## IMF Survey: Poorer Countries Should Try to Reduce Reliance on Agriculture

_IMF News, November 11, 2011_

## Source details

**Canonical URL:** [IMF Survey: Poorer Countries Should Try to Reduce Reliance on Agriculture](https://www.imf.org/en/news/articles/2015/09/28/04/53/soint111111a)

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## Bibliographic details
- Published: November 11, 2011

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### Main findings
- Low-income countries should strive to move beyond their traditional reliance on agriculture to achieve higher growth and protect their economies from food prices volatility.
- The rural sector is an imperfect insurance mechanism; most developing countries do not really have a safety net.
- Shift to other sectors can increase labor productivity, but countries also need higher investment and productivity in agriculture.

### Impact of increasing global demand for food and commodity volatility
- China's growth—and to a lesser extent India's growth—are increasing demand for a set of commodities; net buyers of those commodities face difficulties.
- Food-scarce countries are particularly impacted by the combination of drought and the general rise in world food prices; specific regions cited include Eastern Africa.
- Commodity price instability raises the riskiness of agriculture as a livelihood: "If that safety net goes away, what is left?"

### Policy recommendations and mechanisms
- Encourage labor to move away from agriculture toward more urban, skill-intensive employment, while increasing investment and productivity in agriculture for those who remain.
- Create insurance mechanisms to protect main crops and link to commodity prices.
  - Existing futures markets are acknowledged but are described as "not great for providing insurance as such."
  - Recommendation: "think of mechanisms for linking to commodity prices" and develop insurance markets where countries can insure their main crops.
- Recognize that jobs to absorb workers leaving agriculture will need to be created; the specific industries are often not predictable in advance.

### Political economy and implementation challenges
- Moving people out of agriculture is "politically, extremely fraught" because of the question of what to do with those who end up without an occupation.
- This transition is characterized as "a very delicate issue, probably the most difficult issue."
- All problems ultimately have micro dimensions because different people's lives are affected differently (example: a soybean producer with acres benefits from rising prices, whereas a one-acre net buyer of food is harmed).

### Key statements (verbatim)
- "If we really think that commodity price instability is the way of future, do we really want poor people to be involved in the commodity industries, in particular agriculture?"
- "Right now, the rural sector is an imperfect insurance mechanism."
- "How do you get people out of agriculture? This is going to be the big challenge for the next 20 years."
- "I am not a huge believer in the power of macro policy to directly help poor people."
- "All problems are eventually micro problems because it is people's lives that get affected by them…"

*IMF Survey online, November 11, 2011.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [Listen to the podcast](https://www.imf.org/external/pubs/ft/survey/so/pvcast.aspx)
- [LIC seminar conference page](https://www.imf.org/external/np/seminars/eng/2011/lic/index.htm)
- [Commodity price swings](https://www.imf.org/external/pubs/ft/survey/so/2011/CAR092311A.htm)
- [Analysis for LIC](https://www.imf.org/external/pubs/ft/survey/so/2011/INT092111A.htm)
- [Africa outlook](http://www.imf.org/external/pubs/ft/survey/so/2011/CAR101911A.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint111111a_