| Food Security II -African Hunger |
A STRATEGY FOR CUTTING HUNGER IN AFRICA -- Part 5
(91) ACCELERATING AGRICULTURAL GROWTH AS A STRATEGIC GROWTH ENGINE
(92) What is known about African agriculture?
(93) Africa is a huge continent (Figure 1) with highly varied agro-ecology. Therefore, making broad generalizations about agriculture throughout the subcontinent is often misleading. Ultimately, recommendations need to be tailored to each country and agro-ecological region.(1)
Nonetheless, there are some common characteristics that stand out. The following is not an all-inclusive list, but rather a list of key features describing the structure of African agriculture and food systems:
(94) African agriculture is largely rainfed (about 4.1% of arable land is under irrigation), and subject to substantial variability in rainfall as well as periodic and severe droughts.
(95) Despite the substantial contribution of large-scale commercial farms in southern Africa and in Kenya, the bulk of African agriculture is characterized by mixed smallholder farms, from 0.5 to 5 hectares, with limited capital inputs except for hand tools, some livestock, some trees and, in some areas, some animal traction equipment;
(96) In most countries, women are heavily involved in agriculture, often providing the majority of the labor and sometimes making most day-to-day farm management decisions, particularly in areas where male migration to mines and other off-farm jobs is widespread. Yet women generally have poorer access to credit, extension, and other agricultural support services than do men.
(97) On the whole, except for the ten years of crisis (1975-1985), African agriculture has grown by about the rate of population growth, 3% per year over the period since 1960-1975, 1.8% per year between 1975 and 1985, and 3% per year since;
(98) However, Africa has lost important export market shares in many, if not most, of its traditional agricultural export crops;
(99) Much of the increase in agricultural production has come as a result of expansion of acreage planted, and increasingly, the new lands being put into production are of lesser quality;
(100) However, the continued rural-urban migration (which in some countries has led to urban population growth rates of 5%) has meant that the increase in production must have been accompanied by increasing productivity of agricultural labor;
(101) Yields in agricultural production are well below world norms, despite significant yield gains from the mid-a980s resulting from investments in agricultural research;
(102) Marketing costs are the highest in the world, because of policy problems, high transport costs, and low population density, which increases per-unit assembly and distribution costs; this reduces competitiveness, employment and real wages;
(103) New data have shown a rather wide disparity in land holdings among smallholders, even in the same location; as a result, 80% of the marketed surplus in many countries is produced by 20% of the population; and many farmers are net buyers of basic staples (hence reducing rural-to-rural marketing costs is as important as rural-to-urban costs). There are, therefore, substantial numbers of poor in high production areas(2);
(104) Most smallholders do not produce enough food for themselves and depend on the market for a substantial (up to 40%) portion of their food consumption; this means that most smallholders have sources of cash income - wage labor, remittances and non-farm business income;
(105) The smallholder sector is thus divided into two groups, a dynamic subsector, able to invest in capital goods and land improvements, to purchase marketed inputs and to adopt new technologies, and a more constrained subsector with little ability to broadly increase productivity. People in the less dynamic subsector, constrained by very limited land and other resources, ultimately will need to derive the bulk of their income from non-farm sources (including selling their labor to other farmers). But such employment opportunities won't arise unless those smallholders who do have the resources needed to expand production are empowered by providing them with the means to increase production and productivity. Increased productivity in the more dynamic group will generate new jobs (in both agricultural and non-agricultural activities) at higher wages for those in the less dynamic subsector. This is an explicit strategy to promote dynamic linkages in the smallholder sector.
(106) Increasing income (and African countries have been growing, albeit slowly) and rapid urbanization have led to increasing demands for higher value foods - meat, dairy products, cooking oil, more processed foods, etc.;
(107) There is a large amount of inter-African trade in agricultural commodities, much, if not most, of it unrecorded;
(108) African agriculture is much less capital intensive than agriculture in other parts of the developing world and uses much less fertilizer.
Figure 2. Perspective On The Size of Africa
(109) Much of this information is captured in Table V.
(110) Why has agricultural and food system development been so difficult in Africa? Are there geographic, climatic, demographic or social factors that make accelerating agricultural growth more difficult in Africa than in other regions of the world? To be sure, there are a number of factors that differentiate Africa from Asia, and make the "green revolution" experience less relevant. Of particular importance are the following factors: (3)
(111) Declining real prices for traditional export crops;
(112) Limited infrastructural services in rural areas, which not only raise marketing costs, but also inhibit the development of rural-based agro-industry;
(113) A high level of vector borne and viral disease, particularly malaria and HIV/AIDS, which reduce the productivity of rural labor;
(114) Declining natural resource base, including substantial deforestation and declining soil fertility;
(115) Complicated land tenure systems which often have limited transferability and sometimes offer limited security of tenure;
(116) High post-harvest losses;
(117) Weak rural financial intermediation;
(118) Poor participation by end-users in development project design and agricultural policy formulation;
(119) A much more differentiated agriculture, with many more crops and many more ecological zones than the mono-cultural rice and wheat areas of Asia;
(120) A much more dispersed population, increasing infrastructural and marketing costs;
(121) A dependence on rainfed agriculture, rather than irrigated agriculture like most of Asia;
(122) A less educated rural population than that of Asia at the beginning of its rapid growth;
(123) These factors make increasing productivity more difficult, and probably reduce the rate of return of many investments. However, they do not mean that most African countries cannot increase agricultural production from three percent to five percent per year, the rate required to rapidly reduce poverty. Indeed, several countries are experiencing this type of rapid growth, but there is still a wide gap between potential and actual.
(124) Despite the above, the most important set of factors inhibiting African agriculture has been the set of economic policies which African states have followed for most of the post-Independence period. These policies have been characterized by macroeconomic instability, urban bias, and inconsistency and policy reversal. For the most part, African countries have taxed rural producers and subsidized urban consumers, although more so in West Africa than in East and Southern Africa. In the latter areas, at least where there was European settler agriculture, policies were put in place to protect the Europeans from outside competition, both by Africans and from imports. Many of these policies have continued in the post-independence era, leading, for example, to high import tariffs on maize in Kenya. African governments have underinvested in rural areas while providing services disproportionately to urban areas. They have controlled agriculture markets, subsidized inputs (thus making access to inputs and credit a political process), and under-financed key institutions such as national agricultural research institutions.
(125) TABLE V. AGRICULTURAL INDICATORS FOR AFRICA, ASIA AND LATIN AMERICA
| Indicator | Africa | Asia | Latin America |
| Agricultural GDP (billions of dollars) 1997 | 62.4 | 400.1 | 143.2 |
| Agriculture/GDP (percent) 1995 | 30 | 25 | 10 |
| Agricultural Labor Force (as percent of total) 1995 | 70 | 72 | 29 |
| Agricultural Exports (as percent of total) 1995 | 40 | 18 | 30 |
| Agricultural production Index (1961-64 =100) | |||
| 1965-1969 | 113 | 115 | 115 |
| 1975-1979 | 135 | 154 | 153 |
| 1985-1989 | 166 | 230 | 200 |
| 1995-1998 | 221 | 338 | 253 |
| Agricultural Production Per Capita Index (1961-64 = 100) | |||
| 1965-1969 | 100 | 103 | 102 |
| 1975-1979 | 92 | 110 | 106 |
| 1985-1989 | 84 | 135 | 112 |
| 1995-1998 | 87 | 169 | 120 |
| Cereal Yields (Kg per hectare), 1994 | 1,230 | 2,943 | 2,477 |
| Cereal Output per Capita (Kgs), 1993-1996 | 133 | 285 | 256 |
| Agricultural Land per Worker (hectares), 1994 | 5.9 | 1.3 | 24.8 |
| Fertilizer per Arable Land (Kg per hectare) 1993-1996 | 15 | 180 | 75 |
| Irrigated area as Percent of Arable Land, 1994 | 6.6 | 33.3 | 9.2 |
| Tractors/arable Land (Number per 1000 hectares), 1994 | 290 | 804 | 1165 |
| Road Density (km of road per square kilometer), 1995 | .06 | .37 | .16 |
| Paved Roads (percentage of total roads), 1995 | 15 | 29 | 25 |
| Population Density (people per sq kilometer), 1995 | 25 | 146 | 24 |
| Rural non-farm income as percent of total rural income | 42 | 32 | 40 |
Source: Can Africa Claim the Twenty-First Century, The World Bank, 2000
(126) Beginning in the mid-1980s many African countries, under pressure from the donor community, began the process of structural reform. Budget deficits were reduced, foreign exchange markets liberalized, subsidies removed, trade regimes made more open, prices decontrolled, public enterprises privatized, financial markets liberalized and agricultural marketing boards eliminated. These changes have taken a long time, and are far from completed. Recent years have seen some backsliding, particularly in East and Southern Africa. This will be discussed in greater depth below.
(127) AN AGRICULTURAL-BASED STRATEGY FOR CUTTING HUNGER
(128) The argument of this paper to this point may be recapitulated as follows: (1) hunger is largely a result of low levels of income, so a strategy to cut hunger substantially must be based on reducing poverty and raising the incomes of the poor; (2) revitalizing agriculture is central to such an effort; (3) African agriculture has been stagnating largely because of poor government policies including underinvestment in the sector; (4) political and economic liberalization on the one hand, and globalization on the other, offer a new opportunity for turning agriculture around, but only if OECD countries open their markets more to African products, particularly agriculturally-based value added products; and (5) competing in the international economy of the twenty-first century will require an entirely new approach by both African countries and their partners in the North because the international economy is more complicated and more demanding than it was even ten years ago. The opportunities are there, but the task will not be easy.
(129) A resurgent agriculture, in most African countries, must be market-oriented and demand led. The sources of this resurgent demand include both domestic and international markets. Domestically, this involves:
(130) Increased food production for both urban and rural markets (including taking advantages of opportunities for import substitution when economically feasible);
(131) Increased domestic markets for higher value foods
(132) Increased value added through processing of agricultural commodities
(133) Staple Food Markets
(134) The crux of this argument is simple. Increased production of basic food crops without increased demand results in reduced prices and little change in farmer income. The demand for basic foods is income inelastic. However, given continuing high levels of population growth and rural-urban migration, the demand for basic food commodities, even in the absence of rapid overall economic growth, is likely to grow at between three and four percent per year. Reducing marketing costs, even without increasing on-farm productivity, could reduce the price of food for consumers and thus increase demand a bit more. However, given the high transport-to-value costs of most staple foods and existing OECD food policies, export markets in staple commodities will likely be limited to regional markets. A robust staple food market is foundational for agricultural growth, but working alone it cannot be a leading sector.
(135) This is not to say that there is not a critical role for staple food production and therefore for investments to increase productivity in this sector. On the demand side, there may be scope to displace food imports through the development of more reliable information systems and grades and standards for regional trade. Lack of such information and standards acts as a non-tariff barrier to local trade and raises the price of agricultural goods produced in the region relative to extra-African imports.
(136) Higher Value Domestic Food Product Markets
(137) While staple foods have low income elasticity, higher value foods such as edible oils, meat, fish and dairy products all have high income elasticities. The 1994 devaluation of the CFA franc allowed Sahelian cattle producers to recapture coastal West African meat markets previously lost to subsidized meat imports from Western Europe. Here, given EU beef subsidies, it may be important for African countries to provide tariff protection for nascent beef and dairy industries from dumping by developed countries.(4) This is especially true since these products tend to be largely consumed by the higher income groups, and thus tariffs will not greatly affect the poor. Moreover, given the regional distribution of economic activity, the strengthening of the regional beef and dairy market in West Africa will tend to increase incomes for the poorer Sahelian regions.
(138) Agro-Processing
(139) There is now a clear understanding that agricultural development must be seen from the perspective of the food and agricultural system, not just the farm. "The constraints to assuring sustainable growth and food security lie both on and off the farm. In many countries well over half the consumers' costs of food come from post-harvest operations and purchased inputs. Improving productivity of input and output marketing, storage and processing are therefore critical."(5) Increasingly, busy urban households are seeking foods that require less time for cooking and which maintain freshness in urban environments. Many of these processed food requirements are met from imports rather than domestic sources. Here again, development of regional markets will create the scale economies needed to make higher levels of processing profitable.
(140) Export Strategies
(141) While domestic markets will continue to be the most important segment of overall demand for agricultural produce, they will tend to be less dynamic than external markets. The international market is growing more quickly than the world economy and more quickly than the non-agricultural sectors of most African economies. Moreover, most commodities produced by African countries for world markets are of higher value than commodities produced for domestic consumption. Agricultural transformation in Africa requires a virtuous circle of increased production of higher valued commodities, increased agricultural incomes, increased demand for rural non-agricultural services, increased demand for staple food products and increased productivity in food production.
(142) Moreover, producing for world markets has other important benefits. For example:
(146) The African Agricultural Export Experience
(147) Overvalued exchange rates, taxation and under-investment have undermined Africa's traditional export agriculture sector (Table VI). Three things are important to note from this table:
1. (148) In every commodity, except tea, Africa's share of world trade has declined.
2. (149) In four of the ten commodities, African exports in 1997 were actually less than they were in 1970.
3. (150) With the exception of tobacco and bananas, world trade in all of these commodities increased by between 2.2% per year and 0.8% per year, hardly the dynamic segment of world trade. Yet they are still important to Africa, and can represent important opportunities if Africa stays competitive.
(151) TABLE VI: AFRICA'S SHARE OF WORLD TRADE FOR ITS MAIN EXPORT CROPS
| Crops | World Exports
(000 metric tons) |
African Exports
(000 metric tons) |
Africa's Share of World Trade (%) | |||
| 1970 | 1997 | 1970 | 1997 | 1970 | 1997 | |
| Bananas | 5,730 | 14,512 | 394 | 429 | 6.9 | 3.0 |
| Cocoa | 1,136 | 2,061 | 867 | 1,403 | 75.8 | 67.9 |
| Coffee | 3,282 | 5,074 | 1,010 | 808 | 30.8 | 15.9 |
| Cotton Lint | 4,000 | 5,677 | 672 | 869 | 16.8 | 15.3 |
| Groundnuts | 983 | 1,218 | 677 | 61 | 68.9 | 5.0 |
| Palm Oil | 906 | 12,297 | 178 | 156 | 19.6 | 1.3 |
| Rubber | 2,661 | 4,668 | 201 | 292 | 7.6 | 6.3 |
| Sugar | 21,861 | 37,883 | 1,515 | 1,386 | 6.9 | 3.7 |
| Tea | 752 | 1,352 | 109 | 313 | 14.5 | 23.2 |
| Tobacco | 1,200 | 5,733 | 88 | 289 | 7.3 | 5.0 |
Source: FAOSTAT
(152) On the other hand, some African countries have been able to exploit non-traditional niche markets (Table VII).
(153) In each of these countries, non-traditional exports (NTEs) have, over a short period of time, increased their share of total exports, and have exhibited very rapid growth. Not all of these NTEs are agriculturally based, but a substantial proportion of them are.
(154) TABLE VII. NON-TRADITIONAL EXPORTS FROM SELECTED AFRICAN COUNTRIES
| Country | Share of Total Exports
(percent) |
Average Annual Growth (percent) |
| 1994 | 1998 | 1994-1998 | |
| Cote d'Ivoire | 13.5 | 17.4 | 16.4 |
| Ghana | 9.7 | 19.2 | 35.5 |
| Madagascar | 64.1 | 86.1 | 11.9 |
| Mauritius | 67.2 | 68.9 | 2.9 |
| Mozambique | 5.6 | 17.8 | 50.3 |
| Senegal | 11.5 | 13.3 | 9.3 |
| Uganda | 5.6 | 34.9 | 101.5 |
| Zambia | 14.7 | 33.0 | 16.5 |
(155) Africa's export strategy must be balanced across three important market segments: traditional exports, non-traditional exports and regional exports. As noted above, prices in traditional export markets have fallen for almost half a century. Nevertheless, for many commodities, Africa still has comparative advantage in these markets, and increased export intensity can increase incomes (labor and land productivity remain higher in traditional export crops than in staple food production). Moreover, comparative advantage is a dynamic concept, and while Africa lost market share in crops such as palm oil and coffee because of, inter alia, under-investment in these crops, it could regain market share by reinvesting wisely. Africa is still largely a lower-cost producer of traditional crops than the rest of the world at the farm level, but the advantage is often lost because of policy and marketing impediments.(6)
(156) Regional trade in agricultural products is already quite robust, although little of this trade appears in official statistics.(7) Studies conducted by USAID in East and Southern Africa demonstrated that cross-border trade, much of it agricultural products, was many times larger than officially reported.(8) For example, in 1994-95 uncounted agricultural exports from Uganda to Kenya were equal to 60% of total official agricultural exports. The informality of this trade, in part to escape customs duties, but in larger measure to avoid delays and extortion at border crossings, increases costs and thus reduces returns to farmers. Frequently, shipments are carried in bulk to the border, broken up into head or bicycle loads, and then re-assembled once the border has been crossed. What this means is that efforts to reduce intra-African trade barriers, if successful, will reduce transactions costs, and thus lead to expanded trade, but may not always create new markets that didn't exist before. Great care should be taken in thinking through the development of sub-regional market spaces in Africa, particularly in agriculture.(9)
(157) Nevertheless, regional trade may become a stepping stone, in some cases, to entry into new non-traditional markets. Regional trade is often easier to capture than overseas markets and can serve as an apprenticeship in learning what is needed (in terms of system organization, quality standards, etc.) to be competitive in external markets. Traditionally, in the pre-globalization economy, industries developed by first serving the domestic market, then the regional market and finally the international market. In this way production and marketing skills became more finely honed as the level of competition increased. However, with international capital and technology more mobile, the way is open for producing directly for the international market without going through these intermediate steps.
(158) Non-traditional agricultural exports should become the most dynamic sector of the economy, both because of market demand and the importance of knowledge as a factor of production. That this is happening is demonstrated by the rates of growth presented in Table VII above. Although these growth rates are probably overstated because they begin at such a low base, nevertheless they demonstrate that it is possible to substantially diversify export production in a relatively short time. However, breaking into non-traditional markets takes new skills and a higher degree of sophistication than has been necessary for competition in traditional export markets. These skills will also be useful in adding value in domestic markets and in competing in regional markets.
1. 0 Moussa Batchily Ba, et al.1999. Workshop on Agriculture Transformation in Africa: Abidjan, Côte d'Ivoire, September 26-29, 1995. MSU International Development Working Paper no 75. East Lansing: Dept. of Agricultural Economics, Michigan State University. http://www.aec.msu.edu/agecon/fs2/papers/idwp75.pdf
2. 0 Personal communication with Michael Weber and Thomas Jayne. See also: T.S. Jayne. 2001. "Differential Access to Land Among Smallholders in Africa: Implications for Poverty Reduction Strategies and Structural Transformation." MSU International Development Paper (draft) no 80. East Lansing: Dept. of Agricultural Economics, Michigan State University.
3. 0 Much of this list is derived from African Development Bank, Agriculture and Rural Development Sector Report, pp. 7-11.
4. 0 Pressure to re-institute EU export subsidies on beef will likely grow because Europe is currently accumulating very large stocks of unsold beef due to the sharp drop in demand for beef in Europe because of Mad Cow Disease.
5. 0 Howard et al., op. cit., p. 2.
6. 0 Patricia Kristjanson, Mark Newman, Cheryl Christiansen and Martin Abel, "Export Crop Competitiveness: Strategies for Sub-Saharan Africa" APAP #109; USAID #PN-ABG-776; July 1990.
7. 0 One exception is work done on regional trade in West Africa following the CFA franc devaluation. Cf. Yade, Mbaye, Anne Chohin-Kuper, Valerie Kelly, John Staatz and James Tefft. 1999. "The Role of Regional Trade in Agricultural Transformation: the Case of West Africa Following the Devaluation of the CFA Franc." Paper presented at the Tegemeo/ECAPAPA/MSU/USAID Workshop on Agricultural Transformation, Nairobi, June 27-30, 1999. MSU Agricultural Economics Staff Paper no. 99-28, June 1999 http://www.aec.msu.edu/agecon/fs2/ag_transformation/atw_yade.pdf and James Tefft, Mbaye Yade, John Staatz et al. Food Security and Agricultural Subsectors in West Africa: Future Prospects and Key Issues Four Years After the Devaluation of the CFA Franc. Policy Briefs (covering the Cotton Subsector, the Beef Subsector, Horticultural Subsectors, and Consumption). Bamako: Institut du Sahel, November, 1998 (http://www.aec.msu.edu/agecon/fs2/sahel/index.htm)
8. 0 See "Unrecorded Cross-Border Trade Between Kenya and Uganda: Proceeding ofa Workshop Held at the Mayfair Hotel, Nairobi, Kenya, December 6, 1996". July 1997. Chris Ackello-Ogutu and Protase Echessah. (USAID AFR/SDTechnical Paper No. 58. http://www.afr-sd.org/publications/59trade.pdf
9. 0 The literature has much to say on the efficacy of trading blocks, and the problems of trade diversion as opposed to trade creation. Given the degree of subsidization of OECD food products, there are efficiency arguments for creating a regional protected space to offset the price advantage that these subsidies bring. However, a contrary argument, that African countries should accept the subsidization of their consumers by OECD taxpayers, has some cogency. Given the importance of food in the commodity bundles of the poor, there are distributional as well as efficiency arguments to be considered. If labor were mobile, and farmers had other opportunities, then the anti-protection argument would dominate. However, labor is relatively immobile, and farmers' opportunities in the short-run are constrained.