Published on Let's Talk Development

How rules can help farmers — or hold them back

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Photo © Vincent Tremeau / World Bank. Photo © Vincent Tremeau / World Bank.

In one country in Sub-Saharan Africa, it takes over a week to get documents necessary to export agricultural goods. In a neighboring country, it takes a day.  In one Latin American nation, it takes a month to register a tractor, while in nearby countries, the job can be done in as little as three days.

Agriculture makes a significant contribution to the economies of low-income countries, and farmers are at the center of that work. Since the world’s 500 million smallholder farmers are among the poorest and most malnourished groups, helping farmers become more productive is an important component of poverty reduction as well. 

Regulations and laws that govern the provision of key agricultural inputs such as seeds, fertilizer, or machinery can hold a farmer back. By the same token, government regulations can promote access to finance and facilitate market transactions.  

Improving Business Climate

Enabling the Business of Agriculture assesses the implementation of regulations that affect the lives of and livelihoods of farmers. It measures how 101 countries perform in facilitating provision to their farmers of eight key aspects of their work: seed, fertilizers, machinery, livestock, plant health, ability to trade, and access finance. Each country is awarded an aggregate score.  

The report finds that the business climate for agriculture overall is improving, but wide gaps remain between where many countries stand and best practices. Addressing these gaps is critical: while agriculture constitutes only about 3.9% of global GDP, it contributes about 25% of the GDP of low-income countries.

Over the last two years, 47 countries around the world enacted 67 regulatory reforms that the report measured. These reforms made it easier for farmers to manage pest outbreaks, get quality seeds, expand their markets by trading, and access finance to grow and sell their produce more efficiently. The greatest progress was made in reforms governing plant protection, access to finance and provision of seed, the report found.

A number of developing countries are among those that have made the biggest regulatory improvements: Sierra Leone, Armenia, and Burundi showed particularly strong forward momentum.  Not surprisingly, many of the countries providing the most conducive environments for farmers were advanced or European economies, with France, Croatia and the Czech Republic offering the most favorable milieus.

Gaps Remain

However, even as the report points to bright spots, it also shows where rules hold farmers back. Low-income countries were well behind more affluent countries in metrics for registering fertilizer, sustaining livestock, and protecting plant health. Among the 20 lowest-scoring countries across all indicators, 14 are in Sub-Saharan Africa. In almost every region of the world, the gap between strongest and weakest agribusiness performers was wide.

Farmers play a crucial role in meeting growing food demand in the world, and smallholder farmers supply about 80 percent of the food produced in Asia, Sub-Saharan Africa and Latin America. The report underscores the need to accelerate reforms to tackle outdated legal provisions that do not meet farmers’ needs and remove obstacles that stifle business processes.

Countries that have efficient regulatory processes in agriculture tend to have higher productivity. Enabling the Business of Agriculture helps identify and understand where reforms can help farmers achieve their full potential.

Download the report.

Visit the Enabling the Business of Agriculture website | press release



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