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AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICA FOR CHINA AGRICULTURAL UNIVERSITY

AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICA FOR CHINA AGRICULTURAL UNIVERSITY. Guo Li The World Bank June 16, 2011. Outline. A brief introduction of the World Bank. Challenges and opportunities for Africa’s Agriculture. What can agriculture do for Africa’s development?

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AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICA FOR CHINA AGRICULTURAL UNIVERSITY

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  1. AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICAFOR CHINA AGRICULTURAL UNIVERSITY Guo Li The World Bank June 16, 2011

  2. Outline • A brief introduction of the World Bank. • Challenges and opportunities for Africa’s Agriculture. • What can agriculture do for Africa’s development? • Options for moving forward. • Can Africa do it? • Concluding remarks.

  3. Challenges and Opportunities for Africa’s Agriculture • Daunting Challenges (2004-2006 data): • Poverty incidence 41% (US$1 per day, EAP: 9%; LAC 9%; SAP: 31%;) • 32% population undernourished (EAP: 12%; LAC: 10%; SAP: 21%); • 70% of poverty in agriculture; • Projected food deficit (e.g., food aid per capita 4 times as other regions); • Only region with projected increased numbers of malnutrition children (under 5 years old) in coming two decades. Obviously, agriculture sector performs poorly. Projected cereal deficit Sub Saharan Africa

  4. Challenges and Opportunities for Africa’s Agriculture • Opportunities: • Remarkable progress in recent years (macroeconomic growth, policy reforms, higher level of social and political stability, etc.) • Abundant natural resources (12 times the land area of India with only 2/3 as many people to feed); • Growing domestic and regional food markets (due to urbanization, population growth, etc.); • Equitable land distribution by international standards (with a few exceptions);

  5. Challenges and Opportunities Facing Africa • Opportunities: • Stronger political commitment to agriculture (e.g., 2003’s Comprehensive African Agricultural Development Program, CAADP); • Technological advances and improved incentives for agricultural investment; • New market opportunities for farmers due to food price increase and biofuels demand .

  6. What Can Agriculture Do for Africa’s Development? Three Worlds of Agriculture

  7. What Can Agriculture Do for Africa’s Development? Characteristics of three country types, 2005

  8. What Can Agriculture do for Africa’s Development? In Sub-Saharan Africa, agriculture is essential to: • Overall economic growth; • Reducing mass poverty; • Food insecurity; and • Providing environmental services. Therefore, promoting agriculture development should be a center piece of the continent’s development agenda.

  9. What Can Agriculture do for Africa’s Development? 1. As to overall economic growth, in Agriculture- based countries, which are mainly SSA countries, agriculture • Generates about 29% of GDP; • Creates 65% employment; • Accounts for 32% of GDP growth. • Productivity determines the price of food, then determines wage costs, and then the competitiveness of the tradable sectors; and • SSA’s comparative advantages for many years to come.

  10. What Can Agriculture do for Africa’s Development? 2. Effective mass poverty reduction tool • Global poverty rate declining from 1993 (28%) to 2002 (22%) was mainly the result of falling rural poverty; • International experiences show that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth originating outside agriculture (China, 3.5 times; LAC, 2.7 times, similar pattern found in Ghana). GDP growth originating in agriculture benefits the poorest half of the population sustainably more

  11. What Can Agriculture do for Africa’s Development? 3. Improving food insecurity: • Agriculture production is important for food security. Increasing and stabilizing domestic food production is the best way to deal with external risks and market uncertainties. 4. Environmental services: • Current issues: agriculture is the largest user of water, contributing to water scarcity, it is a major player in underground water depletion, agrochemcial pollution, accounting for 30% of greenhouse gas emissions.

  12. Options for Moving Forward • Political commitment should be strong; • Significantly increase investment in agriculture related R&D; • Accelerate the rural infrastructure construction (e.g, road, water, etc); and • Make smallholders more productive and sustainable through developing markets of credit, inputs, and promoting regional integration.

  13. Options for Moving Forward • Political commitment to agriculture sector should be strong • In early 2000s, after a long period negligence, key African leaders began to shift attention to the agriculture sector. However, AU leaders had committed to agriculture before (1980). • Observed excessively tax agriculture and underinvestment in agriculture reflecting a political economy in which urban interests have the upper hand.

  14. Options for Moving Forward • Significantly increase investment in agriculture related R&D • Although with a high IRR (43%), both global and national failures of markets and governance lead to serious underinvestment in agriculture R&D; • While China and India tripled their R&D over the past 20 years, SSA only increased by barely 20% (declining in about half of the countries). • Together with other factors, we observed a widening yield gap for cereals with the rest of the World.

  15. Options for Moving Forward • Significantly increase investment in agriculture related R&D

  16. Options for Moving Forward • Accelerate the rural infrastructure construction • Rural infrastructure in today’s Africa is only a fraction of that Asia had available (today’s road density: 3-4km/1000 Km2 in Ethiopia, Mali; 50-70 in Namibia; but 388 in India in early 1990s); • In Africa, only 4% of the area in production is under irrigation, compared with 39% in South Asia and 29% in East Asia.

  17. Options for Moving Forward • Make smallholders more productive and sustainable through developing markets of inputs and credit, promoting producers’ organizations, and accelerating regional integration. • In the case of seed and fertilizer, market failures continue to be pervasive in Africa, due to high transaction cost, risks, and economies of scale; • Market-smart approaches to jump-starting agricultural input markets include targeted vouchers to enable farmers to purchase inputs and stimulate demand in private markets;

  18. Options for Moving Forward • Make smallholders more productive and sustainable • Improve access to financial services and reduce exposures to uninsured risks; • Collective action by producer organizations can reduce transaction costs in market, achieve some market power, and increase representation in national and international policy forums. For smallholders, producer organizations are essential to achieve competitiveness. • More open intraregional trade among African countries offers important opportunities for exploiting different comparative advantages, achieving greater scale economies, stabilizing food supplies facing weather shocks, as global warming continues.

  19. Options for Moving Forward Of course, there are other important options, such as • Education: reality-- average 4 years for rural adult male; 3 years for rural adult females in SSA, SA, and MENA; • Health: e.g., HIV/AIDS, greatly reduces agricultural productivity (in rural Zambia, population declines have been especially severe for young rural adjusts: 19 % of people 15-24 years old in 1990, the most productive age, are estimated to have died by 2000).

  20. Can Africa Do it? If other regions can, why NOT Africa? 1. China’s rural development in past 30 years CP: current price.

  21. Can Africa Do it? 1. Decline of poverty in China

  22. Can Africa Do it? 2. Decline of poverty in India

  23. Can Africa Do it? 3. Brazilian Cerrado: Pre-1970: Remote region, poor soils, low population, stagnant agriculture 1970s, 80s: Transformation led by public investments in R&D, infrastructure, credit; emphasis on large-scale systems Post-1990: Private sector-led boom built on exports (soybeans, maize, cotton, cattle); reduced poverty

  24. Can Africa Do it? 4. Africa’s own success stories, in addition to the opportunities identified before….

  25. Can Africa Do it? 4. Africa’s own success stories • Cassava transformation in West and Southern Africa; • Hybrid maize in Eastern and Southern Africa; • Smallholder cotton in Mali, 1960 to 2006; • Success of horticultural exports in Kenya and Cote d’Ivire; • Smallholder dairying in Eastern Africa; • Sustainable soil fertility management in Zambia, Burkina Faso, and Kenya; • Ghana’s poverty decline….

  26. Can Africa Do it? 4. Africa’s own success stories All these success stories demonstrate that, to different extents, the soundness of the policy options listed above, such as political commitment, increased investment in agriculture related R&D, fostering an enabling environment (credit, inputs, and regional integration).

  27. THANK YOU Downloads • World Development Report 2008: Agriculture for Development http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2008/0,,menuPK:2795178~pagePK:64167702~piPK:64167676~theSitePK:2795143,00.html • Awakening Africa’s Sleeping Giants http://siteresources.worldbank.org/INTARD/Resources/sleeping_giant.pdf; • Successes in African Agriculture: Lessons for the Future http://www.ifpri.org/publication/successes-african-agriculture-1

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