On 17 February 2012 Ministers responsible for agriculture from seven African countries (Ethiopia, Ghana, Rwanda, Burkina Faso, Kenya and Mozambique and Tanzania) gathered in Dares-Salaam to discuss strategies for development and investment in the sector under a new regional body called - "Grow Africa".
Investment includes irrigation (mainly for rice, high value horticulture, coffee and tea), marshland development (mainly for rice), terracing, and livestock-related, which can be defined as sector specific. Investment as rural road, R&E, rural financing, and agricultural institution cannot be sector specific, which is assumed proportionally to sector specific investment. Recurrent spending is also assumed to be proportional to sector specific investment. Fertilizer and seed subsidies are sector specific and are treated as part of recurrent spending.For each dollar of public investment in agriculture, it generates 3.19 additional dollar GDP in q=which 3.11 dollar is increases in agricultural GDP.
Extending the methodology and analysis:Better integration of investment analysis in the economywide framework – detail investment data at the country level needed for the econometric analysis; – econometrics usually estimates net aggregate impacts without identifying specific impact pathways, i.e., we need to know not only what but also why in order to prioritizing public investment– Understanding how investments interact with each other is crucialBetter modeling farm and household behaviorCapturing distributional effectsLooking beyond income (e.g., nutrition outcome)Incorporating risk and social protection
Strategies and Priorities for African Agriculture
Strategies and Priorities for African Agriculture – Economywide Perspectives from Country Studies Edited by Xinshen Diao, James Thurlow, Samuel Benin, and Shenggen Fan Key Findings and Highlights IFPRI Policy Seminar October 3, 2012 Xinshen DiaoINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Background: Research Motivation Debates on the role of African agriculture in early 2000s Calling for evidence-based policies Calling for an economy-wide approach Comprehensive Africa Agriculture Development Programme (CAADP) started in 2003 Targeting 6% annual growth rate in agriculture Allocating at least 10% of public resources to agriculture IFPRI-CAADP agreement Strengthening analytic support to CAADP process Emphasizing the role of research in formulating agricultural development strategies at country levelINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Background: Recent Developments Increases in world food prices have made agricultural growth an imperative for food security Recent commitment of G-8 and African leaders to the New Alliance for Food Security and Nutrition Recent initiative Grow Africa focused on empowering small scale farmers More public resources allocated to agriculture: 13 of 32 countries with available data allocated more public resources to agriculture now than before CAADP 8 countries reached the 10% allocation target African agriculture grew 3.4% per year over 2001-10 For the first time, agriculture growth was higher than Africa’s population growth rate of 2.5%INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Research Questions Within the context of the CAADP, what is agriculture’s potential contribution to future development in Africa? What should be the priorities among different subsectors in agriculture? Is 6% agricultural growth enough to achieve poverty- and hunger-reduction goals? How many resources are required to support the necessary agricultural growth? How should limited public resources be prioritized?INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Selection of Case Studies: A Typology of African Countries Rural poor more than half of poor population Rural poor less than half of poor Agriculture more than 30% of Agriculture less than 30% population GDP GDP More-favorable agro-ecological conditions Coastal Benin Cote d’Ivoire South Africa Ghana Kenya The Gambia Tanzania Mauritius Togo Mozambique Senegal Landlocked Burkina Faso Lesotho Ethiopia Swaziland Malawi Uganda Mali Zimbabwe Mineral Central African Republic Chad Angola Democratic Republic of the Congo Equatorial Guinea Cameroon Nigeria Guinea Republic of Congo Sudan Zambia Botswana South Sudan Less-favorable agro-ecological conditions Burundi Eritrea Cape Verde Niger Madagascar Rwanda Mauritania NamibiaSources: GDP and poverty data from World Bank. Agro-ecological and geographic classifications from Diao et al. (2007)
Key finding 1: Agriculture-led growth has the largest impact on reducing poverty rates % change in national poverty rate resulting from a 1% increase in total GDP growth rate Uganda Tanzania Rwanda Nigeria Kenya Ghana Ethiopia-2.5 -2 -1.5 -1 -0.5 0 Nonagriculture-led growth Agriculture-led growth Baseline growthSource: Authors, based on results reported in the country case studiesNotes: The poverty rate is calculated according to national poverty line. Differences in the definition of national poverty linesmean that comparison can be made across sectors but not countries. n.a. = not available because the nonagricultural growthsimulation was not run for this country. Malawi, Mozambique, and Zambia are omitted because no baseline elasticity wasINTERNATIONAL FOOD POLICY RESEARCH INSTITUTEreported
Key finding 2: Food staples have stronger growth linkages Change in total gross domestic product (GDP) Staple foods Export crops Country Multiplier Lead sector Multiplier Lead sector Ethiopia 1.13 All cereals 1.04 All export crops 1.06 Livestock Kenya 2.39 All cereals 2.62 All export crops 2.68 Horticulture Malawi 1.11 Maize 1.05 Tobacco 1.78 Nonmaize cereals 1.06 Other export crops 1.27 Roots Mozambique 1.42 Maize 1.48 Traditional export crops 1.71 Roots 0.83 Biofuel crops Nigeria 1.28 Maize 0.70 All export crops 1.86 Pulses and oilseeds Tanzania 1.21 Sorghum and millet 1.15 All export crops 1.70 Livestock Uganda 1.32 All cereals 0.62 All export crops 1.39 Horticulture Zambia 1.63 All cereals 0.30 All export crops 1.88 Roots 1.75 LivestockSource: Authors, based on results reported in the country case studiesNotes: The change is calculated as that caused by a one-unit change in gross domestic product driven by the lead sectorspecified. In Kenya case, the multiplier is based on fixed prices and unconstrained resources.
Key finding 3: Food staple growth is more pro-poor % change in national poverty rate from a 1% increase in GDP growth rate Staple foods Export crops Country Poverty-growth Lead sector Poverty-growth Lead sector elasticity elasticity Ethiopia -1.40 All cereals -1.16 All export crops Kenya -2.13 All food crops -1.90 All export crops Malawi -0.74 Maize -0.62 Tobacco -0.85 Horticulture -0.57 Other export crops Mozambique -0.73 Maize -0.29 Traditional export -0.65 All cereals -0.43 crops Biofuel crops Nigeria -1.01 All cereals -0.81 All export crops -0.92 Roots Rwanda -2.39 Maize -1.81 Coffee -2.59 Pulses -1.63 Tea Tanzania -1.09 Maize -1.00 All export crops Uganda -1.07 Roots -0.64 All export crops -1.38 Horticulture Zambia -0.27 All cereals -0.25 All export crops -0.33 RootsSource: Authors, based on results reported in the country case studiesNotes: Ghana is not shown because detailed sector elasticity was not calculated for this country
Key finding 4: Returns to public investment in staple sectors is high – An example from Rwanda Ratio of GDP/investment Ratio of AgGDP/investment Grains 2.75 2.73 Maize 7.02 6.59 Rice 1.41 1.22 Roots and tubers 5.03 4.65 Cassava 5.48 4.61 Potatoes 5.88 5.66 Sweet potatoes 2.53 2.22 Other staple crops Pulses 9.09 8.21 Bananas 5.35 4.94 Oilseeds 5.89 4.73 Export crops 1.02 1.24 Coffee 1.01 1.74 Tea 1.95 2.52 Livestock 2.02 1.90 Agriculture total 3.19 3.11Sources: Authors’ calculation using the DCGE model results combined with the public investment data from Rwanda, MINAGRI(2007)Note: Returns are measured as increases in GDP or agricultural GDP over time discounted to the current value (10% ofdiscount rate) and costs are measured by planned public investment 2006-15 at the base-year price combined with recurrentspending over time discounted to the current value (10% of discount rate)
Lessons for African Development Strategies Broad growth is crucial Agriculture remains a key development sector in all studied countries despite the diversity in their agro-ecological conditions and economic structure Broad-based growth provides opportunities to majority of farmers any narrowly defined single agricultural subsector is unlikely to generate enough economy-wide growth or to significantly reduce national poverty The composition of agricultural growth matters The poverty impact of an agricultural subsector’s growth should be at the top of the agenda in an agricultural strategy Need to consider how subsectors are linked to the rest of economy in setting priorities Targeting investments in the relatively large agricultural sector is essential to have agriculture as an engine of economy-wide growth Market opportunities must be considered when setting up prioritiesINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Research Beyond This Book Better integration of investment analysis into the economy-wide framework Detailed investment data at the country level is needed for better econometric analyses – Efforts through ReSAKSS and country SAKSSs Necessary not only to identify net aggregate impacts but also to specify impact pathways - need to know not only “what” but also “why” in order to prioritize public investment Understanding how investments interact with each other is crucial Looking beyond poverty (e.g. agriculture-nutrition link) Incorporating risk and social protection Monitoring and evaluation – a proposal for Agriculture Transformation Index (ATI)INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE