ACCORDING to the founder of Microsoft, Bill Gates, of all the interventions to reduce poverty, improving agricultural productivity is the best. Nothing else works as efficiently.
He speaks from experience. His Gates Foundation, to which he has contributed US$28 billion of his wealth, is either the largest or second largest philanthropic organisation in the world, funding thousands of projects mainly aimed at enhancing healthcare and reducing extreme poverty.
Gates says the foundation’s agriculture program has become one of its biggest and fastest growing due to huge results. Without the agriculture program he says, “We don’t see a way of achieving our goals, where kids can be healthy, their brains can fully develop, and they can have a chance to live a normal life.”
"Most of the poor people of the world are farmers —farmers with very small plots of land, who have to deal with a great deal of uncertainty because they don’t know what their yield is going to be, and in many years they are making just enough, or not even enough, to have the food that they expect," Gates said.
"The metrics here are pretty simple. About three-quarters of the poor who live on these farms need greater productivity, and if they get that productivity we’ll see the benefits in income, we’ll see it in health, we’ll see it in the percentage of their kids who are going off to school. These are incredibly measurable things.
"Once you get the right seeds and information—a lot of it can be left to the marketplace. This is a place where philanthropy and government work, and market-based activity, meet each other."
Gates made these comments at an International Agriculture and Food Security Briefing in Washington. He was arguing for increased funding of research, from both the public and private sectors, but being in the US Senate building it was inevitably the former that was on his mind.
Many others think it would be a good idea to increase public funding of agricultural research too, not least the scientists and public servants whose jobs depend on it. And perhaps there is an argument for a certain amount of funding of basic research that the private sector would not undertake because there was no prospect of a commercial return. I can think of quite a few less deserving things that receive funding.
But there are a couple of areas where only governments can act, which would make a huge difference to the poor farmers of the world without spending a cent of taxpayers’ money.
It is a simple fact that even if Gates is successful at delivering improved seeds and knowhow to poor farmers, and they are able to produce a surplus to sell, they face enormous barriers trying to sell it.
Many countries either reject imports of agricultural produce from developing countries or impose enormous tariffs, making them uneconomic. Even more impose insurmountable biosecurity hurdles that have the same effect.
An example of this is Australia’s approach to the importation of bananas from the Philippines. The Philippines can export to New Zealand, Japan, Korea, the Middle East, China and soon the USA, but not Australia. And yet Filipino banana growers are mostly dirt poor and would greatly benefit from access to a regional market like Australia.
There are hundreds of similar examples around the world. Poor countries struggling to emerge from subsistence agriculture are denied access to major markets due either to outright protectionism or protectionism masquerading as biosecurity.
Another government inspired barrier to agricultural development is foreign food aid. Australia is not the worst offender, but a good example of what can happen was seen last year when a cargo of export sheep was diverted to Pakistan after being rejected by Bahrain. The sheep were cruelly destroyed at the instigation of local sheep suppliers who did not want to see their businesses destroyed.
Food aid floods the local market and causes a dramatic drop in prices, undermining struggling local producers. Indeed, many do not survive, leading a need for more food aid to avert famine. The aid can actually destroy any chance of a prosperous local economy from being established.
Gates concedes that it’s not enough just to come up with new seeds and information, and acknowledges that land policies, extension policies, research policies and acceptance of GMO techniques are also important. If he had added free trade to that, it would have been a complete list.
David Leyonhjelm has been an agribusiness consultant for 25 years. He may be contacted at firstname.lastname@example.org