By Derek Byerlee. Presented at the ASTI-FARA conference Agricultural R&D: Investing in Africa's Future: Analyzing Trends, Challenges, and Opportunities - Accra, Ghana on December 5-7, 2011. http://www.asti.cgiar.org/2011conf
An Underutilized Opportunity to Boost Commercial Agriculture Derek Byerlee ASTI/FARA Conference Accra, Dec 6 th , 2011
Africa has a great growth opportunity in commercial agriculture Example of Ghanaian cocoa But R&D critical to ensure competitiveness Producer/industry funding of R&D by collective action (e.g., a levy) can improve R&D by 1) boosting R&D funding, 2) improving the effectiveness of R&D Evidence that it works well in many settings and Africa has tapped only a small part of its potential Case studies
Imports vs Exports Africa vs Competitors 25 Shares of World Agricultural Exports 9.00 20 8.00 Brazil Imports 7.00 Thailand$US2000 billionis Exports SS Africa 15 6.00 5.00 10 4.00 3.00 5 2.00 1.00 0 0.00 2006 1985 1980 2006 1961 1973 2000 1988 1974 1972 1986 2000 2008 1982 2003 1964 1979 1988 2002 2004 1967 1970 1976 1991 1982 1990 1996 1984 1994 1997 1998 1970 1976 1992 1978 1994
Share of world exports Share of world imports40% 20% 18% % of golbal agricultural imports 16%30% 14% 12%20% 10% 1991-93 8% 1991-93 2006-08 6% 2006-0810% 4% 2%0% 0%
Ratio of cash crop yields Yield performanceAfrica vs Asia/LA relates to R&D1.5 Cotton Variety releases fell 60% 1 1995-05 relative to Ratio, 1991-93 previous decade Ratio 2006-08 Bt cotton delayed 6-80.5 yrs vs competitors Oil palm R&D shifted to SE Asia 0 where exports > than all agric exports from SSA
Market prospects Comparative advantages Strong commodity Land and water market outlook resources Trillion dollar domestic Could double land area market by 2030 Locational advantage Regional trade opport. Private investor interest New industries Biofuels Cassava for China?
Conceptual Practical Collective action to Cost effective to collect overcome scale and non- Export products excludability Some domestic Levy based on output Industry governance products Issues Instability of funding Heterogeneity of industry Organized Likely underfunding (use matching grants) producers/industry Free riders requires Institutional designs collective political action
Potential Actual Assume min size Nine countries industry of $100 M and Coffee, cocoa, sugar, tea 1% levy and tobacco All exports levied plus Total in 2008 of $PPP 90 half of commercial M crops for domestic mkts Ghana, SA, C’Iv, Kenya Potential llevy of $PPP Range of institutional 500 M in 2008 designs Equivalent to one third Mostly nonprofit crop of total R&D in 2008 institute
Coffee Oil Palm Colombia 2nd place Colombia 4th place Strong industry assoc New industry and larger with over 0.5 M members producers (1.5 ha average) High research intensity-- Oldest institute from 1938 value based levy (1.5%) State of art and successful Successful but faces But low share to R&D and challenges of low research intensity of pest, science and costs 0.47% R&D only 14% of levy
Kenya tea as African R&D budget Prod value success story 300 120 1st or 2nd exporter, smallholder 250 100 based R&D budget (M Shillings) Small institute of 13 FTEs Tea value (B Shillings) 200 80 Historically very effective in serving smallholders 150 60 Volume based levy 100 40 Low research intensity of 0.1% 50 20 + some company R&D Moving to value based levy 0 0 and improved industry governanceSource: Nzuma, 2011
The little engine that could--highly competitive 0.4% value levy on nearly all products matched by government (by law) Well funded and staffed relative to neighbors Real R&D spending doubled since established Strong industry governance Four board members—two gov, two industry Commodity and regional committees Evidence of impacts Overall B/C at least 16:1 but patchy
Africa’s most successful agric exporter Federation of 14 producer associations established in 2003 R&D contracted mostly to CNRA Only 18% to R&D, rest to extension etc Underfunding of R&D especially for major crops like cocoa (research intensity 0.2%) Volume based levies set by industry Strong industry governance especially where POs are strong
Africa has huge potential in commercial agriculture Needs to invest more in R&D to regain competitiveness R&D on commercial crops underfunded although important exceptions (e.g., cocoa Ghana) Collective action by industry can increase funding but not necessarily so Matching funds would provide incentive to raise funds Strong industry governance improves effectiveness of research and accountability to industry However, R&D often shortchanged in allocation Importance of building capacity of POs although well run parastatals may be a second best (CRIG) FARA, MFIs and others should advocate & facilitate industry R&D funding (including regional)
Country Product R&D expend. Industry Specific crop Public R&D valueb R&D intensitya intensityc $PPP M $PPP M % %Ghana Cocoa 33.25 757 4.4 0.9Cote Multi 42.6 7,847 na 0.5?d’Ivoire?South Sugar 18.59 673 2.8 2.0AfricaKenya Tea 3.10 369 0.8 1.3Kenya Coffee 5.78 45 12.8 1.3Malawi/ Tea 2.42 65 3.7 0.7gZimbMauritius Sugar 9.89 149 6.6 3.9Tanzania Coffee 3.43 46 7.4 0.5Tanzania Tobacco 0.06 81 0.1 0.5Tanzania Tea 4.10 37 11.1 0.5Uganda Coffee 4.75 228 2.1 1.2Source: ASTI files
Funding only or Funding + R&D implementation? Single commodity vs multi-commodity? Levy funding vs block grants thru parastatal organizations? National or regional?