MP2overview

= **MP2: Policies, Institutions, and Markets to Strengthen Assets and Agricultural Incomes for the Poor** =



Seventy-five percent of the poor in developing countries live in rural areas and the majority of them depend on agriculture for their livelihoods. Given agriculture’s predominant role in the lives of the rural poor, any strategy for cutting poverty and hunger must center on rapid growth in the agricultural sector. Agricultural growth reduces poverty by twice the rate of growth in nonagricultural sectors, yet the potential of using smallholder agriculture for promoting development and poverty reduction remains underexploited. To leverage agriculture’s potential for increasing the poor’s incomes, it is essential that countries have enabling policies and institutions. This MP addresses five main challenges that have prevented countries from creating a policy environment that would allow agriculture to fully contribute to poverty reduction and development.

First, policies often fail to address the emerging challenges of rising energy prices, climate change, natural resource scarcity, and agro-biodiversity loss. Second, policies in support of agricultural productivity and marketing are captured by large-scale farmers, do not address the needs of smallholders, women farmers, and other vulnerable groups and do not provide adequate risk protection for the rural poor. Third, inadequate policies result in underinvestment or policy distortion in the agricultural sector, especially with regard to research and development, where new challenges and opportunities for future growth lie. Fourth, policies already in existence are often ineffectively implemented due to weak institutions and are not sufficiently supported by infrastructure and agricultural service provision due to market and government failures. Fifth, there are few policies in place that support farmers’ organizations, resource users groups, producers groups, and other actors who are essential for the emergence of effective smallholder-oriented value chains, and that provide adequate social protection for the rural poor.

The first component of MP2 analyzes how countries can improve their policy environment to enable smallholder income growth. This strategic foresight and future scenario analysis (4.1.1) would inform the research on policies that provide an enabling framework for agriculture, including international trade policies, macroeconomic policies, and nonagricultural policies (4.1.2); property rights (4.3.2); and agricultural policies, including technology, production, and environmental service policies (4.1.3) that affect agriculture and rural household income. To be able to influence policy change, MP2 also analyzes policy and implementation processes and policy-research linkages (4.1.6), interacts closely with policymakers and stakeholders, and builds capacity for policy research.

Effective policies would contribute to appropriate public and private investments (4.1.5) as well as investment through collective action (4.3.2). Agricultural policies and investments will best enhance the incomes of smallholders and other vulnerable groups if they lead to the provision of the infrastructure, products, services, programs, and institutions that provide the resources essential for agricultural development and that address the market, state, and collective-action failures that are widespread in this sector (4.3.1). To be effective, policies have to be effectively implemented; hence this MP will also consider the implementation and evaluation of programs. Other MPs will provide public goods through direct research in the relevant fields (such as disease control for a specific livestock product or the specific problems of a crop) as well as research on required policy for such specific interventions at the commodity or subsector level. Research under MP2 will focus on the policies, infrastructure, services, and institutions commonly required for many agricultural subsectors and their interactions in enabling pro-poor agricultural growth, as well as the role the public sector, private sector, and civil society can play in providing infrastructure, services, and programs for agricultural development (4.3.1 and 4.3.2). In addition to infrastructures and services, the extreme rural poor and vulnerable groups would need social protection so that they can participate in income-generation growth (4.1.4). MP2 will conduct research on the role of property rights and assets in helping the poor escape from poverty traps and participate in agricultural growth, and on strategies for strengthening the poor’s assets, reducing gender asset gaps to empower women, and achieving environmental protection and other development outcomes (4.3.2 and 4.3.3). MP2 will interact closely with actors and institutions involved in this area, analyzing their institutional incentives and reform options, and contributing to the strengthening of their capacity and coordination.

Throughout the MP, the differential involvement and impact of gender, social class, caste, ethnicity, and other considerations will be an integral aspect of each research component.

The overall goal of MP2 is to create a policy and institutional environment that allows agriculture to fully contribute to poverty reduction, sustainable rural development, and income growth. MP2 will advance research and impacts on the ground for five major objectives to reach both rural smallholders, together with multiplier effects to benefit landless labor and the nonfarm rural-sector households.

The five objectives are:


 * Strengthen strategic ex-ante evaluation capacity for research and investment priority setting, targeting, and decision-making focused on enhanced rural income generation
 * Develop optimal sets of policies conducive for the rural income generation of smallholder farmers, including macroeconomic, international trade, and nonagricultural policies; production and technology policies; and social protection policies to foster sustainable rural growth and incomes
 * Promote stronger and better public resource allocation, prioritization, and sequencing of public investments, and associated policy processes
 * Link smallholders to markets through innovations in policies, institutions, and investments
 * Identify innovative governance arrangements to strengthen property rights, asset control, and the poor’s access to rural services

MP2 will achieve this through work on three interlinked components: (1) policies and investments that enable pro-poor growth; (2) value chains linking small farmers to markets; and (3) enabling institutions and governance for the poor. MP2 will focus on the policies, investments, and institutions that enhance agricultural income opportunities and improved resource management practices for the poor, including farmers, pastoralists, fishers, forest dwellers, and, particularly, women.