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  1. 1. EMERGING TRENDS and SCENARIOS for AFRICAN AGRICULTURE Johan van Rooyen, University of Stellenbosch 3rd RUFORM BIENNIAL 27 SEPT 2012, UGANDA
  2. 2. SUMMARY 1. EMERGING TRENDS r.e:• The “rediscovery” of African Agriculture and new roles for agriculture;• The changing structure of African Agriculture; and• Concerns of the evolving development path 2. TOWARDS A STRATEGIC FRAMEWORK: THRUSTS & TIPPING POINTS 3. DEVELOPMENT PATH SCENARIOS
  3. 3. TRENDS (1): REDISCOVERING THE ROLE OF AGRICULTURE in AFRICA’S DEVELOPMENT Since 2000 crises and opportunity combined in putting agriculture (back) on the African development agenda:• Rising food prices, food insecurity and hunger;• Stagnation in per capita value added in sub-Saharan agriculture;• Increased rural poverty, increasing urbanisation, urban-rural disparities & social tensions;• Signs of environmental degradation; loss of bio-diversity.
  4. 4. Changes in the thinking (theoretical concepts) and policies on the Roles of Agriculture in Africa:(i) From the generally accepted J-M development paradigm of the 1960/1970’s: # agricultural growth the key pillar for economic development; # the role of agriculture to lead industrialization and the structural transformation of the economy through the following functions:• Increased food supplies;• Releasing labour resources to more productive non agri- industries;• Earning foreign exchange - exports of food & fibers;• Capital formation; and a• Range of large income multipliers & employment linkages..
  5. 5. (ii) To the effective undermining of the J-M paradigm over the past three decades, in spite of “Green Revolution” successes elsewhere:# economic development policies of the late 70/80’s: import substitution industrialization, strong anti- agriculture price biases (World Bank: Krueger, Schiff & Valdes,1991); and# structural adjustment policies (1980’s debt crises) and the so called "Washington Consensus“: direct cash transfers to the poor and job creating public work programs, rather than agricultural support as an instrument for development
  6. 6. (iii) To the “rediscovery” of agricultural development in African economics; both as contributor to the crises; and also as an instrument for solutions:• International agencies: FAO, 2009; World Bank, 2005/07/08/09; Byerlee, et al, 2009; Badiane, 2009, World Development Reports 2008 & 9;• The 2005 Report of the Commission for Africa: ”Our common Interest” emphasised the need for accelerated agricultural growth• African Heads of State consistently pledged to increase their support and budgetary allocations to agricultural development• The Millennium Development goals (MDG’s) situate agriculture to contribute directly to four of the eight goals, viz eradication of extreme poverty and hunger; to promote gender equality and empowerment; ensure environmental sustainability; and develop a global partnership for development.
  7. 7. (iv) To moving towards a new Paradigm? (Alain De Janvry (Elmhirst Lecture, IAAE,2009) argue for a new paradigm /a new role of agriculture in development) “Agriculture having the capacity to contribute to several dimensions of development”1. accelerating GDP growth;2. providing for the growing global demand for food and fiber;3. reducing poverty and food vulnerability in poor households;4. narrowing the rural-urban income gap ( and social tensions);5. supporting environmental sustainability; and6. contributing to domestic economic specialization and regional integration and trade.
  8. 8. .A paradigm shift; or is the J-M view just revisited andupdated?*Not so important what we “call” it, but what isimportant in this 2000+ perspective is that futureAfrican agricultural development:• Must be situated to be part of a comprehensive and integrated economic development process – not necessary the leading sector;• Must not be isolated and segmented development; and• Should not sporadicaly and opportunisticaly be exploited and directed.
  9. 9. (v)….and to accommodate some more important realizations and concerns:• Approaches where agricultural development resulted as a series of opportunistic/spontaneous events or where it was driven by sporadic market forces alone, did not deliver a sustainable development trajectory;• (In Africa) NATION STATES are increasingly turning in to ECONOMIC DOMAINS. Agriculture thus increasingly to be “exploited” as an Economic Activity; and• Agricultural intensification could (again)result in a “Tragedy of the Commons” and a “scramble for Africa’s agricultural recourses” (not miniral resources this time); that will leave Africans out in the cold –again!
  10. 10. Conclusion: some key words to be accommodated in any future agricultural development scenario :• Agriculture a “Good Contributor”; not necessary “the Major Driver” of economic growth;• Agriculture part of Integrated, comprehensive, innovative, interactive development – not opportunistic, sporadic, isolated;• Finding “Strategic thrusts” and “Tipping Points” - actions that cause the “agricultural development virus” (agricultural productivity and growth) to spread –- farm by farm, district by district, country by country, region by region( hybrid seed corn, USA,1930’s – Gladwell, Ryan & Gross; Green Revolution cases, 1960-80’s);• “Tipping Points” in the “new view of agriculture” likely to be found in : trade in food, energy and lifestyles; links to super markets; supply chain management; farm business contracts; green/bio technology; good governance systems; food security management & politics; and HCD (AET)
  12. 12. # ACTIVATING AFRICAN AGRICULTURAL POTENTIAL• Per capita production: <200kg/cap - 1984; 600 kg/cap – 2006• Total production: 300 million – 1984; 750 million – 2006 “Africa Rising”: SOMETHING IS HAPPENING IN AFRICAN AGRICULTURE (despite the neglect of the past 30 years!) , although “THE ECONOMIST” caution about too much short term optimism!
  13. 13. Million tons 100 200 300 400 500 600 700 01964196519661967196819691970197119721973197419751976197719781979198019811982 Total198319841985198619871988198919901991 Per capita (kg)199219931994199519961997 Africa, 1964-2006199819992000200120022003200420052006 500 550 600 650 700 750 Total and per capita production in
  14. 14. The sources of agricultural production growth: Arable land Increased yield Cropping expansion intensity increases 1961- 1999-2030 1961- 1999-2030 1961- 1999- 1999 1999 1999 2030 Developing 23 21 71 67 6 12 countriesSub-Saharan 35* 27* 34 61 31** 12 Near East/ 14 13 72 68 14 19 East Asia 26 5 79 81* -5 14 South Asia 6 6 80* 81* 14 13Latin America 46** 33** 55 46 -1 21*(FAO STATS)
  15. 15. Africa has high potential agricultural land!
  16. 16. Food grain production growth potential (1980-2050) Change 1980-2004 (%) 2050 (%)South America 80* 60Asia 64 47Central & North America 40 21Europe 80* 44Africa 75 150*Absa-Agribusiness,2009
  17. 17. CONCLUSIONS on PRODUCTION POTENSIAL:• Future growth in African agriculture largely through land expansion and increased yield effects; crop intensity also potential – irrigation, double cropping, etc• Productivity - wider defined as only yield increases; an integrated agricultural production development strategy, activating all three sources of agricultural output growth, called for• Impact of climate change? - not expected to cause major production changes over next 30 years (BFAP,2009) on food security ?
  18. 18. # Meeting the demand for food at global, national and household levels: Where, What?THE GLOBAL SCENARIO:• Growth in demand for food and fiber - to concentrate in markets of North America, Western Europe and China.• Emerging and changing consumer trends in these markets will be geared to : # convenience, food safety and quality; # fun, surprise and taste experiences: and will be # increasingly sensitive to environmental, ethical and social considerations- children, mothers, women, workers. These driven by the trade, retail, activists, education,etc.• These trends to have profound effects on the food business systems - production, processing, trading and retailing i.e. the whole agri - food value chain.
  19. 19. Food Market growth potential
  20. 20. The African Growth Scenario
  21. 21. African urbanisation – New markets on the door step! Population in Africa (millions)140012001000800 Rural600 Urban400200 0 1950 1975 2007 2025 2050
  23. 23. RESULTS:# Lowest ratings: 105:Burundi,Chad,DRC=18.4# Countries of SSA in the lowest third: Tanz = 26.8 Mal = 27.3 Zam = 28.5 Moz = 29.2 Bot = 56.5 RSA = 61.6 Chin = 62.5; Braz = 67.6 USA = 89.5
  24. 24. THE VALUE OF MACRO/COUNTRY FOOD SECURITY STATS?RSA Case:FSI = 61.7 - but severe food vulnerability at rural house hold levels:KZN - 10 rural municipalities Food Vulnerability Index = 56%Limpopo- 25 rural municipalities FVI = 54%Note: In all cases high potential agri-resources available but not properly used! Why?
  25. 25. Household food security concerns:• This will remain serious in most African economies• A holistic, integrated view required focusing on: # farm production - at national and household levels + # trade and distribution + # access – own production, income, grants & safety nets + # nutrition and diet + # food safety systems; all at• Access to food in poor societies to focus on strategies to enhance both the household level income generation and also “own” food production and storage capacity- in rural and urban environments• Women farmers should be a particular focus point.
  26. 26. # Evolving Trade Patterns Imports ($1000) Exports ($1000) Net exports 70 60 50 40 30Millions 20 10 0 -10 -20 -30 -40
  27. 27. Net Imports of high value foods (t) Cheese Infant food Frozen potatoes Roasted coffee 20000 0 -20000 -40000 -60000 -80000-100000
  28. 28. Net imports of meat (t) Beef Game meat Chicken meat 200 100 0 -100Thousands -200 -300 -400 -500 -600 -700 -800
  29. 29. Millions -5 0 5-35 -30 -25 -20 -15 -10 10 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 Wheat 1981 1983 1985 Maize 1987 1989 1991 1993 1995 1997 Net imports of grains (t) 1999 2001 2003 2005 2007
  30. 30. Net imports of sugar, oilseed cake, flour (t) Sugar Oilseed cake meal Wheat flour Maize flour 2000 1000 0Thousands -1000 -2000 -3000 -4000 -5000
  31. 31. Conclusions on evolving agri-trade patterns• Per capita production has been increasing• Net imports have increased but imports are still only 22% of total production, and exports 14%• No distinct pattern of imports or exports: human consumption, animal consumption; high value products are both imported and exported.• This means that demand has exploded - the market is there - but Africa’s farmers are struggling to keep up! Opportunities not grasped?
  32. 32. The nature of African trade linkages:• “African agriculture will increasingly be targeted as a source of raw materials for global food & fiber provisions” (Derrick Byerlee, 2010) : THE NEXT SCRAMBLE FOR AFRICA’S (FOOD PRODUCTION) RESOURCES IS ALREADY ON!• The sourcing of raw products from African farmers through business contracts and/or long term supply arrangements• farm producers will become "members of the food business team”, operating in an integrated and coordinated manner with processors and retail/supermarkets.• International and local food and agbiz value chains will drive the “scramble” for Africa’s land and water resources; competition will be between chains.
  33. 33. The changing nature of agri-food business investments:• From wholesale/auction market infrastructure - emphasis on providing access to producers of mass raw materials; to• The development of the full value chain infrastructure and relationships.• Processing and retail will be the new drivers of business opportunities in the food system( Reardon, et al, 2009).• Commercialising farm production will become a major investment; a “tipping point” in the emerging agri- food systems
  34. 34. a strategic concern: The “spaghetti bowl” of African trade agreements, regulations –enhancing or constraining intra-regional trade?
  35. 35. Another strategic concern: The Logistics Performance Index (WB,2012)Germany 1 100 %South Africa 28 78.9%Brazil 41 70.6%Senegal 58 59.8%Botswana 68Malawi 73Tanzania 88Mozambq 136 41.5%8 of 10 lowest ranked LPI countries in Africa!
  36. 36. # The changing nature of African farm production: towards commercialisation• The main mode of African agricultural production will remain smallholder farming; but commercializing smallholder farming complex & difficult• Traditionally large scale commercial farming systems in countries - South Africa, Zimbabwe, Zambia, Tanzania and also new corporate farming ventures are highly successful with technical innovation and market responses – driving African productivity and production increases;• Apart from farm production scale economic advantages, large scale farming render lower transactions costs to deliver into agri-food value chains; and• Large scale farming competes more effectively with non-agricultural opportunities for investment, reward and remuneration. Large scale commercial farming, linking in to ag-food value chains, expected to dominate African agricultural growth and development scenarios.
  37. 37. A CONCERN: DOES AG-FOOD VALUE CHAIN DOMINATED BUSINESS SYSTEMS AGITATE AGAINST AFRICAN SMALLHOLDER AGRICULTURE? WOULD THIS CONSTRAIN PROGRESS?• Producers, linked to ag-food value chains generally found to be better off due to price and quality considerations and due to sustained long term value prospects;• Companies in the value chain and retail/super markets generally prefer to source from larger scale operations, rather than from smallholders due many considerations: * high transactions costs; * problems with volume and quality consistency and delivery ;• Larger farms are generally better equipped to benefit from this transformation – specialisation + diversification and providing sustained employment opportunities.
  38. 38. • Recent case studies on the relation between smallholder agriculture and ag-food value chain driven business systems do not support the view that this will effectively exclude smallholders and asset poor farmers from future business opportunities:• Various cases where raw products are sourced from small holders- not "as an act of charity or corporate social responsibility"- because their inclusion is profitable, even with large producers operating in the same sector: sugar, vegetables, milk, fruit, meat (Nestle, 2009; Shoprite/Checkers,2009);• Where smallholders dominate the agrarian structure and markets are expanding; and• through “social protocols” - the BEE Score Card system in SA for example – where agbusiness companies source from smallholder “schemes/projects”
  39. 39. Conclusion: towards new farming business models/typologies in Africa: The emergence of outgrower schemes, contract farming, cooperative/group schemes, lead by private sector initiatives with public sector participation (PPP’s), to enable:• the requisite non- land assets such as infrastructure, access to land, irrigation, farm equity, farmer associations/producer cooperatives, transport and communication systems through partnership arrangements with government agencies;• cost saving “economies of scale” collective input supply contracts between smallholders and agribusinessess; and to• Effectively address business related constraints such as access to funding, lack of credit ,weak E & T and R & D support, market access, etc.• Job creation to stabilise rural environments?
  40. 40. # ENVIRONMENTALLY SUSTAINABLE AGRI- PRODUCTION SYSTEMS In view of the expected global sourcing of raw materials from Africa; while striving to achieve the envisaged doubling of food production by 2050, African Agriculture provide great scope to:• position as a core component of an environmentally sustainable economic production system – chemicals, energy, low input production, etc;• to apply green-technology and produce bio-based commodities - liquid fuels, agri-chemicals, animal feeds;• Note recent initiatives by the Consultative Group of International Agricultural Research (CGIAR) to establish/ link global research networks to promote an economic system striving for reductions in water, land, nutrients and chemicals
  41. 41. # Limits to generalizations: Africa is big and diverse!
  42. 42. # Good Governance systems forAgricultural Growth and Development It is now the time to recognise the importance, opportunities and need to direct development and investment - “Good investment protocols” to:• Counter “land grabs” and sporadic/opportunistic “exploitation” of Africa’s rich agricultural resource base;• Promote social & environmentally responsible (sustainable) agriculture: link economics, ethics & environment to development strategies and investment; and to• Stabilise communities by facilitating smallholder involvement, job creation and broad based participation in new developments
  43. 43. Conclusions :• “Africa Rising” (Economist): Collective African GDP of $ 1.8 trillion = Brazil, Russia; 316 million subscribed mobile phones; 52 African cities> 1million; 29 countries with revenues> $3bill;12 countries with GDP/cap> China• Differing production growth potentials; food security indexs; resource bases, urbanisation, pop growth, productivities, etc• Different trade blocks & policies;• Joint declarations & commitments: joint initiatives: fund mobilisation, emerging regional agribusiness trade; etc; and So, Africa have sufficient “muscle” and common interests to dare to create strategic and operational frameworks and protocols to direct the agricultural development path - but keep diversities in mind
  44. 44. TOWARDS THE FUTURE: STRATEGIC THRUSTS & TIPPING POINTS FOR AFRICAN AGRICULTURE The particular scenario for African agriculture is expected to evolve within a environment of an “aggressive” expansion of agribusiness to cover the entire supply/value chain. This will result in:• Increased agric production: commercial farmers + out growers + farm production for home consumption;• Increased employment and livelihood along the value chain;• Improved input supply markets : fertilizers, mechanisation, seeds, etc;• Expanding processing, packaging, certification, food safety controls;• Growing services: banking, cell phones, contracting,…;• The rise of the retail sector: supermarkets, fast foods, niche markets, informal markets;• But will need “checks and ballances” r.e. social, environment, ethics.
  45. 45. Five Strategic, Cross Cutting Thrusts:In this changing environment five important crosscutting thrusts will be required to direct the futureGrowth Path for African Agriculture:1.STIMULATION of MARKET LINKAGES: to commercialise Africanagriculture through linkages to local and global markets, supply chaindevelopment, infrastructure, info, legal provisions, harmonised trade policies;2. ACCOMMODATING SOCIAL/LIVELIHOOD CONSIDERATIONS:focus on employment and household level food security and vulnerability as amajor concern of many poor African households-in rural and urbanenvironments – smallholder support systems;3. DESIGNING for a SUSTAINABLE ENVIRONMENT : the design ofenvironmentally sustainable agriculture, including bio-based practices, andappropriate governance systems to incentivise farming communities andagribusinesses to introduce and maintain such practices in their productionsystems;
  46. 46. Five strategic “cross cutting” thrusts:4. GOOD GOVERNANCE and LEADERSHIP: accountableagricultural management, governance and leadership;andinvestment protocols, development charters, etc. to enablesustainable production; and to empower farm producers, inparticular women groups, to have a “telling” voice in:• value chain governance and added value distribution; and• in the designing and implementation of rural & agricultural development initiatives and models;5. HUMAN CAPACITY DEVELOPMENT : providing the requiredhuman capacity/capital, skills and agents to drive agriculturalgrowth and development. Women & young farmers to be animportant focus; technicians, managers and specialists requiredby the value chain. An innovative AET system will prove pivotalto activate all the above thrusts.
  47. 47. A SCENARIO MATRIX: The degree to which each of these Five Strategic Thrusts will beimplemented, give content to a Scenario Matrix: Strategic Development Path Scenarios: Thrusts: Exploitative Sporadic Vibrant1. Market linkages segmented opportunistic interactive2. Social/livelihood exploitative skew equitable3. Environmental exploitative opportunistic sustainable4. Governance opportunistic inconsistent accountable5. Human capital exploitative inconsistent empowering