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Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
Growing Opportunities for African Agricultural Development
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Growing Opportunities for African Agricultural Development

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By Hans P. Binswanger-Mkhize, Derek Byerlee, Alex McCalla, Michael Morris and John Staatz. Presented at the ASTI-FARA conference Agricultural R&D: Investing in Africa's Future: Analyzing Trends, …

By Hans P. Binswanger-Mkhize, Derek Byerlee, Alex McCalla, Michael Morris and John Staatz. Presented at the ASTI-FARA conference Agricultural R&D: Investing in Africa's Future: Analyzing Trends, Challenges, and Opportunities - Accra, Ghana, December 5-7, 2011. http://www.asti.cgiar.org/2011conf

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  • 1. GROWING OPPORTUNITIES FOR AFRICAN AGRICULTURAL DEVELOPMENT Hans P. Binswanger-Mkhize, Derek Byerlee, Alex McCalla, Michael Morris and John Staatz ASTI-FARA-IFPRI Conference December 5, 2011
  • 2. Outline
    • Acceleration of growth and agricultural growth and its determinants
    • Higher international prices and market opportunities
    • Africa’s Sleeping Giant: The Guinea Savannas
    • Scale of farming and FDI
    • The road ahead
  • 3. Africa’s constraints
    • 47 countries, many of them small and landlocked
    • An enormous land mass
    • A low but rapidly growing population
    • Under-developed infrastructure
    • High prevalence of Malaria, TB and AIDS
      • And other Africa-specific diseases
    • Extreme heterogeneity of agricultural conditions
    • Despite relatively poor soils, there is an enormous under-used agricultural potential
  • 4. Recent Positive Trends in Africa
    • Recent Real Economic Growth above 6 %
    • Agricultural growth recently at 3.5% per year
    • From 15 armed conflicts in 2003 to only four today
    • In 2010, 27 of 46 African countries had implemented a total of 49 “Doing Business”reforms
    • Accelerated efforts in building of Regional and sub-Regional Institutions
    • CAADP: A new continental framework for Agricultural Growth
  • 5. Macroeconomic Conditions and Agricultural Growth Improving macro-economic score  Higher agric. growth
  • 6.
    • Better macro management
    • Uneven progress on sectoral policy
    • Many African countries reinvesting in agriculture
      • But there is continued taxation
    • Taxing exports, protecting import substitutes
      • Net effect neutral, but damage on both sides
      • Undermines competitiveness, investment returns
    • Sub-Saharan farmers still face the lowest agricultural incentives in the world
    Improving policy environment
  • 7. The recent twin food crises Source: World Bank
  • 8. Determinants of higher food prices
      • Slowing but still high population growth
        • Highest in Africa, followed by Asia
      • Fast Income Growth in Asia and now in Africa
      • Low real interest rates
      • Bio-fuels
  • 9. World prices are expected to settle at higher levels than in the past Source: OECD-FAO, 2011
  • 10. Climate change is expected to contribute to higher world prices Source: Nelson et al, 2011
  • 11. Higher international prices
    • Will help offset adverse OECD policies
    • Will transmit themselves to domestic economies in Africa
    • Will lead to higher farm gate prices
    • Higher profits, investments, farm growth
    • Higher nonfarm incomes and rural wages
    • If there is no backsliding on macro policies, and if domestic incentives improve
  • 12. Where are Africa’s market opportunities
    • Food staples and livestock products for domestic and regional markets
      • Farmers can compete at import parity prices rather than lower export prices
      • Lower quality and phyto-sanitary standards
      • Can re-conquer markets lost to the rest of the World
    • Much larger opportunities than for niche developed country export markets
    • Longer term opportunities
      • mainly in South-South Trade
      • Bio-fuels in sugar-ethanol, cassava, jathropa
    • Requires Regional Infrastructure & Integration
  • 13. Removing Barriers To Trade And Improving Markets
    • Progress in Regional Integration has been limited, and barriers to food trade remain high
    • This adds to high input prices, reduces output prices, and reduces development of competitive markets all around
    • Infrastructure, competition policy, and farmer organization involvement are also necessary
    • The critical issues of expanding improved seeds and fertilizers, and access to markets cannot be addressed without the above improvements
  • 14. World Bank FAO Roma Tre Michigan State
  • 15. Brazilian Cerrado
    • Pre-1970: Remote region, poor soils, low population, stagnant agriculture
    • 1970s, 80s: Transformation led by public investments in R&D, infrastructure, credit; emphasis on large-scale systems
    • Post-1990: Private sector-led boom built on exports (soybeans, maize, cotton, cattle); reduced poverty
  • 16. Northeast Thailand
    • Pre-1960: Remote region, poor soils, subsistence agriculture, high poverty levels
    • 1970s, 80s: Transformation led by pursuit of cassava export opportunity; public support for private sector; emphasis on small-scale systems
    • Post-1990: Further intensification and diversification; falling poverty
  • 17.
    • African Guinea Savannah
    • 800 - 1,100 mm rainfall
    • 150 - 220 days season
    • 7 million km 2 total area
    • 0.5 million km 2 cropped
    • 3 cropping systems:
      • Cereal - root crop
      • Root crop
      • Maize mixed
  • 18. Farm-level productivity lower in Africa Example of cassava Cassava yield (t/ha)
  • 19. But shipment values similar Example of cassava Shipment value (US$/t) other family labor hired labor crop chemicals fertilizer seed
  • 20.
    • Farm-level production costs in Africa are often low compared to other regions (key factors: nutrient mining, low wages)
    • Africa’s producers are generally competitive in domestic markets
    • Africa’s producers are generally not competitive in global markets
  • 21.
    • Regional markets offer most promising opportunities for expansion over the short to medium term
    • Competitiveness of African countries is undermined by inefficiencies in domestic logistics
    • Smallholders have a critical role to play as source of competitiveness in Africa
  • 22. Scale of production
    • Literature: Small farms more productive
    • Why have large farms survived?
    • Privileged treatment:
    • Land access
    • Tax treatment
    • Input and output subsidies
    • Infrastructure
  • 23. Alternatives to large farms
    • Realization of scale economies
    • Contract farming with smallholders
    • Machine hire services by the private sector
    • Effective producer organizations
  • 24. Scale of production
    • Little evidence to suggest that large-scale farming models are necessary or even particularly promising for Africa
    • Smallholder-led commercialization likely to lead to more inclusive growth, with greater backward and forward linkages
  • 25. Bright prospects for Africa
    • Five principal factors
    • Rapid growth and strong demand prospects
    • Better domestic policy environments
    • Improved business climate
    • Increased incentives to invest in agriculture
    • New technologies for production and processing

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