Agricultural development and food security African Economic Development

Agricultural development and food security African Economic Development Renata Serra – March 8 th 2007

The role of agriculture for development • Why is agricultural development key for industrial development and overall economic growth? – supply of raw materials to industry – release of surplus labor for industry – increases in national savings (from net agricultural surplus) – creation of a larger internal market (from increases in rural incomes) – increases in food supply, decline in malnutrition and increases in productivity • Need to promote linkages between agriculture and other sectors!

Agriculture in SSA • Agriculture is a key sector in SSA • In the poorest countries, it accounts for, on average: – 1/3 of GDP – 3/4 of labor force – 1/2 of total export and foreign exchange earnings • However, it has seriously underperformed – 1960 s-70 s: agriculture was mostly regarded as secondary to industry ‘urban bias’ • Most of SSA agriculture is by small-holders – Large scale and mechanized plantations exist mainly in Southern Africa (few in West and Eastern Africa) • Contract farming is rising in the export sector – Such opportunities are mixed-blessing for farmers

Underperformance: features – Declining per-capita output • Population growth mainly outpacing production growth – Slow increases in land productivity • Yields per hectare lower than in Asia and LA • Land degradation and soil erosion – Declines in labor productivity • Due to decline in K and other inputs (e. g. fertilizers)

Underperformance: explanations • Policies: – Squeezing of agricultural sectors by governments – Food aid and imports used as response to food shortages depressed farmers’ incentives • Institutions: – Lack of complementary interventions, and investment in infrastructures • External constraints: – Lack of access to markets, uneven trade environment – Biased investment in R&D: very little R&D on crops suitable to semi-arid African land • Note: African farmers do respond to incentives and act rationally (socio-cultural explanations are not supported by evidence!!)

Institutional/environmental constraints • Lack of complementary infrastructure prevents maximization of long-term returns • Inter-sectoral dualism – Output per worker in agriculture is much lower than in other sectors • High levels of off-farm employment and seasonal male migration (due to high seasonality) reduce returns to agricultural investment • Linkages between production, nutrition, water, sanitation, health, and education, make interventions in one sector not highly effective

Institutional constraints (cont’d) • Traditional gender role divisions in agriculture and house-work lead to inequity and inefficiency – Women play crucial roles as farmers but enjoy limited access to labor, technology, land credit – Women’s multiple roles limit their ability to take advantage of productivity-increasing technology • Ex. 1: resistance to rice cultivation in the Semry project in Cameroon • Ex. 2: low adoption rates of hybrid maize packages in Malawi – Very few projects target the specific needs and constraints of women farmers, thus failing to increase production and household food security

What are the best interventions? • Is it ‘Getting prices right’ as in SAPs liberalization policies? – – Elimination of marketing boards (parastatals) Removal of output price subsidies, ceilings, controls Elimination of input subsidies (credit, fertilizers, etc. ) Removal of tariffs on M and X • Is it fixing institutions? – Expand access to credit, saving, and inputs markets – Land reforms (including titling and tenure rights) and development of land markets – Ameliorate labor markets (education & training, rural off -farm opportunities)

Some reflections • Institutions may need to be ‘fixed’ before prices – Farmers may not respond to price increases if they face constraints to inputs – Access to markets seems to be the paramount problem • In particular, sound land reforms are necessary – Individual private property rights are not always the solution! They may incite further conflicts, and not lead necessarily to greater returns • Safety nets are needed for the rural poor not to suffer – Farmers are harmed by price liberalization if they are net consumers

Reflections (cont’d) • Greater attention should be paid to indigenous systems to enhance local acceptability, selfreliance, and ecological soundness • Public investment is crucial also for agricultural development – Due to the public good nature of crop research, extension services, rural infrastructures, and information for accessing markets • The political weight and negotiation power of African states needs to be enhanced – Ex: “Black gold” video shows African negotiators’ lack of power at the WTO conference in Cancun, 2003

Agriculture-nutrition linkages • What is the relationship between agricultural production, farmers’ income, household calorie intake, and nutrition? • What effects from crop commercialization on child nutrition? – Positive: via income increases – Negative: via decreased food crop production and decreased subsistence ratio • What interventions increase rural living standards?

Malawi case study • Avg. holding per sample HH: 1. 5 ha > nationally • Diversified incomes – 30% own-produced maize; 30% cash crop; 39% offfarm (e. g. transfers, wage work) • Maize commercialization is not high (11%): 56% of HHs sell maize at the low price • Strong seasonality: Dec-Jan is the wet, hungry season, 99% of HHs buy maize at the high price • Nutrition depends on maize S (harvest – sale + purchase) • Poorer HHs have smallest harvest, sell 78% of it, and purchase the least

Tobacco Households • Tobacco: higher returns but greater risks • Larger HHs and larger land-holdings • Farmers’ conservative behavior lead them to continued food crop cultivation • Hence tobacco does not displace maize, in fact it increases the “subsistence ratio” • Women in these HHs own a smaller share of income

Findings • Total HH income is more important than food crop production in affecting child and women’s nutrition • Poorer households are subject to strong seasonality in malnutrition • Morbidity affects children regardless of income, thus equalizing effects on nutrition • Tobacco HHs did not experience better child nutrition measures despite the greater incomes (gender variable? ) • Cash-crop (tobacco) can help but only if support is provided to reduce farmers’ risk

Final Q for your own research • “What is the future for tobacco growers in East Africa, given recent opposition of donors (e. g. USAID) to provide assistance to tobacco production? ”