Africa’s Turnaround William Masters Professor of Food Policy, Tufts University From Crisis to Opportunity in African Agriculture* * Forthcoming in Food and Financial Crises: Impacts on Sub-Saharan Africa, David R. Lee and Muna B. Ndulo. editors. Wallingford, UK: CAB International, 2011 Harambe Entrepreneur Alliance – Fourth Annual Symposium, 25 March 2011

How much longer? Cartoon (c) 2002, reproduced with permission by Nicholson from "The Australian" newspaper:

World agriculture is changing rapidly Monthly average prices for wheat, maize and rice, Jan Feb Source: FAO Global Information and Early Warning System data ( downloaded Feb 20, All are monthly export prices, normalized to Jan. 2000=100, for US No. 2 Hard Red Winter Wheat, US No. 2 Yellow Maize, and Thai 100% Broken Rice.

USDA estimates of average cereal grain yields (mt/ha), Source: Calculated from USDA, PS&D data ( downloaded 7 Nov Results shown are each region’s total production per harvested area in barley, corn, millet, mixed grains, oats, rice, rye, sorghum and wheat. Africa’s green revolution is here

Cartoon (c) 2002, reproduced with permission by Nicholson from "The Australian" newspaper: Rural demography Farm technologies Food policies Three big trends will change the picture

Rural population growth is a major cause of Africa’s impoverishment Reprinted from Robert Eastwood, Michael Lipton and Andrew Newell (2010), “Farm Size”, chapter 65 in Prabhu Pingali and Robert Evenson, eds., Handbook of Agricultural Economics, Volume 4, Pages Elsevier. Rural demography Food policies Farm technologies Land available per farm household (hectares)

Population by principal residence, World (total)Sub-Saharan Africa Source: Calculated from UN World Urbanization Prospects, 2009 Revision, released April 2010 at Downloaded 7 Nov Urban growth eventually employs all new workers Rural demography Food policies Farm technologies

Until cities grow big enough, new workers have no choice but to be farmers We are here: ≈480 m. ≈1.1 b. ≈310 m. ≈1.4 b. Population Source: Calculated from FAOStat (downloaded 17 March 2009). Rural population estimates and projections are based on UN Population Projections (2006 revision) and UN Urbanization Prospects (2001 revision). Eventually land available per farmer rises Rising rural populations reduce land available per farmer Rural population by region, Rural demography Food policies Farm technologies

Africa had the world’s fastest and longest rural population growth Below zero = more land/farmer Source: Calculated from FAOStat (downloaded 17 March 2009). Rural population estimates and projections are based on UN Population Projections (2006 revision) and UN Urbanization Prospects (2001 revision). Rural population growth rates by region, Rural demography Food policies Farm technologies Over 2% annual growth for 30 years! Under 1.3% annually, and falling

Africa also had the world’s fastest urban population growth Source: Calculated from FAOStat (downloaded 17 March 2009). Rural population estimates and projections are based on UN Population Projections (2006 revision) and UN Urbanization Prospects (2001 revision). From >5% annually …to <4% Zero = no change Urban population growth rates by region, Rural demography Food policies Farm technologies

Africa’s long baby boom is finally entering the workforce Source: Calculated from UN Population Projections, 2008 revision (March 2009), at Child and elderly dependency rates by region (0-15 and 65+), Rural demography Food policies Farm technologies Africa had the world’s most severe demographic burden (>45% ) now a demographic gift

Conclusions #1: Africa’s demographic turnaround Africa is just now emerging from the world’s most extreme demographic transition, which involved: –The world’s fastest rural population growth > 2,0 % for 30 years, 1960s-1980s –The world’s fastest urban population growth > 4,5 % for 50 years, 1950s-1990s –The worst dependency rates (children or the elderly) > 45 % for 60 years, 1950 – 2010 These pressures are now easing, steadily opening new windows of opportunity Rural demography Food policies Farm technologies

Demography is not destiny: Leadership matters! Rural demography Food policies Farm technologies

Agricultural policy in Africa: 16 country studies* Rural demography Food policies Farm technologies *Plus five for cotton only

Methodology: Price distortions due to stroke of the pen policies Nominal Rate of Assistance: tariff-equivalent gap between internal and foreign prices: Sometimes this is actually a tariff: Usually we observe only prices and must infer marketing costs: Rural demography Food policies Farm technologies

Results: Heavy taxation of farmers and trade, followed by major reforms Source: K.Anderson and W. Masters (eds), Distortions to Agricultural Incentives in Africa. Washington, DC: The World Bank, Importable products Exportable products All farm products This gap is anti-trade bias This level is net anti-farm bias Rural demography Food policies Farm technologies

Individual countries follow varied paths Countries’ total NRA for all tradable farm products, Rural demography Food policies Farm technologies

Our common methodology allows comparison across all kinds of countries No. ofPercentage of world countriesPop.GDPAg.GDP Africa Asia LAC8758 ECA13636 HIC Total Rural demography Food policies Farm technologies

The global context is becoming more favorable, as other countries limit their subsidies Average NRAs for all products by year, with 95% confidence bands Source: W.A. Masters and A. Garcia (2009), “Agricultural Price Distortion and Stabilization: Stylized Facts and Hypothesis Tests,” in K. Anderson, ed., Political Economy of Distortions to Agricultural Incentives. Washington, DC: World Bank. Less anti- farm bias Less pro- farm bias Rural demography Food policies Farm technologies

National average NRAs by real income per capita, with 95% confidence bands Source: Author’s calculations, from data available at Each line shows data from 66 countries in each year from 1961 to 2005 (n=2520), smoothed with confidence intervals using Stata’s lpolyci at bandwidth 1 and degree 4. Income per capita is expressed in US$ at 2000 PPP prices. (≈$22,000/yr)(≈$400/yr)(≈$3,000/yr) ≈$5,000/yr Africa is not yet at the income levels associated with costly farm subsidies Rural demography Food policies Farm technologies

Policy reforms have finally cut Africa’s heavy colonial and post-colonial taxation of farmers –The average burden per farmer reached US$134 in the ‘70s Further reduction is possible and desirable –The average burden per farmer was US$41 in , –…more than all public investment or foreign aid to the sector Later, the challenge will be to limit subsidies –As incomes rise, political pressures shift rapidly Conclusions #2: Africa’s food-policy turnaround Rural demography Food policies Farm technologies

USDA estimates of average cereal grain yields (mt/ha), Source: Calculated from USDA, PS&D data ( downloaded 7 Nov Results shown are each region’s total production per harvested area in barley, corn, millet, mixed grains, oats, rice, rye, sorghum and wheat. What’s behind Africa’s green revolution? Rural demography Food policies Farm technologies

African agriculture is really distinctive Source: Reprinted from W.A. Masters, “Paying for Prosperity: How and Why to Invest in Agricultural Research and Development in Africa” (2005), Journal of International Affairs, 58(2): Rural demography Food policies Farm technologies

Appropriate new technologies have only recently been developed and disseminated Source: Reprinted from W.A. Masters, “Paying for Prosperity: How and Why to Invest in Agricultural Research and Development in Africa” (2005), Journal of International Affairs, 58(2): Rural demography Food policies Farm technologies

Conclusions: Three turnarounds in African agriculture Rural demography –Slowdown in rural and urban population growth –Reduction in the dependency rate (children or elderly) Food policies –Many reforms done –More challenges ahead Farm technologies –Yields and output are rising –Technological transformation is finally under way Rural demography Food policies Farm technologies

Reproduced from W.A. Masters (2008), “Beyond the Food Crisis: Trade, Aid and Innovation in African Agriculture.” African Technology Development Forum 5(1): 3-15.African Technology Development Forum Postscript: What role for foreigners in Africa’s turnaround? Foreign aid to African agriculture had dropped to US$1 per African (vs. US$4 for health, and US$38 in total). From such a small base, rapid growth is possible Rural demography Food policies Farm technologies