Review of trends and the challenges of monitoring progress

How agricultural ODA is used

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  Three areas account for over 50% of total agricultural assistance for the 2005-08 period: agricultural policy (22%), which includes aid to agricultural ministries and capacity building, agricultural water resources (18%) which captures all forms of irrigation investment, and agricultural development (13%) which comprises farm development and integrated projects.
  

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  Agricultural policy has only risen marginally over the period and has fallen proportionally in relation to other areas of agricultural investment. In 2000-03 it was by far the largest nvestment area, accounting for 28% of all agricultural assistance. By 2005-08, it represented 22% of agricultural assistance (USD 1.1bn). Declines are particularly prominent in North Africa (70%), North and Central America (39%), South America (35%) and South and Central Asia (15%).
  
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  Agricultural development, another significant area, while increasing by an average 14% in volume over the two periods, has also fallen slightly as proportion of total agricultural aid from 15% to 13%.
  
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  Water resources has grown by 34% over the period, increasing slightly from 17% to 18% of all agricultural assistance. Growth, however, is particularly strong in North Africa, where it now constitutes 46% of all agricultural investment. It has also risen considerably in South and Central Asia, with proportions of total agriculture increasing from 29% to 36%.
  
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  Agricultural research, which includes the promotion of new technologies, has risen in prominence from 6% to 10% of all agricultural assistance. 2005-08 levels (USD 515m) are almost double those of 2000-03.
  
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  A few other areas, while small in volume, have seen considerable increases over the period. Most dramatic is agricultural alternative development, activities aimed to reduce illicit drug cultivation by promoting agricultural alternatives. Such activities have risen from 1% to 6% of all agricultural aid, a six-fold increase (to an annual average of USD 320m). Growth has largely been driven by the US, accounting for 91% of all aid to this area over 2006-08, and 27% of US agricultural aid over this period. As can be expected, Central and South Asia and South America constitute the bulk of this increase. Three quarters of US agricultural aid to Afghanistan, the largest recipient of US agricultural aid, has been directed to agricultural alternative development. Similarly, this purpose constituted over 95% of all US agricultural aid to Bolivia, Columbia, Ecuador and Peru over 2006-08. Further donor detail concerning the disbursing department / ministry of such assistance would help determine the extent such activity constitutes pro-poor long term development.¹⁷
  
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  Agrarian reform (particularly in SSA and Central/South Asia) and extension services have also seen substantial increases - over 100% - although proportions remain small.
  
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  Crop based aid to food and commercial crops have diverged. While the former has grown in-line with that of agriculture in general (constituting 7% of agricultural aid), aid to industrial and commercial crops have more than tripled, rising from 1% to 3% of all agricultural assistance. In 2007, aid to commercial crops exceeded that to food crops for the first time. However, 2008 witnessed dramatic increases in food crop investment, reaching USD 848m (Figure 10).
  
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  Aid to many forms of direct support for agriculture has fallen over the period – notably for agricultural inputs and financial services – to levels almost half that of 2000-03. Area-based projects through agricultural land resources have also declined. This perhaps partly reflects changing perceptions of the role of the public sector in the provision of agricultural inputs and services. Few development agencies (with the notable exception of Japan) now provide agricultural inputs such as fertilisers, chemicals, seeds and machinery. Declines in finance services is consistent with policies such as those of the World Bank where focus has moved away from commodity targeted credit in favour of broadening and deepening general financial services.
  

Analysis of DAC agricultural codes reveals some immediate limitations. These may be only overcome through detailed project-level descriptions provided by the OECD-CRS database (assuming detail is sufficient), and analysis of donor-specific data.

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  There is no differentiation between aid for smallholder and large-scale commercial enterprises. While there are definitional challenges here, such differentiation could contribute to analysis of the linkages between aid, production, growth and poverty reduction. It could also significantly aid assessment of who the beneficiaries of agricultural assistance are. The differentiation between food and export crops is not sufficient given that both may apply to smallholder production. Such data has been collated by some donors. For example, some donors submitted volumes of aid to smallholder development to the Expert Assessment of G8 Efforts towards Global Food Security presented at L’Aquila, although definitions are largely absent.
  
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  The considerable difference between small-scale micro-irrigation, often characterised by easily replicable low-technologies, and large-scale irrigation and storage reservoir systems cannot be differentiated by the current codes. It is therefore challenging to monitor the generally perceived shift away from new large-scale infrastructure investments towards either (i) rehabilitation and improved management of current systems, or, more recently, (ii) towards small-scale community managed systems. Similarly, it is unclear whether aid is for capital or recurrent costs – key issues in irrigation development policy with significant implications for project sustainability. How aid is used within these subsectors will be as, if not more important as volumes of aid.
  
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  The mutually exclusive methodology applied by the DAC may conceal more nuanced changes in agricultural aid. For example, it has been argued that aid to agricultural research may be underestimated since research components are likely to be incorporated in crop production or general agricultural development projects.