International Fund for Agricultural Development (IFAD) submission to UK International Development Committee inquiry on the impact of Covid 19 on developing countries

Written evidence of 8 May 2020 for wave 2: longer term issues, implications and lessons to be learned.

Introduction to IFAD

The International Fund for Agricultural Development (IFAD) is an international financial institution and a specialised agency of the United Nations that works to address poverty and hunger in rural areas of developing countries. IFAD is the only multilateral development institution that focuses exclusively on transforming rural economies and food systems. It works in remote regions of developing countries and fragile situations, where few aid agencies or international financial institutions venture.

IFAD acts as a catalyst for increasing public and private investments in agriculture and the development of rural enterprises. It places poor rural women and men at the centre of its activities and involves them as participants in project design and implementation. IFAD invests in the very people most likely to be left behind poor small-scale producers, women, youth, indigenous people and other vulnerable groups. Investing in rural areas promotes prosperity, food security and resilience. Economic growth in agriculture is two to three times more effective at reducing poverty and food insecurity than growth in other sectors.

Reason for submitting an evidence to the International Development Committee

Most of the world’s poorest and hungry people live in rural areas and they are likely to face major challenges due to COVID-19. Unless we urgently act on it, the health crisis will risk becoming a food and livelihoods crisis, especially for the rural poor and small-scale farmers. Accordingly, around 63 per cent of the world’s poorest people work in agriculture, the overwhelming majority on small farms. Most of the poorest, hungriest and most marginalized people live in rural areas, and that is where the development community now needs to focus its mid- to long-term efforts. IFAD wishes to provide the perspective of rural people and rural areas to the International Development Committee so that any long-term development strategy focuses on tackling the challenges faced by the most vulnerable. 

Impacts of COVID-19 on rural people

As Secretary of State Anne-Marie Trevelyan told MPs during an evidence session of the IDC “the coronavirus pandemic threatens to undo 30 years of international development work, with a bleak picture for the world’s poorest[1]”. COVID-19 will have effects that go beyond the health sector and threatens to profoundly affect the livelihoods of poor rural farmers who depend on agriculture. More than 70 per cent of the food calories produced in Latin America, sub-Saharan Africa, and South and East Asia come from small rural poor farmers[2] and if we do not support them in producing and selling their products, we will increase the likelihood of a food crisis.

There are a number of factors that are putting the resilience of small producers – and food systems more generally – at risk. Transport and distribution systems can be interrupted by control measures like lockdowns and restrictions on social interaction. Reduced availability of agricultural labour, because of restrictions on migration and mobility, is likely to pose an imminent threat in areas with upcoming agricultural seasons – such as the Horn of Africa, Central America and the Caribbean, Western Africa and parts of Asia. At the same time, national food security risks being further compromised by trade and export restrictions, which could be especially damaging for food-importing countries. Urgent action is needed in not only the short term, but also looking at next planting season, as the risk of farmers not having access to agricultural inputs due to market restrictions will be exacerbated by the pandemic in the coming months.

Given that we focus on the poorest of the poor, we fear that the impact of COVID-19 on our beneficiary groups is likely to be especially pronounced, as it will add to an already precarious situation, affected by a variable weather and the ongoing desert locust swarms[3], in the case of East Africa. It will be the most marginal and poor groups who suffer the most – among them, rural women and young people. School closures and the need to care for sick family members will increase the workloads of many women. Many women will also suffer as unemployment rises, as their current work is more likely to be under informal and precarious working conditions. Similarly, young people, who have greater difficulty than older adults in finding decent jobs, are even more likely to become excluded and disenfranchised.

Restrictions on trade and movement are already making it difficult for small-scale farmers to access markets, both to obtain essential inputs such as seeds and to sell final products. In some places, the lack of availability of seasonal labour will impede production, especially for labour-intensive foods such as fruits and vegetables. In addition, the availability of non-farm work that many rural households rely on to diversify their incomes is likely to shrink, as are incomes from remittances.

On the supply side, the short-term effects will likely depend on the extent to which small-scale producers are supported to overcome the impacts of restrictive measures and lockdowns. Small-scale farmers’ reliance on family labour and their close proximity to local markets potentially enables them to serve local markets at a time when trade and transport restrictions threaten food availability. This is the focus of many of IFAD’s repurposed project activities in response to COVID-19. For example, in Nigeria we are supporting a women’s cooperative to maintain their sales of rice to local consumers in lockdown conditions[4]. And in Cambodia we are providing seeds, fertilizer and irrigation support for small-scale farmers producing key products for local diets, while, in El Salvador, we are speeding up investment plans[5] to enable farmers’ organizations to supply vegetables, fruits and dairy products to local markets.

The effects of the pandemic could be severe for urban as well as rural areas, given their reliance on local small-scale producers for their food – a factor that will only be heightened in the current context of import and trade restrictions. It will be important therefore - for the food security of both rural and urban people - that small-scale farmers are supported to play their key role in serving domestic and local markets during the crisis, and that connectivity between urban and rural areas is maintained within the food sector.

The situation is highly dynamic. Not only is there is an alarming increase in the prevalence of the virus in many developing countries; but, in addition, measures to prevent the spread of the virus at country level, as well as knock-on economic impacts (globally and within countries), are affecting the rural poor. In essence, there is a high risk that COVID-19 crisis will undo the progress the world has made in reducing rural poverty (SDG1), also threatening to aggravate the already declining food security (SDG2).

During the G-20 Extraordinary Agriculture Ministers Meeting on 23 April, Ministers affirmed[6] that “efforts will support rural communities, especially small-scale farmers and family farms, to be more economically prosperous, resilient and sustainable, and to have improved food security and nutrition, giving special attention to the needs of developing and low-income countries”. IFAD welcomes this approach and looks forward to work with its partners and donors to support a strong recovery from the effects of COVID-19.

IFAD’s role in the global response to COVID-19 pandemic

The COVID-19 pandemic is far more than a health crisis: it is affecting societies and economies. The International Food Policy Research Institute estimates, for example, that 140 million additional people could fall into extreme poverty this year as a result of the virus[7], while a recent United Nations University study[8] projects that global poverty could increase for the first time since 1990. The potential impacts on already vulnerable groups are especially worrying, especially in sub-Saharan Africa, where a large share of people are threatened by poverty and hunger.

Small-scale farmers and other rural people particularly vulnerable to shocks, including the impacts of the present pandemic. But they can also be part of the solution. In a sense, they already are right where we need them most: in rural areas of developing countries, providing food for vulnerable people and supplying food to local markets in situations where the COVID-19 crisis has created complex logistical and transport issues. This is why IFAD is stepping up to ensure small-scale farmers have the right support and investment to continue this crucial role.

The UN Secretary-General has called for urgent and coordinated global action to respond to the crisis, including through a socio-economic response framework – and IFAD is responding within this framework. IFAD’s strategic response to the COVID-19 crisis is centred on a coordinated range of activities that address immediate impacts, prevent the erosion of results from past and ongoing operations, and put in place the building blocks to support post-crisis recovery.

To achieve these goals, our response is organized into four broad categories:

Identify immediate solutions

IFAD’s country teams are already working with governments to find immediate solutions within ongoing projects. So far, over 100 projects across 65 countries have identified measures that can be put into action as part of the COVID-19 response.

Scale up

We have launched a multi-donor COVID-19 Rural Poor Stimulus Facility to provide a more scaled-up response to complement our repurposed activities. The Facility will safeguard the food security and resilience of poor rural people by ensuring timely access to inputs, information, markets and liquidity.

Advice and support

We are advising and supporting governments as they work to mitigate some of the potentially most severe impacts of the crisis.

Look to the long term

As governments begin to enact their long-term recovery plans, we remain ready to take action to support them. This means rebuilding rural economies and refocusing efforts with the aim of eradicating rural poverty and hunger in a post–COVID-19 context.

Lessons from the field and IFAD’s initial response on the ground

IFAD currently finances over 200 projects across more than 100 countries, with an estimated outreach to 110 million beneficiaries. These beneficiaries are some of the most vulnerable to the health and economic effects of COVID-19. The COVID-19 crisis presents both a threat to the development impact of IFAD-supported projects, and an urgent call for IFAD to play its part to help mitigate its economic and social effects on poor rural people more generally. With its in-country presence and expertise, IFAD is well placed to deliver the fast-tracked responses required for poor rural people and small-scale producers, and ensure that the longer-term development objectives of the supported-projects are met and, thus, contribute to more resilient rural livelihoods and the achievement of SDG1 and SDG2 by 2030.

As part of IFAD’s strategic response to COVID-19 and since the beginning of the crisis, IFAD has been repurposing its ongoing projects wherever necessary and feasible, without compromising the projects’ objectives. As of 9 April 2020, over 100 projects across 65 countries have identified measures to reallocate, repurpose, and/or extend project lengths as part of the COVID-19 response, for a total value of over US$ 100million.  While some these measures were taken without financial implications, others have been financed with unallocated funds from the projects. Still, not all IFAD’s ongoing operations will be able to do so as they may not have enough resource available to cover for the needed adjustments to response to the COVID-19 situation.

The lessons IFAD has learned through our work in other fragile and post-emergency situations will be of particular value in this recovery phase. Key initiatives will include:

• Supporting governments as they develop plans to accelerate recovery, rebuilding the resilience of rural livelihoods, and addressing structural inequalities so that, when the next crisis strikes, we are able to protect those most at risk of being left behind.

• In India, Mexico and Palestine, there are plans to purchase agricultural surpluses from farmers to ease the effects of reduced market access.

• Efforts to improve access to inputs either have been planned or are already being implemented in several other countries, including Angola, Brazil, Bosnia and Herzegovina, Eritrea, Ghana, Indonesia and Viet Nam.

IFAD global appeal to tackle COVID-19 pandemic

As mentioned above, IFAD has recently launched[9] a multi-donor COVID-19 Rural Poor Stimulus Facility (RPSF). The purpose of the Facility will be to mitigate the effects of the pandemic on food production, market access and rural employment.  As part of the broader UN socio-economic response framework, the Facility will ensure that farmers in the most vulnerable countries have timely access to inputs, information, markets and liquidity. IFAD has already committed $ 40 million from its resources and aims to raise at least $200 million more from Member States, foundations and the private sector.

The Rural Poor Stimulus Facility will focus on the following activities:

• Provide inputs for production of crops, livestock and fisheries to small-scale producers so that they can weather the immediate effects of the economic crisis.
• Facilitate access to markets to support small-scale farmers to sell their products in conditions where restricted movement is interrupting the functioning of markets, including providing logistics and storage support.
• Provide targeted funds for rural financial services to ensure sufficient liquidity is available and to ease immediate loan repayment requirements to maintain services, markets and jobs for poor rural people.
• Use digital services to share key information on production, weather, finance and markets.