In the seven countries of Central America, rural people are twice as likely to be poor as their urban compatriots. Are rural development (RD) strategies working? Is the declining agricultural sector likely to become an engine of growth? Can small family farms survive? Is it possible for planners and donors to link poverty reduction and environmental sustainability agendas?

A report from the Overseas Development Institute (ODI) explores options for more effective RD options in Central America. Drawing on findings presented to a DFID-sponsored conference, it focuses on the region’s poorest states – Honduras and Nicaragua.

Market forces, policy failures, natural disasters and environmental degradation have hit the small farm sector hard. Although crop areas have increased considerably, yields and agricultural value-added have remained flat. Despite their agricultural potential, several countries in the region are now net food importers – 20 per cent of Nicaraguan households are dependent on food aid. The persistent decline in commodity prices – especially for coffee and bananas – has had dire effects.

Skewed land distribution remains a driver of poverty and movement to vulnerable areas of forest land, cities and across international frontiers. Those most likely to leave are the better educated, the young and the fit. Growing emigrant remittances and post-Hurricane Mitch international aid flows have prevented the exchange rate depreciation – which would have helped those who have remained on the land to compete internationally.

The report also notes that:

• The number of rural households provided with health and education services may have expanded, but there are serious worries about the quality of provision – among Nicaragua’s poorest families, a third of children do not attend school and some 40 per cent are illiterate.
• Efforts to promote the rural non-farm economy (RNFE) through credit, technical assistance and infrastructure often bypass the rural poor who lack the education and skills to participate in knowledge and capital-intensive RNFE activities.
• Migration has contributed to depopulation along the Atlantic coast of Nicaragua and Honduras and the abandonment of remote areas to ‘uncivil’ society engaged in drug smuggling, illegal logging and other criminal activities.

The paper identifies opportunities to work with the poor to improve livelihoods. Small farmers could benefit from the niche market for organic, shade-grown and bird-friendly coffee. Sustainable tourism could allow the poor to benefit from the beaches, coral reefs, Mayan ruins and white-water rafting, which attract visitors. If vested timber interests were challenged, there is a high potential for the community-based management of pine and broadleaf forests.

The report argues that public investment in public goods is required in order to save small-scale farming in the region. Planners and donors must:

• recognise that human capital is the most important explanatory factor of rural inequality in Central America: investment in education offers the best opportunity to develop civic, ethical, moral and democratic values
• promote ecologically sustainable and labour-saving farm technologies
• target agricultural subsidies to storage and marketing operations in order to make farmers less vulnerable to ‘selling cheap’ and ‘buying expensive’
• work together with marginalised rural communities on watershed protection, natural forest management, reforestation of bare hillsides and degraded pastures and water conservation.

Source(s):
‘Options for rural poverty reduction in Central America’, Overseas Development Institute, by M. Richards, S. Maxwell and J. Wadsworth, January 2003 Full document.

Funded by: Department for International Development, UK

id21 Research Highlight: 28 August 2003

Further Information:
Simon Maxwell
Overseas Development Institute
111 Westminster Bridge Road
London SE1 7JD
UK

Tel: +44 (0)20 7922 0300
Fax: +44 (0)20 7922 0399
Contact the contributor: s.maxwell@odi.org.uk

Other related links:
'Powering rural development: energy management in African schools and hospitals'

'Working together in West Africa: rural development research and policy'

Sustainable Agriculture and Rural Livelihoods from IIED

'Escaping poverty: Can policy reach the chronically poor?' Insights #46

See more links from the id21 chronic poverty guide