Megatrends Transforming Africa s Agri-food Systems

Megatrends Transforming Africa s Agri-food Systems T.S. Jayne, with Milu Muyanga, Kwame Yeboah, Ayala Wineman, Nicholas Sitko, Lulama Traub USAID Bureau for Food Security Seminar, Washington, DC 21 June, 2017

Five inter-related trends 2

Five inter-related trends Rapid population growth 3

Five inter-related trends Rapid population growth Rapid growth in food demand 4

Five inter-related trends Rapid population growth Labor force exit from farming Rapid growth in food demand 5

Five inter-related trends Rise of investor farmers / changing farm sizes Rapid population growth Labor force exit from farming Rapid growth in food demand 6

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm sizes Rapid population growth Labor force exit from farming Rapid growth in food demand 7

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm and market structure Rapid population growth Labor force exit from farming Rapid growth in food demand 8

Africa s rapid population growth 12 Billions of people 10 8 6 4 2 0.92 6.1 2.1 3.8 7.2 6.8 0 2015 2050 2100 Sub-Saharan Africa Rest of world

Sub-Saharan Africa: only region of world where rural population continues to rise past 2050 1000 900 800 700 600 500 400 300 200 100 0 1950 1955 1960 1965 Total Rural Population (millions) 1970 1975 China 1980 1985 1990 1995 2000 2005 2010 India 2015 Sub-Saharan Africa Other South Asia South-East Asia 2020 2025 2030 2035 2040 2045 2050 Source: UN 2013 10

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm and market structure Rapid population growth Labor force exit from farming Rapid growth in food demand 11

SSA Total Food Imports from 7 to 40 billion USD (2001-2015) (intra SSA trade from 1 to 10 billion USD) 50 45 40 35 USD Billions 30 25 20 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SSA Imports from non-ssa SSA's imports from SSA

Net cereal exports, Sub-Saharan Africa Sub-saharan Africa -30-20 -10 0 10 1980 1985 1990 1995 2000 2005 2010 2015 Year MAIZE WHEAT RICE TOTAL Source: FAOSTAT, 2016

Net cereal exports, East Africa Region East Africa -10-5 0 1980 1985 1990 1995 2000 2005 2010 2015 Year Maize Wheat Rice Total NX Source: FAOSTAT, 2016

Significance: Currently, sub-saharan Africa (SSA) is amongst the (sub)continents with the largest gap between cereal consumption and production, whereas its projected tripling demand between 2010 and 2050 is much greater than in other continents. We show that nearly complete closure of the gap between current farm yields and yield potential is needed to maintain the current level of cereal selfsufficiency (approximately 80%) by 2050. For all countries, such yield gap closure requires a large, abrupt acceleration in rate of yield increase. If this acceleration is not achieved, massive cropland expansion with attendant biodiversity loss and greenhouse gas emissions or vast import dependency are to be expected. Van Ittersum et al, Proceedings of National Academy of Sciences, 2016 15

Significance: Currently, sub-saharan Africa (SSA) is amongst the (sub)continents with the largest gap between cereal consumption and production, whereas its projected tripling demand between 2010 and 2050 is much greater than in other continents. Nearly complete closure of the gap between current farm yields and yield potential is needed to maintain the current level of cereal self-sufficiency (approximately 80%) by 2050. For all countries, such yield gap closure requires a large, abrupt acceleration in rate of yield increase. If this acceleration is not achieved, massive cropland expansion with attendant biodiversity loss and greenhouse gas emissions or vast import dependency are to be expected. Van Ittersum et al, Proceedings of National Academy of Sciences, 2016 16

Relationship between % of rural population on degrading agricultural land and pop density Roughly 28% of rural population in SSA live on degrading agricultural land. 43 million additional people living on DAL between 2000-2010 18

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm and market structure Rapid population growth Labor force exit from farming Rapid growth in food demand 19

Employment trends

Changes in the share of total jobs in farming, non-farm and off-farm agrifood systems, among the working age population (15 64 years) Farming 80.0 % of total FTE jobs 60.0 40.0 20.0 0.0 Ghana (2006-2013) Nigeria (2004-2013) Rwanda (2006-2011) Tanzania (2009-2012) Uganda (2006-2012) Zambia (2006-2012) Base year End year Non-farm outside Agrifood system 80.0 % of total FTE jobs 60.0 40.0 20.0 0.0 Ghana (2006-2013) Nigeria (2004-2013) Rwanda (2006-2011) Tanzania (2009-2012) Uganda (2006-2012) Zambia (2006-2012) Base year End year 21

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm and market structure Rapid population growth Labor force exit from farming Rapid growth in food demand 23

Changes in farm structure in Tanzania (2008-2012), National Panel Surveys Number of farms (% of total) % growth in number of farms between initial and latest year % of total operated land on farms between 0-100 ha Farm size 2008 2012 2008 2012 0 5 ha 5,454,961 (92.8) 6,151,035 (91.4) 12.8 62.4 56.3 5 10 ha 300,511 (5.1) 406,947 (6.0) 35.4 15.9 18.0 10 20 ha 77,668 (1.3) 109,960 (1.6) 41.6 7.9 9.7 20 100 ha 45,700 (0.7) 64,588 (0.9) 41.3 13.8 16.0 Total 5,878,840 (100%) 6,732,530 (100%) 14.5 100.0 100.0 Share of farmland on farms 5-100 ha from 38% to 44% in 4 years

Changes in farm structure in Ghana (1992-2013) Ghana Number of farms % growth in number of farms % of total cultivated area 1992 2013 1992 2013 0-2 ha 1,458,540 1,582,034 8.5 25.1 14.2 2-5 ha 578,890 998,651 72.5 35.6 31.3 5-10 ha 116,800 320,411 174.3 17.2 22.8 10-20 ha 38,690 117,722 204.3 11.0 16.1 20-100 ha 18,980 37,421 97.2 11.1 12.2 >100 ha -- 1,740 - -- 3.5 Total 2,211,900 3,057,978 38.3 100 100 51.1% Source: Ghana GLSS Surveys, 1992, 2013, Jayne et al., 2016, using data from Ghana GLSS Surveys I and IV.

Changes in farm structure in Zambia (2001-2012) Farm size category Number of farms % growth in number of farms % of total cultivated area 2001 2012 2001 2012 0 2 ha 638,118 748,771 17.3 34.1 16.2 2 5 ha 159,039 418,544 163.2 45 31.7 5 10 ha 20,832 165,129 692.6 14.3 25.0 10 20 ha 2,352 53,454 2272.7 6.6 15.0 52.1% 20 100 ha -- 13,839 na -- 12.1 Total 820,341 1,399,737 100 100 Source: Zambia MAL Crop Forecast Surveys, 2001 and 2012

Average land area allocated to each land use, by category of landholding size, Tanzania Source: Agricultural Sample Census, 2008

Characteristics of emergent farmers

Rise of the medium-scale farmers

Type 1: Urban-based investor farmer Mode of entry to medium-scale farming status: acquire farm using non-farm income Zambia Kenya (n=164) (n=180) % of cases 58 60 % men 91.4 80 Year of birth 1960 1947 Years of education of head 11 12.7 Have held a job other than farmer (%) 100 83.3 Formerly /currently employed by the public sector (%) 59.6 56.7 Current landholding size (ha) 74.9 50.1 % of land currently under cultivation 24.7 46.6 Decade when land was acquired 1969 or earlier 1.1 6 1970-79 5.1 18 1980-89 7.4 20 1990-99 23.8 32 2000 or later 63.4 25 Source: MSU, UP, and ReNAPRI Retrospective Life History Surveys, 2015

Type 2: Rural-based elite farmer Mode of entry into medium-scale farming status: expansion of rural elite Zambia Kenya (n=118) (n=120) % of cases 42 40 % men 92.9 82.5 Year of birth 1966 1945 Years of education of head 8.2 7.5 Have held a job other than as a farmer (%) 32.9 17.5 Landholding size when operator started own household (ha) 10.7 16.2 Current landholding size (ha) 38.2 32.7 % of land currently under cultivation 46.9 54.1 Decade when land was acquired 1969 or earlier 3.9 29 1970-79 6.7 24 1980-89 14.8 20 1990-99 32.2 18 2000 or later 42.0 9 Source: MSU, UP, and ReNAPRI Retrospective Life History Surveys, 2015

% of National Landholdings held by Urban Households 35% 32.7% 30% 26.8% 25% 22.0% 22.0% 20% 18.3% 16.8% 15% 10% 11.2% 10.9% 11.8% 5% 0% 2008 2009 2004 2010 2010 2004/2005 2010 2007 2013/2014 Ghana Kenya Malawi Rwanda Tanzania Zambia Source: Demographic and Health Surveys, various years between 2004-2014.

% of National Landholdings held by Urban Households 35% 32.7% 30% 26.8% 25% 22.0% 22.0% 20% 18.3% 16.8% 15% 10% 11.2% 10.9% 11.8% 5% 0% 2008 2009 2004 2010 2010 2004/2005 2010 2007 Source: 2013/2014 DHS Ghana Kenya Malawi Rwanda Tanzania Zambia

Nominal value of tractor imports to Sub-Saharan Africa (excluding South Africa), 2001-2015 $600,000 $500,000 Nominal value of imports in 000 US$ $400,000 $300,000 $200,000 $100,000 $- 2001 2003 2005 2007 2009 2011 2013 2015 Sub-Saharan Africa Southern Africa North Eastern Africa Western Africa Linear (Sub-Saharan Africa) Source: vanderwesthuisen, forthcoming 36

Nominal value of tractor imports in selective Sub-Saharan African countries (2001-2015) $100,000 $90,000 Value of Imports: US$ Thousand $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- 2001 2003 2005 2007 2009 2011 2013 2015 Ghana Nigeria Kenya Tanzania Zambia Linear (Ghana) Linear (Nigeria) Linear (Kenya) Linear (Tanzania) Linear (Zambia) Source: vanderwesthuisen, forthcoming 37

Rise of large-scale traders Large-scale traders purchases from smallholder farmers are rising rapidly Zambia: nationally representative smallholder survey data shows that between 2012 and 2015, maize sales to large-scale traders (LSTs) increased from 23% to 41% Kenya: no sales to LSTs in 2004 à 21% of maize sales by volume in 2007 à 37% in 2014 Tanzania: 34% of maize sales by volume in 2016

GINI coefficients in farm landholding Period Movement in Gini coefficient: Ghana (cult. area) 1992 à 2013 0.54 à 0.70 Kenya (cult. area) 1994 à 2006 0.51 à 0.55 Tanzania (landholdings) 2008 à 2012 0.63 à 0.69 Zambia (landholding) 2001 à 2012 0.42 à 0.49 Source: Jayne et al. 2014 (JIA) 39

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm and market structure Rapid population growth Labor force exit from farming Rapid growth in food demand 40

Output and factor price indices, northern Tanzania 180 170 Price index (2008/9=100) 160 150 140 130 120 110 100 90 Agricultural wage (TSH/day) Land rental rate (TSH/ha) Maize (TSH/kg) 80 2008/9 2010/11 2012/13 41

Output and factor price indices, western Tanzania 300 Adjusted price (2008/9=100) 260 220 180 140 100 Agricultural wage (TSH/day) Land rental rate (TSH/ha) Maize (TSH/kg) 60 2008/9 2010/11 2012/13 42

Output and factor price indices, rural Malawi, 2004-2013 Adjusted price (2004=100) 450 400 350 300 250 200 150 100 50 0 2004 2005 2010 2013 Rental rate (MWK/ha) Agricultural wage (MWK/day) MWK/kg urea MWK/kg maize Sources: IHS for land and wages; FEWSNET for urea and maize

Five inter-related trends Rising land scarcity Rise of investor farmers / changing farm and market structure Rapid population growth Labor force exit from farming Rapid growth in food demand 44

Share of labor force in farming is declining most rapidly where agricultural productivity growth is highest -2.00-1.00 0.00 1.00 2.00 Annual % change in share of labor force engaged in farming Nigeria Kenya Uganda Tanzania Ghana Mali Malawi Zambia -2 0 2 4 6 8 Average annual TFP growth in agriculture(%) Trend line Rwanda Source: Yeboah and Jayne, 2016

Non-farm labor productivity growth linked to lagged agricultural productivity growth Av. annual labor productivity growth in non-agriculture (%) -4-2 0 2 4 6 Zambia Zambia1 Bostwana Nigeria1 Mauritius Nigeria Mauritius1 South Africa1 Ghana1 South Africa Ethiopia Ghana Kenya Kenya1 Senegal1 Senegal Bostwana1 Ethiopia1 Tanzania1 Tanzania Malawi Malawi1-2 0 2 4 Average annual agricultural total factor productivity growth (%) Trend line

Table 1. Factors associated with changes in proportion of labor force in farming, 11-country annual pooled data, 1995-2011 Fixed effect model (i) (ii) Log lag labor productivity in agriculture -0.133* -0.284** (-2.15) (-2.77) Log lag labor productivity in non-agriculture -0.0121-0.176 (-0.23) (-1.89) Other covariates Index of governance (lagged) -0.0205 0.0698 (-0.45) (1.06) Time trend -0.00961*** -0.00458 (-4.62) (-0.96) Population density -0.00181-0.00475 (-1.51) (-1.89) Road density - -0.000260 - (-0.21) Constant -0.519** 0.0690 (-3.07) (0.20) Number of observations 161 78 Number of Countries 11 10 Adjusted/Overall R-square 0.71 0.87 Time period 1995-2011 1995-2011 48

Conclusions 1. Performance of agriculture will continue to exert major influence on job growth and income growth in overall economy 2. Agricultural productivity growth will be the cornerstone of any comprehensive youth livelihoods strategy: Ag productivity growth influences pace of labor force exit out of farming Labor productivity in broader economy

Conclusions (cont.) 3. Important changes in the distribution of farm sizes Decline in share of farmland under 5 hectare farms Rise of medium-scale farms Rising inequality of farmland distribution Growing land scarcity driven by middle/high income urban people seeking to acquire land not just for farming speculation, housing/properties, farming Rise of new towns converting formerly remote land into valued property

Conclusions (cont.) 3. Ag sector policies must anticipate and respond to rising land prices, decline of inheritance, market as increasingly important mode of acquiring land Resources needed for youth to succeed in farming (access to land, finance) Distinguish between trying to keep youth in agriculture vs. giving youth viable choices

Conclusions 4. Investments that raise productivity / profitability of farming: Agricultural R&D and extension systems Improved seed + fertilizer: crucial but incomplete Farm management best practices Well resourced public agricultural-nutrition institutions Local policy institutes Access to finance Policy/enabling environment to attract private investment 5. Education: 300 million youth need access to skills, training Malawi example Ethiopia: 3,000 PhDs per year in 1995; now over 100,000 per year

Conclusions Bottom line: Economic transformation in SSA will require inclusive agricultural productivity growth improved access to education strengthening of African public institutions Governments hold the key!

Thank You 55