in controlling the spread of plant and animal diseases. the rural feeder road infrastructure must be strengthened to enable farmers to access local markets with their crops. a further area where government intervention is needed is to strengthen land tenure rights for smallholders. only if farmers have secure rights to use their land will they have incentives to invest in land improvement and to avoid see the discussion in clive drew ( 2010 ), “ past successes and failures in supporting agricultural commercialisation in uganda ”, mimeo, prepared for the world bank. see table 8 in world bank ( 2011 ), agriculture for inclusive growth in uganda. bis central bankers ’ speeches practises which damage the long term productivity of the soil. secure land rights will also encourage land rentals and enable farmers to use their land as collateral for credit. admittedly this is an extremely sensitive issue for public policy, but its importance for the long term future of agriculture means that it cannot be ignored. government should avoid subsidising the provision of goods and services which can be supplied by the market, such as credit and fertiliser. subsidised farm inputs are not the best way to help smallholder farmers to raise their yields. given constraints on government budgets, subsidised inputs can only benefit a small share of the total number of farmers in uganda and other countries in the region. subsidised inputs are likely to be captured by larger, better off farmers, rather than resource poor smallholders. subsidies often simply transfer resources from taxpayers to favoured beneficiaries and encourage the inefficient use of subsidised inputs. when the opportunity cost of subsidising private goods from the government budget is taken into account – the fact that the money spent on these subsidies could have been used more productively on public goods and services – the overall impact on agricultural productivity is negative. scarce budgetary resources should be allocated only to public goods and services, such as agricultural research and extension services and rural feeder roads, where they can generate the highest social rates of return, if well designed and implemented. 5 5. conclusions to conclude, i will briefly summarise the main messages of my address. first, the very weak performance of agriculture in east africa, especially food crop agriculture, demonstrates that our agricultural policies have not worked. they must be reformed. although agriculture deserves a larger share of government budgets than it currently receives, modernising agriculture will not require huge public investments. far more important is putting in place the

right policies for the sector. secondly, the strategy for agricultural modernisation should involve helping smallholder farmers to raise their yields and to produce more output for the market. this strategy can support inclusive growth and reduce poverty by raising farm incomes. agricultural modernisation should not involve displacing smallholders to make room for large scale mechanised farming. this would be extremely regressive and, given that large farms have much lower yields per acre than small farms, lead to lower agricultural output. thirdly, the first step on the road to the modernisation of smallholder farming should be to encourage smallholders to adopt good agricultural practises, which can enable substantial gains in yields even without the use of high input farm technology. this should be the priority of the agricultural extension services. government should also strengthen the rural feeder road network and strive to enhance the security of land rights for farmers. fourthly, government spending on agriculture should be focussed on the provision of public goods and services, such as extension services which provide technical advice to farmers. scarce public resources should not be used to subsidise inputs which can be provided by the market. the evidence for high social rates of return to the provision of public goods and services for agriculture is surveyed in enrique blanco armas, camilo gomez osorio, blanca moreno dodson and dwi endah abriningrum ( 2012 ), “ agriculture public spending and growth in indonesia ”, policy research working paper 5977 world bank. bis central bankers ’ speeches