Agriculture for Development. Focus on Sub-Saharan Africa
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1 Agriculture for Development Focus on Sub-Saharan Africa
2 Main Message World Development Report 28 To achieve the Millennium Development Goals, agriculture must be given much higher priority in the development agenda For Sub-Saharan Africa 1. Lead sector for overall growth Poverty reduction and food security 2. It is happening growth has been accelerating with better incentives 3. Focus must now be on increasing smallholder productivity More and better investments Approaches tailored to highly diverse farming systems 2
3 Agriculture s share in growth World Development Report 28 Three rural worlds 8% Agriculture based countries Mainly SS-Africa 417 million rural people 2% Urbanized countries Mainly Latin America 255 million rural people Transforming countries Mainly Asia, MENA 2.2 billion rural people 5% 1% Rural poor/total poor, 22 3
4 Three Functions of Agriculture for Development 1. Lead sector for growth 2. Source of livelihoods Food security and poverty reduction 3. A way of better managing natural resources
5 Average annual real agricultural growth (%) Yield expansion index World Development Report A trigger for overall growth in early stages Large sector for GDP growth Affordable food wage competitiveness Comparative advantage in trade Strong growth linkages Accelerating agricultural growth in Africa but: Lagging productivity ASIA AFRICA Area expansion index
6 Expenditure gains induced by 1% GDP growth (%) World Development Report A source of livelihoods Agriculture-based countries: 4 million people in agriculture, 17 million extreme poor 8 GDP growth from agriculture benefits the income of the poor 2-4 times more than GDP growth from nonagriculture 6 Agriculture Nonagriculture Low est Highest Expenditure deciles 6
7 Cereal yields (Kg/Ha) Poverty incidence (%) Cereal yields (Kg/Ha) Poverty incidence (%) World Development Report 28 Agricultural productivity drives poverty reduction but stagnant yields in Sub-Saharan Africa Cereal Yields and $1 a day Poverty Incidence in South Asia Cereal Yields and $1 a day Poverty Incidence in Sub-Saharan Africa Poverty (right axis) Poverty (right axis) Yields (left axis) Yields (left axis)
8 Poverty rate (%) World Development Report 28 Ghana a breaking story on poverty reduction Rural Savanah / /99 25/6 Rural Forest Urban Rural poverty halved with increased agricultural productivity, higher cocoa prices, reduced food prices, and income diversification 8
9 GDP growth (%) Rainfall variability (% World Development Report A way of better managing natural resources and the environment Land degradation is a huge constraint Only 4% irrigated Highly vulnerable to climate change Successes: Agro-forestry in Niger and Zambia 2 15 Rainfall and GDP growth in Zimbabwe GDP growth (annual %) Rainfall
10 Macroeconomic score Agriculture growth rate Improved opportunities World Development Report 28 Improved macro-economic conditions in Sub Saharan-Africa Improving macro-economic score 1 6 Higher agric. growth Average annual change of macroeconomic score 1
11 Value of exports (198=1) Million Tons World Development Report 28 Improved opportunities--markets High value, labor-intensive products for external, regional and domestic markets offer strong growth opportunities From 2-15, demand for food in Africa projected to double Developing country exports Horticulture Meat Traditional exports Projected cereal deficit Sub Saharan Africa 2 (actual) 23 (projected) 11
12 Ton per hectare World Development Report 28 Large exploitable yield gaps can be captured Maize Yields in African countries Malaw i (n=4566) Ethiopia (n=31) Nigeria (n=251) Uganda (n=461) Mali (n=163) Mozambique (n=58) Average national yield Average yield in farm demonstrations 12
13 World Development Report 28 Improved opportunities Technological innovations NERICA, conservation farming, dairy ICTs for extension, finance etc Institutional innovations Weather and price risk insurance (Malawi) Building input markets Stronger producer organizations Public-private-CSO partnerships 13
14 World Development Report 28 But Major Challenges Global trade distortions remain pervasive Real international commodity prices have been suppressed by current global trade policies (% of price) Trade share losses to developing countries due to current global trade policies (% point loss to developing country trade shares) -21 Cotton -27 Cotton -15 Oilseed -34 Oilseed -12 Dairy products -7 Dairy products -7 Other grains -5 Coarse grains -5 Wheat -21 Wheat -4 Processed meat -18 Processed meat -4 Rice -2 Rice -3 Sugar -9 Sugar 14
15 Index of cropland per ag population (1961=1) Kg of fertilizer per ha of arable land Challenges World Development Report Increasing land and water constraints Cropland per capita of agricultural population 16 Fertilizer use/ha ECA LAC MENA EAP SA SSA Developing countries Sub Saharan Africa
16 US$/ton World Development Report The Challenges High transactions costs and risks in domestic grain markets Wholesale price at Addis Ababa Import parity (Addis Ababa) Export parity (FOB Djibouti)
17 Challenges World Development Report 28 Making growth pro-poor Connecting smallholders to new markets Improving assets of the poor, especially women Implementation bottlenecks Weaknesses in governance (new state roles, coordination, decentralization) Underinvestment in core public goods 17
18 percent percent World Development Report 28 Challenges Agricultural-based countries spend too little on agriculture (and R&D) Ag GDP/GDP Public Spending on Ag (% of Ag GDP) Spending on Ag R&D (% of Ag GDP) Agriculture-based Transforming Urbanized Agriculture based Transforming Urbanized But quality of existing spending often poor 18
19 % poverty in rural areas % ODA to agriculture World Development Report 28 Challenges Donor support to agriculture also declined despite MDG to halve poverty % rural poverty % ODA to Ag
20 World Development Report 28 A strategic agenda Four basic blocks, different interventions Pre-conditions: Socio political context Governance Macro fundamentals Demand for Ag products Stronger markets, value chains Demand for Ag products More competitive smallholders Pathways out of poverty: farming, labor, migration Exit: Off-farm employment, migration, remittances Transition to market Better subsistence Transition to market 2
21 World Development Report 28 Implementation must address special features of the African context Decentralized to deal with huge heterogeneity Very diverse farming systems Differentiated Market-oriented vs better subsistence Particular attention to needs of women farmers Multisectoral to capture synergies Technology, markets, infrastructure, finance Regional approaches to expand markets NEPAD initiatives 21
22 World Development Report 28 WDR recommendations on current issues Doha must progress with attention to transitional issues in developing countries Subsidies can be used with attention to market development and equity GMOs have unrealized potential for the poor with attention to bio-safety IPRs must be tailored to country and commodity specifics with attention to humanitarian access Biofuels will be important but need more productive and sustainable technologies Climate change requires urgent attention both adapation and mitigation 22
23 Agricultural Price Distortions in Africa Progress but
24 World Development Report 28 Opportunities and challenges through getting prices right : background 2 years ago World Bank research showed: severe anti-agric, anti-trade biases in price and trade policies in Africa and other dev. countries agric export taxes hurt farm households, but so too did manuf protection and overvalued exchange rates while in OECD countries, high agric protection Since then, much reform has taken place: Reduced agric export taxes & manuf protection; market exchange rates in Africa and other developing countries Some agricultural reform in OECD countries 24
25 World Development Report 28 NRA (%) Nominal Rate of Assistance (NRA) to agric: high-income countries (blue), and developing countries (red), HICs & ECA Developing countries (incl. KOR & TWN) 25
26 World Development Report 28 Agric NRA in Africa vs. other developing economies (unweighted averages) Africa Asia ECA LAC 26
27 World Development Report 28 Anti-trade bias in African agric & trade policies has lessened, but still there NRA total NRA importables NRA exportables 27
28 World Development Report 28 African NRAs: country ordering as of Morocco* Nigeria Rsa Zambia Ghana Uganda Africa Excl Rsa Egypt Cameroon Kenya Ethiopia Senegal Sudan Zimbabwe Coted'Ivoire Madagascar Tanzania Mozambique NRA Ag. Total * Data not available
29 World Development Report 28 Morocco* Mozambique Kenya Ghana Uganda Madagascar Cameroon Rsa Sudan Nigeria Egypt Senegal Africa Excl Rsa Ethiopia Tanzania Zambia Coted'Ivoire Zimbabwe African NRAs: country ordering as of NRA Ag. Total * Data not available
30 World Development Report 28 Sugar, milk and rice have highest NRAs in developing countries (av) Sugar Milk Rice AVERAGE Poultry Wheat Maize Coffee Cotton Beef Groundnuts Cocoa
31 World Development Report 28 Sorghum Wheat Bananas Plantain Sunflowers Sugar Millet Cassava Coffee Yams Average Rice Maize Vanilla Tea Beef Beans Cotton Cocoa Groundnuts Soybeans Tobacco NRA still negative for most farm products in Africa (2-4 in red, in blue) Excluding South Africa
32 World Development Report 28 So there s still plenty of scope for reducing price distortions Cuts in food import tariffs would raise international agric prices But in developing countries with high food tariffs, this could lower food prices for the poor Global trade reform would boost growth in developing countries And could also reduce inequality and poverty So substantial scope remains for a major contribution from WTO s Doha Round 32
33 World Development Report 28 Sources of gain from freeing all merchandise trade globally (%): two-thirds rules! (percentages) Developing countries gain High-income countries gain Global gains Developing country reform High-income (OECD) reform All countries reform: Agric policies Non-ag trade policies TOTAL
34 If all merchandise trade World Development Report 28 were freed up globally: Share of global agric output exported would rise from 7% to 12%, thickening the market Developing countries share of global agric exports would rise from 54% to 64% Share of African agric output exported would rise from 11% to 21% ag&food self-sufficiency would rise from 99% to 11% Real price of food in Africa would fall 3.4% Real wages of unskilled in SSAfrica would rise by 4.4%, and real returns from agric land by.5% 34
35 World Development Report 28 What of the future? If Africa is to trade its way out of poverty, it could adjust easier if liberalizing as part of multilateral trade reform With unilateral trade reform, African agric trade would change little in aggregate; but with full multilateral reform of all goods globally, African ag & food exports would increase 38%, and ag & food imports would increase 29% Without Doha, will ag protection increase? 35
36 World Development Report 28 Decline in anti-agric bias due to cuts in agric taxation & in non-agric protection India China 36
37 World Development Report 28 Korea and Taiwan followed Japan Ln real GDP per capita Japan Korea Taiwan 37
38 World Development Report 28 so will China and India too, to avoid social unrest from widening urban-rural income gap? Ln real GDP per capita China Japan Korea Taiwan India 38
39 Thank you
40 World Development Report 28 A striking discrepancy WORLD POOR AGRICULTURE 4% OFFICIAL DEVELOPMENT ASSISTANCE (12% in 199) RURAL 75% AGRICULTURE 4% PUBLIC SPENDING (Sub-Saharan Africa) Agriculture major livelihood 4
41 Heterogeneity at Household Level World Development Report 28 Favored vs marginal areas Agro-ecology, market access, social exclusion Source of livelihoods Market-oriented vs subsistence farming Rural non-farm enterprises and labor markets Intra-household differences Gender roles and decision making Access to assets and services 41
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