Safety net for agricultural households

The Food and Agriculture Organization’s (FAO) annual report on the State of Food and Agriculture (SOFA) 2015 explores the potential of social protection programmes in developing countries to tackle hunger and poverty.

Social protection programmes fall into three main categories. These are social assistance: publically-provided non-contributory transfers that can be provided in kind (such as food) as well as cash; social insurance: pooled, contributory insurance programmes and labour market protection: provision of unemployment benefits, building skills and enhancing workers’ productivity and employability.

A great diversity underlines the various types of social protection programmes found across and even within countries around the world. Typically, there are diverse sets of social protection programmes with different objectives, thus reflecting different contexts and preferences.

According to Andre Croppenstedt, an FAO economist, “The diversity of social protection programmes is a reflection of the fact that it is very difficult to reach all target groups with one programme. For example, social pensions are meant to support elderly people, who are poor, while school feeding is aimed at improving the education and nutrition outcomes of poor and vulnerable children.”

At present, many developing countries are increasingly recognising that social protection measures are vital to relieve the deprivation of the poor and prevent others from falling into poverty traps when crises strike.

Programmes such as cash transfers, school feeding and public works offer an economical way to provide vulnerable people with greater opportunities to end extreme poverty and hunger and also improve the health of their children as well as take care of their education, the report adds.

Extreme poverty is disproportionately concentrated in the rural areas of the world. The World Bank estimates that until 2010, 78 percent of the extreme poor were living in rural areas.

The report says that social protection can offer a sustainable pathway out of poverty if there is inclusive growth in the economy. In most low- and middle-income countries, agriculture remains the largest employer of the poor and is a major source of livelihood. However, poverty and its corollaries—malnutrition, illness and lack of education—limit agricultural productivity.

Social protection programmes have expanded rapidly over the past two decades. Such programmes currently benefit 2.1 billion people in developing countries in various ways, including keeping 150 million people out of extreme poverty, the report adds.

However, there is wide variation among various regions, with the coverage lowest in regions where poverty incidence is the highest.

“It is urgent that we act to support the most vulnerable people to free the world of hunger,” FAO Director-General José Graziano da Silva said.

“Social protection programmes allow households to access more food—often by increasing what they grow themselves—and also make their diets more diverse and healthier. These programmes can have positive impacts on infant and maternal nutrition, reduce child labour and raise school attendance, all of which increase productivity,” he added.

Agriculture and rural poverty are closely related. Agriculture generates about 10 percent of the gross domestic product (GDP) in low- and middle-income countries and employs about 45 percent of the total labour force.

The figure means that the value of output per worker is much lower in agriculture than in other sectors, implying low incomes for people who depend on agriculture for livelihood.

“Rural people in most developing countries, and especially in Sub-Saharan Africa (SSA), rely on agriculture for an important share of their incomes. For poor agricultural households, income from on-farm activities is relatively more important than it is for other agricultural households,” Croppenstedt said.

For example, in Ghana food producers <g data-gr-id="105">make up</g> 43 percent of the population, but account for 69 percent of the headcount poor. In SSA, almost three-quarters of the economically active rural population are small family farmers who produce a significant share of their food for consumption but many of them are poor or extremely poor, the economist added.

Family farms form the backbone of agriculture in low- and middle-income countries, but many family farms are small. Almost 75 percent (375 million family farms) in low- and middle-income countries are smaller than one hectare.

“The poorest farming households are the net food buyers, and food makes up a large share of the household budgets of the poor, whether or not they farm,” Croppenstedt said.

It is the poor’s reliance on agriculture for livelihood and the high share of expenditure on food that makes agriculture key to poverty and hunger alleviation interventions.

In some countries and regions, such as the Sahel region in Africa, rainfall variability, land degradation and desertification contribute to vulnerability and poverty. Climate change is set to worsen these stresses over the coming decades, the report warns.

The Child Support Grant in southern Africa is the largest social protection programme in SSA. It entails cash transfers to the primary caregiver of a child who is under the age of 18 and living in a household earning below a defined income threshold (in 2014 the programme covered 11 million poor children).

Only about a third of the world’s poorest people are covered by any form of social protection. The coverage rate dips even lower in South Asia and SSA regions with the highest incidence of extreme poverty, the report says.

However, without assistance, many poor and vulnerable people will never have the opportunity to break out of the poverty trap, according to the report.

Most countries—even the poorest—can afford some social protection programme. According to FAO, globally some $67 billion a year in income supplements, mostly provided by social protection programmes, will allow for the eradication of hunger by 2030. That is less than 0.10 percent of world GDP.

The FAO report cites successful examples of social protection programmes in Ethiopia, Ghana, Lesotho, Zambia and Bangladesh.

But social protection alone cannot sustainably eradicate hunger and rural poverty, the report adds. So, it underscores the need for combining and coordinating public investment in social protection with public and private investments in agriculture and rural development. Such actions will ensure inclusive economic growth as a sustainable way to break the cycle of rural poverty.

The report also shows that progress has been uneven across the world. Though the prevalence of hunger and poverty has fallen substantially in some regions, especially in East Asia and the Pacific as well as Southeast Asia, in South Asia and SSA, progress has been slow overall.

The report says that investment in agriculture remains the single most effective way to provide opportunities to generate income and improve nutrition, especially for women and youth in rural areas.