World Bank Group Activities and Results This chapter examines the Bank Group’s contribution along the crop production chain shown in figure 1.3 in six areas: irrigation and drainage; research and extension; access to credit; access to land and formalization of land rights; transport and marketing infrastructure; and policies, markets, and agribusiness.
These six broad areas were selected because of their importance to sustainable improvement in agricultural productivity. Cross-country studies by the International Food Policy Research Institute (IFPRI) have found that investment in both research and extension and road infrastructure have some of the largest returns for agricultural growth and poverty reduction (Fan 2008b). Irrigation investments have also made significant contributions to increasing crop production (Fan and Hazell 1999; Fan, Hazell, and Thorat 1999; Fan, Zhang, and Zhang 2002), and water management is important for increasing food production in an environment of increasingly stressed water resources (IEG 2006e). Improving access to credit is critical for meeting a range of farmer and agribusiness needs and for the success of development programs (World Bank 2004a; Conning and Udry 2007). Secure rights to land can encourage farmers to invest in irrigation and drainage, soil conservation measures, and other natural resource management practices to improve the productivity of their land (World Bank 2003b). Efficient markets allow farmers and agribusinesses to capitalize on market opportunities and benefit from increased farm productivity (World Bank 2004a). Figure 3.1 shows IEG’s estimate of World Bank and IFC commitments in the six areas.1
Irrigation and Drainage The Bank provided $6.2 billion (34 percent of total agricultural lending) for irrigation and drainage in 173 proj-
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Growth and Productivity in Agriculture and Agribusiness
ects over the evaluation period. Forty-five percent ($2.8 billion) went to South Asia, mostly India, followed by 20 percent to East Asia, mostly China and Indonesia. Seven percent went to Sub-Saharan Africa, which has the least amount of land under irrigation. There is considerable scope for expansion of irrigation in Sub-Saharan Africa, though resource constraints (including limited IDA allocations)—in some cases low prioritization (Peacock, Ward, and Gambarelli 2007), and in other cases lack of consensus on regional water sharing arrangements, such as those over the Nile basin— have constrained investments in this sector.
The $6.2 billion the Bank has lent for irrigation and drainage over the period has addressed three interconnected issues. The Bank’s irrigation and drainage portfolio tackles three interconnected issues: improving access to water, enhancing recovery of operation and maintenance costs, and improving water-use efficiency. The majority of projects in the portfolio focus on surface irrigation, and about 20 percent (37 projects) address groundwater-related activities. Over time, the frequency of activities that support
Photo courtesy of Curt Carnemark/World Bank.
As shown in chapter 2, three of these areas—irrigation and drainage, research and extension, and markets and agribusiness—are formally regarded as part of agricultural lending in the Bank. Roads and market infrastructure, support for land issues, and rural credit are classified separately. The critical importance of the latter three in promoting agricultural development is recognized in the recent Agriculture Action Plan (World Bank 2009e), which refers to them as “other agriculture-related investments.” For IFC, these six areas are covered under five investment sectors—agribusiness, infrastructure, financial markets, manufacturing, and chemicals.