Poverty reduction in Guatemala remains as one of the key challenges to be dealt with before a more balanced and socially inclusive economic growth could be achieved. Poverty According to figures in 2006, 6.6 million people are still living under poverty and a third of this figure, or 2 million people, are struggling with extreme poverty. Moreover, despite a fall in extreme poverty during the 1990s, Guatemala’s dependency on exports and susceptibility to global price shocks such as the world coffee crisis and natural disasters such as the Tropical Storm Stan in 2005 has led to a subsequent increase of the poverty rate in 2004 and falling again in 2005. Notwithstanding a recent fall in the poverty rate, both external and natural events continue to exert great influence on poverty levels in Guatemala. Consequently, poverty alleviation work in tandem with risk management policies in Guatemala. Poverty and income inequality Ranked with the second highest inequality rate in Latin America, (Gini coefficient of 0.55), many disparities exist between different economic sectors and income groups, reflecting a large rich-poor divide in Guatemala. Further data has shown that only 3.8 percent of the country's total income is earned by the poorest 20 percent of the population, compared with the 60.6 percent earned by the richest 20 percent of the population Furthermore, income inequality in Guatemala is accentuated by regional differences, namely, 1) a large rural agrarian sector and 2) social exclusion. Inequality and Agriculture Agriculture is one of the primary sectors in Guatemala (22.2 percent of GDP), producing principal cash crops such as coffee, sugars and bananas. Together with other non-agricultural products, they contribute towards 75 percent of export earnings. The agricultural sector employs about 39 percent of the national workforce, resulting in suppressed wages and low productivity. This provides some explanation for the rural-urban dichotomy in living standards. This problem is made worse by subsistence agriculture, resulting in low productivity and value-addedness. As a result, meagre incomes push subsistence farmers into poverty. Moreover, a denial of access to credit for vital agricultural investment has often led to farmers sinking into a vicious poverty cycle which continues through generations. Sudden and unexpected events such as natural calamities and adverse climate conditions can also threaten agricultural harvests. It is not a matter of coincidence that the rural poor often comprised a large portion of populations living within these danger zones. Understandably, the rural poor