Key Trends in Policies and Investments for Agri-Food Transformation

Transcription

1 Key Trends in Policies and Investments for Agri-Food Transformation Harare, Zimbabwe June 14, 2018 Holger A. Kray Head, Africa Agriculture Policy Unit 1

2 Challenges & Enablers to Agri-Food Transformation a systems perspective 2

3 MEGATRENDS : HARNESSING OPPORTUNITY, MANAGING CHALLENGES 2x US$30-50 BILLION Increase in demand for food by African food market continues to grow US$1 trillion by 2030 from current US$300 billion. Continent s food import bill - an opportunity for smallholder farmers, Africa s largest entrepreneurs by numbers who already produce 80% of the food consumed. Ag VCs are becoming more urbanized and consumer driven, with a premium on quality and food safety - new growth opportunities within Africa s food system. + Ag output and employment continue to grow, with value addition and employment being created along value chains in the form of agricultural trade, farm servicing, agro-processing, urban retailing and food services. Climate change not only has an impact on the productivity, incomes and nutritional outcomes, but also has repercussions on supply and prices of foods, the viability of many SMEs, and ultimately past twin goal achievements 14 Countries in Africa with a protracted crisis situation [acutely vulnerable to hunger, disease and disruptions to livelihoods over prolonged periods] 3

4 EFFECTIVE AG TRANSFORMATION REQUIRES A SYSTEMS PERSPECTIVE FOCUS ON AGRI-BUSINESS BEYOND JUST THE FARM 4

5 EFFECTIVE AG TRANSFORMATION REQUIRES A SYSTEMS PERSPECTIVE FOCUS ON AGRI-BUSINESS BEYOND JUST THE FARM FOCUS ON EIGHT KEY ENABLERS FROM POLICY TO TECHNOLOGY POLICY AND ENABLING ENVIRONMENT AG SKILLS, RESEARCH AND EDUCATION AG MARKETS AND AGRI-BUSINESS AG FINANCE CLIMATE SMART AG IRRIGATION, DRAINAGE NUTRITION SENSITIVE AG LAND ADMIN, PROPERTY RIGHTS 5

6 THE AGRI-FOOD POLICY TOOLBOX 6

7 Signs of Agri-Food System Transformation empirical evidence 7

8 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 8

9 RISING REAL INCOMES 35% growth in inflation-adjusted real p.c. incomes in SSA, Doubling in many countries Poverty rates falling for the region % of people living on less than $1.90 a day declined from 54% in 1990 to 41% in 2013 (Barrett et al., 2017) 9

10 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 2. Impressive agricultural growth rates 10

11 IMPRESSIVE AGRICULTURAL GROWTH Annual inflation-adjusted agricultural growth rates, : Sub-Saharan Africa: % East Asia: % South Asia: % Latin America: % World: % 11

12 % growth rate AGRICULTURAL VALUE ADDED ANNUAL GROWTH RATES (constant local currency units) Ethiopia Nigeria Rwanda Moz'bique Mali Tanzania Kenya Malawi Zambia % growth Source: World Development Indicators,

13 RELATIONSHIP BETWEEN AGRICULTURAL GROWTH AND POVERTY REDUCTION Source: IFAD Rural Development Report, 2016; World Development Indicators database,

14 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 2. Impressive agricultural growth rates 3. Rise of commercialized African investor farmers 14

15 CHANGES IN FARM STRUCTURE IN TANZANIA ( ) LSMS / NATIONAL PANEL SURVEYS Farm size Number of farms (% of total) % growth in number of farms between initial and latest year % of total operated land on farms between ha ha 5,454,961 (92.8) 6,151,035 (91.4) % 5 10 ha 300,511 (5.1) 406,947 (6.0) ha 77,668 (1.3) 109,960 (1.6) % ha 45,700 (0.7) 64,588 (0.9) Total 5,878,840 (100%) 6,732,530 (100%)

16 CHANGES IN FARM STRUCTURE IN GHANA ( ) Ghana Number of farms % growth in number of farms % of total cultivated area ha 1,458,540 1,582, ha 578, , ha 116, , ha 38, , ha 18,980 37, >100 ha -- 1, % of total farmland Total 2,211,900 3,057, Source: Ghana GLSS Surveys, 1992, 2013

17 MEDIUM SCALE FARMS SHARE OF TOTAL CROP VALUE IN TANZANIA 14% TO 30% IN 6 YEARS Source: NPS 2009, 2011, 2013,

18 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 2. Impressive agricultural growth rates 3. Rise of commercialized African investor farmers 4. Rapid investment in agricultural value chains by African entrepreneurs 18

19 RAPID INVESTMENT IN AGRICULTURAL VALUE CHAINS BY AFRICAN ENTREPRENEURS 8-fold increase in the volumes and value of food marketed through rural-to-urban value chains since 2000 (Tschirley et al, 2017) Underlying drivers: rapidly rising urban demand high global food prices agricultural sectoral reforms of 1990s 19

20 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 2. Impressive agricultural growth rates 3. Rise of commercialized African investor farmers 4. Rapid investment in agricultural value chains by African entrepreneurs 5. Diversification of the labor force into off-farm activities 20

21 RAPID DECLINE IN SHARE OF LABOR FORCE IN FARMING (IN FULL-TIME EQUVALENTS) Source: Yeboah and Jayne (2018)

22 MAJORITY OF OFF-FARM AGRI-FOOD SYSTEM JOBS IN COMMERCE, MUCH LESS IN AGRO-PROCESSING Source: Yeboah and Jayne (2018)

23 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 2. Impressive agricultural growth rates 3. Rise of commercialized African investor farmers 4. Rapid investment in agricultural value chains by African entrepreneurs 5. Diversification of the labor force into off-farm activities 6. Greater vibrancy of agricultural factors markets 23

24 MODE OF ACQUISITION OF ALL FARM PLOTS IN TANZANIA PERCENT OF PLOTS Inherited 33.17% Gifted 10.33% Purchased 29.63% PERCENT OF TOTAL FARMLAND AREA Other mode of acquisition 11.30% Rented 7.00% Borrowed 11.09% Rented 9.63% Borrowed 6.90% Inherited/ gifted 38.34% Other (squatting / cleared land/ allocated) 6.16% Purchased 36.46% Observations 4,291 Source: LSMS/National Panel Survey 2014/15 24

25 NOMINAL VALUE OF TRACTOR IMPORTS TO SUB-SAHARAN AFRICA (EXCL. SOUTH AFRICA), Source: Van der Westhuisen et al, 2018, based on Trade Map database 25

26 % OF FARM HOUSEHOLDS RENTING TRACTOR SERVICES IN TANZANIA, 2009 VS 2015 Source: Van der Westhuisen, 2018, based on LSMS/NPS surveys 26

27 MEAN LAND PRICES IN TANZANIA : +53.9% IN REAL TERMS IN 6 YEARS Source: LSMS 2009, 2011, 2013,

28 OUTPUT AND FACTOR PRICE INDICES, RURAL MALAWI, Sources: LSMS-ISA and IHS for land and wages; FEWSNET for urea and maize

29 7 UNMISTAKABLE SIGNS OF AGRI-FOOD SYSTEM TRANSFORMATION IN SSA 1. Major growth in per capita incomes 2. Impressive agricultural growth rates 3. Rise of commercialized African investor farmers 4. Rapid investment in agricultural value chains by African entrepreneurs 5. Diversification of the labor force into off-farm activities 6. Greater vibrancy of agricultural factors markets 7. Improved market access conditions for African farmers 29

30 FARMER REPORTED NUMBERS OF TRADERS BUYING MAIZE IN THEIR VILLAGE, 2014 Source: Sitko and Jayne, 2014

31 CHANGE IN FARM HOUSEHOLDS DISTANCE TO SERVICES IN RURAL KENYA, Source: Chamberlin and Jayne,

32 MAJOR CHALLENGES TO BE TACKLED 1. Future ag growth needed from higher value per hectare and per laborer, not just area expansion 32

33 AFRICA S AGRICULTURAL GROWTH STILL RELIES MAINLY ON CROPLAND EXPANSION, NOT ENOUGH ON PRODUCTIVITY GROWTH Source: Economic Research Service, 33

34 MARKET CHALLENGES TO BE TACKLED 1. Future ag growth needed from higher value per hectare and per laborer, not just area expansion 2. Land/soil degradation will make continued agricultural transformation more difficult unless addressed Proximate causes: low adoption of climate smart and sustainable land management practices Underlying culprits ineffective national ag R&D and extension systems 3. The employment challenge : each year, roughly 17 million young Africans enter working age 34

35 World Bank support to AFR Agri-Food Transformation a synthesis 35

36 IDA18: Goals for Agri-Food Development : Aligned with Three Pillars of World Bank Strategy

37 Key Trends in Policies and Investments for Agri-Food Transformation Harare, Zimbabwe June 14, 2018 Holger A. Kray Head, Africa Agriculture Policy Unit 37