A New Partnership for African Agriculture

The world’s poorest nations are reeling under the burden of high food and fuel prices. Volatility in the food commodities and fuel markets has profoundly destabilized their already fragile economic situation. Millions of families have been pushed deeper into hunger and poverty.

On September 24 2008, The Bill & Melinda Gates Foundation, the Howard G. Buffett Foundation, and the government of Belgium have committed US$76 million to a new initiative that could change how World Food Program procures food in developing countries.

WFP is the world’s single largest purchaser of food for humanitarian operations that include relief and safety net programs such as school feeding.

The new initiative, Purchase for Progress (P4P), is expected to guarantee hundreds of thousands of smallholder farmers access reliable markets for their surplus produce at competitive prices, increasing household incomes and bolstering fragile local economies.

Transformation in WFP’s local food procurement policies and practices, which are central to the agency’s new business model, aim to strengthen the role of low-income smallholder farmers in local agricultural markets and enable them to prosper from supplying food for WFP’s global operations.

Developed in partnership with the foundations, P4P will be launched in 21 pilot countries over the next five years. Speaking of the initiative, Gates said ”This is exactly the kind of innovative public-private partnership we need to advance the Millennium Development Goals and address extreme hunger and poverty around the world.”

With this partnership, WFP will align its efforts with organizations such as the Alliance for a Green Revolution in Africa (AGRA) that are focused on helping small farmers increase their productivity through the use of improved seeds and farm management techniques.

The majority of the world’s poorest people lives in rural areas, and most rely on agriculture for their food and income. Transforming the way WFP to purchases food therefore represents a momentous leap toward a truly sustainable change that could eventually benefit millions of poor rural households, especially in Sub-Saharan Africa.

The expectation is that through P4P, WFP will explore different ways to use its enormous purchasing power in developing countries to maximize gains for small farmers while alleviating any distortion to local markets.

By supporting small farmers’ ability to produce and supply food to WFP’s global operations, P4P will help them increase their incomes, which is critical in addressing rural unemployment, hunger and poverty at their roots.

We hope that P4P initiative will also seek to promote local food processing projects to provide food of high nutritional value, enabling farmers to reap maximum benefit from their crops. Besides supporting farmers to capitalize on the market offered by WFP, P4P must also connect them to other local and regional food markets.

Which way for Africa's Agriculture?

There is what is hip in just about every sphere of life. It is not surprising that even in development policy there a “flavor of the day” just like soup of the day at a lunch counter. After two decades in the doldrums, agriculture is back in vogue Africa.

At the food summit in Rome in June this year, the world discovered that for thirty years food production sub-Saharan Africa failed to keep pace with human population growth. Nearly 240 million Africans are malnourished and more than 25% of the population is chronically hungry.

Attention shifted away from agriculture partly because making it work seemed such an improbable mission. Agricultural development models were founded on on egotistical state-backed schemes like the attempt at large scale irrigation schemes or Mwalimu Nyerere’s Ujamaa villages. At the same time, traditional forms of land ownership seemed to constrain attempts at rationalizing land use and agricultural production.

In Africa, rainfall is both erratic and highly variable while soil conditions vary enormously. In most countries infrastructure (roads, railway, water, and electricity), markets and financial services are weak, broken or non existent. Political and civic governance is patchy and are shamefully mired in the financial orthodoxy of international institutions that froze public funding and support for technology, science and research that ensures American and European farmers keep up to date with the latest developments.

In his book Starved for Science, Robert Paarlberg, a leading scholar on smallholder agricultural development in Africa attributes withdrawal of donor support for modern agricultural science in Africa plus outright opposition to new farm science on the part of global pressure groups has contributed directly to hunger and deepening poverty.

There are good reasons to expect agricultural growth to reduce poverty. Agricultural development raises returns to land, the only real asset that the many rural poor in Africa own. Moreover, growth of food output should push down the price of staple foods, to the immense benefit of the poor who even in rural areas are overwhelmingly net buyers of food. It is argued that 1% growth in agriculture produces a 1.5% growth across the economy. Farming in sub-Saharan Africa tends to be labour-intensive, creating low level, local jobs.

But African agriculture is not an irredeemable disaster. It has great promise. According to the latest UN report agriculture contributes at least 40% of exports, 30% of GDP up to 30% of foreign exchange earnings, and 70 to 80% of employment.

Therefore, targeted investments in food production and high value market-led produce should pay off both in terms of food security at a time of soaring food prices, and in terms of household income and national economic development. The debate now focuses on where that investment should go.

At the dawn of the 21^st century there are big players with deep pockets: there is the Alliance for an African Green Revolution backed by the Bill & Melinda Gates Foundation and Rockefeller Foundation and championed by Kofi Annan and Ngongi Namanga, a former Deputy Executive Director of World Food Programme; there is also the Millennium Villages Project spearheaded by Jeffery Sachs and Pedro Sanchez both of the Earth Institute at Columbia University in New York.

Past agrarian revolutions proceeded through land reforms, culminating in displacement of people from the land. Larger farm holdings mean economies of scale and high productivity and hence better returns on investment

There are voices urging a similar approach in Africa. A battery of big private investors plan to consolidate small plots of land into more productive large ones, to introduce new technology and to provide capital to modernize and maintain grain elevators and fertilizer supply depots.

But most African governments are deeply suspicious of any move that aggregates small land holdings takes people off the land. The critical failure of other sectors of the economy to grow means there are few alternative jobs for the landless. The destabilizing effects of a jobless populace living in slum towns in both inner city and on the outskirts of major urban centres capital cities are all too familiar is worrisome.

In many parts of Africa, especially Kenya and Uganda, the system of land is a tribal inheritance, passed down from father to son. Historically, tribes through ties of kinship one generation to the next making any commercial acquisition and accumulation of land problematic if not impossible.

The challenge therefore is how to increase productivity among subsistence smallholder farmers. The opportunity and innovation lies in the role of policy, technology, research support and institutional arrangements that can aggregate production of small farm rather aggregating the land resource base. My sense is that traditional focus on large holdings as a pre-requisite for modernization and profitability of African agriculture is misplaced. In Europe, the economic viability of small farms has been sustained through a supportive policy framework, the Common Agricultural Policy.

Market-oriented production of high value crops through contract farming can enlist a strong network of smallholder farmers. Contract farming can expedite technology transfer, capital inflows and provide assured markets.

Contract farming can be defined as a system for the production and supply of agricultural produce under forward contracts between producers or suppliers and buyers. The essence of such an arrangement is the commitment of the producer to provide produce of a particular type, over a period and at an agreed price, and in the quality required by a known and committed buyer.

Renewed attention on African agriculture carries an inordinate risk of hailing tired ideas and presenting false choices for instance, large vs. small scale, biotechnology vs. organic, input credit vs. large foreign capital, indigenous technical knowledge vs. new farm science. In my view progress in African agriculture will depend on active private sector participation that enable smallholder farmers gain access high quality inputs, research and extension support as well as assured lucrative regional and international markets.

Ultimately for smallholder African farmers, the future of African agriculture will be determined by the household balance sheet. What model works or does not work will be determined by the farmers check book.