The contribution of rice research to poverty alleviation D. Dawe
Rice is the dominant staple food of Asia, accounting for more than 70% of caloric intake in some countries. Furthermore, Asia is home to approximately 70% of the world's 1.3 billion poor, and the most severe malnutrition in the world occurs in South Asia. These considerations mean that rice research has a key role to play in global poverty alleviation. Rice research contributes to poverty alleviation through several pathways, and these contributions benefit both producers and consumers. The direct pathway leads to higher productivity and higher profits for farmers. The indirect pathway arises from the lower prices for consumers that are the inevitable result of higher farm productivity for any given level of demand. In the short run, lower prices for consumers reduce poverty because many poor people (the urban poor, the rural landless, and nonrice farmers) are net buyers of rice, and lower prices increase their effective incomes. In the long run, lower prices for consumers reduce the cost to employers of hiring workers (without sacrificing any welfare on the part of those workers). This stimulates job creation in the higher productivity industrial and service sectors of the economy, and eventually draws labor out of agriculture. This structural transformation of the economy is essential for long-term poverty alleviation. In fact, no country has ever become wealthy without removing a significant fraction of its labor force from the agricultural sector. After the initial success of the Green Revolution, rice yields have stagnated or grown slowly in many countries, and this slow growth retards the process of poverty alleviation. Creation of a C4 rice plant has the potential to generate substantially higher farm yields and make an important contribution to global poverty alleviation efforts.
Rice is one of the world's most important crops in terms of economic value, and approximately 90% of the world's rice is grown and consumed in Asia in a belt ranging from Pakistan in the west to Japan in the east. Because of the dominance of this region, this chapter will focus on rice production and consumption in Asia. Rice is very important to Asian consumers, but the magnitude of this importance is astonishing. Rice accounts for more than 70% of total caloric intake for the average citizen in Myanmar and Bangladesh, and it accounts for nearly two-thirds in Vietnam. Even in relatively wealthier countries such as Thailand and Indonesia, it still accounts for nearly 50% of caloric intake (FAO 1999). Furthermore, these figures are for the average citizen, which means that for many citizens (primarily the poor) the share is even higher. Rice is also important to millions
of small Asian farmers who grow the crop on millions of hectares throughout the region, and to the many landless workers who derive income from working on these farms. Asia is also home to a majority of the world's poor. According to the Human Development Report (UNDP 1997), approximately 70% of the world's 1.3 billion poor people live in this part of the world. To some extent, this is because Asia already has such a large population. But even in relative terms, malnutrition appears to affect a substantially larger share of the population in South Asia than in Africa, which are the two poorest regions in the world (Svedberg 1999). Thus, rice research has a key role to play in poverty alleviation at the global scale.
Rice research and poverty alleviation How does rice research help alleviate poverty? In some ways, this is an easy question to answer. Higher standards of living for rice farmers can only be sustained if farmers are able to produce more rice per unit of input. This higher productivity leads to higher profits from farming and a reduction in poverty. Thus, one way that rice research helps alleviate poverty is by increasing the productivity of farmers. This is the "direct" contribution to poverty alleviation. It is an important one, and it applies primarily to farmers that own land. If this direct contribution were the only one, then research priorities would be relatively simple to set. The only goal would be to help the poorest farmers directly, and this would mean working with farmers on marginal lands without access to roads and irrigation. But rice research also makes an important indirect contribution to poverty alleviation, and, unfortunately, this contribution is often overlooked. This indirect contribution makes itself felt in both the short term and the long term. To appreciate the short-term indirect contribution of rice research to poverty alleviation, it is important to understand that not all poor people are farmers who own land, grow rice, and benefit directly from improvements in crop productivity. In fact, several classes of people are very poor but do not reap any direct benefits from rice research. These people are net purchasers of rice, and they reap indirect benefits from rice research in terms of lower prices for the rice they must buy to stay alive. It is true that lower rice prices, holding all else constant, adversely affect poor rice farmers who produce a surplus of rice: this is the food price policy dilemma noted by Timmer et al (1983). But agricultural research resolves this dilemma, as will be explained shortly. Who are the poor people who are net consumers of rice? One increasingly important group is the urban poor. As of 1997, urban dwellers accounted for one-third of the total population in Asia. Although this means that two-thirds of the population still lives in rural areas, urbanization is increasing throughout the developing world, and Asia is no exception. From 1990 to 1997, Asia's rural population grew at a rate of just 0.6% per annum, while the urban population grew more than five times as fast at 3.2% per annum. The urban population increased by 211 million people from 1990 to 1997, whereas the rural population increased by just 93 million. Population projections from the United Nations indicate that the urban population will exceed the rural population in Asia by 2025 (UN 1997). Average levels of income are surely higher in urban areas than in rural areas, but not all urban dwellers are well-to-do. There is little doubt that the number of urban poor is increasing, both in absolute terms and as a share of the total poor (Haddad et al 1999). Although the share of total poverty that is urban is increasing, it is still probably true that the number of the rural poor exceeds the number of the urban poor. Yet, despite the tremendous importance of rice as a crop in rural Asia, not all rural dwellers are land-owning rice farmers.
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Many rural people are landless or near landless and derive most of their income from agricultural labor. In fact, when we think of truly abysmal poverty, we usually think of someone who does not have enough food to eat. Almost by definition, this is not a farmer with sufficient land to grow enough food for his or her family. No doubt many land-owning farmers are poor, but they are not the poorest of the poor. How numerous are the rural landless or near landless? Data on their numbers are not easy to obtain, but it is clear that they are by no means a small group. In Bangladesh, for example, assuming a paddy rice yield of 2.8 t ha -~ (equal to the national average), it would take about 0.2 ha of land to supply an average-size family of 4.7 people with just half of the national average per capita consumption of rice. (This assumes that all of the available land is planted to rice, with nothing left over for vegetables or other crops.) According to an official government survey conducted in 1995-96 (Bangladesh Bureau of Statistics 1998), 48 million Bangladeshis live in households that own less than this amount of land (this is nearly half the rural population). These people have little or no surplus rice to sell, and, if rice prices were lower, they would surely buy more than they currently are able to afford. They are net purchasers of rice, they are very poor, and they would benefit from lower rice prices, especially if those lower prices were induced by higher farm productivity. In Indonesia, 45% of rural households on Java do not own any land, and another 20% own less than 0.25 ha. In the Philippines, the 1980 census showed that 48% of the rural labor force consisted of landless agricultural laborers (cited in Hayami et al 1990). Many of these work on lands growing maize, sugarcane, coconut, hemp, or tobacco. In Sri Lanka, there are many workers in the estate crops sector (e.g., tea). All of these people and their families would benefit from being able to purchase cheaper rice. Rural dwellers who own land, but use it to grow nonrice crops, are also poor in many cases. They would benefit from cheaper rice prices. In Indonesia, many farmers plant maize, cassava, and soybeans. In the Philippines, maize and coconut are important crops grown by poor smallholders. Several studies have compiled data on the position in the income distribution of net buyers and net sellers of rice. Mellor (1978) found that the two poorest deciles of the income distribution in India were net buyers of food, whereas each of the top eight deciles were net sellers of food. Sahn (1988) showed that 84% of rural households in Sri Lanka were net consumers of rice (and, of course, all urban households). In Madagascar, Barrett and Dorosh (1996) found that "the roughly one-third of rice farmers who fall below the poverty line have substantial net purchases of rice, suggesting important negative effects of increases in rice prices on household welfare." This finding only concerns rice farmers with land, and ignores the rural landless who are even poorer and who are also net purchasers of rice. The authors go on to state that "the poorest rice farmers are quite vulnerable to an increase in the price of their principal crop .... Conversely, the largest, wealthiest 10% or so of farmers stand to benefit significantly from rice price increases." A recent World Bank report on Indonesia states that three out of four Indonesians are net consumers of rice. Clearly, not all of these net rice consumers are poor, but Indonesia is still a poor country, and a substantial number of these net consumers must be poor. Thus, lower rice prices contribute directly to short-term poverty alleviation for these households. Thus, many poor Asians are net purchasers of rice, and they benefit from the lower rice prices induced indirectly by rice research. Rice constitutes an important part of their daily expenditures, so the contribution of lower prices is not trivial. For example, for the poorest 10% of the urban population in Bangladesh, rice accounts for half of total expenditures. Even for the poorest 60% of the urban population, nearly 40% of expenditures go to rice (Bangladesh
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Bureau of Statistics 1998). In Indonesia, rice accounts for 20% of total expenditures for the poorest quarter of the urban population (about 20 million people). For the poorest 5% of the urban population, the share of rice is about 25% (Biro Pusat Statistik 1998). But poverty alleviation is ultimately a long-term, broad-based process, and higher farm productivity makes at least two important long-term indirect contributions to poverty alleviation. One is through higher wages for farm laborers. As farm yields rise, the value of production increases, which in turn increases the demand for labor. Higher demand for labor leads to higher wages for the poorest of the rural poor, those who work as hired hands on someone else's farm. The second important long-term indirect contribution is through lower rice prices. To understand this contribution, it is important to view the process of long-term poverty alleviation in the context of the structural transformation of the economy. To raise the incomes of large numbers of poor people in a sustainable manner requires economic growth over a long period of time. This is not always a sufficient condition, but it is certainly necessary. Long-term poverty alleviation also requires the creation of jobs in the relatively higher productivity industrial and service sectors of the economy. This is obviously true if one is trying to reach the urban poor. It is also true for the long-term reduction of rural poverty, because no country in history has managed to grow rich while keeping a large share of its population in agriculture. This is a striking empirical regularity of the development process (Timmer 1988). In other words, longterm poverty alleviation requires a structural transformation of the economy away from agriculture and toward industry and services. Low rice prices that are the result of higher productivity induced by agricultural research contribute to this structural transformation of the economy. Low rice prices allow wages to be lower from the employer's point of view, without sacrificing any welfare on the part of the workers. In conjunction with other factors, these lower wages stimulate the job creation and growth that are necessary for sustainable poverty alleviation. If a country insists on a high rice price policy instead, workers will legitimately demand higher wages. But these higher wages will discourage investment, both domestic and foreign, and the growth process will be retarded. Lower rice prices also contribute to a structural transformation of the agricultural sector itself. They allow rice farmers to diversify their cropping patterns by making it cheaper to buy rice from the market. These ex-rice farmers then begin to produce other crops such as fruits and vegetables; this allows consumers to diversify their diets and increase their intake of proteins, vitamins, and minerals. Yet this does not mean that countries can accelerate the growth process simply by pursuing policies that arbitrarily depress rice (food) prices. This strategy has been tried, and it has not worked. If low farm prices are not accompanied by rising productivity, farmers have little incentive to produce, leading to reduced supplies of food. In conjunction with low prices that encourage high levels of consumption, this results in either black markets (and high prices for those without privileged access to cheap food) or large government fiscal deficits that cannot be sustained. The only solution to this low price/high price dilemma is agricultural research. Farmers will be encouraged to continue producing even as prices fall only if research leads to higher productivity that compensates for the lower prices. If farmers are able to produce more rice per unit of input, then it is possible for the welfare of everyone to improve. Consumers will gain through lower prices, and the welfare of farmers will also improve as production per unit labor increases. Higher production per unit labor will allow farmers to shift some of their labor into nonfarm work, or will allow family members to migrate to urban areas in search of higher paying jobs. This shedding of labor from agriculture and diversification of income sources are
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key components of the structural transformation mentioned above. This process is well under way in Asia, and data from several different countries show that the share of rice in total farm household income is typically less than 50% (Sombilla and Hossain 1999). This also highlights the fact that even many rice farmers ultimately benefit from low rice prices. The rice-growing families of today are progressively diversifying out of rice by growing other crops, moving off the farm, or receiving remittances from family members with jobs in urban areas. Thus, lower food prices and higher wages that are the result of increased agricultural productivity (as opposed to government decree) contribute to poverty alleviation over the long term. Datt and Ravallion (1998) demonstrate empirically that this process has occurred in India. Using data from 24 household surveys spanning 35 years, they show that "higher farm productivity brought both absolute and relative gains to poor rural households. A large share of the gains was via wages and prices, though these effects took time. The benefits to the poor were not confined to those near the poverty line." Timmer (1997) analyzed cross-sectional data from 27 developing countries on income growth, income distribution, and inequality. For countries with relatively equal distributions of income (generally those in the rice-producing countries of East, South, and Southeast Asia), he found that the poorest members of society (those in the bottom quintile of the income distribution) benefited more from agricultural growth than from growth in the industrial and service sectors of the economy. He also found that agricultural growth helps the poor relatively more than the rich in these countries. Agricultural growth is thus both relatively efficient and fair in its effects on poverty alleviation. Since agricultural research is one of the prime determinants of agricultural growth, research clearly has an important role to play in connecting the poor to the growth process.
Long-term trends in rice prices and yields Since the Green Revolution began in the mid-1960s, rice prices have fallen in real terms (i.e., after adjusting for inflation) and the productivity of rice land has increased dramatically. Both of these developments have made important contributions to poverty alleviation in Asia. From 1950 to 1981, the price of rice on the world market averaged approximately US$860 t-' (constant 1998 prices). From 1985 to 1999, however, prices averaged about US$327 t-~, a decline of 62% (Fig. 1). This is a remarkable decline and it has allowed many rice-deficit nations in Asia (and elsewhere) to turn to the world market for needed supplies at a relatively low cost. Only a small share of world production is traded on the world market, however, so this is not necessarily representative of overall price trends. Long-term data for retail rice prices are not easily available for all countries, but rice prices in domestic markets are generally also lower than they were at the beginning of the Green Revolution. For example, rice prices in Thailand, Indonesia, and the Philippines are about 15-20% lower now than they were in 1968 (Fig. 2). The decline has been greater in India and Bangladesh, where retail prices adjusted for inflation are about 50% lower than they were in 1968 (Fig. 3). Lower prices are clearly a boon for consumers, but they represent a deterioration in the situation of farmers if all other factors are constant. But other factors have been far from constant. Production per unit land soared in Asia during this period, with paddy rice yields increasing from an average of just 2.1 t ha -~ between 1964 and 1966 to 3.9 t ha-' from 1996 to 1998, an increase of 89% (Fig. 4). Clearly, not all of the increase in yields is solely attributable to rice research. Increased use of fertilizer and increased investment in irrigation have also made important contributions. Yet rice research allowed these additional inputs and investments to have a large impact, and farmers have benefited tremendously from the resultant gains in
The contribution of rice research to poverty alleviation
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yield. Lower rice prices and higher rice yields have allowed both rice farmers and rice consumers to escape poverty during the past 35 years.
Future trends in rice demand Will the trend of lower prices and higher yields continue? In the case of prices, the outcome will depend on both supply and demand. In the next 20 years, future demand for rice will
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depend primarily on population growth. Income growth and urbanization will also affect demand, but in the aggregate these effects are likely to be small. Population growth has been steadily declining in Asia for the past few decades. In the 1960s, population grew at an average annual rate of 2.3%, but this has slowed substantially to just 1.4% from 1990 to 1997 (FAO 1999). Population growth projections from the United Nations estimate that this trend will continue, with average annual population growth in Asia slowing to a rate of 1.08% y-~ from 1995 to 2020 (UN 1997). This implies that growth in rice demand in the next 20 years will be much slower than it was in past decades. Thus, estimates made by Rosegrant et al (1995) in the IMPACT model of the International Food Policy Research Institute (IFPRI) are that demand for rice will grow by approximately 1.0% y-~ until 2020. Slower growth in demand does not guarantee lower prices, however, since gains in rice production are becoming more difficult to achieve. Growth in rice area harvested has slowed
The contribution of rice research to poverty alleviation
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to a trickle at just 0.2% per annum from 1984 to 1998, and yield growth is much slower than it was in the past. From 1967 to 1984, rice yields in Asia grew at an average compound rate of 2.5% per annum, while this rate slowed to just 1.2% per annum from 1984 to 1998. (In absolute terms, yield grew at an average annual rate of 67 kg ha -~ y-~ in the first period, and just 42 kg ha -1 y-~ in the latter period.) To summarize, although demand growth is slowing down, so is growth in yields, and it is unclear how prices will evolve during the next 20 years. The discussion in an earlier section of this chapter explained why low rice prices contribute to poverty alleviation, so it will be beneficial for prices to be as low as possible in the future, provided that the low prices are due to increased productivity. Thus, the goal of rice research should not be to meet some fixed hypothetical growth rate of future demand, but should be to increase production and yield as much as possible. If the growth of supply exceeds the growth in demand, that will not generate stockpiles of useless grain. Instead, it will push prices lower, and this will hasten the escape from poverty. Without such research, however, there is a real risk of stagnant yields and higher prices, which would throw millions of already poor Asians deeper into poverty. One hopes that it does not take a major food crisis to elicit more funding for agricultural research.
Future constraints to increasing rice production The most important inputs in rice production are land, labor, water, and fertilizer. Constraints to the future supply of these inputs will affect rice production, and consideration of these constraints gives insights into the type of technologies that are most likely to be helpful in reducing the incidence of poverty. Land is an increasingly scarce resource in Asia. Urbanization and road construction are placing demands on land use, and it is certain that future gains in rice production will come primarily from increased production per unit land, not from increased area cultivated. If the area cultivated expands significantly, this will lead to environmental problems as production expands to marginal lands that are prone to soil erosion. Water is another key natural resource that is becoming scarcer as we enter the 21 st century. First, demand for water from industries and households is growing rapidly, leaving less water for agriculture than would otherwise be available. Second, the costs of constructing new irrigation systems are increasing rapidly (Rosegrant and Svendsen 1993). The water supplies most suitable for irrigation were naturally developed first, leaving only the sources that are in relatively unfavorable topographic locations. This makes it unlikely that increasing irrigation water supplies will make a large contribution to future increases in rice production. Although Asia is very densely populated, labor is also becoming scarcer as economic development proceeds and more attractive jobs in urban areas become available. Farmers in many parts of Asia, even in relatively poor countries such as India and Bangladesh, find it increasingly difficult to hire farm workers. Technologies that require large inputs of labor to increase rice production are not likely to be economically attractive to farmers and will not be adopted. For example, the use of deep-placed urea tablets to increase nitrogen-use efficiency was not accepted by many Indonesian farmers because of the additional labor involved in placing the tablets deep into the soil (Cohen 1997). In contrast to increasing shortages of land, water, and labor, fertilizer is much cheaper now than it was 30 years ago. The world market price of urea (the most common source of nitrogen for rice farmers in Asia) was US$516 t-~ on average from 1957 to 1961, but declined to US$174 t-1 on average from 1994 to 1998 (all prices are in constant 1998 dollars; see Fig. 5). Because
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of these low prices, the cost of nitrogen fertilizer is a relatively small share of the total value of production. For example, recent data collected from representative farm enterprises in several key irrigated rice-growing areas showed mean shares of just 3.5% in West Java, Indonesia, 6.7% in the Central Plains of Thailand, and 6.8% in the Mekong Delta of Vietnam (these data are averages of six seasons during the period 1994-98). The share is comparable in typical rainfed systems. It might be supposed that the reason for the low shares of fertilizer costs is heavy government subsidies, but this is not the case (Dawe 2000). The relatively low cost of nitrogen fertilizer suggests that this is a viable means of increasing future yields. But this will be contingent upon the development of new rice varieties. The Green Revolution began more than 30 years ago, and this has given farmers adequate time to learn the benefits of nitrogen fertilizer. Although farmers' fertilizer management can certainly be improved, they are not grossly underapplying nitrogen given the current varieties available. In other words, increased yields through higher nitrogen applications in farmers' fields will require new varieties developed through more research. If rice can be converted into a C4 plant, this would open the door for the creation of such new varieties. Such a development would represent a major contribution to poverty alleviation in Asia.
References Bangladesh Bureau of Statistics. 1998. Household expenditure survey 1995-96. 364 p. Barrett CB, Dorosh PA. 1996. Farmers' welfare and changing food prices: nonparametric evidence from rice in Madagascar. Am. J. Agric. Econ. 78(3):656-669. Biro Pusat Statistik. 1998. Statistical yearbook of Indonesia. Jakarta, Indonesia. 594 p. Cohen M. 1997. Barren business: fertilizer monopoly goes to seed. Far Eastern Econ. Rev. October 16. p 60-61.
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Datt G, Ravallion M. 1998. Farm productivity and rural poverty in India. J. Dev. Studies 34(4):62-85. Dawe D. 2000. The potential role of biological nitrogen fixation in meeting future demand for rice and fertilizer. In: Ladha JK, Reddy PM, editors. The quest for nitrogen fixation in rice. Proceedings of the Third Working Group Meeting on Assessing Opportunities for Nitrogen Fixation in Rice, 9-12 Aug. 1999, Los Bafios, Laguna, Philippines. Makati City (Philippines): International Rice Research Institute. p 1-9. FAO (Food and Agriculture Organization). 1999. FAOStat on-line electronic database I999. Haddad L, Ruel MT, Garrett JL. 1999. Are urban poverty and undernutrition growing? Some newly assembled evidence. World Dev. 27( 11 ): 1891-1904. Hayami Y, Quisumbing MAR, Adriano LS. 1990. Toward an alternative land reform paradigm: a Philippine perspective. Manila (Philippines): Ateneo de Manila University Press. 209 p. IMF (International Monetary Fund). 1999. International financial statistics. CD-ROM database and browser. Mellor JW. 1978. Food price policy and income distribution in low-income countries. Econ. Dev. Cult. Change 26(1): 1-26. IRRI (International Rice Research Institute). 1995. World rice statistics: 1993-94. Los Bafios (Philippines): IRRI. IRRI (International Rice Research Institute). 2000. Unpublished database. Rosegrant MW, Sombilla MA, Perez N. 1995. Global food projections to 2020: implications for investment. Food, Agriculture and the Environment Discussion Paper No. 5. Washington, D.C. (USA): International Food Policy Research Institute. Rosegrant MW, Svendsen M. 1993. Asian food production in the 1990s: irrigation investment and management policy. Food Policy 18( 1):13-32. Sahn DE. 1988. The effect of price and income changes on food-energy intake in Sri Lanka. Econ. Dev. Cult. Change 36(2):315-340. Sombilla MA, Hossain M. 1999. Rice and food security in Asia: a long-term outlook. Los Bafios (Philippines): International Rice Research Institute. 38 p. Svedberg E 1999. 841 million undernourished? World Dev. 27( 12):2081-2098. Timmer CE 1988. The agricultural transformation. In: Chenery H, Srinivasan TN, editors. Handbook of development economics. Vol. 1. Amsterdam (Netherlands): North-Holland (Elsevier Science Publishers). p 275-331. Timmer CE 1997. How well do the poor connect to the growth process? CAER II Discussion Paper No. 17. Cambridge, Mass. (USA): Harvard Institute of International Development. 29 p. Timmer PC, Falcon WP, Pearson SR. 1983. Food policy analysis. Published for the World Bank. Baltimore, Md. (USA): The Johns Hopkins University Press. 301 p. UNDP (United Nations Development Programme). 1997. Human development report. New York (USA): Oxford University Press. UN (United Nations). 1997. World population prospects, 1996 revision. New York (USA): United Nations.
Notes Author's address: Social Sciences Division, International Rice Research Institute, MCPO Box 3127,
1271 Makati City, Philippines. Citation: Sheehy JE, Mitchell PL, Hardy B, editors. 2000. Redesigning rice photosynthesis to increase
yield. Proceedings of the Workshop on The Quest to Reduce Hunger: Redesigning Rice Photosynthesis, 30 Nov.-3 Dec. 1999, Los Bafios, Philippines. Makati City (Philippines): International Rice Research Institute and Amsterdam (The Netherlands): Elsevier Science B.V. 293 p.
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