The food system represents a vital economic sector, making up the largest source of employment (both self-employment and wage employment) in many developing countries. This system extends far beyond farm production to include a wide range of activities, including food processing, transportation, and retail. A new report from the World Bank examines how the global food system can be strengthened to fulfill the SDG goals of enhanced global employment and reduced poverty.
As incomes rise, local demand for and spending on food change. The overall share of expenditures on food continues to rise, but the share of those increases spent on cereal declines relative the share spent on fresh, processed, and convenience foods. In addition, increased urbanization means a growing gap between the location of food production and food consumption. As a result, there is a growing need for food processing, transportation, and transformation beyond the farm level, providing opportunities for jobs and entrepreneurship. The report finds that in six African countries (Ethiopia, Malawi, Mozambique, Tanzania, Uganda, and Zambia), the transformation of the food system is forecast to add more jobs than any other sector of the economy by 2025. Over the same period, employment in farming in these countries is expected to decrease from 75 percent to 61 percent; employment in the broader food system (manufacturing, marketing, transportation, and preparation) will increase from 8 percent to 12 percent, mostly in rural areas.
The report emphasizes that it is critical for governments, development partners, and private sector actors to take advantage of this growth in the food system in order to improve employment prospects. This includes promoting the growth of food value chains, taking employment intensity (number of jobs per unit of output) into considerations in policy decisions, and facilitating inclusion of youth, women, and other marginalized populations.
In terms of promoting growth in the food value chain, the report discusses the need to increase agricultural productivity growth in order to raise farm incomes and boost the demand for non-farm goods and services. In Ethiopia, the study finds that each US$1 of agricultural output creates US$1.23 in activity in other parts of the economy. Forty percent of this growth coming from higher demand for agricultural inputs and for the use of agricultural outputs in food processing, while the other 60 percent comes from increased demand for goods and services stemming from higher agricultural incomes and spending. Similarly, in Bangladesh, the report finds that as farm incomes increase by 10 percent, this generates a 6 percent increase in non-farm incomes.
In addition, agricultural productivity growth will need to take into account the realities of climate change. Droughts, floods, and rising temperatures will continue to threaten yields, according to the report, driving the need for climate-smart agriculture (CSA). CSA can help increase productivity, reduce greenhouse gas emissions, and increase farmers’ resilience to climate change.
Efforts to increase agricultural productivity growth can include:
- Encouraging the development and adoption of improved crop and livestock technologies and access to complementary inputs;
- Improving livestock health;
- Reducing gender inequality, specifically promoting gender-inclusive research and extension services and enacting gender equality laws and regulations;
- Improving water management and sustainable water use;
- Strengthening land governance;
- Reducing land degradation; and
- Strengthening farmers’ skills and knowledge.
Encouraging the growth of food value chains will also require investment in rural infrastructure. Roads, ports, electrification, cold storage and warehouses, and communications infrastructure can all help strengthen rural-urban linkages and improve the functioning of food value chains, thus creating employment opportunities and raising incomes. In addition, attention should be paid to improving the climate for investment and trade in developing countries, encouraging competition among private sector actors, and encouraging entrepreneurship.
The report also cautions that as food systems change and mechanization and automation become more widespread, policymakers need to ensure that new policies aimed at making the food sector more efficient do not undermine employment intensity and end up reducing job opportunities. This can be done by promoting high-value agriculture, ensuring that the types of agricultural machinery provided through government programs are demand-driven rather than supply-driven, avoiding policies that artificially make machinery cheap relative to human labor (including tax/credit policies), and encouraging innovative machinery use, such as the Hello Tractor program in Nigeria.
Finally, for the food system to grow sustainably and equitably, policymakers and development partners need to focus on the inclusion of women and youth. This includes facilitating job training and education programs, improving access to land and affordable financial services for marginalized populations, and actively including women and youth in the policy-making process.
The report also discusses how policymakers can improve the quality of jobs available, as well as the quantity. This can be done by improving land productivity and access to markets, promoting farm diversification to reduce seasonality in labor demand and incomes, supporting social safety nets and access to social services, and strengthening labor regulations to protect workers’ rights.
The report highlights that priorities for the food system and employment will vary by country, so policymakers need to gain an understanding of the areas and constraints that are most pressing in their specific location. For example, in countries that depend on agriculture, creating non-farm jobs can be difficult; policymakers in these countries will need to first focus on increasing the profitability of agricultural tradables in order to increase incomes and stimulate demand growth in rural areas. Similarly, some countries will need to focus on improving basic education, such as literacy, while others may have a stronger educational system on which to build entrepreneurial training programs.