Sub-Saharan Africa: The state of smallholder in agriculture
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Sub-Saharan Africa: The state of smallholder in agriculture
- 1. Right Place, Right Time: Sub-Saharan Africa: the state of smallholders in agriculture Geoffrey Livingston, Steven Schonberger and Sara Delaney IFAD January 24, 2011
- 2. Outline Context Opportunity Right Place, Right Time Recommendations
- 3. 1. Context Sub-Saharan Africa is a region of superlatives and contrasts.
- 5. 47 (48) countries
- 6. Two countries per 1 million km2
- 8. Geological stability resulting in high levels of low fertility soils.
- 9. About 55% of the continent is considered unsuitable for agriculture. Of the remaining land, 16% is considered high quality, 13% medium and 16% low.
- 13. Income inequality significantly lower than Asia and LAC.
- 15. Average inflation from 2007-2010 was 9.1%, compared to 6.4% in LAC, 5.5% in developing Asia and 1.5% in the advanced economies.
- 18. SSA countries, on average, currently devote 5-7% of their public expenditures to agriculture, as compared to 8-10% in Asia.
- 22. Traditionally low relative cost of land to capital resulted in expansion for increased production.
- 24. 2. Opportunity: Smallholder risks Risk management is critical for smallholders to intensify “farming as a business”… IFAD Rural Poverty Report highlights impact of risk on willingness of smallholders to undertake on-farm investments of labour and cash for intensification IFAD experience - while social risks are fairly consistent across agro-ecological zones and production systems, business risks vary considerably. Business risks are reduced for those able to participate in more integrated supply chains.
- 25. (Authors based on Pingali and Rosengrant 1995, Swinnen, et al 2007, USAID 2009)
- 26. Opportunity: External Support Smallholders supported by increased investments to reduce risks but limited impact… Eleven of fifteen CAADP Investment Plans prioritize improving value chains. ROPPA focus on rice, dairy, meat, vegetables, fish. Innovative PPPs such as corridors, breadbaskets, etc. Increased donor support to inputs, irrigation, rural finance, marketing, research. Returns to these investments in SSA are lower than other regions – irrigation efficiencies and seed adaptation rates. Why?
- 27. Right Place, Right Time Lowering the Business Risk
- 31. 3. Right Place, Right Time Distance to Market
- 32. 3. Right Place, Right Time
- 33. 3. Right Place, Right Time Fertilizer price formation in Thailand, Tanzania and Mali in 2006
- 34. 3. Right Place, Right Time Implications
- 35. 3. Right Place, Right Time Are trucking costs in SSA really so high?
- 41. 3. Right Place, Right Time Average costs per kilometre Central Africa USD 1.87 East Africa USD 1.33 Germany USD 1.52 Poland USD 2.18
- 42. Estimated profit margins along major corridors Ngaounderé-N’Djamena = 118% Mombassa-Kampala = 86% Tema-Bamako = 80% Lusaka-Joburg = 18%
- 43. 3. Right Place, Right Time Only one instance of deregulation: Rwanda Nominal prices decreased by 30% Real prices decreased by 75% Size of the truck fleet increased fourfold between 1995-2007
- 44. Right Time Observe due measure, for right timing is in all things the most important factor. (Heriod, Greek Poet, circa 800 b.c.) 3. Right Place, Right Time
- 45. Cases of “wrong time” implementation Fertilizer subsidy programmes Marketing loans to cooperatives Organization of export campaigns 3. Right Place, Right Time
- 46. 3. Right Place, Right Time Donor Institutions are not setting the example Lag time between donor project approval and project start-up commonly exceed 12 months. Processing of requests for disbursements at IFAD have come down but still average 28 days.
- 47. 3. Right Place, Right Time Conclusions Evidence of stronger economic & agricultural growth. Growing demand for agricultural products provides improved production incentives. Capitalizing on these opportunities requires intensification. Intensification requires risk reduction. And risk reduction requires getting the place and timing right. But focus on spatial & temporal aspects has been noticeably lacking and resulted in underperformance.
- 48. 4. Key Recommendations Greater use of value chain analysis to highlight and benchmark cost and time implications in terms of both inputs and outputs. Ensure that critical timing aspects are identified and agreed with and understood by project stakeholders. Include specific indicators for transport costs and critical timing aspects into monitoring framework. Ensure that annual work plans and budgets define and respects spatial and temporal coordination requirements.
Editor's Notes
- There is a pronounced tendency to search for new technical solutions to rural poverty while often ignoring the potential to strengthen existing investments. Improved technology packages, better crop husbandry, innovative financial services all have a role to play in improving the lives of rural Africans. However, there are potentially enormous gains that can be achieved through improving the spatial and temporal coordination of existing development interventions by simply responding to the two, proverbial “elephants in the room”:
- More than one third of all sub-Saharan rural Africans are so geographically and economically isolated from market towns that, at present, they are virtually condemned to a life of subsistence agriculture, regardless of their access to modern inputs, irrigation infrastructure or financial services. The majority of development programmes and projects do not deliver goods, services and works in a timely manner and this has had an extremely negative impact on productivity and increased revenues of project clients. Successful agricultural campaigns are all about planning and timing. Without rigorous project management, farmers will not gain the full benefits of new technological solutions.
- Distance to market is first and foremost about marketing costs, getting inputs in and getting outputs out.
- Not only are rural SS Africans the most geographically isolated, the cost of truck transport in SSA is multiple times higher than in any other developing region. From a cost perspective, a Pakistani farmer living five hours from a market town, pays the same amount to transport his milled rice as a Chadian living one hour from a market town.
- So the SSA farmer needs proportionally a much higher crop response rate to fertilizer to make adoption a viable proposition. She will also be paid a lower farm gate price because the consolidator has to pay the high cost of transport to the market centre.
- If a farmer cannot profitably market her surplus, then there is no logical reason to produce more than her family can store and/or consume. There is thus no motivation to adopt productivity enhancing technologies, particularly those external inputs which are costly and, in any event, are not likely to be available. There are numerous, well documented studies which underline the very strong correlation between proximity to market and agricultural productivity. This stands to reason.So about 130 m Africans, talk of new technological solutions is largely irrelevant. They are sitting on the side lines and will remain subsistence farmers unless the
- Conventional wisdom says that they are because of this
- And this
- And this
- And border crossings like this
- And of course thisBut in actual fact,
- Transport costs in SSA are only slightly higher than in Germany and less than in Poland.But transport prices are a whole different story. Pakistan exampleWhy is that?
- In West and Central Africa the trucking industry is highly regulated. Freight allocation is controlled by trucking cartels which erect barriers to entry, promulgate and enforce regulations which limit competition, and create conditions which favour bribery to increase market share under the “tour de role” freight allocation system. There is far greater competition in Southern Africa and, to a lesser extent, East Africa. This increased competition is reflected in significantly lower estimated profit margins.
- So, for much of Africa, revising the policy environment for the trucking industry to make it more competitive would effectively shorten the “economic distance” from farm to market, decrease the cost of purchased inputs, improve profit margins for smallholder marketable surpluses and level the playing field for millions of SSA smallholders so that they may better seize opportunities and start farming as a business.
- Development stakeholders pay insufficient attention to the critical importance of project planning and management as a factor in rural poverty reduction. Discussions concerning improved productivity, greater food security and increased revenues centre on the new silver bullet, the breakthrough technology, the new “it”. Talking about the impact of improved planning, prompt disbursements and timely delivery of goods, works and services on poverty reduction and economic growth is not very exciting. It does not generate research grants or fellowships nor provide the raw material for refereed papers in prestigious journals. Perhaps this is why there is so little data on the impact of poor management and late delivery of inputs on economic growth. But anyone with even a passing knowledge of hands-on development practice knows that SSA agriculture, as the engine of economic growth, is running on perhaps four of its six cylinders and this is because inputs, be they financial, agronomic or technical, are, all too often, not being delivered in a timely manner, be it at a donor institution, ministry of agriculture, the project implementation unit, the bank or MFI or the agricultural cooperative. Of course, no one knows the exact impact of untimely delivery of goods, services, and funding but there is widespread recognition that the problem is pervasive. It is also correctable.
- The impact of frequent (some would say systematic) slow response time on the part of donors is far reaching. Not only does it retard programme implementation but, perhaps more importantly, sends the exact wrong message to client governments, agricultural cooperatives, private sector partners and smallholders that timing is not important. It also undermines donor credibility. How can donors credibly advocate for more expedient government procurement processes when their own administrative processes exhibit the same weaknesses?
- Intro:Operationalizing “right place” essentially means making more informed choices regarding project implementation zones, distinguishing clearly between objectives of enhanced commercial access and food securityGreater attention needs to be paid to assessing the real costs of transport. This should be a standard element in vc analysis but, at least in IFAD projects, it is rarely carried out.Harmonized strategies under CAADP presents new opportunities to provide more holistic responses to interlinking challenges of ag prod, transport infrastructure, mkt access and increased returns.We need to be more realistic in assessing mkting opps. Operationalizing right time means paying much greater attention to providing inputs in a timely manner. The issue of timing needs to be at the forefront of planning and be a key driver of mgmt. oversight.