AGRICULTURE AND FOOD SECURITY POLICY CONSTRAINTS

1. AGRICULTURE AND FOOD SECURITYPOLICY CONSTRAINTS OUSMANE BADIANE Director for Africa

2. ONE KEY MESSAGE • Good Policies are not a solution for everything • Bad Policies are a problem for everything else • Policy Reversal would jeopardize ongoing growth recovery process • Risk of return to failed policies of 60s and 70s • No institutional memory • New generation of leaders • Stronger fiscal positions • More open, democratic systems • Populist pressures and tendencies

3. POLICY REFORMS AND ECONOMIC PEROFMANCE IN AFRICA Source: IMF (2008); WDI (2008); Benin, S. et al. ReSAKSS (2012)

4. POLICY REFORMS AND PERFORMANCE OF LOCAL MARKETS Case of Maize Markets in Benin Martket liberalization, price margins and stability - Benin Change in relative spatial margins Percent Change in absolute spatial margins Cfa/Kg Change in local price stability Percent Change in temporal margins Percent Page 4 Badiane and Resnick (2006)

5. POST 1980s RECOVERY: LONGEST PERIOD OF SUSTAINED GROWTH SINCE 1960S SOURCE: IFPRI / Badiane 2011

6. THE GROWTH IS ACCELERATINGAS WELL AS SPREADING GEOGRAPHICALLY SOURCE: IFPRI / Badiane and Ulimwengu

7. AGRICULTURAL TRADE AND ECONOMIC GROWTH AGR. EXPORT AND DOMESTIC GROWTH AGR. EXPORT AND DOMESTIC GROWTH INDUST. GROWTH EXPORT GROWTH 0.04% To 1.83% 1% Growth

8. AGRICULTURAL TRADE AND RURAL GROWTH IN AFRICA Incremental income from 1$ additional revenue from agricultural tradables Source: C. Delgado et al (1998)

9. LONG TERM TRENDS IN FOOD DEMAND AMONG AFRICAN COUNTRIES Increase in Demand and Incomes in Billion US$ IFPRI/Badiane

10. THE STABILIZATION POTENTAIL OF REGIONAL TRADE

11. RISK OF POLICY REVERSAL AND FUTURE GROWTH DISTRUST OF PRIVATE SECTOR HAS NOT CHANGED MUCH LACK OF CONFIDENCE IN MARKETS FARMING NOT RECOGNIZED AS PRIVATE BUSINESS ACTIVITY THEIR PRODUCTS AS SEEN AS COMMON RATHER THAN PRIVATE GOODS LINGERING DOUBT RE EFFECTIVENESS AND COST OF ALTERNATIVE POLICIES NO DISTINCTION BETWEEN POLICY GOAL AND INSTRUMENTS RETURN TO SUBSIDIES AND PRICE CONTROLS CREATION OF NEW SPECIALIZED AGENCIES LEARN FROM EXPERIENCE OF 1960 – 1980 AVOID REPEATING SAME MISTAKES: SAME POLICIES -> SAME RESULTS MOVE TO EVIDENCE BASED POLICY UNDER CAAPD IS CRITICAL

12. PRINCIPLES OF EFFECTIVE INPUT POLICIES WHAT IS THE PROBLEM? • IT IS THE ABSENCE OF A CRITICAL MASS OF: • OPERATORS • NETWORKS • INFRASTRUCTURE, AND • SERVICES • IN ORDER TO ENSURE THAT INPUTS ARE AVAILABLE AT TIMES AND PLACES NEEDED AT REASONABLE COST

13. UNDERSTANDING THE COST OF SUPPLYING FERTILIZERS Source: Bumb, Johnson and Fuentes, 2012 *Averaged across Ghana, Mali, Senegal, and Nigeria

14. INPUT SUBSIDY POLICIES: THE EVIDENCE THEY CAN BOOST PRODUCTDION IN SHORT RUN THEY ARE NOT CERTAIN TO RAISE INPUTS USE AND YIELDS ONCE REMOVED (BROOKS 2012) THEY DISTORT COSTS OF FACTORS, LEADING TO INEFFICIENT ALLOCATION OF INPUTS THEY MAY BYPASS NASCENT LOCAL INPUT DEALERS (BANFUL 2009, BUMB ET AL., 2011; TAKESHIMA ET AL, FORTHCOMING) THEY HAVE BEEN PRONE TO BAD TARGETING AND LEAKAGES (MASON AND RICKER-GILBERT, 2012) EXCESSIVE LEAKAGE BENEFITS LARGER FARMERS FAILURE TO REACH THE POOREST AND MOST VULNERABLE HH 1 2 3 4 5

15. INPUT SUBSIDY POLICIES: THE EVIDENCE THEY ARE VERY COSTLY FISCALLY: GHANA: FERTILIZER SUBSIDIES: 17 % OF MOFA BUDGET COSTS TRIPLED FROM GHS 29 TO GHS 90 MILL. OVER LAST 3 YEARS COULD REACH 3 5% OF BUDGET IN 2020. (BENIN ET AL., 2012) MALAWI: FERTILIZER SUBSIDIES: 74% OF AG BUDGET IN 2008/09 AND 6.6% OF COUNTRY’S GDP (DORWARD AND CHIRA, 2011). ZAMBIA: FERTILIZER AND SEED SUBSIDIES: 40% OF AG BUDGET BETWEEN 2004 AND 2011 (MASON AND RICKER-GILBERT, 2012) THEY LEAD TO SERIOUS MACRO IMPLICATIONS IN THE LONG RUN SERIOUS FISCAL DEFICIT / FOREIGN EXCHANGE SHORTAGESCURRENCY OVERVALUATION DECREASED COMPETITIVENESS SLOWER ECONOMIC GROWTH 5 6

16. OVERCOMING POLICY CONSTRAINTS 1. IMPROVED DATA SYSTEMS • You need data before you need them! • What to do / How: • Data clusters: production, trade, hh status, prices, costs, expenditures, etc • Working Groups/Task Forces: bureau of statistics; NARs; data units in finance; trade, sector ministries • Common platform:harmonized standards and exchange protocols

17. OVERCOMING POLICY CONSTRAINTS 2. READY-TO-USE TOP EXPERTISE • A serious policy maker has to have constant access to high quality technical team • What to do/How: • Network: build ANDmaintain a network of leading national centers of expertise • Engagement:create mechanism with a plan to engage and use local expertise • agreement on long term strategic research • vehicle for ad hoc, short term technical input 

18. OVERCOMING POLICY CONSTRAINTS 3. EFFECTIVE COORDINATION / BROKERING FUNCTION • First priority post Dakar! • What/how: • Dream team: assemble qualified team, first from existing staff, later dedicated team • Feed the beast: define demand for policy research and link to research networks • Connect!: ensure access to evidence and its use in policy formulation 

19. OVERCOMING POLICY CONSTRAINTS 4. OPERATIONAL KNOWLEDGEMENT MANAGEMENT • Make it your 2014 Resolution! • What/how: • Infrastructure:create up-to-date IT platform • Knowledge base: build, maintain, and expand knowledge base: start with collecting existing key data, reports, and policy documents • Right to know: eliminate barriers to accessing knowledge • Never Forget: build memory of actions, processeses, outcomes– lessons learning to avoid past mistakes

20. OVERCOMING POLICY CONSTRAINTS 5. INCLUSIVE POLICY DIALOGUE • Collective wisdom is best • What/how: • Dialogue platform: institute broad, informed debate about key strategic issues and choices • Review culture: evaluate and track commitments, performance and progress