Poverty impacts of improved agricultural productivity: opportunities for genetically modified crops.

There is widespread concern that food prices may rise substantially in the coming decades due to a combination of increasing population, binding land and water constraints, potential increases in demand for biofuels, and climate change (Evans, 2009; Fischer, Byerlee, & Edmeades, 2009; Msangi & Rosegrant, 2009). As shown by van der Mensbrugghe, Osorio-Rodarte, Burns, and Baffes (2009), these factors could result in substantial increases in food prices, with potentially adverse implications for poverty (Ivanic & Martin, 2008). The upward pressure on food prices makes it particularly important to focus on the potential for increasing productivity. Productivity improvements—particularly in developing countries—have been found to be a powerful force for poverty reduction (Datt & Ravallion, 1998; de Janvry & Sadoulet, 2002). The recent spread of genetically modified plants in developing countries has often resulted in significantly higher yields and lower input use, for example in the case of cotton (Qaim & Zilberman, 2003) and maize (Gouse, Pray, Schimmelpfennig, & Kirsten, 2006). Informed commentators also believe that there are scientific possibilities for substantial further increases in productivity (Fischer et al., 2009). There is also strong evidence of serious underinvestment in research on agricultural productivity, as evidenced by very high rates of return on government investments in research and development (Alston, Marra, Pardey, & Wyatt, 2000). The impact of agricultural productivity on poverty has historically been a source of controversy. Higher productivity can be expected to lower food prices— either at a national or global level, depending upon whether countries are open to trade in agricultural products. And such declines in prices can be expected to benefit consumers not involved in farming, and particularly the poorest, who spend around three-quarters of their income on staple foods (Cranfield, Preckel, & Hertel, 2007). If the decline in agricultural prices is sufficiently large, the increase in farm incomes may be small (Irz, Lin, Thirtle, & Wiggins, 2001) or even negative. In this article, we address the potential povertyreducing role of policies such as agricultural research and development that raise agricultural productivity. Specifically, we explore a policy of increased investment in agricultural research and development that leads to increases of one percentage point annually in agricultural productivity growth over the 40 years to 2050. Using a global macroeconomic model and a set of microeconomic models, we quantify the likely impacts of the projected global growth on world food prices and poverty. Next, we describe the model used for the analysis. Then, we formulate and discuss the scenarios used and follow that with the results. Maros Ivanic and Will Martin The World Bank Constraints on land and water resources, growth in population, and an apparent slowdown in agricultural productivity raise concerns that food prices may rise substantially in the coming decades. A key question is whether policies aimed at increasing agricultural productivity may be effective in reversing the longrun trend and bringing about significant reductions in food prices. This article uses a global general equilibrium model and a set of microeconomic household models for a sample of 26 developing countries to assess potential implications of higher agricultural productivity—such as through the adoption of genetically modified plants—for household incomes, farmer profits, and poverty. Higher agricultural productivity resulting from increased investments in research and development is found capable of significantly lowering poverty by lowering the cost of consumption of the poorest households without significantly hurting farmers’ returns. We also found that raising agricultural productivity among the developing countries only is sufficient to achieve most poverty reduction in the global scenario.