Dr. Raj Patel of LRAN critiques the World Bank’s World Development Report

Tuesday 23 October 2007 by LRAN

October 2007
by Raj Patel

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Mark Phillips · ActionAidMany have welcomed the 2008 World Development Report on Agriculture as a sign of the World Bank’s nascent interest in the profession of the world’s poorest.1 The World Bank has, however, long been involved in food and farming systems. This report provides a broad overview, together with some detailed case studies, of the precise impacts of the World Bank’s involvement with agriculture. The Bank’s policies, particularly those promoting structural adjustment (or their modern form ­ Poverty Reduction Strategy Papers), have been directly responsible for the current critical health of agriculture in developing countries. In the Bank’s view, the World Development Report offers a blueprint for the future of agriculture. Closer analysis, however, suggests that its recommendations will extend the crisis, not fix it.

I. The History of the World Bank’s Love and Hate of Agriculture
The World Bank’s initial forays into agriculture were diplomatic ­ they brokered, through the 1950s, a water-sharing arrangement between India and Pakistan over the Indus River Basin, a problem created by the partition of India after British rule. But the Bank was slow to start thinking systematically about agriculture. In 1961, across the World Bank’s central and field operations, the number of professionals charged with agriculture was twelve.2 There were structural reasons for the Bank’s disinclination towards agriculture. In its early years, it needed to prove its creditworthiness, which directed it towards projects in which a high rate of repayment was assured. Few agricultural programmes fit this brief. The Bank shifted its vision with the arrival of a new president, George Woods, who noticed that agriculture, which employed two thirds of the world’s poorest people, accounted for only 8 percent of the Bank’s loans, to 1963.

He inaugurated investment particularly in agricultural research, joining the initiatives driven by the Rockefeller and Ford Foundations to develop `green revolution’ technology. In the early 1970s, Bank President McNamara singled out agriculture, `which has for so long been the stepchild of development’,3 for particular focus. Through the 1970s, particularly in Africa, the Bank applied itself to building public institutions that could support farmers, through extension, credit and marketing. Paradoxically, it was precisely these marketing boards that the World Bank was to target and eradicate through the 1980s with its structural adjustment lending programme. Structural Adjustment Programmes (SAPs) were aimed at `getting the fundamentals right’ ­ an omnibus policy goal that encompassed a country’s government spending, exchange rate, tariff structure ­ in short every aspect of monetary and fiscal policy. For most governments in the Global South, such policies were non-negotiable. Many countries found themselves in a credit crunch following the debt crisis of the 1970s and 1980s, and had no way of servicing their debts without the World Bank. Mark Phillips · ActionAid

So they borrowed, and agreed to the conditions imposed by the Bank.4 Among the aims of SAPs was the control of price inflation, which discouraged investment and saving, and was diagnosed as the product of profligate government expenditure. Government intervention was described as `distorting’ ­ a term that tacitly invokes an ideal of `undistorted’ markets.

The framing of government intervention in this way marked the ascendance of a particular political ideology based on the economic doctrine of Milton Friedman. The solution to distortions was to set up the correct economic infrastructure so that prices reflected costs (so that the market might work more efficiently). This meant reductions in government social spending, as well as the dismantling of support mechanisms and agencies that had been created to assist the poor, and a simultaneous `opening’ of markets to foreign capital, corporations, and imports.

The result, detailed in country after country, was widespread unemployment, spikes in poverty rates, particularly for children, and, in some cases, food riots.5 While these policies have been widely discredited by scholars of international development,6 they remain a core part of the Bank’s lending focus, whether under the banner of `adjustment with a human face’ or the more recent Poverty Reduction Strategy Papers.7 For agriculture, the effects of the SAPs were devastating. The two key impacts lay in: the liberalisation of trade and finance the dismantling of marketing boards The following sections deal with each of these in turn.

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