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Nichodemus rudaheranwa2

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  • 1. Development for LDCs: Roadmap for Action Nichodemus Rudaheranwa [email_address]
  • 2. Presentation outline
    • Challenges facing LDCs (climate chance, food security, energy security, economic crisis)
    • Emerging opportunities for LDCs
    • Recommendations
  • 3. Policy impacting on agriculture in LDCs
    • Low productivity;
    • Poor transport and market access;
    • Limited access and costly to inputs;
    • Vulnerability to weather and market shocks;
    • Large numbers of small agricultural producers are trapped into poverty;
    • Breaking out of this poverty trap would require to rethink on the package of public investments and policy change that can help unlock the potential of the agriculture in LDCs
  • 4. Structural adjustment programmes (SAPs)
    • Initiated in the 1980s by World Bank and IMF
    • Designed to
      • Reduce the role of government
      • Cut back on public sector expenditures
      • Improve balance of payments
      • Reduce government deficits
      • Enhance macroeconomic performance
      • Help in achieving higher economic growth rates
  • 5. Structural adjustment programmes (SAPs)
    • Key elements of policy reforms:
      • Macroeconomic reforms
      • Privatisation of government agencies
      • Liberalisation of markets
      • Removal of government from agricultural markets
      • Elimination of subsidies;
    • Devaluation of currencies, reduced taxation on agriculture and raised producer prices and generated significant benefits for farmers in tradable sectors;
    • Negative impacts on producers of staple foods for domestic markets;
    • Competition from low cost and often subsidised food imports;
    • Reduced access to credit at affordable rates;
    • Removal of input subsidies led to reduction in adoption of modern crop varieties and fertilizers;
    • Input prices increased beyond the capacity of many smallholder farmers;
    • All these have left LDCs with food deficits; and
    • Reduced public sector investments left many famers poorer and more vulnerable than before
  • 6. Declining support for investments in agriculture
    • Donor support for agriculture has been declining
    • Investment declined in agricultural research and public goods like irrigation, rural roads and electrification which are very essential to reduce post-harvest losses
    • Low investment eroded civil service salaries, immobilised extension workers and research staff, diminished staff incentives; and fuelled exodus of seniors scientists from public research institutions
    • Bilateral and multilateral donors shifted emphasis of ODA towards social sectors particularly health and education
    • Share of agriculture in overall ODA declined in many African countries for example
    • However, rates of return on public investment are high due to its growth and poverty reduction effects
  • 7. Agricultural aid as a share of total aid in SSA (%) Country 2002 2003 2004 2005 2006 Botswana 1.64 1.00 0.87 0.97 0.74 Burkina Faso 5.50 8.35 7.23 7.63 7.87 Cameroon 2.87 1.00 1.36 2.94 1.45 Cote d’Ivoire 0.85 1.29 1.29 0.94 4.24 Ethiopia 4.82 3.30 1.97 2.08 2.83 Ghana 3.56 4.32 1.79 4.10 5.80 Kenya 5.17 4.42 3.59 2.86 4.33 Malawi 3.88 6.37 3.93 8.72 5.28 Mali 6.46 4.62 6.71 6.78 5.29 Nigeria 1.24 1.91 0.83 0.12 0.05 Togo 3.30 4.63 3.53 2.49 1.40 Uganda 2.99 3.16 5.08 4.96 5.18 Zambia 3.96 2.29 1.33 1.80 2.51
  • 8. Returns to public spending in Africa & Asia Ghana Uganda Tanzania Ethiopia India Thailand Agriculture 16.8 12.4 12.5 0.14 13.5 12.6 Education -0.2 7.2 9.0 0.56 1.40 2.10 Health 1.3 0.9 - -0.03 0.80 - Roads 8.8 2.7 9.1 4.22 5.30 0.90
  • 9. Impediments to marketing agricultural products
    • High transport and other transaction costs translate into costly inputs and limit access to improved seeds, fertilizers and other inputs
    • Poorly developed markets for agricultural products lead to low and volatile out prices
    • Non-tariff barriers reduce intra-and extra-regional trade leading to greater price volatility
    • Expanding regional markets can serve as a vent for surplus to reduce the thinness of domestic markets and likelihood of price collapse from rising agricultural productivity in absence of wide markets .
  • 10. Food crisis in 2008
    • Food crisis in Africa was overshadowed by the global financial crisis
    • Most urban and rural households in Africa rely on food purchase and stand to loose from high food prices
    • High prices reduce real incomes and increase prevalence of food insecurity and malnutrition among the poor
  • 11. Factors underpinning the food crisis
    • Drivers behind the 2008 food price hikes
      • Production shortfalls due to extreme weather events
      • Lower stock levels and market volatility due to changes in policies of the world major cereal producers (USA, China, EU and India)
      • Steep increases in petroleum prices
      • Emerging biofuel market demand for some agricultural commodities including sugar, maize, cassava, oilseeds and palm oil
      • Shifts in consumption patterns due to rapid and sustained economic growth and urbanisation in emerging populous developing economies, China and India with rising demand and consumption of meat and dairy products that are heavily dependant on cereal inputs
      • Trade policies involving export restrictions and export bans by some countries which aggravated shortages
      • Speculative re-stocking and pre-stocking by large importers with capacity contributed to higher food prices
      • The 2008 turmoil in traditional asset markets impacted on food prices as investors hedged their resources in agricultural commodities in the hope of achieving better returns in the hope better returns than those available in tradition assets
      • As most of these factors have not been fully resolved, food insecurity remain rampant.
  • 12. Land grab in some LDCs
    • Recent rush to secure land for food production from Africa
      • Rising land prices in developed countries due to food crisis and commodity price increases have increased costs of food production
      • Demand for land for use in biofuels production has risen, hence the search for low cost lands in developing countries to produce crops for use in biofuels production;
      • Rising population combined with rise in income per capita increased demand for food in place like China and India are looking elsewhere to meet their food needs (e.g. Dairy, meat, eggs, and horticulture, etc.)
      • Increased need for secure food supplies particularly by increasing water-constrained countries including those in middle east are acquiring land in Africa
  • 13. Potential effects of land grabbing
    • Africa needs significant private investments in agriculture sector but the rush for land in Africa has several potential challenges:
      • Reliance on large scale agriculture for food yet small holder farmers form over 80% of farmers
      • Land transactions often ignore small holder farmers including their eviction with no compensation with alternative livelihoods
      • Large mechanised agriculture on large farms can lead to labour substitution rather increased employment creation and rural wages
      • Environmental effects of large scale mechanised production system can be significant
      • In some case the land given is to produce food exclusively for export back to the investor countries
  • 14. Vulnerability to effects of climate change
    • Africa contributes less than 3% of the global greenhouse emissions
    • Bears disproportionate burden of economic losses, health, human and social consequences of its effects
      • Severe droughts to occur more frequently especially in dry semi-arid regions like Sahel thereby threatening food security, etc.
      • Low rainfall and high inter- and intra-seasonal variability of rainfall and lengths of the growing seasons
      • Rising sea levels will lead to coastal erosion, more floods and storm surges impacting on densely populated coastal settlements and cities;
      • Decrease in river basin run-offs with less water for agriculture and hydropower generation
      • Loss due to climate change is estimated to be as high as US$ 133 billions, of which US$ 132 would be from agriculture alone.
      • Increased migration due to displacements caused by floods, drought and desertification and in search of better livelihoods or evade disasters
  • 15. Livestock impacts of droughts in Africa 1981-1999 Period Location Livestock losses 1981-1984 Botswana 20% of national herd 1982-1984 Niger 62%of national cattle herd 1983-1984 Ethiopia (Borana Plateau) 45-90% of calves, 45% of cows 1991 Northern Kenya 28% of cattle and 18% of sheep and goats 1991-1993 Ethiopia (Borana) 42% of the cattle 1993 Namibia 22% of cattle and 41% of goats and sheep 1995-1997 Greater Horn of Africa (average of 9 pastoral areas) 22% of cattle and 41% of goats and sheep 1995-1997 Southern Ethiopia 46% of cattle; 41% of goats and sheep 1998-1999 Ethiopia (Borana) 62% of cattle
  • 16. Measures for adjusting to effects of climate change
    • Measures to adjust to effects climate change involve:
      • Production process including delayed planting; shifting into more drought resistant/tolerant crops; shifting the composition of livestock from large animals like cattle to small ruminants that are better tolerate heat; investment in water harvesting and better water management ; and hanging ;and changing land uses
      • Market approaches including he use of crop and flood insurance and diversification;
      • Technological innovations including the development of drought and flood tolerant crops and crops with better water use efficiency ; and
      • Policy intervention including supporting farmers to purchase crop insurance, price stabilisation; strategic grain reserves and use of market hedging instruments
  • 17. Constraints to adaptation to climate change
    • Constraints to adaptation to climate change by farmers include:
      • Limited access to information on weather
      • Lack of predictive information on climate change and expected impacts;
      • Lack of information on appropriate adaptation methods, cost of adjustments to adaptation, etc.; and
      • Lack of access to credit to enable farmers adopt more efficient and optimal measures, invest in crop insurance, improve investments in better land and water management strategies and reduce the effects of shocks on their incomes and assets.
  • 18. Possible measures to effects of climate change
    • Greater support for national and international research will be needed to assist Africa develop and shift into new strains of crops with tolerance to drought, disease, floods and pests
    • Investments in irrigation and better water management
    • Developing local capacity for improved climate predictions, preparedness and disaster management
    • Public investments are needed to support the development of weather stations
    • Measures in form of subsidies might be necessary initially to support the adoption of crop and livestock insurance given that cost of the insurance premiums might be high for farmers
  • 19. Emerging carbon markets
    • Deforestation is one of the major causes of release of green house gases and major global contributor to global climate change
    • Africa has some 635 million ha of forest cover or 16% of total global forest cover
    • Hi potential to help sequester carbon and contribute to the reduction of carbon emissions through carbon sinks.
    • Carbon trade market is of considerable size:
      • Grew from US$ 19 billion in 2006 to US$ 30 billion in 2007 (i.e. 250% the total value of aid to Africa)
  • 20. Potential carbon mitigation from land use changes in 2003-2012 (million tons of carbon)
  • 21. Emerging carbon markets
    • Smallholder farmers can benefit from emerging carbon markets by being compensated for better land use practices reducing deforestation, degradation, revamping of ecosystem services, biodiversity, etc.
    • Practices would enable farmers both meet their food needs and benefit from expanding carbon markets
    • Support sustainable harvesting of timber and non-timber forest products and diversity of livelihoods and food security.
  • 22. Recommendations for action
    • LDCs and development partners need to strengthen collaboration to undertake assessment of risks posed by climate change to the competitiveness of existing and potential exports. Development partners could support the capacity development of this process
    • Development partners should assist and support LDCs by developing and transferring technologies such as drought and flood tolerant new varieties that are helpful in addressing climate related impacts
    • Development partners should commit to multilaterally agreed best practices and principles in the use of trade restricting measures including carbon footprint standards and labelling, etc.
    • The potential for Africa in carbon trade is high and development partners need to support Africa in developing the capacity to tap into the emerging opportunities
  • 23. Conclusion
    • Agriculture is important for food security in two ways by being a primary sources of (a) food people eat, and (b) livelihood in Africa currently dependant on rain-fed agriculture with few additional inputs
    • Climate changes are likely to enhance the frequency and seriousness of floods, droughts, incidences of pests and diseases in regions with high rainfall variability
    • Lack of access to financing undermines agricultural productivity by limiting ability to afford improved seeds, fertilizers, small scale irrigation and livestock.
    • Adverse effects of climate change on agriculture will put the livelihoods of Africa’s rural farmers at risk and increase their vulnerability to food insecurity ;
    • Raising productivity and changing land use patterns among smallholder farmers will both enhance food production and reduce deforestation and associated carbon losses
    • Concrete support and increased resources are needed to tackle Africa’s climate change challenges
    • There is a critical need to review and shift emphasis of bilateral and multilateral development assistance from social sectors particularly health and education to wards boosting infrastructure and other process supportive economic growth.

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