Can urbanization benefit rural populations?

Increasing urbanization plays a major role in shifting patterns of food supply and demand and thus in transforming food systems. These transformations carry significant implications for the livelihoods of rural populations, presenting both challenges and opportunities. A new paper published in Food Security examines some of these impacts in Africa south of the Sahara (SSA) and South Asia, as well as the enabling environments needed to help rural communities benefit from the changes.

Both SSA and South Asia are expected to experience rapid urban population growth over the next three decades, according to the study. The urban population of SSA is forecast to reach 840 million in 2050, while South Asia is forecast to see its urban population grow to 1.2 billion in the same timeframe. In both regions, while most of this growth is expected to occur in large cities, peri-urban areas (i.e., small and medium-sized cities and neighborhoods on the outskirts of large city centers) are also on the rise. This distinction is important, the study emphasizes, because smaller urban areas are tied to rural economies in different ways than large cities. They often depend more heavily on the agricultural sector, for example, and be more closely tied to local food value chains.

The paper identifies four main channels through which urbanization can impact rural livelihoods. As stated above, the extent to which these channels are in play varies depending on the size and geographic location of a particular urban area.

• Overall growth in urban food demand. Overall demand for food could rise as much as 2.5 times and 1.7 times its current levels in SSA and South Asia, respectively, by 2050. In both regions, urban food demand is expected to grow by two to four times more than rural food demand between now and 2050.
• Urban population’s purchasing power and food preferences. On average, urban households are better able to afford food than rural households. While urban populations in much of SSA struggle more with poverty and income inequality than their urban peers in South Asia, in general, their purchasing power and subsequent food security tend to be higher than rural populations. With this burgeoning urban demand and increased purchasing power will come shifts in consumer preferences. This includes shifts toward greater consumption of meat, dairy, vegetables and fruits, and processed foods – all higher value products that can increase incomes for rural producers.
• Complexity of food value chains and shifts in market linkages. In addition to opening the door to the production of higher-value crops, growing demand for more diverse foods and more processed foods provides opportunities for rural and peri-urban populations to diversify their incomes by engaging in more formal agricultural food value chains as processors and traders as well as producers. Employment in these off-farm sectors is increasing faster than on-farm employment in SSA. In addition, the paper highlights that households more closely linked to urban markets often receive greater returns on their products due to having lower transaction costs and better access to and information about these growing markets. However, formal value chains often benefit larger producers more than smallholders, potentially pushing smaller producers out of profitable sectors and increasing poverty in rural areas.
• Direct and indirect land use changes. As urban populations grow, agricultural land surrounding cities is converted to living space. This expansion of urban land impacts food production and the livelihoods of rural producers. In South Asia, between 1992 and 2015, 75 percent of urban expansion impacted surrounding cropland; this number was less than 40 percent in SSA. The paper projects that between 2000 and 2030, Asia as a whole will lose about 3 percent of its agricultural land to urban expansion, leading to a 6 percent loss in food production. In SSA, a similar 3 percent reduction in cropland will lead to a 9 percent reduction in food production. In addition to directly impacting agricultural production, these shifts in land use will also result in more rural people seeking off-farm employment.

The paper also identifies the various enabling factors – social, physical, geographic, economic, and institutional conditions – that help determine whether rural populations will be able to reap the opportunities and avoid the dangers presented by the foregoing channels. These include migration and remittance flows, communication and transport infrastructure, urbanization patterns (growth of small cities and peri-urban areas instead of large cities), trade policies and financial incentives, and stable government services.

Ensuring the proper combination of enabling factors to help rural populations, particularly smallholders, take advantage of the opportunities presented by urbanization will require a multi-sectoral approach on both the local and the global scale.  Globally, this means focusing on establishing and upholding fair trade agreements and increasing investments in capacity building in developing countries. At the national level, policymakers should work to integrate food and agriculture policies and invest in improving communication and transportation infrastructure linking rural and urban areas. Local governments should focus on ensuring that government services are accessible and inclusive, particularly for smallholders, and on increasing rural populations’ access to markets and agricultural inputs.