This background paper has two objectives. First, it provides an overview of trends in the magnitude, location and nature of rural poverty, with emphasis on least developed countries. There is a large body of recent work describing the trends in rural poverty across the globe. This paper selects the most relevant findings linked to the overall mandate and interests of IFAD in agricultural development for poverty alleviation. A starting point is IFAD’s Rural Poverty Report 2001. A recent synthesis of relevant information is available in the World Development Report 2008, spotlighting the role of agriculture in development generally and poverty reduction in particular. In doing so, the World Development Report gave much attention to the rural poor and the potential ways out of poverty for the three types of countries: primarily agricultural, in transition, and urbanised. IFPRI sponsored a major conference in Beijing in October 2007, “Taking Action for the World’s Poor and Hungary People,” where current issues, perceptions and evidence over a wide range of themes related to rural poverty were documented. And there have been some important recent studies coming both from academics as well as international agencies such as the FAO and other UN agencies.
The second objective of this paper is to offer new evidence that advances an understanding of rural poverty. It presents various quantitative analyses of the determinants both of rural activities and of income from farm- and non-farm sources. The analysis uses household survey data from FAO’s Rural Income Generating Activities (RIGA) data base of 15 countries, complemented by demographic, health, production and income data from other sources, such as numerous national censuses and the WHO. The nature of poverty differs depending on the level of development of a country, on whether poverty is predominantly urban or rural, on the economic activities available to families and on the access families have to a range of assets. For the rural poor specifically, the distinction between sources of income is important for the identification of possible avenues through which policy and donor assistance can support raising household incomes: What is the degree of household dependence on farming? What are the opportunities for off-farm work and migration? And the access of rural families to education, land, and various forms of infrastructure will determine what households do and what incomes they can earn. Which household characteristics and assets are associated with specific occupations? Farming or agricultural labour? Farm work or non-farm work? Which are associated with higher incomes? And how does the relationship between assets and economic activity, and between assets and income, vary across the spectrum of countries, regions and level of development?
Section 2 provides an overview of some broad, recent trends, issues and potential challenges related to the rural economy and the alleviation of rural poverty. The section discusses the world demographic changes and future of food demand and trade, the role biofuels in food price trends, where WTO agricultural trade negotiations stand, and recent thinking about the future of the small farm.
Section 3 examines in more detail the evolution of rural poverty and food security indicators, using IFAD’s RPR 2001 as a point of reference. It presents how poverty correlates with family and personal characteristics, such as education levels, age and gender of household heads, the number of dependents within the family and access to infrastructure important for sanitation and health.
Section 4 looks at who are the rural poor and what do they do. Based on survey and other data sources, rural poverty profiles for several countries are presented, focusing on household characteristics and access to assets. The section emphasizes the relationship between family assets and the probability of being poor, and classifies households in a typology based on access to different bundles of assets. This information is relevant for the design of interventions – government, NGOs and private – determining the most efficient targeting and coverage. There is discussion of the role of rural labour markets and what is known about participation by workers in those markets in farm and non-farm employment.
Section 5 discusses the changing income sources of the rural poor as the rural economy evolves and countries develop. It presents an analysis of the share of household income deriving from agriculture as family income increases, and compares rural households across countries at different stages of development.
Section 6 present some concluding remarks regarding the policy challenges to reducing rural poverty.
