African agricultural development:

lessons and challenges

Steve

Wiggins Overseas

Development Institute

Outline

3� years History … optimism & pessimism

Performance since 1990: what do weknow?

Policy: less discord, but a big challenge

HISTORYFLUCTUATING PERCEPTIONS OF AFRICAN AGRICULTURE

Optimism: vent for surplus 1880s - 1930

Ecological pessimism: Machakos, Kenya 1930s

Machakos redeemed, 1991

Sahel1968-

73• Desertification???

Africa’s dreadful 97�s

80

90

100

110

120

130

140

19

62 1

96

4 19

66 1

96

8 19

70 1

97

2 19

74 19

76 1

97

8 19

80 1

98

2 19

84

Gro

ss

Pro

dn

Food

Per

Cap

In

dex

1961/6

3 =

100, 3

year

movin

g a

v.

AfricaSouth America Asia

Explaining failure of 70s & 80s

•Variable rainfall, Infertile soil

•Disease•Distance•Neo-Malthusianism

& Eco-Doom

Geography&

environment

'Only to feed her growing population at the present level of per capita food consumption, Africa would thus need to increase her food production at a rate of, say, 3.2 per cent per year for several decades in succession. This is of course an impossible challenge for her to meet.'• (Platteau 1990: 290-1)

Hostage to fortune

Explaining failure of 70s & 80s

•Land tenure•Institutions:

finance, risk

Geography (2):exceptionalism

•Dependency•Squeeze on peasants•[Cash crops vs food

crops]

External condition

s, internal

structures

Explaining failure of 70s & 80s

•Public marketing

boards•Negative protection

•Urban bias

Policyfailin

gs

Exportables-60%

-50%

0%

-10%

-20%

-30%

-40%

10%

195

5 195

7 195

9 196

1 196

3 196

5 196

7 196

9 197

1 197

3 197

5 19

77

197

9 198

1 198

3 198

5 198

7 198

9 199

1 199

3 199

5 199

7 199

9 200

1 200

3 200

5

Net

Rate

of A

ssis

tan

ce

to

A

gri

cu

ltu

reAfrica: net rate of assistance to agriculture

All agriculture

1990sAgriculture lost to sight!

Ideas & lessons → ag lost to sight

•Poverty traps?•Owing to:

•High T costs?

•Government failure?

•Real costs?

(Factor) Market failings

BUT TIMES CHANGE …… OPTIMISM RETURNS

Africa, SS, economic growth 1996 to 2008

79 to 95:0% per cap

growth 96 to 08:

3.2% per cap.

-0.50

-0.40

0.00

-0.10

-0.20

-0.30

0.10

Average NRA for 1970/85 compared to 2000s

1970 to 85

200 to 2010

60

85

2000

Jan

2001

Jan

2002

Jan

2003

Jan

2004

Jan

2005

Jan

2006

Jan

2007

Jan

2008

Jan

2009

Jan

2010

Jan

2011

Jan

2012

Jan

2013

Jan

2014

Jan

Inde

x de

flate

d by

US

GD

P de

flato

r160

Commodity Food and Beverage Price Index, 2005 = 100, includes Food and Beverage Price Indices

135

Commodity Agricultural Raw Materials Index, 2005 = 100, includes Timber, Cotton, Wool, Rubber, and Hides Price Indices

110

Abundant land!

Agriculture back on agendaMaputo Declaration 2003

CAADP ex

2003 AGRA

Regional Economic Integration

RECENT PERFORMANCE(A) REGIONAL & COUNTRY STATS

1.0

0.5

0.0

-0.5

1.5

4.0

3.5

3.0

2.5

2.0

AFR

ICA

EA

ST

MID

DL

E NO

RT

H SO

UT

H

WE

ST

Avera

ge

An

nu

al G

row

th

Rate

, %

Africa, Growth Agricultural Production, 1990/11

Ag PIN

Ag PIN per cap

60

50

40

30

20

10

70

600

400

200

800

1,000

1,200

Incre

ase

, %

Av

Valu

e P

rod

n C

ult

ivate

d

Lan

d, U

S$/h

a, con

sta

nt

04/0

6 v

alu

e1990/922009/11

Increase, %

- -Africa

Eastern

Middle

Northern Southern

Western

70

60

50

40

30

20

10

4,000

3,000

2,000

1,000

5,000

6,000

7,000

Incre

ase

seen

1990/9

2 t

o

2009/1

1, %

Valu

e p

er

EA

P A

g, In

t$

con

t 04/0

6Growth of agricultural labour

productivity, Africa, 1990/92 to 2009/11

1990/922009/11Change

- -Africa

Eastern

Middle

Northern Southern

Western

MICRO STUDIES

Returns good, Incomes rising …

2,500

2,000

1,500

1,000

500

0

3,000

3,500

Tef Wheat

Chickpeas

Lentils

Onion

Tomato

Green pepper

Lume, Gross Margin, US$/ha

Drivers of change oftenprivate & internal

Often initiative from SF & traders

Public — Gov’t & NGO — can help, but not always necessary

Stimulus often from domestic markets, not exportsDomestic marketing demands less stringent

CautiousCommercialisation•Small areas switched to

crops formarket•SF rarely sacrifice food

crops•SF intensify

• fertiliser, (sometimes) improved seed & agro- chemicals

• hired labour•Biggest Step? Irrigation

Gradual,

marginal

changes

Active Labour, Landmarkets …

•2010: 82 days•2012: 138 days

2010

2012

Lume: > 90%

households hired labour: days

annual household

:% households renting in land

13%45%

200340

US$ per hectare

But sticky Capital Mkts

•NOT: credit from Banks, advances from input dealers, traders or processors

Working K from

SF savings

•BUT may• slow process• limit degree• restrict which

households participate

Lack of credit not a

barrier

In sum:Progress, if not

dramatictransformation

POLICY: WHAT TO DO?

No secrets: consensusRural Investment Climate• Doesn’t have to be perfect!

[Rodrik]

Ghana ex 1983: Fast agri

growth Fast falling poverty

0

1

2

3

5

4

-3 .1% year

1961

/62

1962

/64

1964

/66

1966

/68

1968

/70

1970

/72

1972

/74

1974

/76

1976

/78

1978

/80

1980

/82

1982

/84

1984

/86

1986

/88

1988

/90

1990

/92

1992

/94

1994

/96

1996

/98

1998

/00

2000

/02

2002

/04

2004

/06

2006

/08

Agric

ultu

re g

ross

pro

d: B

ill U

S$

2000

2.6 % year

5.1 % year

1974 1982

20

30

40

50

60

70

1991/1992

1998/1999

2006

Povert

y In

cidence

(%

)

Poverty, rural

Poverty, cocoa producers

30.3

17.3

3000

2500

2000

1500

1000

500

0

35302520151050

Kca

l / d

ay

/

cap

Maln

utr

itio

n

Prevale

nce

(%

)

U5 Underweight (DHS)Food supply (kcal/capita/day) (kcal)

Consensus• Bullet slide 22RputrVael rPduabnlaic

Goods

•Roads, power, irrigation, etc.

•Education, Health, Water

•Research & Extension

36

Big ChallengeFailings in rural markets:

solutions?

State intervention?

e.g. Fert Sub

InstitutionalInnovation e.g.Contracts, Co-

ops, etc.

37

Public direction: Malawi’s fert.subs

-

0.50

1.51.00

1.0

1.50

2.00

2.50

3.003.5

0.0

0.5

2.0

2.5

3.0

20

01

/20

02

20

02

/20

03

20

03

/20

04

20

04

/20

05

20

05

/20

06

20

06

/20

07

20

07

/20

08

20

08

/20

09 20

09

/20

10 20

11

/20

12

20

12

/20

13

Yie

ld,

ton

ne/h

a

Pro

du

cti

on

, M

to

nn

es

Marketing Years, May to April

ProductionYield t/ha

(Private) Subs

• One Acre Fund 130k SF Kenya, Rwanda Seed, Fert,

Insurance,Mktg

Lean admin

US$50 per SF?

Institutional innovation …… levering in private capital

•Contracting

Lower T-costs

•Underwriting ruralbanking

Reduce risk

•Patient capital, challengefunds

Initial learning,

high K costs

Conclusions (1)

Reality & perceptions on the

move …sense of proportion:

Asia’s great lesson for Africa

not always appreciated

Conclusions (2)

•Africa diverse: much to learn from

•Initiatives … not documented, still less evaluated

•Need library of workingmodels

Learning!

Conclusions (3)

• Progress being made

• Elephant traps avoided?

• Demand surging• Factor market

initiatives

• SF enterprise

Reasons for cautio

usoptimism

Africa’s greater challenge?

manufacturing & the urban economy