The case for rural development is easy to make: the large majority of the poor live in the rural areas of the developing world. Even with urbanisation, this reality will not change for at least another 20 years. Although some of the rural poor may be helped by transfers from cities, for most poor households any improvement in their incomes will depend on generating more and better jobs in rural areas.
Agriculture is likely to be central to rural development and rural poverty alleviation. Farming has high potential to create jobs, to increase returns to the assets that the poor possess—their labour and in some cases their land—and to push down the price of food staples, which is crucial when so many of the poor are net buyers of food. Historically, few countries have industrialised successfully without prior development of their agriculture. Recent comparisons made across countries show that increases in agricultural productivity are closely related to poverty reduction. In most rural areas, moreover, there are few alternatives to farming as a large-scale source of jobs. The opportunities for mining and tourism are restricted to locations with mineral deposits or natural assets, and rural manufacturers find it difficult to compete with urban factories.
How much these changes hinder agricultural development varies by context. This paper considers different country situations, based on the prospects for minerals, manufacturing, and agriculture. In most cases, agriculture proves central to development efforts, either as a leading sector or as a supporter to other sectors.
The case for smallholder development as one of the main ways to reduce poverty remains compelling, at least to these authors. The policy agenda, however, must change to meet the new challenges facing small farms. The challenge is to improve the workings of markets for outputs, inputs and financial services to overcome market failures. Meeting this challenge calls for innovations in institutions, for joint work between farmers, private companies, and NGOs, and for a new, more facilitating role for ministries of agriculture and other public agencies. New thinking on the role of the state in agricultural development and new opportunities to build on democratisation, decentralisation, and the introduction of participatory policy processes, plus a renewed interest in agriculture among major international donors, give grounds for hope that greater support can be delivered to enable small farm development. But unless key policymakers adopt a more assertive agenda toward small-farm agriculture, there is a growing risk that rural poverty will rise dramatically and that waves of migrants to urban areas will overwhelm available job opportunities, urban infrastructure, and support services.
