"Investing in smallholder farmers delivers higher poverty-reduction returns than financing large agribusiness"

"and infrastructure. Policies for the latter include the provision of agricultural extension services, access to risk management instruments such as insurance, and assistance with convening and coordinating smallholders to exploit scale through cooperatives and other producer organizations. Finally, as countries seek to move downstream from natural resources and integrate into manu- facturing and services value chains, the objective of delivering jobs for the current stock of poor workers calls for policies that reinforce comparative advantage.3 This means, for example, a relatively small, agriculturally rich country would focus on agriprocessing, or a large, low-skilled labor surplus country would implement policies conducive to attracting light manufacturing GVCs. For example, Côte d’Ivoire and Rwanda adopted strategies to expand agriculture value added and increase pro- cessing to raise returns to smallholder coffee farm- ers (box 8.1). Ethiopia, by leveraging FDI in industrial parks, developed labor-intensive light manufactur- ing to absorb labor transitioning away from agricul- ture. And Morocco upgraded to high-value manufac- turing to create jobs for an underemployed skilled population. These strategies offer a contrast with strategies that attempt to promote the development of high-technology, innovation-driven value chain nodes—strategies that in the same countries, even if successful, would unlikely have significant impacts on lower-skilled workers and could contribute to wage polarization. At the heart of policies that reinforce compara- tive advantage are those that minimize distortions of market prices—of land, labor, and capital—so that factors flow smoothly to the sectors and places where comparative advantage can be best exploited. These include economywide policies to support land mar- ket reforms, competition, open labor markets, and access to finance, along with investments in critical infrastructure. In low-income, labor surplus countries with large pools of unskilled labor transitioning from the agri- culture sector, externalities arising from the diver- gence between the market price and the opportunity cost of labor may call for additional targeted incen- tives for the private sector to invest in labor-intensive activities.4 job growth in GVCs is associated with both greater use of imported inputs and greater use of technology. Thus, although the higher imported inputs and capital intensity of GVC production may mean less labor is needed per unit of output, the output boost induced by GVC participation means more jobs are created overall. Chapter 3 also points out that GVCs are, on the whole, inclusive; they are both pro-poor and a significant source of jobs for women. These positive outcomes can be facilitated by supportive domestic policies. Create jobs in sectors that absorb poor and low-skilled workers For many developing countries, particularly those selling only commodities, ensuring GVCs benefit the poorest will come primarily through integrating smallholders into agriculture value chains and home- based workers into manufacturing and services GVCs. Integration of smallholders is particularly important for Africa, where 55 percent of jobs and more than 70 percent of the earnings of the poor are reliant on the agriculture sector.1 As discussed in chapter 2, foreign direct invest- ment (FDI) may play a critical role in supporting the development of agriculture value chains. Lead firms help solve many of the challenges of raising small- holder productivity by providing access to inputs, technical support, finance, and markets. The integra- tion of smallholders with offtakers or directly with processors supports greater value addition at the farmgate through a range of services such as tech- nology transfer, quality or certification premiums, and continual access to the market. For"

"important for Africa, where 55 percent of jobs and more than 70 percent of the earnings of the poor are reliant on the agriculture sector.1 As discussed in chapter 2, foreign direct invest- ment (FDI) may play a critical role in supporting the development of agriculture value chains. Lead firms help solve many of the challenges of raising small- holder productivity by providing access to inputs, technical support, finance, and markets. The integra- tion of smallholders with offtakers or directly with processors supports greater value addition at the farmgate through a range of services such as tech- nology transfer, quality or certification premiums, and continual access to the market. For example, the rapid development of floriculture value chains across East Africa, which opened up many jobs and earnings opportunities for smallholder farmers and women in packing and distribution, was made possible through subcontracting models organized by lead firms. Smallholder integration in GVCs is, however, not a panacea. A case study in Côte d’Ivoire and Ghana on participation in the pineapple and cocoa value chains found that, although participation leads to better growing processes, larger yields, and higher incomes for successful commercial farmers, it is also associated with an increase in casual labor hiring, as well as dis- placement of farmers from land because of their weak bargaining positions and scant knowledge of their rights to land ownership.2 Moreover, the near-collapse of Ghana’s export pineapple sector in the mid-2000s was due in part to smallholders’ lack of organization, which contributed to overproduction and inflexibility in response to changing market demand. Policies for inclusion and sustainability | 197 (not in employment, education, or training). In Ban- gladesh, more than 3 million women, mainly young rural–urban migrants, gained employment in the garment sector as it integrated into GVCs in the early 2000s, contributing to an almost 10 percentage point rise in the rate of female labor force participation in just a decade. Education and skills development policy is the starting point for helping youth to take advantage of the opportunities for employment in GVCs. The World Development Report 2019: The Changing Nature of Create jobs for women and youth The propensity of GVCs to employ women and youth is partly related to the sectors and activities that lend themselves to outsourcing and global relocation, which in turn are associated with some of the negative consequences of GVCs, especially those around low wages and poor working conditions. Nevertheless, the potential of GVCs to employ large numbers of young female workers means they may play a major role in supporting many countries’ efforts to increase female labor force participation and reduce youth NEETs Box 8.1  Taking advantage of comparative advantage: Agribusiness GVCs deliver more and better jobs in Côte d’Ivoire and Rwanda Côte d’Ivoire’s cashew value chain Cashews are Côte d’Ivoire’s third-ranking export after cacao and refined petroleum products, and they are an important source of cash for smallholders and processors in the poorer north of the country. Although Côte d’Ivoire pro- duces 23 percent of the world’s cashew supply, fewer than 7 percent of raw cashew nuts are processed domestically. Low yields and low quality are a result of poorly maintained plantations, lack of quality stock and inputs, weak exten- sion services, losses in postharvest handling and storage, and lack of finance for improvements. With coordinated support from the World Bank"