Procesos

yet to be seen how regional policies will emerge to tackle at regional level non-tariff barriers including the poor state of the regional transportation and communication systems among countries in Africa. 6.5.2 Challenges over input access and

technical constraints

Input subsidy dilemma

Policies and actions to increase the access to inputs such as fertilizer, pesticides, and animal vaccines are highly important but difficult to implement. One way to increase input access is input subsidy. Haggblade and Hazell (2010) report that the success of the increase in maize yields and production in Eastern and Southern Africa (mainly in Kenya and Zimbabwe) in the 1960s was based on the successful diffusion of hybrid maize seeds, making some other essential inputs such as fertilizer affordable to farmers. In this example, it is often cited that the input subsidies have made maize the main basic staple in Eastern and Southern Africa to this day. However, input subsidies may continue to be difficult to implement because they are costly, unsustainable and require serious targeting to avoid moral hazard and selection bias. As O’Connell (2008) notes, one of the problems, especially in Sub-Saharan Africa is the misallocation of financial resources that are sometimes guided more by favouritism than efficiency. In the input subsidy case, the targeting of whom to help has been compromised by lack of information and often exasperated by misallocation of funds to the already richer farmers. Why input subsidy use continues to be debated to this day highlights the difficulty associated with its motivation and implementation.

Education and technology policies

There is a consensus that most of the agricultural technology that Africa needs is readily available either in the continent itself or abroad and faults the lack of local research and extension to facilitate the technology transfer and adoption (Bingswanger- Mkhize, 2009). The removal of technical barriers hampering productivity has become one of the priorities of the African Union’s Africa Agriculture Agenda initiative. However, it remains linked to the inability to improve African farmers’ education and to strengthen agricultural research and extension.

Because of limited resources allocated to education, many countries in Africa, as in other developing countries, still face the old dilemma of having to choose a priority between investment to provide general education for all and investment that emphasizes preparing an elite for high education (The Phelps vs. Lucas arguments). This is a policy choice that has no clear-cut answer, as each has advantages and risks. Education for all will lift overall literacy rates and spark development but in the short run may not yield the high level of key skills required for a quick technology transfer and implementation to trigger growth. On the other hand, emphasis on educating mainly a few elite may prompt increases in productivity in the short run but may engender risks of insufficient skilled manpower to oversee economic activities, besides the all-to-familiar ‘brain drain’ risk. Many countries in Africa have treaded between the two lines, and the evidence shows that productivity remains low. One could think that in the immediate future, increasing the size of the resources allocated to education is among the top priorities regardless of the path chosen.

Although much remains to be done to overcome technical barriers in Africa’s food sector, there are a few encouraging examples. Access to and diffusion of techniques to restore soil fertility in arable land has proven successful, as the cases of soil fertility management in Zambia and Western Kenya show. Farmers in these areas have been using simple techniques such as minimum tillage systems that allow water and soil organic retention, along with crop rotation and use of manure. Additionally, in livestock, the use of dairy breeds and animal disease control since the early 1960s have contributed to the trebling of dairy production in Kenya. Likewise, bovine meat production per head has increased due to better control of animal diseases. One can also cite the success of the efforts to fight Rinderpest diseases on livestock (mainly cattle) in 35 countries in Africa after the launch of mass vaccination campaign under the Pan African Rinderpest Campaign in the mid-1980s. Similarly, regional initiatives under the Common Africa Agriculture Development Programme (CAADP) have been aimed at the removal of technical barriers preventing such successes, especially for land and water management and fertilizer use, and the results show some progress but at a slow pace (OECD, 2010).

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6.5.3 Challenges linked to foreign agricultural investment

Many low-income countries in Sub-Saharan Africa have recently been the target of new foreign agricultural investment originating from advanced or emerging economies (e.g. The Golf States, China, India, Russia, South Korea) that have limited agricultural land and insecure food supply. These investments bring new resources (skills, technology, and infrastructure) and especially make use of local resources previously unused, such as labor and land. The expected benefits for the host countries include payroll tax revenues and profit taxes, while for the investing countries the benefit is mainly a reliable and relatively stable food supply. The exact extent of these impacts remains unknown and may vary across countries and the types of investment. The successes in agricultural production and development (e.g. fruits and vegetables in East Africa, livestock production in Sudan) show that the private sector and foreign investment have played important roles by linking farmers to input and output markets. For instance, these investments have eased the access to credit and essential inputs and have guaranteed an outlet for food products at a stable and agreed upon price.

There is a concern, however, that if the host countries are food insecure, the foreign investment in agriculture may worsen the food insecurity problem by reducing the competitiveness of domestic food (and agricultural) production and especially by elevating production cost and food prices for local consumers.8 _{The reduced competitiveness arises} from the increased competition for land and labour (especially if they are mobile across sectors). Also, as food price rises, local food producers may still profit indirectly from the investment, but the gain may be temporary as it can be diminished by the entry of relatively cheaper imports. High local food prices entice the entry of cheaper imports, which cuts consumer loss but increases the country’s dependency on food imports. However, it cannot be said outright that the foreign agricultural investment is all harmful; the resulting welfare effects depend much on how the employment gain and the returns to the owners of land and labour offset their losses from increased food and

8 _{Collier et al. (2009) cited also the risk for Africa having}

investors who are not interested in helping the country’s agricultural sector but arrive seeking a quick profit.

input prices. The rise in production costs (especially land and labour) has negative effects on other non-agricultural sectors, jeopardising for instance the comparative advantages in exporting labour- intensive products (textile), and as a consequence, the foreign agricultural investment may increase food-import dependency. However, the impact of the foreign agricultural investment on food security depends on how much additional purchasing power it has created to allow the host countries to afford food imports.

6.5.4 Efficiency or self-sufficiency?

This policy dilemma is no longer an issue for some of the relatively high-income countries in Africa, as they have already solved the problem by importing some of the food products that are costly to produce at home. True, many of these countries are still looking for food supply stability (e.g. by directly investing in other countries), but it seems that for them, efficiency has won over self-sufficiency. Because these rich countries have enough revenues, they can afford to pay for food imports. But, as the poorer countries in Africa grow, can they follow in the footsteps of the richer ones? To address this question, it is useful to check how the efficiency and self-sufficiency debates play out regarding two important issues, namely food security and export diversification.9

Rationale for food security

If ensuring food security is a country’s main goal, then the examples of Africa’s richer countries show that it is indeed feasible to secure access to food by developing non-food or non-agricultural activities and then using the cash revenues from these activities to import food. Implementing such a strategy is, however, difficult and less straightforward because in many of the poor African countries, agricultural and food production are not activities that can be transformed or abandoned overnight. Agricultural activities have been the mainstay of the rural livelihoods, and the farmers’ flexibility to switch from food to cash crops (or vice versa), let alone from food production to, say, tourism, is hardly a given. One complication is that food crops are seasonal while cash crops may be perennial (or

9 _{FAO (2008) offers more analyses on biofuel and food}

security that highlight the dilemma energy vs. crop and is an illustration of such debates.

Chapter 6: The roles of economic and agricultural policies in Africa agricultural and food trade

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