Review of trends and the challenges of monitoring progress



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A Development Initiatives report commissioned by ONE

Agricultural Development Assistance

A summary review of trends and the challenges of monitoring progress



Daniel Coppard




Contents


Executive summary 3

Introduction: A summary of long term trends 3

L’Aquila 2009: The challenge of monitoring commitments 5

Methodology: Defining agriculture and food security 7

Global volumes 9

Regional trends 15

How agricultural ODA is used 18

Significance of DAC non-agricultural codes 22

Donor profiles 26

39


Annexes 40



Executive summary


This paper assesses trends in volumes, geographical distribution and the different uses of agricultural development assistance. It explores relevant DAC non-agricultural codes and their significance relative to the standard DAC definitions of agricultural aid. Further, it considers donor declarations made at L’Aquila in agriculture and food security and assesses the data challenges in monitor progress against these commitments.

The paper identifies a number of limitations of the DAC definitions, including its inability to capture aid channelled through multi-sectoral programmes, and the reduction of programmes that cover a range of agricultural activities to one code. It also fails to capture how assistance is actually used, information that is vital given that quality of agricultural aid – its efficacy as a tool for poverty reduction – should be considered as important as quantity. The category of irrigation, for example, does not differentiate between large and micro schemes, between new projects and rehabilitation programmes. It does not indicate whether aid is for capital or recurrent costs, or whether it is co-financed by the recipient government – all factors that determine programme efficacy and sustainability. Such detail will well compliment DAC-level data.

An assessment of different donors reveals a wide range of assistance patterns – both regional, and thematic. Some donors, such as the UK, favour multi-sectoral programmes over that of agricultural aid. In such cases, an assessment of DAC agricultural aid alone will not represent the full extent of assistance contributing to agricultural and food security investment. This paper identifies such donors, and recommends that a more detailed donor investigation be conducted.

Given its limitations, the DAC agricultural definitions provide the most comprehensive assessment of the use of agricultural aid. Trends in the types of agricultural assistance are varied. Direct agricultural aid via provision of services (including financial services) is generally in decline, while integrated farm-based projects are increasing in popularity. It is therefore important to maintain a disaggregated analysis of agricultural aid to monitor these trends, while a combination of different aggregations, such as agriculture as a whole, sub-aggregates as proposed by the DAC, rural development and budget support will assist overall aid monitoring. Project level data, either via DAC project descriptions, other databases, or from donors will be necessary, however, to pursue further detailed analysis.


Introduction: A summary of long term trends


The long-term decline of aid and domestic public expenditure in the agricultural sector is now widely acknowledged, and considered by many as a paradoxical neglect of a sector central to pro-poor economic growth. Development assistance in agriculture1 increased in the 1970s, levelled in the 1980s, then declined dramatically at a rate of 5 percent per annum between 1988 and 2000 – more than halving from $9 billion to around $4 billion. The importance of agriculture relative to other sectors has also declined. As a proportion of sector allocable aid, agricultural assistance has fallen by two thirds, from a high of 25% in the mid 1980s to 7% by 2000. While recent years suggest an upward trend, overall aid has increased at a greater rate such that proportionately, agricultural assistance has failed to grow (see figure 1).

Domestic public expenditure has also declined. One study of 44 countries found the agricultural share of total government expenditure falling from 11% in 1980 to 7% in 2002.2 In 17 African countries the share fell to as low as 4.5% of total government spending by 2002, well below the 10% commitment made by heads of African States in 2003.

The cause of this decline cannot be attributed to one factor. Explanations include:


  • Changes in the role and scope of the state in the sector, particularly driven by SAPs towards more market-led approaches and withdrawal of direct service delivery;

  • Perception that agricultural problems can be addressed outside the sector (transport, infrastructure, trade etc.);

  • Increased attention towards health and education sectors, in line with PRSPs;

  • The loss of donor confidence in agriculture; perceived high transaction costs and complexity of investments and weaker demand for assistance to agriculture from many developing country governments.

Figure 1: Long-term trends in global DAC agricultural aid


L’Aquila 2009: The challenge of monitoring commitments


Recent G8 summits have sought to address these trends, motivated further by global food price hikes in 2007 and 2008. A key output of the 2009 L’Aquila summit was the joint Declaration on Global Food Security, referred to as the L'Aquila Food Security Initiative (AFSI). Following on from the Hokkaido summit in 2008, it acknowledged declines in agricultural aid and committed to five food security principals: (i) sustained commitments, (ii) stronger donor coordination, (iii) support of comprehensive strategies, (iv) investment through country-owned plans and (v) effective leverage of multilateral institutions. The commitment was backed by specific financing:

12. We are determined to translate these principles into action and take all the necessary measures to achieve global food security... In this respect, we welcome the commitments made by countries represented at L’Aquila towards a goal of mobilizing $20 billion over three years through this coordinated, comprehensive strategy focused on sustainable agriculture development, while keeping a strong commitment to ensure adequate emergency food aid assistance.

This was subsequently revised in September to $22 billion at the Pittsburgh G20 summit as additional countries pledged support.

A number of issues arise in monitoring progress against this commitment. In particular, differences and ambiguities between individual country commitments outlined below mean that it may be more appropriate to monitor progress at the individual donor level. However, some donors are yet to specify their contribution to the goal.



Whose commitment?

Leaders did not collectively commit to mobilising $20 billion. Rather, they ‘welcomed’ those who had contributed to the goal. These included fourteen countries (Australia, Canada, Denmark, France, Germany, Italy, Japan, The Netherlands, Republic of Korea, Russia, Spain, Sweden, the United Kingdom, and the United States), together with the European commission. These were joined by Belgium, Finland, Ireland, Norway and Switzerland at Pittsburgh. In practice this was not, therefore, a G8 commitment.

Not all countries have, to date, made budgetary provision for these commitments, with a number yet to announce how much specifically will be provided (see summary table below).

How much really?

The $22 billion commitment was not explicitly described as an ‘increase’ in financing in the way that the Gleneagles commitments, for example, were presented. 2008 DAC agricultural ODA was $6.3bn. An additional $22bn over three years would require an additional $7.3bn a year, a more than doubling of 2008 levels (along the lines of the US objective of doubling agricultural ODA). Using this methodology would also require the selection of a baseline: additional to G8 or total DAC agricultural aid? Or additional to aid from participating donors? A base year would also have to be fixed, requiring a choice between 2007, 2008 or 2009. Choosing between 2007 and 2008, for example, could affect the annual targets by some $800m due to increases over this period.

A $22bn aggregate over three years is considerably less ambitious. This would require an average of 7.3bn a year in total for three years, just $1bn more than 2008 levels (i.e. an additional $3bn over three years). The US alone has budgeted a little over $1bn in bilateral 2009-2010 increases in agricultural aid– if this level was maintained in subsequent years the US alone would fulfil this collective commitment. Further, if the commitment were to include other areas such as food aid, nutrition and social safety nets (see below), this interpretation of the commitment would actually represent a fall in assistance.

Other ambiguities influence the value of the commitment. Only a limited number of donors have been forthcoming as to how much is new, or already budgeted assistance. The US, for example, has indicated that approximately half of its pledge is new financing. Of Germany’s $1bn commitment, $300m is currently not already allocated. Canada has pledged $600m of new financing over the three year period. By some estimates, less than half of the total goal will be new money.

Nor do commitments indicate whether volumes are expressed in constant or current prices. Should inflation start to rise over the subsequent three years, this could have a significant impact on the value of the total commitment.

What is it for?

There is inconsistency among donors as to what the $22bn will be used for. This renders the monitoring of commitments highly problematic and strikes at the heart of the challenge of defining agriculture and food security.

The US, for example, has specified its commitment does not include food aid or nutrition programmes, i.e. it has an explicit focus on medium and long term agricultural investments. President Obama (a key orchestrator of the initiative) stated at L’Aquila that the $20bn as a whole was for food security and agricultural development programmes and was “in addition to the emergency humanitarian aid that we provide”. This has been the sentiment of subsequent US documentation. Germany has set similar conditions.

Other donors, however, have widened the beneficiary sectors. Canada’s contribution, for example, includes nutrition and food aid, while Australia includes social safety nets.



Many other donors, again, have not elaborated on their definitions of food security, and associations between food security and emergency aid may prove problematic. In the Experts Group assessment of ‘G8 Efforts Towards Global Food Security’ presented at L’Aquila3, aid totals included a wide range of activities, from food aid to climate change adaptation, to governance. This was largely to respond to previous G8 Hokkaido commitments that highlighted the need for short-term (food aid), as well as medium and long-term responses to food security. By contrast, the focus of the L’Aquila commitments is one of more long-term development. Thus, as exemplified by the US, this paper argues that emergency food aid should not be included in any overall assessment of the Initiative.

Table of selected contributors to the AFSI.

Donor

Volume over 3 years

New financing

What for

United States

$3.5bn

Approximately half

In addition to emergency food aid, humanitarian assistance and nutrition programmes

UK

$1.8bn (£1.1bn)







Italy

$450m







Canada

$600m of new financing, $1.18bn total in 2011

Additional $600m over 3 years

Including nutrition and food aid

Germany

$1bn (€700m)

$300m not already in pipeline

For food security initiatives, excluding humanitarian assistance

Australia

$450m




Rural development, social safety nets, agri productivity

Related commitments

France

$1.5bn over 2008-2012, €1bn for Africa4







Spain

$773m over 4 years; an additional $200m a year for following 5 years5







Japan

$4bn for SSA over 5 years6




For infrastructure and agriculture


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