Reforming agriculture policies for growth and employment

In Malange, Angola, we met Florinda Chilumbo, a farmer who plants fruits and vegetables and sells them at the local market. Although these crops earn her more, she plans to grow maize to qualify for government subsidies and free technical assistance.

Governments and development partners tend to support certain crops over others to meet their export and food security targets. Globally, governments provide over $650 billion annually in agricultural support. Nearly three-quarters of that assistance is tied to specific foodstuffs.

When public support targets specific crops or livestock products, it narrows  options for farmers and agribusinesses by sustaining dominant value chains or uncompetitive foodstuffs, sidelining nutrition and job considerations. As OECD analysis shows, that approach tends to distribute resources inefficiently, limiting farm incomes, and worsening environmental damage by encouraging input overuse or farming in fragile areas. Beyond the distortions, this spending often performs poorly, returning only 35 cents per dollar. Put simply, picking winners in agriculture rarely delivers good value for money.  

Farmers like Florinda, who have tremendous commercial potential, could instead generate better-paying jobs across the value chain by moving beyond maize and diversifying their crops.

Support for single agrifood products is most often delivered through market price support or input subsidies to boost mainly sugar, maize and rice production. Figure 1, which uses data from AgIncentives, shows how that support has shifted over time, comparing commodity-specific and non-product-specific measures across income groups. 

In high-income countries, support has increasingly moved away from specific products over the past 20 years, favoring more flexible policies that encourage innovation and diversification. By contrast, middle- and low-income countries have seen little change. In these countries, support remains largely tied to specific crops, limiting diversification.

A winning public policy would enable farmers and agribusinesses to choose their products based on market demand. Effective public investment should instead focus on fixing market failures that hold back productivity, and developing value chains.

That support can include a wider number of levers, from land titling, food safety systems, and animal and plant health services to digital infrastructure and data systems that lower transaction costs, as well as agricultural R&D, extension, and skills training.

An “open-menu” approach to agricultural support can advance food security and export goals, and at the same time promote diversification and move their food systems up the value chain. The ultimate result will be better-paying jobs.

On the other hand, such an approach can be harder to manage because it demands more specialized services, like agriculture extension. This is where digital platforms and AI can make a real difference.

Brazil’s ABC Program offers a concrete illustration of an open-menu approach, helping farmers adopt diverse climate-resilient practices that reduce greenhouse gas emissions while improving productivity and overall sector resilience regardless of what the farmer decides to produce. Instead of focusing on any particular agrifood product, the program aims to raise farmers’ incomes and improve environmental, economic and social sustainability in the sector across a range of harvests.

The World Bank Group is supporting such efforts around the world. Reforming agricultural policies is one of three pillars of the newly launched AgriConnect initiative, alongside expanding infrastructure and unlocking finance for farmers and agribusinesses.  

Agricultural transformation depends less on choosing the “right” products and more on choosing the right rules and investments. When public action expands options instead of narrowing them, family farmers can connect with markets and build more thriving businesses.