Awakening the Sleeping Giant:Prospects for Commercial Agriculture
in Sub-Saharan Africa
High-level Seminar for Policy Makers: Broad-based Development
through Economic Transformation and Job Creation
9-11 February 2011Maputo, Mozambique
Recent study from
World Bankand FAO
Study objectiveTo promote the growth of commercial agriculture in Africa in ways that contribute to broad-based poverty reduction
Analytical approachThe study explored the feasibility of restoring international agricultural competitiveness and growth in Africa through the identification of key products, production and marketing systems that could stimulate development of competitive commercial agriculture
Brazilian CerradoPre-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)
Northeast ThailandPre-1960: Remote region, poor
soils, subsistence agriculture, high poverty levels
1970s, 80s: Transformation led by pursuit of cassava export opportunity; public support for private sector; emphasis on small-scale systems
Post-1990: Further intensification and diversification; falling poverty
Study focusAgro-climatic zone Guinea Savannah
Case study countriesMozambique, Nigeria, Zambia
Target commoditiesCassava, cotton, maize, rice,
soybeans, sugar
African Guinea Savannah • 800 - 1,100 mm rainfall• 150 - 220 days season• 7 million km2 total area• 0.5 million km2 cropped• 3 cropping systems:
Cereal - root cropRoot cropMaize mixed
Key issues for analysisRole played by • Research and extension• Infrastructure• Finance• Business climate• Human capital• Government policies
Macro policies improving in Africa
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
0
1
2
3
4
5
6
7
8
9
10
BrazilMozambiqueNigeriaThailandZambia
Mac
roec
onom
ic s
core
And agricultural exports less taxed
1965–69 1970–74 1975–79 1980–84 1985–89 1990–94 1995–99 2001–04-70
-60
-50
-40
-30
-20
-10
0
10
20
Nom
inal
rate
of a
ssis
tanc
e (p
erce
nt)
Nigeria
Zambia
Brazil
Thailand
Mozambique
Value chain analysis: Production
Value chain analysis: Processing
Value chain analysis: Transport and storage
Value chain analysis: Exports / Import substitution
Brazil Thailand Mozambique Nigeria Zambia0
20
40
60
80
100
120
140
1601971–75
2004–06
Example of cassava
Farm-level productivity lower in AfricaCa
ssav
a yi
eld
(t/h
a)
But shipment values similar
FAM ECF FAM ECF LCF FAM ECF LCF ECFMozambique Nigeria Zambia Thailand
0
10
20
30
40
50
60
70
80
90
100
Example of cassava
Ship
men
t val
ue (U
S$/t
)
1. Farm-level production costs in Africa are often low compared to other regions
2. Africa’s producers are generally competitive in domestic markets
3. Africa’s producers are generally not competitive in global markets
Value Chain Analysis Results
4. Regional markets offer most promising opportunities for expansion over the short to medium term
5. Competitiveness of African countries is undermined by inefficiencies in domestic logistics
6. Smallholders have a critical role to play as source of competitiveness in Africa
Value Chain Analysis Results
Scale of production
Literature: Small farms more productive
Why have large farms survived?
Privileged treatment:• Land access• Tax treatment• Input and output subsidies• Infrastructure
Farm size and commercial agriculture: Is bigger necessarily better?
Foreign Direct Investment in big farms
Major opportunities… …with significant risks• Fills a huge investment gap• Transfer of technology and
know-how• Export development• New industries (biofuels)• Employment generation• Opening of remote regions
• Lack of attention to existing land users
• Asset stripping and speculation
• Negative environmental impacts (forests)
• Risks of highly unequal agrarian structure
• Governance
Alternativesto large farms
Realization of scale economies
• Contract farming with smallholders
• Machine hire services by the private sector
• Effective producer organizations
Scale of productionBottom line• Little evidence to suggest that large-scale farming
models are necessary or even particularly promising for Africa
• Smallholder-led commercialization likely to lead to more inclusive growth, with greater backward and forward linkages
Bright prospects for Africa
Five principal factors1. Rapid growth and strong demand prospects 2. Better domestic policy environments 3. Improved business
climate 4. Increased incentives
to invest in agriculture 5. New technologies
for production andprocessing
Needed interventions1. Policy reforms• No backsliding on macro policies• Eliminate remaining taxation of agriculture• Reform / modernize land policies
2. Investments• Research• Education• Infrastructure
3. Institutional changes• Make markets work better for smallholders• Improve access to finance
Social and environmental issuesSocial impacts
management• Land tenure• Farm size• Technology choice
Environmental impacts management
• Soil fertility• Water quality and quantity• Tradeoffs: intensification vs.
extensification
The road aheadGrounds for cautious optimism,
but many constraints remain…• Start with bulk commodities• Target domestic and regional markets• Reduce logistics costs• Pay attention to
land management• Pay attention to
environmental issues• Make the necessary
public investments• Engage the private sector