Despite significant strides in reducing poverty during recent decades, there are still about 1.2 billion extremely poor people in the world. In addition, about 870 million people are undernourished, and about 2 billion people suffer from micronutrient deficiency. About 70 percent of the world’s poor people live in rural areas, and many have some dependency on agriculture. Over time, however, there has been progress in reducing the total number of undernourished people and in reducing the number of poor people in Asia and in Latin America. Did agricultural performance help bring down the poverty and hunger rates?
There is evidence that agricultural growth has a high poverty reduction payoff. Higher agricultural productivity growth underpinned early development in Japan, the United States, and Western Europe, and later in China, the Republic of Korea, and Taiwan. Analysis by the International Fund for Agricultural Development (IFAD), the World Bank, and IFPRI shows that there is a clear correlation between the developing countries with the largest reduction in poverty rates and incidence of undernourishment and those with the most rapid agricultural growth. For example, a 1 percent per annum increase in agricultural growth, on average, leads to a 2.7 percent increase in the income of people in the lowest three income deciles in developing countries. Investment in agriculture is 2.5 to 3.0 times more effective in increasing the income of the poor than is nonagricultural investment. And agricultural growth, as opposed to growth in general, is typically the primary source of poverty reduction. The contrary is also true: a decline in agricultural growth throws many poor people into poverty. This explains some of the increase in poverty and hunger in developing countries during 2008 and 2010, when food prices increased worldwide.