High value products or staple crops? A discussion on development strategies for Southern Africa

Unexploited agricultural potential and regional trade opportunities together with the presence of South Africa and other middle-income countries, offer Southern Africa the unique opportunity to foster agricultural growth through regional linkages. In this study a global general equilibrium model that focuses on Southern Africa is used to analyze the implications that these specific characteristics of the regional economy have on growth choices of low-income countries. Three groups of growth scenarios are define to analyze the role of South Africa as a possible engine of growth, the role of own growth engines in low-income countries, and growth linkages between middle- and low-income countries. Results of the simulation scenarios show that larger benefits to low-income countries can be expected from grain and livestock productivity growth as a result of high multiplier effects and the large share of these activities in GDP. Productivity growth in grain and livestock results in higher GDP growth, higher agricultural output and food consumption, and lower agricultural imports than with productivity growth in non-traditional export crops. Unlike other regions where growth in grain production is likely constrained by domestic demand, growing middle-income economies in Southern Africa can provide additional demand to grains and livestock, slowing down the decline in grain prices in the region.Community/Rural/Urban Development,

An updated look at the recovery of agricultural productivity in Sub-Saharan Africa:

"We analyze the evolution of Sub-Saharan Africa's agricultural total factor productivity (TFP) over the past 40 years, looking for evidence of recent changes in growth patterns using a nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of Sub-Saharan Africa's agriculture during the 1984–2003 period after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production resulting from changes in the output structure and an adjustment in the use of inputs, including an overall net reduction in fertilizer use but increased fertilizer use in most of the best-performing countries. Policy changes African countries conducted between the mid-1980s and the second half of the 1990s together with technological innovations available at that time appear to have played an important role in improving agriculture's performance. As TFP growth in Sub-Saharan Africa is mainly a result of catching up to the frontier, we expect growth to slow in the coming years unless African countries accelerate the incorporation of innovations into the production process and increase the speed of technical change." from authors' abstractAgriculture, Efficiency, Malmquist index, Total factor productivity, Technical change, Development strategies,

Agricultural Productivity and Policies in Sub-Saharan Africa

We analyze the evolution of Sub-Saharan Africa’s agricultural total factor productivity (TFP) over the past 45 years, looking for evidence of recent changes in growth patterns using an improved nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of Sub-Saharan Africa’s agriculture between 1984 and 2006 after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production resulting from changes in the output structure and an adjustment in the use of inputs. Policy interventions, including fiscal, trade and sector specific policies, appear to have played an important role in improving agriculture’s performance. Despite the improved agricultural performance, SSA economies face serious challenges to sustain growth. Among these are the small contribution of technical change to TFP growth in the past, the large tax burden imposed by remaining distortions, and the challenge of population growth.agriculture, efficiency, Malmquist index, total factor productivity, technical change, Sub-Saharan Africa, policy, Agricultural and Food Policy, International Development, Productivity Analysis,

Agricultural productivity and policies in Sub-Saharan Africa:

We analyze the evolution of Sub-Saharan Africa's (SSA's) agricultural total factor productivity (TFP) over the past 45 years, looking for evidence of recent changes in growth patterns using an improved nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of SSA's agriculture between 1984 and 2006 after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production, resulting from changes in the output structure and an adjustment in the use of inputs. Policy interventions, including fiscal, trade, and sector-specific policies, appear to have played an important role in improving agricultural performance. Despite the improved agricultural performance, economies in SSA face serious challenges to sustain growth. Among these are the small contribution of technological change to TFP growth in the past, the large tax burden imposed by remaining distortions, and the challenge of population growth.Agriculture, Efficiency, Malmquist index, policy, Technical change, Total factor productivity,

How important is a regional free trade area for Southern Africa?: Potential impacts and structural constraints

"We develop a detailed trade analysis to assess the potential welfare impacts of a free trade agreement (FTA) on the agricultural sector of southern African countries and to determine opportunities and challenges faced by the region as a consequence of the agreement. Our approach combines an in-depth look at the current trading patterns of southern African countries with the application of a partial equilibrium analysis that uses bilateral trade data at the four-digit standard international trade classification (SITC) level for 193 agricultural industries in 14 southern African countries. Low diversification of agricultural exports in most southern African countries seems to be a major constraint for promoting regional trade. In most countries, overall welfare effects of an FTA would be positive but small. Inefficient agricultural producers with a regional comparative advantage for agriculture would benefit from trade creation with the rest of the world. Welfare results for regional importers would be negative because of increased imports from inefficient regional producers. These results suggest that the region should be looking at regional policies and interventions beyond trade arrangements, such as those targeting investment, agricultural productivity, and diversification, to enhance benefits of regional trade liberalization." from authors' abstractRegional trade agreement, Agricultural trade, Development strategies,

Lagging regions and development strategies: The case of Peru

"Despite the economic transformation of Peru's coastal economy, the country's inland region remains poor and underdeveloped. We herein examine the economic linkages between the two regions using a multi-regional computable general equilibrium model based on a regionalized social accounting matrix. The model results show that coastal growth undermines the inland economy by increasing import competition and internal migration. Peru, therefore, cannot rely solely on rapid national growth to generate broad-based poverty reduction. When we simulate policies aimed at curbing divergence, we find that reducing interregional transaction costs stimulates national economic growth, but widens divergence by shifting inland production towards agriculture and concentrating investment in coastal manufacturing. In contrast, conditional cash transfers reduce regional and rural-urban inequality, but do not stimulate national growth. Finally, investing in inland productivity (through extension services and improved rural roads) reduces regional divergence, but the resulting market constraints worsen rural-urban inequality. These findings suggest that isolated interventions may worsen inequality, and that complementarities exist between supply-side investments and policies aimed at stimulating demand and improving access to national markets." from authors' abstractRegional development, Public investments, economic growth, Development strategies,

Mitigating greenhouse gas emissions in Kenya's food system: Economic interdependencies and policy opportunities

Low- and middle-income countries worldwide share the common challenge of achieving sustainable economic development while reducing greenhouse gas (GHG) emissions. This challenge is complex due to the interconnectedness of economic activities, where policies targeting one industry can have ripple effects on others. Therefore, it is crucial to understand integrated GHG emissions and their relationships across industries within an economy to inform effective policy formulation. Kenya, as a middle-income country experiencing rapid economic growth, faces an urgent need to address this challenge. This study analyzes the economic relationships between agricultural production, the food industry, and other sectors of the economy in Kenya to identify key drivers of national GHG emissions from the food system. To accomplish this, an environmentally extended input-output (EEIO) table is employed to calculate both direct and indirect emissions for 38 activities of Kenya’s economy, as well as emissions embodied in final goods. Direct emissions refer to those generated during the production process of an activity, while indirect emissions are produced by other activities that provide inputs to the activity of interest. The findings reveal that agriculture is the largest contributor to GHG emissions in Kenya, with the majority of emissions stemming from direct sources such as enteric fermentation and manure management in livestock production. Additionally, the study finds that total emission intensity in the manufacturing sector is considerably higher than in most agricultural activities, except for livestock production, primarily due to the significant level of indirect emissions associated with manufacturing processes. Within the agricultural sector, cereals and livestock production exhibit high levels of direct emissions, while export crops like coffee and tea, as well as vegetable cultivation, show relatively higher indirect emissions. Addressing GHG emissions from the livestock sector emerges as a crucial step in significantly reducing agricultural emissions in Kenya. The dairy sub-sector presents an opportunity for intensification and technological advancements, as climate-smart technologies have already demonstrated their potential to enhance productivity while reducing emissions. Conversely, mitigating GHG emissions in beef production, which is primarily concentrated in ecologically fragile areas, will require institutional innovations focusing on rangeland management, disease control, and scaling up livestock marketing efforts. While the intensification of dairy production can contribute to agricultural growth and development in Kenya, its impact on mitigating GHG emissions is expected to be limited at the national scale

Cereal production and technology adoption in Ethiopia:

The Ethiopian government has been promoting a package-driven extension that combines credit, fertilizers, improved seeds, and better management practices. This approach has reached almost all farming communities, representing about 2 percent of agricultural gross domestic product in recent years. This paper is the first to look at the extent and determinants of the adoption of the fertilizer-seed technology package promoted in Ethiopia using nationally representative data from the Central Statistical Agency of Ethiopia. We estimate a double hurdle model of fertilizer use for four major cereal crops: barley, maize, teff, and wheat. Since maize is the only crop that exhibits considerable adoption of improved seed, we estimate a similar model for the adoption of improved seed in maize production. We find that access to fertilizer and seed is related to access to extension services and that production specialization together with wealth play a major role in explaining crop area under fertilizer and improved seed. One of the most important factors behind the limited adoption of the technological package is the inefficiency in the use of inputs, which implies that changes are needed in the seed and fertilizer systems and in the priorities of the extension service to promote more efficient use of inputs and to accommodate risks associated with agricultural production, especially among small and poor households.Agriculture, cereals, double-hurdle model, maize, Technical change, Technology adoption, teff, Wheat,

An appropriate level of risk: Balancing the need for safe livestock products with fair market access for the poor

This paper examines the role of livestock products as commodities of trade, responding to the demand and higher prices that many external markets offer, and at the same time providing important contributions to the development process in poorer countries. It highlights that this opportunity is not without its threats: much of the Western world has, over the last half century in particular, invested substantial amounts of money in controlling and eradicating many infectious diseases of livestock, and in building up healthy and highly productive animals, the products derived from which earn them very large sums of money on world markets. Such countries are not willing to take risks that could threaten their livestock industries, and their domestic and export markets that maintain high animal health and food safety standards. The study builds on a number of 'success stories', examples where developing countries have succeeded in exporting livestock or livestock products to external markets. An analysis of the factors governing their success revealed some commonalities: all were driven by strong private sector partners who contributed capital, management expertise and entrepreneurial flair; most concerned livestock products, rather than live animals, which matched the market's requirements; many had developed strong brand identities which had become synonymous with quality, safety and dependability; and many were vertically integrated systems, incorporating small and medium scale out-grower producers. Often these successes have been achieved despite the absence of effective support from the public sector, such as national veterinary authorities. One of the key findings of this study is the disparity between the push for global harmonisation of animal health standards for trade, and the lack of capacity of developing countries, particularly LDCs, to meet these standards. The study considers how this might be rectified and concludes that building capacity of regional bodies to create regional centres of excellence with regard to SPS matters may be the most practical way forward.Livestock Production/Industries,

Priorities for realizing the potential to increase agricultural productivity and growth in Western and Central Africa:

"We identify a set of development priorities for agriculture that cut across West Africa, at both the country and the regional level, to achieve economy-wide growth goals in the region. To do this, we adopt a modeling and analytical framework that involves the integration of spatial analysis to identify yield gaps determining growth potential of different agricultural activities for areas with similar conditions and an economy-wide multimarket model to simulate ex ante the economic effects of closing these yield gaps. Results indicate that the greatest agriculture-led growth opportunities in West Africa reside in staple crops (cereals as well as roots and tubers) and livestock production. Rice is the commodity with the highest potential for growth and the one that could generate the greatest benefits for many countries. Activities contributing the most to agricultural growth in the Sahel are livestock, rice, coarse grains, and groundnuts; in coastal countries, staple crops like cassava, yams, and cereals seem to be relatively more important than the contributions of other subsectors; and livestock and root crops are the sources of growth with highest potential in Central Africa. Our results also point toward an essential range of policies and investments that are needed to stimulate productivity growth of prioritized activities. These include the following: development of opportunities for regional cooperation on technology adaptation and diffusion, strengthening of regional agricultural markets exploiting opportunities for greater regional cooperation and harmonization, diversification of traditional markets, and enhancement of linkages between agricultural and nonagricultural sectors." from authors' abstractAgricultural growth, Multi-market model, spatial analysis, Staple food crops, Yield gap, Development strategies,