1. Agricultural development and food security African Economic Development Renata Serra – March 8 th 2007

2. The role of agriculture for development Why is agricultural development key for industrial development and overall economic growth? –supply of raw materials to industry –release of surplus labor for industry –increases in national savings (from net agricultural surplus) –creation of a larger internal market (from increases in rural incomes) –increases in food supply, decline in malnutrition and increases in productivity  Need to promote linkages between agriculture and other sectors!

3. Agriculture in SSA Agriculture is a key sector in SSA In the poorest countries, it accounts for, on average: –1/3 of GDP –3/4 of labor force –1/2 of total export and foreign exchange earnings However, it has seriously underperformed –1960s-70s: agriculture was mostly regarded as secondary to industry  ‘urban bias’ Most of SSA agriculture is by small-holders –Large scale and mechanized plantations exist mainly in Southern Africa (few in West and Eastern Africa) Contract farming is rising in the export sector –Such opportunities are mixed-blessing for farmers

4. Underperformance: features –Declining per-capita output Population growth mainly outpacing production growth –Slow increases in land productivity Yields per hectare lower than in Asia and LA Land degradation and soil erosion –Declines in labor productivity Due to decline in K and other inputs (e.g. fertilizers)

5. Underperformance: explanations Policies: –Squeezing of agricultural sectors by governments –Food aid and imports used as response to food shortages depressed farmers’ incentives Institutions: –Lack of complementary interventions, and investment in infrastructures External constraints: –Lack of access to markets, uneven trade environment –Biased investment in R&D: very little R&D on crops suitable to semi-arid African land Note: African farmers do respond to incentives and act rationally (socio-cultural explanations are not supported by evidence!!)

6. Institutional/environmental constraints Lack of complementary infrastructure prevents maximization of long-term returns Inter-sectoral dualism –Output per worker in agriculture is much lower than in other sectors High levels of off-farm employment and seasonal male migration (due to high seasonality) reduce returns to agricultural investment Linkages between production, nutrition, water, sanitation, health, and education, make interventions in one sector not highly effective

7. Institutional constraints (cont’d) Traditional gender role divisions in agriculture and house-work lead to inequity and inefficiency –Women play crucial roles as farmers but enjoy limited access to labor, technology, land and credit –Women’s multiple roles limit their ability to take advantage of productivity-increasing technology Ex. 1: resistance to rice cultivation in the Semry project in Cameroon Ex. 2: low adoption rates of hybrid maize packages in Malawi –Very few projects target the specific needs and constraints of women farmers, thus failing to increase production and household food security

8. What are the best interventions? Is it ‘Getting prices right’ as in SAPs liberalization policies? –Elimination of marketing boards (parastatals) –Removal of output price subsidies, ceilings, controls –Elimination of input subsidies (credit, fertilizers, etc.) –Removal of tariffs on M and X Is it fixing institutions? –Expand access to credit, saving, and inputs markets –Land reforms (including titling and tenure rights) and development of land markets –Ameliorate labor markets (education & training, rural off-farm opportunities)

9. Some reflections Institutions may need to be ‘fixed’ before prices –Farmers may not respond to price increases if they face constraints to inputs –Access to markets seems to be the paramount problem In particular, sound land reforms are necessary –Individual private property rights are not always the solution! They may incite further conflicts, and not lead necessarily to greater returns Safety nets are needed for the rural poor not to suffer –Farmers are harmed by price liberalization if they are net consumers

10. Reflections (cont’d) Greater attention should be paid to indigenous systems to enhance local acceptability, self- reliance, and ecological soundness Public investment is crucial also for agricultural development –Due to the public good nature of crop research, extension services, rural infrastructures, and information for accessing markets The political weight and negotiation power of African states needs to be enhanced –Ex: “Black gold” video shows African negotiators’ lack of power at the WTO conference in Cancun, 2003

11. Agriculture-nutrition linkages What is the relationship between agricultural production, farmers’ income, household calorie intake, and nutrition? What effects from crop commercialization on child nutrition? –Positive: via income increases –Negative: via decreased food crop production and decreased subsistence ratio What interventions increase rural living standards?

12. Malawi case study Avg. holding per sample HH: 1.5 ha > nationally Diversified incomes –30% own-produced maize; 30% cash crop; 39% off- farm (e.g. transfers, wage work) Maize commercialization is not high (11%): 56% of HHs sell maize at the low price Strong seasonality: Dec-Jan is the wet, hungry season, 99% of HHs buy maize at the high price Nutrition depends on maize S (harvest – sale + purchase) Poorer HHs have smallest harvest, sell 78% of it, and purchase the least

13. Tobacco Households Tobacco: higher returns but greater risks Larger HHs and larger land-holdings Farmers’ conservative behavior lead them to continued food crop cultivation Hence tobacco does not displace maize, in fact it increases the “subsistence ratio” Women in these HHs own a smaller share of income

14. Findings Total HH income is more important than food crop production in affecting child and women’s nutrition Poorer households are subject to strong seasonality in malnutrition Morbidity affects children regardless of income, thus equalizing effects on nutrition Tobacco HHs did not experience better child nutrition measures despite the greater incomes (gender variable?) Cash-crop (tobacco) can help but only if support is provided to reduce farmers’ risk

15. Final Q for your own research “What is the future for tobacco growers in East Africa, given recent opposition of donors (e.g. USAID) to provide assistance to tobacco production?”