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AGRICULTURAL SECTOR

Objectives

Recognizing the large productive potential of the Agricultural Sector in Latin America and the short, medium and long-term development needs of the agro-rural population, the Bank assigns priority attention and support to efforts to accelerate development in this sector.

It is the Bank's policy to encourage in the borrower countries increased attention to agriculture development (including livestock) and to provide support for development of sound agricultural policies and effective national strategies, as well as sectoral planning, long-term national and regional planning, the increased flow of coordinated resources directed to agricultural development and the generation of adequate levels of savings to support the sector's capital formation. The Bank's primary concern within the sector is for the overall improvement of the food system.

The Bank's broad objectives in this sector, in general order or priority, are:

  • To assist member country efforts to increase agricultural productivity, with emphasis on food production particularly by low and middle income farmers, and to improve food distribution and marketing with a view to enhancing the stability of food supply and food security of the countries.
  • To support activities that improve the socio-economic well-being of agro-rural populations, with special attention to local food supply, technology adaptation, diversification, land titling and land tenure, productive employment, increased economic participation of the lower income strata of the sector and self-sustained growth through savings generation.
  • To assist efforts that increase productivity and expand agricultural and food production in areas of comparative advantage for export, both within the region and to the rest of the world, and raw materials for national industrialization.
  • To support planning and promotion of rational use of land and water, to encourage conservation practices that will protect the natural resources essential to a continuous self-sustaining agricultural system and encourage appropriate protection of ecological systems.
  • To stimulate and support new initiatives aimed at increasing the future role of agriculture in the production of agro-based energy resources.

Recognizing the interdependency and synergistic linkages of the various sub-sectors of agriculture, the Bank, in accordance with the approved recommendation in RE-85 (Evaluation Report on Rural Development and IDB Multi-Sector Lending, November 1978), encourages an integrated approach to agricultural development. However, in addition to integrated projects, the Bank is prepared to support projects that advance objectives within individual sub-sectors of agriculture when appropriate progress and complementarity in other sub-sector activities related to the success of such projects can be demonstrated.

The Bank's program in agriculture shall be guided by a reasonable assessment of the following factors in each of the countries and sub-regions:

a) The characteristics, constraints, prospects and requirements of the sector.

b) The country's own plans and policies for the sector.

c) The Bank's possibilities to significantly and realistically contribute to the development of the sector through financing as well as through the Bank's expertise as a development institution which facilitates the establishment of a constructive dialogue with each country aimed at improving the effectiveness of the resources allocated to the sector.

As a framework for Bank activities the Bank will give priority attention to assisting borrower countries to make sector studies and to develop comprehensive agriculture sector strategies and programs. In general, agricultural development should be looked at in terms of the interdependency of the various sub-sectors and the interrelationships of associated activities.

Whenever feasible preference will be given to projects or programs which combine activities and interrelated sub-sectors in order to better assure that elements which are relatively dependent on each other move forward in concert. Such an approach could range from an overall integrated development project for an agricultural region to the combination in a single project of several sub-sectors or associated activities. When individual sub-sector projects are to be financed special attention should be given to assure that associated sub-sector activities which relate to the project being financed will also be receiving appropriate attention. To encourage and support sector-wide development programs the Bank will consider the use of sector loans, when conditions are appropriate.

Fields of Activity

1. MARKETING AND AGROINDUSTRY. Investments in marketing and agroindustrial projects are complementary and often essential to production oriented projects or programs. Priority will be given to supporting the following activities:

a) Market development projects that complement agricultural production investment programs and expand markets for agricultural products, with emphasis on modernizing the domestic marketing of national production.

b) Collective marketing projects that achieve economies of scale in the marketing and processing of products of small and medium-sized farms, with preference for associations or cooperatives of producers or consumers established for the common benefit of both groups with special concern for marketing of domestically produced food supply.

c) Production storage systems designed to project the quality and price stability of commodities until they are marketed, such as silos, warehouses, refrigeration facilities, etc.

d) Processing of farm products.

e) Integration of marketing systems, including physical facilities.

f) Marketing of agricultural inputs.

2. RESEARCH AND EXTENSION. Development of human capital through research, extension and education programs aimed at improving the farmers technical and managerial capacity. Aspects of basic education in the rural sector are to be considered in the Policy on Rural Development. Also, see New Guidelines in the Education Sector, GP-86-3.

a) Financing for research or technological development projects may include expansion and improvement of experiment station facilities, laboratories, agro-meteorological services, field testing and research on crops, pastures and livestock, demonstration programs, related materials, machinery and equipment, cost of production and price studies, and specialized training for professionals. Coordination among national research programs and international centers should be encouraged.

b) For extension and transfer of technology financing may be provided for creation or expansion of technical assistance services including physical facilities, equipment, consultants, specialized training at all levels including farmers, inputs for test/demonstration plots, on-farm testing programs, etc.

c) Financing may also be provided to establish and complement systems of production, certification, processing and distribution of improved seed and other genetic materials.

d) Close linkage between research and extension activities should be encouraged, with special emphasis on improved farming systems and on-farm testing.

3. CREDIT. Bank financing for agricultural credit is intended to promote the expansion of financial resources for the agricultural sector and strengthen the credit systems. Thus, the Bank will encourage the borrowing countries to design appropriate national policies, strategies and programs for agricultural credit, in order that the external resources may act as a catalyst to increase the mobilization of national resources and strengthen the national institutions. Bank resources generally should be reserved for new and developing credit programs for which there is particular justification for Bank terms and conditions.

a) Such programs should be aimed at attracting national and external resources, both public and private, and have mechanisms for channeling private savings and attracting commercial sources to financing the agricultural sector. Bank financing of agricultural credit projects will be contingent upon increased mobilization of new national resources for such projects.

b) Credit projects for small farmers should be designed to promote their incorporation into regular institutional credit programs. To this end, the Bank will support the organization and strengthening of intermediary institutions, both public and private, and encourage the creation of efficient programs within the executing credit agency which enable farmers to receive and handle increasingly larger loans with less technical assistance and supervision.

c) The Bank will place special emphasis on the channeling of resources to credit programs that promote the formation of various types of producer associations, in order to: i) extend the benefits to a larger number of farmers; ii) reduce the overhead costs of the programs; iii) extend credit to farmers who would not otherwise be individually eligible; iv) create a community spirit and solidarity among small farmers; and v) facilitate the availability of processing and marketing services for farmers in order to improve their economic situation.

4. IRRIGATION AND DRAINAGE. Bank financing in this sub-sector will give priority to projects such as the following:

a) Irrigation projects aimed at making more productive use of large areas of arid or semi-arid soils or soils affected by long periods of drought, to which it is feasible to transfer technologies already tested in other adaptable regions, through works and activities aimed at the integrated development of irrigated agriculture. Special attention will be given to examining the irrigation aspect of all potential multiple use water projects.

b) Rehabilitation and improvement of irrigation and drainage systems which have deteriorated or become inadequate, and institutional strengthening to improve management and maintenance, including consideration for appropriate water usage rates.

c) Multiple irrigation projects which involve the simultaneous execution of a number of medium-sized and small works. They may be financed as actual irrigation projects or as part of integrated rural development projects.

d) Flood control and drainage projects to make productive use of flooded lands with a good potential for agriculture and to provide flood protection for populated areas and farm lands.

e) Works, activities, studies and training to promote improved use of soil and water resources in irrigation areas with particular interest for improved on-farm water management.

5. CONSERVATION AND WATERSHED PROTECTION. With rapidly increasing pressures on the land for food, other agricultural products and energy production, special concern must be given to soil conservation, watershed protection and skillful management of ecological systems. Serious deterioration of good agricultural land due to inappropriate practices in the past require rehabilitation activities. The Bank will finance loans and technical cooperation in this area and encourage careful consideration of these aspects in the preparation and execution of agriculture projects and programs.

6. AGRO-BASED ENERGY RESOURCES. The Bank will be alert to identify, examine and promote activities having to do with agricultural production of energy resources such as crops and trees grown for fuel, utilization of farm waste, rational fire wood production and collection, etc.

Activities will include financing of research, technical forums, extension testing, dissemination of information, and production and utilization programs. Special attention will be given to evaluating the potential impact of agro-based energy production vis-à-vis food production.

7. FARMER ORGANIZATIONS AND TRAINING. Encourage formation and support improvement of farmer cooperatives, credit unions and other participatory groupings which serve to promote and generate savings, stimulate beneficiary involvement in project planning and execution, assure more equitable distribution of benefits, and facilitate channeling of credit, extension and marketing information and farmer training.

Basic Criteria

In addition to the usual criteria for Bank lending, the following criteria will be taken into consideration.

  • Agriculture development projects should be examined within the context of corresponding national policies, to determine if such policies allow the full execution of the respective projects and the attainment of their objectives.
  • Bank financed agriculture projects should be part of or associated with integrated agricultural programs or there should be evidence that related elements of development essential to the success of the project receive appropriate attention and make adequate progress
  • The agriculture projects in which the Bank participates should have specific developmental objectives with goals such as raising the family income levels of the beneficiaries and increasing the capitalization of the units of production.
  • Each project should contribute to sustaining or improving the agricultural resource base and avoid deterioration of the environmental factors on which the continuation of agriculture depends.
  • With regard to the use of technology to raise income levels, the Bank's resources should be channeled primarily to projects which are likely to increase productive rural employment opportunities and to increase productivity through the use of technology that does not unnecessarily displace labor and has a high utilization of locally available materials.
  • As in other sectors, agriculture development projects are to be designed to include the methodologies and the indicators for measuring progress. In addition to institutional and operational aspects, the evaluations should, as a minimum, measure specific progress, at the beneficiary level, with respect to: a) family income; b) capitalization of enterprises; c) increases in employment levels; and d) improvement of levels of production and productivity.

 

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Prevailing Reference Document: GP-106-3, October 1982.

 

 

* The operational policies of the Inter-American Development Bank are intended to provide operational guidance to staff in assisting the Bank's borrowing member countries. Over the course of the Bank's more than 40 years of operations, the approach to developing operational policies has taken various forms, ranging from the preparation of detailed guidelines to broad statements of principle and intent. Many policies have not been updated since they were originally issued, and a few reflect emphases and approaches of earlier years which have been superseded by specific mandates of the Bank's Governors, the most recent being the Eighth Replenishment mandates of 1994.

In accordance with the Bank's information disclosure policy, the Bank is making all of its operational policies available to the public through the Public Information Center. Users please note that the Bank's operational policies are under a process of continuous review. This review process includes preparation of best practice papers summarizing experience at the Bank and other similar institutions, and sector strategy papers.

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