Fair play for African farmers
Around the world, governments are responding to the global food crisis. After years of underinvestment and neglect, agriculture is making a comeback. Governments from Beijing to Berlin are re-investing in agriculture, finding ways to support their farmers and bring food security to their citizens.
But support for farmers is not a new phenomenon. Every year, farmers in Europe and the United States receive billions of dollars in farm support, including subsidies, from their governments for growing (and frequently for not growing) food crops. The politicians who push through these support programmes can hardly be blamed – they are simply looking after their constituents, which is what they were elected to do. European and American farmers need assistance and their governments should be applauded for supporting them.
Why should it be any different in Africa?
The developed world – along with progressive countries in Asia and Latin America – continues to push domestic farm support policies that boost agricultural productivity and ensure cheap food. Today, farm support under the EU’s Common Agricultural Policy is the single biggest spending item in the combined EU budget, accounting for about 43% of the whole – around €40 billion.
Let’s take a look at how developing countries elsewhere have responded to the food crisis. In Asia, where rice prices have more than doubled in the last five months, governments have offered substantial support to farmers to improve productivity. The Philippines and Thailand both sanctioned subsidies amounting to about $1 billion for fertiliser and irrigation, while China initiated an astounding $5.6 billion programme to achieve significant impact in food production. It now appears that Asian farmers will experience their second green revolution before Africa has its first!
Why should Africa be left behind?
Government-led farm support is happening in every region of the world – except Africa. After decades of policies that favour medium and large farms pushed by international development banks and the industrialised countries, the African farmer is left groping for a foothold. Everything she needs – seeds, fertiliser, public investment in irrigation and extension services – remains beyond her grasp. People are often shocked to learn that African farmers are not using improved seeds or fertilizers, but how could it be otherwise when the realities that confine them to poverty were overlooked in the 1980s? No wonder Africa is the only region in the world where per capita productivity of agriculture has been falling over the last 40 years.
The era of cheap food is over. A global panic has resulted in export restrictions and bans, and the most vulnerable are forced to spend more for less. Many poor countries are losing the modest gains they made toward achieving the Millennium Development Goals. Fertiliser prices have doubled, tripled and even quadrupled over the past year as some rich countries have increased purchases to cash in on the emerging biofuel market and others have stockpiled fertiliser to guarantee food supplies.
Some say that higher prices for food mean higher incomes for poor farmers. Unfortunately, it doesn’t work that way. Dr Jan Poulisse, a senior analyst with the Food and Agriculture Organization of the UN (FAO), in a statement he made to the Guardian, said ‘High commodity prices allow commercial farmers in developed countries to cope with high fertiliser prices. But rising food prices hurt subsistence farmers, particularly in Africa. People just cannot afford it. They were in dire straits before, but now the situation is worse.’
African governments and international stakeholders must follow the lead of national governments throughout the world by providing support for smallholder farmers, most of whom are women, who struggle to grow crops on increasingly marginal lands. Now is the time to offer African farmers a Comprehensive Farm Support Package. This support, including subsidies that enhance the market, will help smallholder farmers increase adoption of improved techniques and technologies to rapidly improve agricultural productivity.
One way to improve farmers’ purchasing power and access to needed inputs is through the voucher system, a highly successful means of subsidising income transfer to smallholders. Vouchers give farmers the opportunity to select the inputs they prefer in the amounts they require. Avoiding the need to transfer cash gives farmers greater control over their lives.
Seed vouchers have been around for some time and have been very effective in Ethiopia, Mozambique and many other countries. Vouchers for fertiliser are relatively new. Malawi, a small, land-locked country, used fertiliser vouchers at a national scale, and went from being a chronic recipient of food aid to a net exporter of maize within just two years, bringing desperately needed income to the cash-strapped country. Not only that, but Malawi actually became a food donor to other African countries.
Self-sufficiency is key. Africa should produce much of the food it needs, and African farmers are more than capable of doing that. But smallholders are locked in serious poverty traps. They simply cannot afford to purchase the inputs they need to escape from poverty. They need the assistance of enlightened governments like Malawi’s. It all starts with a mantra: No farmer left behind.
One option is smart subsidies that target particularly needy farmers. The targeted approach of input subsidies, which is supported by a range of donors and governments, advocates the use of vouchers that can be exchanged at agrodealer shops across rural Africa. When poor farmers can purchase food and agricultural supplies from participating dealers, everybody wins. Food security is promoted at the household level and business is bolstered in local shops. Most importantly, farmers are empowered by the opportunity to choose – an opportunity too long denied to them.
We have to acknowledge once and for all that depending only on a market-driven economy is not the solution for bringing about a smallholder-based green revolution in Africa. Markets are critical, but alone they cannot deliver a pro-poor and pro-growth green revolution. Many farmers are too poor to effectively participate in formal markets. Dependence on market-based systems exacerbates inequalities, benefiting large commercial farmers as was experienced in Latin America. That is not the kind of green revolution that Africa needs. 70-80% of African farmers are smallholders, most of whom are women. The private sector, essential though it may be, is not in a position to bring about an end to poverty by itself. In order for private industry to provide goods and services, it must realise a profit. We must therefore support an affirmative input programme that involves the private sector as a full partner. But at the outset, when private companies are understandably reluctant to take risks, public investment is essential to jump start the system. This is a smart thing to do. With smart subsidies like vouchers, fertiliser use could jump from the current 8-9 kg to the 50 kg per hectare that African leaders committed themselves to achieving by 2010.
Simply put, African farmers need a broad range of support measure, including subsidies, if self-sufficiency is to be brought to the continent. All the more so considering the rising prices of fertilizers – a tonne now sells for over $1300 in most African countries. Subsidies, though just one part of the solution in making an African green revolution a reality, constitute an essential piece of the puzzle. African governments are going this route with Malawi leading the pack.
Why not use smart public and private partnerships to unlock growth and achieve equity?
AGRA, while advocating the need for countries to support targeted input support programmes, recognises the need for greater investments in public goods like irrigation, roads and policies that link farmers to global and regional markets. The Comprehensive Farm Support Package for farmers should include a balanced mix of targeted (smart) subsidies and investment in critical public goods, especially for agricultural research and extension, rural infrastructure and irrigation. The right balance will depend on the stage of economic and agricultural development, the extent of poverty and the level of development of private markets. Some countries may need to start with a significant share of their budget in smart subsidies just to trigger growth (as in Malawi); others may need to invest more in public goods at a higher level and at an earlier stage. The key is to ensure equity and balanced growth. Obviously there should be clarity on process for exit strategies for subsidies to avoid politicisation and unsustainable pressure on national budgets. National governments should make the decision on the right balance.
But not starting is not an option. A recent analysis by the International Food Policy Research Institute has shown that such a Comprehensive Farm Support Package for African farmers can unlock growth and achieve equity.1 Their analysis shows that such a comprehensive package of investments will lift over 100 million Africans out of poverty in 17 countries. To achieve this, the report calls for three priority action areas.
1. Invest around $38 billion (or $7.5 billion per year) in well-understood packages of modern agricultural inputs.
2. Improve and extend transport infrastructure, especially major transport corridors and rural feeder roads.
3. Reduce trade barriers.
Working in partnership with African governments and organisations like the New Partnership for Africa’s Development (NEPAD), the African Development Bank, FAO, the US government’s Millennium Challenge Corporation and the World Bank, AGRA will coordinate its investments and support programmes to leverage partnerships for greater investments in the critical public goods needed to trigger sustained growth of Africa’s breadbasket areas.
While higher levels of official development assistance are needed for Africa, they are not likely to be enough to trigger rapid agricultural transformation. Africa must also look inwards for new financial resources for growth. The economies of many African countries are growing at over 5% annually. New financial capital resources are becoming available, but they are locked up in commercial banks. While commercial banks are lending at a fast rate to the communications, energy and real estate sectors, agricultural lending is miserably low. It is important to find new ways to unlock and leverage the power of commercial banks to work for smallholder farmers in Africa.
A new area of AGRA’s work with great potential for transforming the agriculture sector involves the provision of financial services and loans for smallholder farmers. In Tanzania, AGRA was able to provide a $1 million cash guarantee to leverage $5 million in loans to rural agrodealers from the National Microfinance Bank. More recently in Kenya, AGRA and the International Fund for Agricultural Development/Government of Kenya each contributed $2.5 million to a loan guarantee fund in a joint venture programme with the Equity Bank of Kenya. As a result, Equity Bank is now lending $50 million in financing available to smallholder farmers and agrodealers. Recognising that many African farmers have to trudge as far as 50 km to reach their nearest agrodealer, AGRA is also investing heavily to decrease the distance between dealers and farmers by increasing the number of shops where much-needed farm inputs and supplies can be purchased.
After years of African farmers being left behind, now is the time to turn this ship around. It will take a major push from all sides as well as bold public and private partnerships. With support from governments, donors, private industry – and guided by the perseverance and ingenuity of the farmers themselves –an equitable Green Revolution in Africa is indeed possible. Now is the time for action to make it happen.
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About the Alliance for a Green Revolution in Africa (AGRA)
AGRA is a dynamic partnership working across the African continent to help millions of small-scale farmers and their families lift themselves out of poverty and hunger. AGRA programmes develop practical solutions to significantly boost farm productivity and incomes for the poor while safeguarding the environment. AGRA advocates for policies that support its work across all key aspects of the African agricultural value chain from seeds, soil health and water to markets and agricultural education.
AGRA's Board of Directors is chaired by Kofi A Annan, former Secretary-General of the United Nations. Dr Namanga Ngongi, former Deputy Executive Director of the World Food Programme, is AGRA's president. With support from The Rockefeller Foundation, the Bill & Melinda Gates Foundation, the UK's Department for International Development and other donors, AGRA works across sub-Saharan Africa and maintains offices in Nairobi, Kenya, and Accra, Ghana.