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Agricultural Sciences, 2016, 7, ISSN Online: ISSN Print: Strategic Agricultural Commodity Value Chains in Africa for Increased Food: The Regional
Agricultural Sciences, 2016, 7, ISSN Online: ISSN Print: Strategic Agricultural Commodity Value Chains in Africa for Increased Food: The Regional Approach for Food Security Mahamadou Nassirou Ba Food Security, Agriculture and Land Section in the Regional Integration and Trade Division, United Nations Economic Commission for Africa, Addis Ababa, Ethiopia How to cite this paper: Ba, M.N. (2016) Strategic Agricultural Commodity Value Chains in Africa for Increased Food: The Regional Approach for Food Security. Agricultural Sciences, 7, Received: May 26, 2016 Accepted: September 10, 2016 Published: September 14, 2016 Copyright 2016 by author and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). Open Access Abstract The challenge Africa faces the most is how to feed the 2.4 billion people in This will require a transformational agriculture. Africa doesn t need subsistence agriculture, but rather agriculture linked to the market where market demand and the consuming habits are taken in consideration. Agriculture evolves in an environment where small holders are linked to markets (national and regional), where economies of complementarity and economies of scale are taken advantage of by producers and private sector. In short, Africa will need a paradigm shift to industrialise and commercialise its agriculture sector in order to increase food production, and income and to create jobs in and outside the sector. Africa needs agribusiness and agro-industries to domesticate the benefits of the sector, to create wealth in the sector and retain that wealth in the continent. Agricultural commodities regional value chains for increased food should be the target for Africa. The continent remains the region with the highest prevalence of under-nourishment. Since agriculture remains the mainstay of most African economies except the mineral producers, the sector deserves a close attention from leaders. It accounts for 65% of employment and 40% of Africa s export earnings and accounts for 17% of the GDP. This shows how important the sector is. Agriculture needs to be seen as a conduit for farmers to get connected to markets, a conduit for revenue, for jobs and for transformation. Africa needs to come back on the international scene as food sufficient continent and even food exporter. This can be achieved only with a stable, productive agricultural resource base. Thus, achieving and sustaining food security and economic prosperity in Africa will require significant efforts to modernize the continent s agriculture sector through injection of agribusiness and agro-industries and through the application of science and technology in agriculture. In essence, agriculture needs to be viewed as knowledge based entrepreneurial activity. Smart investments in agriculture will have DOI: /as September 14, 2016 multiplier effects for the whole economy and hence induce prosperity to other sectors. In recent years, a renewed focus on agriculture has been evident in policy and development agendas across the African continent. This paper outlines the status of agriculture, agribusiness and agro-industries in Africa, their role in the agenda of agricultural transformation and economic transformation and the focus on regional value chain to increase food production, transformation and trade. The paper adopts a new thinking in agriculture, which reflects a regional value chain approach. The author covers such issues as: need for agricultural transformation, the role of value chain in agricultural sector, the need for regional value chain for increased income and increased food, the role of markets and the common denominator of all, the regional integration to push forward the African agriculture agenda. Evidence shows that it is agricultural growth, through its leverage effects on the rest of the economy that typically enables poor countries, poor regions and ultimately poor households to take the first steps toward economic transformation. Therefore agricultural productivity, at the small holder s level, has the potential to lift millions of Africa s vulnerable out of poverty and provide sustainable jobs. Other factors, namely the rapid urbanization and increased population growth, are quoted to be of critical importance. Africa population is projected to double, attaining the 2.3 billion people mark over the next 40 years representing half of the globe s total population. This could trigger competition for resources and can have devastating effects on natural resources if not rightly channelled. Keywords Food Security, Agricultural Commodities Value Chain, Regional Value Chains, Agricultural Transformation, Agribusiness, Agro-Industries 1. Introduction Increased food production, availability, access and utilisation, are the ultimate goals for most African nations. Food security exists when all people, at all times, have physical and economic access to sufficient, safe, nutritious food to meet their dietary needs and food preferences for an active life [1]. While on the other hand, the concept of food insecurity is closely linked with the poverty in country. According to the United Nation Development Programme Human Development report [2] on food insecurity, the phenomenon is closely linked to poverty, income and unemployment. Therefore Africa has been striving to achieve the food security goals for decades. Achieving them is critical as Africa population is on the rise and disproportion between supply and demand of food is also widening. In October 2011, the world population passed the 7 billion mark. Furthermore, the world population is projected to exceed 10 billion at the end of the century. Africa, by far the world s poorest region, will record the largest amount of population growth of any world region between now and Africa s population is expected to more than double, rising from 1.1 billion today to at least 2.4 billion by Nearly all of that growth will be in the 51 countries of sub-saharan Af- 550 rica, the region s poorest, from report of Population Reference Bureau (PRB) [3]. Rapid population growth makes it difficult for economies to produce enough food, create enough jobs to lift large numbers of people out of poverty. Such growth will put a massive strain on the global food supply. In addition, Africa will have an unprecedented urban population composed by a large part by its middle class population and youth. That emerging middle class is now used to new dietary habits, such as readymade and package food (cereals, meats and dairy products). For all the above reasons, Africa needs to transform its agriculture, bring about agribusiness and agro-industries to link farms to markets, create jobs, and create revenues, and link up other sectors to agriculture. The African Union (AU), through its New Partnership for Africa s Development (NEPAD), is providing leadership and support via NEPAD s Comprehensive Africa Agriculture Development Programme (CAADP). Through this program AU is encouraging countries to develop investment plans and to allocate at least 10% of their annual national budgets to agriculture. Clearly, recent sharp increases in international food prices are contributing to increased food import bills in the short run. However, improved performance in Africa s agriculture sector through increased public and private investment and targeted interventions can help offset those short-term effects and over the longer term. Achieving the African Agenda of attaining an average of 6% growth rate in agriculture will not only support sustained overall economic growth, but will also open up major opportunities for African farmers in domestic, regional and international markets. We need to enhance our collective efforts to achieve both food and nutritional security in Africa and we urge all the stakeholders in agriculture to sustain the momentum through collaboration. Solution for this new equation has to necessarily pass through the agricultural food systems and value chains development, namely agribusiness and agro-industries development. This alone makes the production and distribution of food a critical issue for Africa. This is a problem and Africa needs to solve it. For instance, the population of Niger, the country with the highest total fertility rate in the world, is projected to grow from 14 million (2006 base data) to 58 million in 2050, a 4.3-fold increase, while in Uganda for the same period it will be from 30 to 91 million, and so on for a number of other countries in Africa [4]. It is worth noting that the 2008 phenomena of food price increase and volatility and food scarcity have triggered changes in the food and agriculture sector as well. Efforts are being made to reduce levels of food insecurity both at regional, national and household levels. At AU level, the food security issue is being tackled through the NEPAD/CAADP framework as mentioned above. Significant political attention has been given to the promotion of improvements in food staples productivity in African countries, both to offset the rapidly increasing costs of food imports, and to stimulate increased incomes and hence food security status at the household level. This attention has been manifested at national level, with many countries placing food staples and agricultural value chains at the centre of their National Agriculture and Investment development Pro- 551 grammes (NAIP) with the implementation of the CAADP compact, as well as regional level within RECS agricultural strategies. A central focus of these initiatives has been to develop and advocate for mechanisms that will result in increased production by smallholders through the adoption of productivity enhancing technologies and to facilitate access to critical inputs as well as link smallholders to the markets. As far as small holders are concerned, reducing their risks is a big deal for them. They don t want to get involved in anything if they don t see their benefits. As such, there must be parallel focus on market access so that farmers can benefit from the potential production increase in terms of increased network and increased income. If the small farmer doesn t see that increase productivity will translate in increase income, there will not be any motivation. CAADP Pillar 2 1 which aims to increase market access through improved rural infrastructure and other trade-related interventions sets specific objectives to include small holders wealth and well-being. As such its objectives are: (i) to accelerate growth in the agricultural sector by raising the capacities of private entrepreneurs (including commercial and small-holder farmers) to meet the increasingly complex quality and logistic requirements of markets, focusing on selected agricultural commodities that offer the potential to raise rural (on- and off-farm) incomes, and (ii) to create the required regulatory and policy framework that would facilitate the emergence of regional economic spaces that would spur the expansion of regional trade and cross-country investments. Abiding to the framework of the CADDP, member states should all support the promotion of agricultural commodities value chains as a mean to increase food production, which is the theme of this report. It is worth recalling that studies have proven that only 1% increase in per capita GDP in agriculture reduces the depth of poverty by at least 5 times more than a similar increase outside the agricultural sector [5]. Also 1 percent increase in agricultural GDP growth is translated to 4% in economic growth [6] Africa green revolution should start by its agricultural transformation as shown in Gallup et al. (1997) [7], that every 1% growth in per capita agricultural GDP led to 1.61% growth in the incomes of the poorest 20% of the population much greater than the impact of similar increases in the manufacturing or service sectors. In terms of the role of agricultural productivity in reducing poverty, Thirtle et al. (2001) [8] concluded from cross-country regression analysis that, on average, every 1% increase in labour productivity in agriculture reduced the number of people living on less than a dollar a day by between 0.6% and 1.2%. No other sector of the economy shows such a strong correlation between productivity gains and poverty reduction. The routes through which growth in agriculture achieve such a potent impact on poverty are among other things through the development of agribusiness and agro-industries with the view of regional value chain approach detailed below in this report. Africa should capitalise in this in its era pf transformation. Today one of the core development strategies recommended by reputable institutions such as United Nations Economic Commission for Africa (UNECA) is the pro- 1 CAADP: Comprehensive Africa Agriculture Development programme: 552 motion of commodity based industrialization anchored in the development of strategic agricultural commodity value chains from the small holder s level at the farm gate, to the consumer table, supported by the development of infrastructure including Small Medium Enterprises (SME) and Small Medium Industries (SMI). To achieve this Africa needs to: 1) develop and implement policies and programs to accelerate industrialization with a focus on regional infrastructure, regional value chains, food security and agricultural transformation, and 2) develop and implement policies and programs in the areas of intra-african and international trade and investments, as well as 3) design and implement land policies and programs that ensure and secure gender equitable land rights, effective and efficient use and management of land for sustainable development. 2. Key Messages Agribusiness and Agro-industries through agricultural commodities value chains should be used as a conduit to help Africa to increase production and productivity of the agricultural sector. There is a crucial need as Africa population is rising, creating a discrepancy between supply and demand of food. At the same time the type of food demanded, especially in urban areas is also changing. Small holder farmers (mostly women) represent 80% of all farms in sub-saharan Africa and contribute up to 90% of food production in some countries. In an unstructured and non-formalised value chains environment, the risks and unit costs are often too high for smallholders to viably access markets, inputs and services. This in turn impacts the efficiency at the farm level, impacting of the production and productivity. It also impacts on the viability of small agribusiness and agro-industries units undertaking value-adding activities such as processing. Investment and growth will only happen inclusively, if smallholders production can be commercialised and agricultural SMEs/SMIs made more resilient. To benefit from economies of complementarity and economies of scale, it is encouraged to open up borders and frontiers and take advantage of comparative and competitive advantages, firm up the free trade areas at RECs level and build the continental free trade are (CFTA) which is the ultimate goal of AU today. For the sake of increased Food Production, smallholder farmers participation in markets is crucially important for improved food security and poverty reduction. They must be connected to the input-market as well as the output market. First at the household level and then extended to national, regional and continental level. The small holders need to be part of the value chain and not only to be and remain the stepping stone of it. Attempts to improve small holders productivity will have limited success if the linkages to markets are not strengthened simultaneously. There is a need for a paradigm shift in political decision to revitalise the role of 553 small holders in agricultural growth so that the growth is inclusive from the farm level upwards. Limited smallholders participation in markets is not necessarily a result of a lack of commercial orientation per se, but the result of constrained choice in a risky environment. This needs to change. The development of agribusiness and agro-industries through commodities value chains should be supported market driven production. This should take in account that smallholders are very heterogeneous, facing different types of constraints according to the commodities, and will react differently to new market opportunities. Regional Value Chain, in the context of a strong regional integration, supported by CFTA could trigger increased productivity in the food sector and serve as a conduit to reduce food insecurity by increased employment opportunities and increased income levels. Policy interventions need to be prioritized and sequenced according to evidencebased diagnosis of the constraints faced by different categories of small holders as evidence-based policy-making minimizes the risks of policy failure. Public policy interventions are generally needed to foster smallholder market integration. Public Private Partnership needs to be encouraged to support value chains actions. 3. Background State of African Agriculture African agriculture has been for past decades the backbone of its economic development. During the past thirty years the competitiveness of many African export crops has declined, and Africa s dependence on imported food crops has increased. While the poor performance of African agriculture can be attributed partly to adverse agro-ecological conditions, experience from elsewhere in the developing world suggests that significant progress is possible. Nonetheless, on a positive note, recent years have seen the mineral and other natural resources sector emerging to support several countries economic development. Regardless of the status of other emerging sectors, agriculture sector has remained the main activity of at least 75 percent of the population. Unfortunately the vast population of the continent, engaged in agriculture, as wage earners or self employed remains the poorest in the continent or even in the world, due mainly to the continued low performance of the sector. African agriculture has remained traditional for the most part with a little modernization. Many studies and reviews revealed that Africa missed the green revolution of the 1960 s which propelled most Asian countries to agricultural and rural transformation and subsequent food sufficiency and inter linkages among economic sectors. But the question remains to ask, if that was a good or a bad thing? There are many debates going on the subject, some scientists think that Africa might not have been ready for that green revolution due to the fact that it was based on high fertilizer use and intensive irrigation coupled with high pesticide use At that period, accessibility to these three catalysts could have been a problem for the majority of Africa farmers. In any case the 554 green revolution was not without high costs. Indeed the consequence of the green revolution has been an increase in yields for specific crops in specific countries, but beyond the yield gain, there were many other costs, such as economic, agricultural and social. The programme used large amount of water, fertilizers and chemicals pesticides, which in the end, impoverished soils, leaving them less fertile and in some cases highly polluted. As a result, local biodiversity was drastically reduced, creating dependence on pesticides (GRAIN, 2007) [9]. Some other scientists think that probably Africa needs its own green revolution, carved to take in account specificities of African agriculture. The fact remains that Africa has been unable to secure food for all its population and to design any sustainable pathway for its own food security: 2 It is certain that Africa food security has been affected by a complexity of factors; nonetheless, a structural transformation in agriculture could take it to a new dime
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