Policy Research Working Paper 10862 explores the role of agriculture in poverty reduction in Timor-Leste, focusing on agricultural productivity's impact and factors influencing its enhancement.
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Agriculture's Importance in Timor-Leste: About 80% of poor households rely on agriculture for their livelihood, making it crucial for poverty reduction. However, agricultural productivity is significantly below international standards.
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Data Sources: Utilizes the 2007 and 2014 Timor-Leste Surveys of Living Standards to analyze trends and impacts.
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Poverty and Agriculture: A majority of poor households (63% in 2014) depend solely on agriculture for their income, with poverty rates higher in the western region compared to the east and center.
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Drivers and Constraints for Agricultural Productivity: Factors include facilitating farm mechanization, improving chemical input usage, enhancing access to credit and extension services, encouraging group farming, expanding commercialization, and reducing gender gaps in productivity.
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Economic Impact: Improvements in agricultural productivity can decrease poverty rates among farmers. For instance, a 10% increase in agricultural productivity might lead to a 1% reduction in poverty rates, based on experiences in other countries.
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Challenges and Solutions: Timor-Leste faces challenges due to low agricultural productivity, risk-averse farming practices, and underdevelopment of key subsectors. Addressing these issues requires targeted policies and investments.
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Policy Relevance: Aligns with Timor-Leste's SDP 2011-2030 and Ministry of Agriculture and Fisheries' strategic plans aimed at transitioning to commercial agriculture, improving rural incomes, and reducing poverty.
This paper contributes insights into strategies for enhancing agricultural productivity in Timor-Leste, a critical step towards poverty alleviation and sustainable economic development.
