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From Poverty to Power Green, Oxfam 2008 - weman

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3 POVERTY AND WEALTH LIVING OFF THE LANDper cent of rural African households do not grow enough <strong>to</strong> feedthemselves all year round, and so rely on the market <strong>to</strong> cover the shortfall.81 Rising food prices hurt poor consumers and may not even helppoor farmers, when the benefits accrue <strong>to</strong> processors and traders andare not transmitted down the value chain.As in the parallel argument for state intervention <strong>to</strong> nurture infantindustries, the role of the state is particularly important at the earlieststages of development, but it should fall away as agriculture takes offand fully functioning markets emerge in the countryside. An economicanalysis of the return on investment in India’s <strong>Green</strong> Revolutionfound that state spending on credit, electricity, and fertiliser yieldednet benefits in the early years, but fell away until by the 1990s all weregenerating a net loss. 82However, this exit can be politically difficult, as the longevity ofEurope’s Common Agricultural Policy and the US farm subsidiesdemonstrates.In India,one difficult legacy of the successful kick-startingof the <strong>Green</strong> Revolution is that the state still spends some $9bn a yearon subsidies, 83 mainly on fertiliser, electricity, and irrigation, whichlargely bypass the poorest people in the countryside, whether landlesslabourers or smallholders. Fertiliser subsidies in particular havebecome little more than a slush fund for the fertiliser industry, whichreceives payments directly from government on a cost-plus basis, thusremoving any incentive <strong>to</strong> improve efficiency. Such arrangements createvested interests that prevent the government from redirecting thatmoney <strong>to</strong>wards public goods, such as rural roads or agriculturalresearch, where investment produces far higher social and economicreturns. 84THE FUTURE OF SMALL-SCALE FARMINGHigh commodity prices, growing demand for biofuels, a possible shift<strong>to</strong> low-carbon agriculture, booming consumer demand in the citiesand in the North for year-round supply, and growing markets fororganic and Fairtrade products could all work in favour of small farmersin the coming years.Whether they can break in<strong>to</strong> these new and growingmarkets will depend largely on their ability <strong>to</strong> organise and upgradetheir production.143

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