100 million people, these systems are less important in terms of poverty reduction than they are in terms of export earnings. High intensity systems will be a m