Agriculture as a business

Addressing agriculture and food security issues in Africa is critical, not only to economic development across the continent, but for the future of food production worldwide over the next generation.

23 January 2019 | Agriculture

Much progress has been made globally in terms of extreme poverty. According to the World Bank, the population living on less than US$1.90 (N$28) a day declined from 44% in 1980 to under 10% by 2015. But we must not celebrate too soon: we are not winning the war on global hunger.

In the 2017 report, 'The State of Food Security and Nutrition in the World', the UN's Food and Agriculture Organisation (FAO) points out that the number of hungry people worldwide increased from 777 million in 2015 to 815 million in 2016.

Climate change is worsening the situation, especially in sub-Saharan Africa. The International Food Policy Research Institute estimates that by 2050, Africa will be home to an additional 38 million hungry people due to climate change.

The challenges facing the world require focused and compassionate leadership. We owe it to ourselves, and to generations to come, to use every opportunity we have to make the world a better place.



Scaling up processing

The future of food in the world will depend on what Africa achieves in agriculture. Africa holds 65% of the uncultivated arable land left to feed nine billion people by 2050.

Its vast savannas are the world's largest agriculture frontier, estimated at 400 million hectares. But only 10% of this is cultivated.

Africa accounts for 75% of global cocoa production, with 65% of this coming from Côte d'Ivoire and Ghana. However, the continent is a price-taker and receives only 2% of the US$100 billion (N$1.47 trillion) annual revenues from chocolate globally.

This is because Africa exports only raw cocoa beans.

This pattern is the same for other commodities of which Africa is a major producer. It is time for Africa to move to the top of global food value chains through agro-industrialisation and adding value to all it produces.

The secret of the wealth of nations is clear: rich nations process what they produce, whether in agriculture, minerals, oil and gas, or services.

Poor nations export their produce as raw materials. While demand for raw commodities is elastic, demand for processed and value-added commodities is relatively inelastic.

Africa's reliance on exporting raw commodities exposes it to the high variability and instability of global commodity prices.

Such external commodity price shocks have continued to negatively affect African economies, creating domestic fiscal and balance of payment deficits that have led to inflation, currency devaluations and a decline in public expenditure.

African countries need policies to unlock the huge potential of these commodities by developing agricultural value chains and agro-allied industries that process and add value.

This will allow them to become more competitive in global value chains and raise incomes for their farmers, instead of being stuck at the bottom of the value chain.



Market-oriented agriculture

There is absolutely no reason for Africa to be food insecure; it should be the breadbasket of the world. Unlocking the enormous potential of its agriculture should be at the top of the global food security agenda.

Some may ask: will that not mean large commercial farmers? Images of ugly incidences of land grabbing may resurface in the minds of others.



Will the smallholders lose out?

Let's not start with the negative narratives that have held Africa back.

To realise its agricultural potential, Africa must use all it has: smallholders, as well as medium- and large-scale commercial farms.

African agrarian systems should support more dynamic and market-oriented agriculture with a commercial focus.

We must stop romanticising poverty. I have never seen a self-proclaimed subsistence farmer, and I come from a rural background, with a father and grandfather who were farmers.

What I see are poor, hard-working farm families desperately looking for opportunities to escape the indignity and pain of grinding poverty.

In my academic work I have researched and written extensively on the efficiency of smallholder farmers, and I am pro-smallholders. But I also know that their level of efficiency depends on the constraints they operate under.

They are 'efficiently poor'. We have to expand the production possibilities for smallholder farmers, remove the binding constraints around them, including limited access to technology, markets, infrastructure and finance, and make agriculture the source of their livelihood. It should be a wealth-creating sector, not a sector for perpetuating intergenerational poverty and misery.



Access to new technologies

The technology already exists to achieve a green revolution in Africa, but it is underused. Resilient and water-efficient new maize varieties allow farmers to harvest good yields in the face of moderate drought. Today's rice varieties can yield 8t/ha, and cassava varieties can yield up to 80t/ha. The problem is a lack of supportive policies for millions of farmers. There's no reason for Africa to spend US$35 billion (N$500 billion) a year importing food. All it needs to do is harness available technologies, apply the right policies and rapidly raise agricultural productivity and farm incomes. This will ensure lower food prices for consumers.



Rural development is crucial

The extent of rural poverty in Africa is unacceptable. Rural-to-urban migration is taking its toll, as most of the rural areas are becoming deserted in the desperate rush of millions of youth to find jobs in the cities, or worse, to migrate on perilous journeys to Europe.

Rural economies have become zones of economic misery. I cannot think of any agenda more important in Africa today than to seriously tackle the underdevelopment in the rural areas.

We must transform them into zones of economic prosperity. And that must start with agriculture and the food industry. It is time we changed the lenses through which we view agriculture in Africa. Agriculture is not a development activity or a social sector; it is a business and must be treated as one to unlock wealth. Think about it: the size of the food and agribusiness market in Africa will be worth a whopping US$1 trillion (N$14.7 trillion) by 2030.

I call for a revitalised and stronger strategic alliance between the African Development Bank, the FAO, the International Fund for Agricultural Development, and the World Food Programme to unleash the potential of agriculture as a business across Africa.

Africa is tired of being poor. Millions of African farmers are tired of being destitute and short-changed. We have the moral obligation, duty and responsibility to rise together and end hunger in Africa.

And we must go much further, by turning agriculture into a business for creating wealth.



*This article is an excerpt from the recent public lecture of the UN's Food and Agriculture Organisation (FAO), given by Dr Akinwumi Adesina, president of the African Development Bank, at the FAO's head office in Rome, Italy. It was first published in farmer's weekly.

Dr Akinwumi Adesina

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