In 2008, the world poor earning fewer than two dollars a day amounts 2.1 billions, of which 3 out of 4 live in rural areas and make their living from agriculture as producers or workers. Agriculture and agro-processing account for 30 to 60 per cent of developing countries' gross domestic product (GDP), and an even larger share of their workforce. Agriculture occupies nearly 70 per cent of developing countries' workforce (Maxwell, 2001); and it is estimated that more than 50 per cent of the poor will be in rural areas and depend on agriculture in 2035 despite the growing urbanization (Nash, 2005). These figures show that the agricultural sector is the sector of the poor. It is the key sector for poverty alleviation.

However, barriers to trade kept the agricultural sector aside of the benefits of globalization. Three poor out of 4 -- nearly 1.5 billion people worldwide -- are not benefiting from globalization as they could, because of barriers to agricultural trade. On average, tariffs on agricultural goods are five times higher than manufactures tariffs globally (Braga, 2005). Non-tariff barriers which include import or export bans, rules of origin, product-specific quota and quota shares, restrictive licenses, price controlling, complex regulatory environment, etc. commonly applied to agricultural goods more than any other product. The situation of agricultural trade has worsened since the beginning of the recent food crisis. In fact, when the crisis started, many countries (China, India, Egypt, Bolivia, etc.) imposed higher tariffs and restrictions on food exports as a coping strategy.

Governments usually adopt protectionist policies on agricultural products to protect their domestic producers and to ensure food self-sufficiency. By doing so, they would rather hurt agricultural production, rural development and the poor who rely on farming for their living. In fact, tariffs and non-tariff barriers to agricultural trade restrict farmers' access to the world market. In this context, farmers are confronted to narrow domestic markets which limit the demand of agricultural products. Feeble demand and limited expansion opportunities in the agricultural sector lessen the benefit from economy of scale and reduce the investment incentive in the agricultural sector. High tariff on agricultural commodities and other trade distortion policies couple with poor rural infrastructure drive up the market price of food items at a level the poor cannot necessarily afford. Food accessibility for the poor is threatened. In the case food production falls in a country as a consequence of natural disasters like drought or flood, barriers to trade annihilate the supply response from the world market. This situation threatens food security in this age of global warming. Hunger, undernourishment and malnourishment are all affected. The losers of protectionist measures on agricultural products are the poor, especially smallholder farmers who make their livelihoods from agriculture.

Agricultural trade liberalization is important for food security and poverty reduction; especially rural poverty. Having access to global market will create big opportunities for farmers and agro-processors. If farmers and agribusiness entrepreneurs are given opportunities to produce and export freely, they will be more willing to invest in agribusiness, especially in rural areas where the labour cost is cheaper. Foreign investment flows to developing countries will increase as well as food production, opportunities for rural employment and agricultural economic growth. Investment increase in the agricultural sector will facilitate transfer of new technologies and spur productivity rise in the agricultural sector. Liberalizing trade of agricultural products will expand high-value primary and processed products such as fruits, vegetables, meat, dairy and fish product for which farmers in developing countries have a comparative advantage. Agricultural and non-farm growth in rural areas will be fostered, boosting incomes and creating jobs.

The impact of globalization on poverty reduction depends on the extent to which the poor are able to participate in the global market. Yet, the agricultural sector is kept behind tariffs and non-tariff barriers to trade. Protectionist measures on agricultural products unable a vast majority of the poor to take advantage of globalization. It is important to shift over food self-sufficiency measures to food security policies by removing the barriers on agricultural products. Agricultural trade liberalization is important for poverty reduction.

Written by Agbessi Komla Amewoa, Associate Expert, UNESCAP-CAPSA, Bogor, Indonesia.