International Development, Downloads July 2008 - June 2009: 9,

Argwings-Kodhek, Gem

Jayne, Thomas S.

Minde, Isaac J.

English

Research Papers in Economics

Page 1
Office of Sustainable
Development
Egerton University
Global Bureau,
Office of
Agriculture and
Food Security
POLICY SYNTHESIS
for Cooperating USAID Offices and
Country Missions
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             Number 47                    September 1999
AFRICAN PERSPECTIVES ON PROGRESS AND CHALLENGES IN
AGRICULTURAL TRANSFORMATION
By
Gem Argwings-Kodhek, T.S. Jayne, and Isaac Minde
Food Security II Cooperative Agreement between U.S. Agency for International Development, Global Bureau, Economic Growth Center, Office of
Agriculture and Food Security and Department of Agricultural Economics, Michigan State University
These were some of the major messages that
emerged from a Fourth Workshop on Agricultural
Transformation in Africa, involving a group of
prominent African researchers, policy makers, and
private sector representatives from 16 countries.
The workshop (held in Nairobi, Kenya, in June
1999), the fourth in a series sponsored by USAID’s
Africa Bureau, was organized by Tegemeo Institute
of Egerton University, the Eastern and Central
Africa Program on Agricultural Policy Analysis
(ECAPAPA), and Michigan State University.
The discussions and consensus from the workshop
were generally more optimistic than the conventional
perceptions about the state of African agriculture.
Key messages from the workshop included:
· Most African countries that have carried out
agricultural policy reforms are doing better than
those that have not. However, there is still much
to do across all countries to nurture a policy
environment that attracts private investment
capable of achieving rapid agricultural
productivity growth.
· Rapid globalization is redefining the concep-
tualization of agricultural growth strategies in
Africa. African economies will either make the
policy decisions to become interconnected with
the rest of the world in a trade-based and
ECAPAPA
Eastern and Central Africa Programme
for Agricultural Policy Analysis
Emerging Trends in African Agriculture:
• Evidence of agricultural recovery and growth in selected countries as sectoral policy reforms begin
to show payoffs;
• Evidence of rising crop input use and intensification in some countries; declines in others;
• Rapid globalization is redefining the conceptualization of agricultural growth strategies in Africa %
growth will require more decentralized and flexible organizations capable of reacting quickly and
responding to international market opportunities; and
• Major concerns about whether the economic and demographic processes of structural 
FS II Policy Synthesis No. 47 
Page 2
specialized competitive system or be left
behind.
· Linking agricultural development to industrial
development is a necessary part of this process.
· Growth will increasingly require a pragmatic
approach toward biotechnology.  The green
revolution largely bypassed much of Africa.
The continent cannot afford to let this happen
with biotechnology.
· The linkage of agriculture to markets makes
the role of commitment, consistency, and
communication more critical among the
business sector, commodity associations and
farmer groups.
· The role of the state remains critical %
agricultural transformation cannot be achieved
by sidestepping  the state. The private sector
has an important role to play in pressuring for
good governance and efficiency.
These six areas are the elements of the vision
developed at the meeting.  Agricultural growth
rates above the rate of population growth (about 4
percent) are well within the technical and economic
capacity of Africa to achieve, provided this is made
a top priority in public investment decisions.
Prioritizing agriculture entails increased budgets
and restructured incentives for technology
development and dissemination, as well as greater
coordination between national, regional, and
international research centers.  And the limited
successes from decades of public and donor
investment in African agricultural systems suggest
that it is more than the quantity of money spent
that matters.  The participants concluded that
governance issues need to be incorporated into the
agricultural transformation debate.
Participants from both the public and private sector
agreed that only through first transforming
agriculture can the lives of most African people be
improved.  But government commitment is still
lacking. Africa spends only one-third as much of
GDP on agricultural research as do most high-
income countries, yet agriculture is six times as
important to its GDP. Investments in agricultural
research and infrastructure need to be increased
18-fold to match the investments being made in the
developed world and those made during the green
revolution in the newly industrialized countries of
South and South East Asia.
DETAILED FINDINGS:
Agricultural Productivity: Contrary to widespread
perceptions, input use has actually increased in
recent years in many African countries, and there is
solid evidence of agricultural productivity growth in
about a third of them.  However, this is not cause for
complacency.  A key question raised repeatedly
during the workshop was what is accounting for the
limited use of productivity-enhancing farm
technologies (e.g., improved seed and fertilizer) in
Africa?  Four country case studies presented on this
topic revealed that the national agricultural research
systems have had a mixed track record in generating
productive new technologies.  These African NARS
tend to be top-heavy with large numbers of non-
research staff, bloated payrolls, and poorly paid
unmotivated scientists. Only small portions of their
budget are from non-government contributions,
creating weak stakeholder oversight.  But even in
cases where improved technologies have been
developed, the ability of farmers to use them has
been impeded by high costs of distribution, caused
by poor infrastructure, high transaction costs, and
policies that thwart private investment in the system.
Some apparently profitable technologies sit
underutilized on the shelf, perhaps convincing
governments that further investment is not money
well spent. This leaves the bulk of funding to donors
whose incentives are often geared to show short-
term payoffs.  The meeting accentuated the
importance of enhancing stakeholder roles in both
research management and financial contributions,
and making research more farmer- and market-
driven. In South East Asia, agricultural research
played a key role in broad-based poverty alleviation
through generating technologies that could be
adopted on small farms, thus improving the lives of
tens of millions of farmers.
Linking African Agriculture to Regional and
Global Markets:  Commercialization % raising the
share of farm output produced for the market rather
than for subsistence % as seen as critical in
agricultural transformation. The productivity gains
accruing from increased specialization and
commercialization are made possible by the 
         FS II Policy Synthesis No. 47 
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development of more reliable and lower-cost
markets and their institutional adjuncts % e.g.,
protection of commerce through strong legal
systems, clearly defined property rights.
Markets are increasingly being liberalized, albeit
slowly and sometimes haltingly, throughout the
continent. But most private markets are still based
on spot market transactions with little coordination
between credit, input and output marketing.  While
a specific goal of policy is to reduce marketing
costs, the evolution of more productive economies
over the past 200 years has featured the
development of more complex marketing and
contracting arrangements.  These more complex
marketing arrangements have successfully reduced
risks and transaction costs of investment in more
technically efficient production processes and have
hence proven valuable because they have
encouraged productivity growth at other stages of
the system. In this regard, market reform policy
should be regarded as a continuous process of
searching for alternative institutional arrangements,
adapted to local conditions, capable of promoting
new investment and productivity growth throughout
the food system.
National domestic markets and global export
markets have long been the preoccupation of
African agricultural policy. Several papers showed
the potential of regional markets to bring positive
benefits to producers without harming consumers.
Achieving these gains, however, will require much
lower transport and transaction costs.  A range of
policies and investments still need to be put in
place to improve the functioning of markets and
reduce the cost of participating in them. (e.g.,
investment in road, harbor and rail infrastructure,
strengthening the legal foundations of a commer-
cialized economy, and selected policy changes to
enhance private investment incentives further).
Linking Agricultural and Industrial
Development:  While accepting that industry can
be important in pulling Africa out of poverty,
participants emphasized that only industrialization
based on strong agricultural growth can lead to
broad-based poverty alleviation of the kind seen in
parts of South East Asia.  A comparative review of
South East Asia and Africa showed that increases in
agricultural income % whether from productivity-
enhancing changes in technology, or from improved
infrastructure, or policy % were the single most
important factor in explaining differences in
enterprise start-up rates, enterprise expansion, and
job creation in non-farm sectors across countries and
regions.  Sustained incentives for private investment
in agriculture also sparked in many East Asian
countries the dynamic demographic and labor shift
culminating in structural transformation.
Agricultural growth fueled the demand for small-
scale industry, which expanded off-farm jobs.  The
rising share of people involved in off-farm activities
in turn raised the demand for domestic agricultural
production. This dynamic transformation process
has been impeded in Africa by a lack of fundamental
investment to get agriculture moving in the first
place.
Tapping the Potential of Biotechnology:   Africa
needs to be aware of both the risks and the very
great potential of this new branch of science to
transform agriculture.  But the meeting concluded
with a clear appreciation that African farmers’
access to the productivity-enhancing benefits of
biotechnology is crucial for future competitiveness
and poverty alleviation.  Biotech is already being
widely used throughout the world. African
governments will either forge agreements with
multinationals and research centers that give African
farmers’ access to this technology, or face becoming
uncompetitive in increasingly globalized markets.
Major priority areas for future analysis are how
African governments and NARS should liaise with
international research centers and multinational
firms to gain a voice in discussions of intellectual
property rights,  and how to nurture competition
pro-actively among the foreign technology firms to
supply the African farmer.
Consistency and Communication:  Even though the
official policy environment across Africa is more
conducive to private investment now than a decade
ago, conflicting policy statements by government
officials in the press raise the specter of policy
reversals and adversely affect the private sector’s
response to liberalization. Statements by key
politicians  critical of a market-oriented system are 
FS II Policy Synthesis No. 47 
Page 4
likely to be incorporated into the private sector’s
expectations of the payoffs and risks of future
investment in the system. For their part, the private
sector and researchers such as agricultural
economists and research scientists are still search-
ing for  processes of effective dialogue with
government and politicians who determine how
public resources are allocated. The result is often
an atmosphere of mutual suspicion and policy
unpredictability. This is one of the biggest differ-
ences between much of Africa and other parts of
the world. Examples of the Taiwanese Joint
Committee on Rural Reconstruction and U.S.
farmers making presentations on their positions
regarding the millennium round of trade negotia-
tions of the World Trade Organization showed how
far Africa has to go in building social capital % the
ability of a society to sit down, discuss, and work
out mutually agreeable ways of achieving goals.
The role of the state remains critical % not  in the
historical role of a participant in production and
marketing, but as a facilitator of socially beneficial
activities undertaken by others. In many countries,
the state has helped break down oligopolies, has
invested in the generation and use of technology
and market information, and has helped reduce the
transaction and contract enforcement costs of doing
business.  Some of these functions only the state
can provide, through organized civil society.
The workshop participants recognized that the
processes of agricultural growth and structural
transformation cannot occur without an explicit
focus on changing the "culture" of the state %  how
people operate within it, transparency of decision
making, etc. It was recognized that analysts and
interest groups need to contribute to such a process,
in part by trying to make their analyses more
concrete, geared toward solutions to practical
problems, and presented in a form that people
outside the profession can easily follow.
FOLLOW-UP ACTIONS: Beyond defining an
analytical agenda, the workshop participants set a
number of target follow-up actions that could
further the cause of agricultural transformation.
Key among these were:
￿ To attempt to measure progress toward agri-
cultural transformation through a process of
defining and measuring benchmark indicators;
￿ To extend productivity measures beyond the
farm to include commodity production,
marketing and processing systems;
￿ To identify business opportunities, particularly
in non-traditional crops and non-traditional
markets; and
￿ To make professional research more in tune
with the questions in policy makers’ minds and
to package results so they can be accessible to,
and understood by, a wider audience.
This policy synthesis is part of that outreach
process.  More detailed information (including
downloadable copies of all papers presented) and
strategies for consideration by decision makers’ can
be found at the Transformation Website
(http://www.aec.msu.edu/agecon/fs2/ag_transformation/index.htm).
Beyond  identifying concrete actions for progress, a
major aim of the workshop and follow-up activities
is to get renewed commitment to agricultural
transformation % one of the most important routes to
improving the lives of millions of citizens of Africa.
*Work for this summary was conducted under the Food Security II
Cooperative Agreement (PCE-A-00-97-00044-00) between Michigan
State University and the United States Agency for International
Development, through the Office of Agriculture and Food Security in  the
Economic Growth Center of the Global Bureau (G/EG/AFS).
Supplemental funding for this research was also provided to the FS II
Cooperative Agreement by the Africa Bureau, through the Food Security
and Productivity Unit of the Sustainable Development Division,
Productive Sector, Growth and Environment (AFR/SD/PSGE/FSP).
Argwings-Kodhek is Senior Research Fellow, Tegemeo Institute; Jayne
is Visiting Associate Professor, Michigan State University; and Minde
is Coordinator, Eastern and Central African Programme for Agricultural
Policy Analysis. The views expressed in this document are exclusively
those of the authors.

African Perspectives on Progress and Challenges in Agricultural Transformation

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