In the Wake of the Food Crisis, A New Deal for Poor Farmers

Jeffrey Sachs in Project Syndicate:

Around the world, government-run agricultural banks in poor countries once not only financed inputs, but also provided agricultural advice and spread new seed technologies. Of course, there were abuses, such as the allocation of public credits to richer farmers rather than to needy ones, or the prolonged subsidization of inputs even after farmers became creditworthy. And in many cases, government agricultural banks went bankrupt. Still, the financing of inputs played a huge and positive role in helping the poorest farmers to escape poverty and dependency on food aid.

During the debt crisis of the 1980’s and 1990’s, the International Monetary Fund and World Bank forced dozens of poor food-importing countries to dismantle these state systems. Poor farmers were told to fend for themselves, to let “market forces” provide for inputs. This was a profound mistake: there were no such market forces. 

Poor farmers lost access to fertilizers and improved seed varieties. They could not obtain bank financing. To its credit, the World Bank recognized this mistake in a scathing internal evaluation of its long-standing agricultural policies last year.

The time has come to reestablish public financing systems that enable small farmers in the poorest countries, notably those farming on two hectares or less, to gain access to needed inputs of high-yield seeds, fertilizer, and small-scale irrigation. Malawi has done this for the past three seasons, and has doubled its food production as a result. Other low-income countries should follow suit.