POVERTY: Agricultural Growth and Investment Options for Poverty Reduction in Rwanda

Agricultural development strategies that are put forward by individual African countries delineate priorities for actions to enhance agricultural and overall development. Understanding alternative agricultural growth options and their linkages with poverty reduction and prioritizing agricultural investments are the two key components of an agricultural development strategy. However, the relationships between growth and poverty reduction and between targeted growth and required public investment are not straightforward, and solid research is needed to support an evidence-based policymaking process. This monograph provides such a study using Rwanda as a case. An economywide model is developed for the study and is applied to the most recent economic data and public investment information to analyze agricultural growth and investment options for poverty reduction in Rwanda. The monograph shows that the country’s targeted agricultural subsector growth, if achieved, would allow Rwanda to meet the Comprehensive Africa Agriculture Development Programme (CAADP) target of 6 percent annual growth in agricultural gross domestic product (GDP) by 2020. With comparable growth in the nonagricultural sector, rapid economic growth would result in the national poverty rate falling to 35.5 percent by 2015, a reduction of 25 percentage points over the 1999 rate. Although the majority of rural households benefit from rapid agricultural growth, the most vulnerable households—those with very small landholdings and with few opportunities to participate in the production of export crops—appear to benefit less. The report shows that economywide growth led by the agricultural sector has a greater effect on poverty reduction than does the same level of growth driven by the nonagricultural sector. Among agricultural subsectors, growth driven mainly by increased productivity in staple crops has the greatest poverty reduction effect. The report points out that meeting the CAADP 6 percent agricultural growth target in Rwanda will require the allocation of public resources to the agricultural sector to rise significantly and reach 10 percent of the total government budget. Estimated economywide returns to public investment in agriculture are high and will come not only from growth in the agricultural sector. Through linkage and multiplier effects, one dollar of public investment in agricultural staples generates US$3.63 of increased agricultural GDP (AgGDP) and US$0.21 of increased nonagricultural GDP. In the agricultural sector, economywide returns from investing in staple foods, including staple crops and livestock, are much higher than those from investing in export crops. But even though the investment returns are high, the planned amount of investment in Rwanda will not be enough to significantly improve the current low yields of many foodcrops in the country. The average yield for maize will stay at a low level in 2015—a level already reached by many African countries today.
The report also points out the trade-offs between rapid growth and low
economywide returns from investing in the export sector. Targeting the export sector through public policy and investment will bring double-digit growth to the sector, measured by an increase in GDP; however, economywide returns to such investments are low. The weak linkages of the export sector with other economic activities on both the supply and demand sides reduce the role of the export sector as a key driver in both overall economic growth and poverty reduction. Nevertheless, the export sector has often attracted more government attention than has the agricultural sector in many African countries, with favorable policies and investment support. The findings of this report, which show relatively low economywide returns to public spending in the export sector and relatively less poverty reduction from growth led by exports, further emphasize the importance of broad-based agricultural growth. Agricultural development strategy, including effective public investment strategy, has to focus on growth that benefits a majority of farmers. Only such a strategy can be expected to be efficient and effective for growth, poverty reduction, and economic development in general.
http://www.ifpri.org/publication/agricultural-growth-and-investment-options-poverty-reduction-rwanda-0

MALNUTRITION: AFRICA: Bullish about the agricultural future

LONDON, 23 July 2010 (IRIN) - Suddenly, after 20 years of relative neglect, African agriculture is a hot topic, with a substantial growth in production and a new interest among major donors in funding the sector. That is the message emerging from a series of seminars now taking place in London looking at the constraints and opportunities facing Africa's farmers.The figures being presented are impressive and - according to Steve Wiggins, who leads the agriculture programme at Britain's Overseas Development Institute - confound the pessimists who assume the situation to be much worse than it is."I often hear it said that Africa is running out of food per head," he told the seminar. "Now unless these statistics are complete and utter junk, that just simply isn't true. The index shows 16, 17, 18 percent more food being produced per capita compared to the early 1980s."In particular, he said, two regions - West Africa and North Africa - were surging ahead, although there were signs that production in East Africa too might now be beginning to accelerate."For those of us working on Africa," said Wiggins, "people use Asia as a stick to beat us with. Well, as far as I can see, there are two bits of Africa there which have done every bit as well as Asia has done over the last quarter of a century."Wiggins's fellow speaker at the opening session was Ousman Badiane, the Africa director of the International Food Policy Research Institute (IFPRI) in Washington. He put his finger on the mid nineties as the point when Africa really turned a corner.With no other overall change which could account for this recovery, Badiane attributed it to the structural adjustment programmes which so many countries had been persuaded to follow. "I believe it was the result of those strong and messy reform programmes of the 1980s. I remember the pain of it, but it completely changed the environment for agriculture."Challenges, opportunitiesBoth speakers were agreed that the food price spike in 2008 and the world economic crisis pose both challenges and opportunities for African farmers. They worried about a growing protectionism in Asia - a major potential market for African agricultural produce - and about the fact that the speed of Asian development may have closed a window of opportunity for African's own industrialization. Steve Wiggens made the point that "the single biggest stimulus to most farmers is a thriving local city."Above all they worried that the gains of the last 20 years might be reversed. Ousman Badiane referred to a new law passed in Kenya to restore price controls on agricultural produce. "That's where Kenya was 25 years ago," he said. "The danger is that the generation of leaders that went through the pains of those reforms are no longer active. So those leaders today can make the same mistakes as the leaders of 25 years ago."And he added: "It is just for me unimaginable that a farmer stands up every day, produces the food and someone claims that is a common good - "It's OUR rice, it's OUR maize." It's amazing. Nobody goes to the farm with them, but once they produce the product, everybody claims it as their own. That has to change. It's a private product; it belongs to the farmers. And they have to be able to sell it for the price that the market offers."CAADEPOusmane Badiane sees the African Union's CAADEP (Comprehensive African Agricultural Development Programme) project, in so far as it gives a voice to farmers, as an influence against this kind of reversal of policies. The first two seminars both sparked discussion of CAADEP, which obliges member governments to devote 10 percent of their national budgets to agriculture and encourages them to produce a coherent plan to which donors can subscribe.But there was a considerable level of scepticism about CAADEP. One participant, currently working in Malawi, described the frantic rush to produce a programme to put before donors, and said he had seen no evidence of new money becoming available.This was echoed by Christie Peacock, chief executive officer of the NGO Farm Africa. "There's so little vision," she said. "I'm very sceptical about the CAADEP process. It's supposed to be African led, but it's often a very top-down process."She echoed the reservations expressed by several participants, that even if new money was now being offered for agricultural development, both through CAADEP and from the US government's Feed the Future programme, there was no well-thought-out plan about how it should be used. "I think we are visionless at the moment," Peacock said, "and after 20 years of lack of interest, we are in danger of reinventing the wheel all over again."But the keynote speaker at the second seminar, Professor Sir Gordon Conway, author of The Doubly Green Revolution, was more optimistic about funding: "I do think there will be money - about a billion dollars of USAID [US Agency for International Development] money this year, and a billion plus next. Not perhaps the 3.5 billion that has been talked about, but around 2.7 billion will be there.""Twenty years ago there was a view that African didn't need agricultural development, that the private sector would do it all, and among some donor agencies that view is still there. But as a result of the food price crisis we have things like the Feed the Future programme, which looks for countries' own plans. It recognizes that countries are different, asks what they intend to do, and acts accordingly, and I think that's quite a good approach."The African Seminar Series is organized by the Future Agricultures Consortium and the Overseas Development Institute. Further sessions on markets, land issues and agriculture-led development in an urbanizing world will take place between now and the beginning of September.

MALNUTRITION: AFRICA: Not spending enough on food

JOHANNESBURG, 21 June 2010 (IRIN) - "Africa is now facing the same type of long-term food deficit problem that India faced in the early 1960s", says a paper by the International Food Policy Research Institute (IFPRI), a US-based think-tank. In the early 1960s India faced a major food crisis. African countries are not spending enough on agriculture and the overall productivity of the continent has dropped since the mid-1980s, said the paper which looked at trends in public spending on agriculture in Africa. "Since the 1960s, Africa has lost ground in the global marketplace. Its share of total world agricultural exports fell from 6 percent in the 1970s to 2 percent in 2007," said the paper entitled, Public Spending for Agriculture in Africa: Trends and Composition. The paper was produced by researchers who work with IFPRI's Regional Strategic Analysis and Knowledge Support System (ReSAKSS). Spending money on food production is critical in Africa, where 70 percent of people live in rural areas and depend on agriculture for food and income. There are also going to be more people to feed in Africa in the next few decades. Sub-Saharan Africa's population is expected to grow faster than elsewhere by 2050, increasing by 910 million people, or 108 percent; East and Southeast Asia's population is set to rise by only 228 million, or 11 percent, according to UN projections. Ten percent target In 2003, the continent adopted the Comprehensive Africa Agriculture Development Programme (CAADP) and countries committed to allocating 10 percent of their budgets to agriculture. Only eight African countries have reached or surpassed the 10 percent target, according to CAADP. Erratic weather could be turning the screws on food security in Africa as well. Drought-hit Niger features in the eight countries to have allocated the required 10 percent of their budget to agriculture to become food secure, but failed rains have driven more than three million of its people into food insecurity and pushed Niger back onto the list of food aid dependent countries where it last featured in 2004. The other countries to reach the 10 percent target are Ethiopia, Burkina Faso, Mali, Ghana, Senegal, Zimbabwe and Malawi. There has been a 75 percent increase in the amount governments spend on agriculture from 2000 to 2005 but the CAADP target "remains unmet because of the very low initial base and the declining trends prior to 2000", says the IFPRI paper. The researchers used another measure - agricultural Gross Domestic Produce (GDP) - to assess the amount countries spend on agriculture. Babatunde Omilola, ReSAKSS coordinator explained how it was calculated. "This measure of government spending on agriculture weighs in the size of the sector in the overall economy and takes into account factors such as revenue generated and its impact on poverty reduction." "With the exception of Botswana, Zambia and Zimbabwe, African countries have spent less than 10 percent of their agricultural GDPs on agriculture in recent decades." Africa spends 5-7 percent as a share of agricultural GDP on food production, whereas Asia spent 8-10 percent. But the range in spending in Africa is quite considerable. "For example, Botswana had the highest percentage in 2005 at 60 percent, while Côte d'Ivoire and Ghana spent less than 2 percent in the same year." Meanwhile, donor funding for agriculture in Africa has dropped dramatically - from 15 percent in the 1980s to 4 percent in 2006- but the amount countries allocate from aid to food production also varies quite considerably. In 2007 Botswana and Nigeria spent less than 1 percent of all aid received on agriculture. However, Burkina Faso in 2006 spent 8 percent of its total aid on agriculture.