New Report tracks the connection between increased Food Production and GDP growth
On cusp of historic agriculture summit, analysis builds a case for betting big on African farmers while bluntly warning of many challenges that lie ahead.
A decade of intense domestic attention to farmers and food production has generated “the most successful development effort” in African history, with countries that made the biggest investments rewarded with sizeable jumps in both farm productivity and overall economic performance, according to a new report released today by the Alliance for a Green Revolution in Africa (AGRA).
These are among the key findings noted in AGRA’s 2016 African Agriculture Status Report (AASR), “Progress towards an Agriculture Transformation of Sub-Saharan Africa.” The document provides an in-depth and unsparing review of an incredibly active ten-year period for African agriculture—one AGRA frames as a prelude for potentially big things to come. The analysis serves as a curtain raiser for this week’s high-powered African Green Revolution Forum (AGRF) in Nairobi, which is attracting heads of state and high-level officials from around the world. And it could lock-in hundreds of millions of dollars in new investments for Africa’s often struggling farmers.
“The last ten years have made a strong case for agriculture as the surest path to producing sustainable economic growth that is felt in all sectors of society—and particularly among poor Africans,” said AGRA President Agnes Kalibata. “The track record is far from perfect,” she added. “Many governments face significant budget constraints and far too many farming families continue to lack basic inputs, like improved seeds or fertilizers. But the evidence is clear. When we invest in our farmers and in the all the things they need to succeed, good things happen across the economy.”
At Last, Agriculture Advances in Africa
The report finds that “after decades of stagnation, much of Africa has enjoyed sustained agriculture productivity growth since 2005, and as a result, poverty rates have declined in places like Ghana, Rwanda, Ethiopia and Burkina Faso. The report notes that agriculture has had its biggest impact in countries that moved quickly to embrace the African Union’s Comprehensive African Agriculture Development Programme or CAADP, which was created in 2003. A key component of CAADP was its call for African governments to allocate 10 percent of national budgets to agriculture and to aim for six percent annual growth in the sector.
The AGRA report notes that even if they didn’t hit the 10 percent targets, early adopters of the CAADP goals have seen productivity on existing farmlands rise by 5.9 to 6.7 percent per year. This boost in turn helped spur a 4.3 percent average annual increase in overall GDP. Those later to the game achieved anywhere from a 3 to 5.7 percent growth in farm productivity and a 2.4 to 3.5 percent increase in GDP.
Meanwhile, countries that sat on the sidelines saw farm productivity rise by less than 3 percent and GDP rise by only 2.2 percent.
The trend is similar for declines in malnutrition, with countries that have embraced the CAADP process experiencing annual declines ranging from 2.4 to 5.7 percent, while those who have not averages only a 1.2 percent decline.
|The Big Payoff from an Early Embrace of Agriculture in Africa
Countries that have implemented the Comprehensive African Agriculture Development Programme (CAADP) have posted higher agriculture productivity and stronger GDP growth as well as sharper declines in malnutrition compared to countries that have not adopted the program by signing CAADP compacts. The differences are especially stark when comparing countries that signed up early, between 2007 and 2009, to those that have not yet signed. The early adopters are: Benin, Burundi, Cape Verde, Ethiopia, Gambia, Ghana, Liberia, Mali, Niger, Nigeria, Rwanda, Sierra Leone, and Togo.
|Annual Increase in Agriculture Production & Land Productivity
Early Adopters: 5.9% – 6.6%
Non-Adopters: 2.1% – 2.9%
|Annual Increase in GDP Per Capita
Non Adopters: 2.2%
|Annual Decline in Malnutrition Prevalence
|Source: 2016 African Agriculture Status Report, Chapter 2|
“It’s clear that with agriculture now back at the top of Africa’s development agenda, the foundations have been laid for a renaissance in African agriculture that could quickly deliver benefits to the broader economy,” said David Ameyaw, one of the report’s lead authors who is head of Monitoring and Evaluation for AGRA.
He said the report found evidence that many farmers are “gaining more options in the seeds they plant, in the fertilizers they use, and in the markets available to purchase their produce.”
But African agriculture experts who contributed to the report make it clear that all is far from well. The report points out that Africa remains “the world’s most food insecure continent, with relatively low levels of agricultural productivity, low rural incomes, high rates of malnutrition and a worsening of food trade balance.”
Worrisome Trends, but Opportunities Abound
“Agriculture development is very uneven across the continent,” said Thomas S. Jayne, a professor of agricultural, food, and resource economics at Michigan State University and a co-author of the report. “Where there is the right mix of interventions, we see it delivering considerable economic opportunities and addressing fundamental development milestones, like improving nutrition. But where it is neglected, agriculture continues to be a barrier to generating more sustainable and equitable economic growth in sub-Saharan Africa.”
Overall, the 2016 AASR digs deep into a wide array of trends affecting African agriculture, some worrisome and others indicative of opportunities transform a sector that has consistently been long on potential and short on achievement. Among the reports key findings:
While public investments in agriculture have grown, public funding should be four times what it is now. Annual public investments in agriculture have risen appreciably across Africa, from an average per country of US $186.4 million between 1995 to 2003 to US $219.6 million between 2008 to 2014. Yet only 13 African countries have hit or surpassed their pledge to invest at least 10 percent of public funds in agriculture. If all that have pledged to could make good on their promise—and competing demands and budget constraints make that difficult— public funding for agriculture across Africa would rise from $12 billion (the amount allocated in 2014) to $40 billion.
Broad-based agricultural growth is going to generate long-term employment and wealth; the industry must grow beyond what happens in the fields. Farming remains a key source of income for 60 to 65 percent of the labor force in sub-Saharan Africa and will continue to be a major source of employment for most countries for a decade or more, particularly for poor Africans. That’s why growth in agriculture is so much more effective at reducing poverty than growth in other sectors. Yet the report notes that to provide a long-term economic lift, agriculture growth must spur a rise in manufacturing jobs—as it did in East Asia— and that’s not yet happening in Africa. Manufacturing accounts for only about 10 percent the region’s total employment, lower than anywhere else in the world save the Arab States.
n Realizing the promise of African agriculture will not be cheap. It could require US $315 billion to US$ 400 billion over the next ten years in public and private sector investments in all aspects of food production, processing, marketing and transport.
n African farms must bridge the gap between the yields they now achieve and the amount their crops actually could deliver. On some 65 percent of Africa’s farmable lands, soils lack necessary nutrients, and many farmers lack the inputs and technical knowledge to revive them. That’s costing African farmers at least US $68 million in lost income opportunities. For example, African farmers cultivating new, improved varieties of maize and other crops see only a 28 percent bump in yields on average while farmers in Asia are harvesting an 88 percent increase.
Urban and rural Africa are increasingly connected by agriculture. Urban consumers are driving a lucrative market for food products that could be worth US$1 trillion by 2030, generating significant income and employment opportunities for African farmers and food companies—though that demand is now being met with a hefty serving of food imports. City dwellers also are increasingly pursuing farming as a business. Evidence from Ghana, Kenya, Malawi, Rwanda, Tanzania and Zambia finds urban households control 15 to 35 percent of Africa’s farmlands. That’s injecting more capital and technology into African agriculture, but it’s also increasing competition for land.
Obtaining financing for production improvements remains a major challenge for rural Africans. While the report notes promising development of products like crop insurance tied to weather indexes, farm loan programs that share the risk among many participants, and innovative uses of mobile banking services and microfinance, only about 6 percent of rural households in sub-Saharan Africa are borrowing from a formal financial institution.
Investments allocated to agricultural research and extension services have fallen precisely when they are needed most. At a time when climate change is producing intense demand for crop varieties and other innovations that can help farmers adapt, investments are not keeping up. For example, expenditures in Zambia, Malawi, and Tanzania in 2014 represented only 1.4 percent or less than overall budget allocations agriculture.
Africa has the world’s largest population of people under 20 years old and they could provide the intellectual capital to power major growth in the agriculture sector. Often discussed as more of a burden than a benefit, the right mix of policy and public investments can create a wide range of economic opportunities that could allow Africa to reap a demographic dividend from its incredibly youthful workforce. Conversely, if governments do not focus on policies that will get youth engaged in agriculture, authors warn we could see widespread youth unemployment and disillusionment.
Ultimately, Africa in 2016 is a continent making notable progress toward realizing its agriculture potential, but one that still has long way to way to go. Africa’s ambitious goals for eradicating hunger and dramatically reducing poverty by 2030 are attainable. But fulfilling them requires strong political leadership at home that is backed by solid commitments from donor countries and international institutions and robust investments from the private sector.
“Despite the unprecedented decade of impressive growth across the continent, much more remains to be done to sustain these gains and truly drive the agricultural transformation needed for Africa’s development and ensure a better life for all,” the authors note. “The good news is that a vibrant agricultural sector, while not the solution to all of our problems, will clearly promote food security and economic opportunities for all Africans. “
Former AGRA President Dr. Namanga Ngongi, who chairs the Board of Trustees for the African Fertilizer and Agribusiness Partnership, said the report should set the stage for a productive meeting when political leaders and agriculture experts converge on Nairobi later this week.
“My hope is that this incisive analysis of the current state of African agriculture will stimulate a more profound and impassioned debate about the kinds of investments and initiatives now required to make transformation of this sector a reality,” Dr. Ngongi said.
Ugandan Parliament approves loan to set up irrigation project
Parliament has approved a Euro 101.8 million loan to develop a solar powered irrigation and water supply system across the country.
The loan will be borrowed from the UK Export Finance (UKEF) and will go towards developing 920 water supply systems for domestic use and irrigation across the country, and will be implemented through the Ministry of Water and Environment over a three-year period.
According to MPs, many regions in Uganda have faced dire situations of drought and have often failed to access water to support agriculture that is a major source of livelihood, as well as water for basic human survival.
“We need this loan because our farmers urgently need irrigation projects in their areas. The drought has affected some communities so hard that people borrow water from each other to survive each day,” said Bukooli Central MP Solomon Silwany
Kumi Municipality MP, Monicah Amoding, said the loan would support people in arid areas to attain access to water but called for parity in distribution of the project.
“Teso region is a dry area and we do not often get rain, that is why this project will go a long way in supporting our people but there must equal distribution of the irrigation pumps that will be set up countrywide,” she said.
The Chairperson of the Committee on National Economy, Syda Bbumba, said that the goal of the project is to improve the quality of life and livelihoods of the population through enhanced agricultural production and increased access to safe water.
“The project will benefit youth and women and will empower them economically through increased production from irrigated growth of high value crops. The project will create more jobs in the agricultural sector and also reduce walking distances,” she said.
Some MPs, however, raised concerns that could likely hinder the progress of the project when the loan is approved, including among others, the availability of land on which to set up the irrigation schemes.
“We have a problem of landholding in Uganda that has affected water production. This project is welcome but we need to advise our people against land fragmentation that could impact on this project,” said Jonam County Emmanuel Ongiertho
The House also tasked Government to present a clear report on the performance of a previously approved loan to support water projects across the country, and suggested the project ought to target areas that actively engaged in agricultural production.
Bill to regulate veterinary drugs in the offing
Nyabushozi County Member of Parliament, Fred Mwesigye, has been granted leave of Parliament to introduce a Private Members Bill entitled, the Veterinary Drugs and Feeds Bill. The bill seeks to address the management and regulation of veterinary products.
Mwesigye said that there are defects in the current veterinary drug regulatory framework, which is not in sync with the recommendations of the World Health Organisation (WHO) and Food and Agricultural Organisation (FAO).
He explained that the National Drug Authority focuses on human drugs and ignores animal drug regulation.
“This leaves the animal drug production to the forces of capitalism which has caused untold suffering to farmers of livestock because fake drugs are being sold on the market in an undetected manner,” Mwesigye added.
Mwesigye said that the international frameworks on veterinary products under WHO and FAO demand clarity in their production and management.
Mwesigye noted that the farmers have been left to fend for themselves leaving them in precarious situations in addressing scarcity and fake drugs.
Kyaka South MP, Jackson Kafuuzi, who seconded the motion, said livestock farmers have difficulty accessing drugs because they can only access them from official drug dispensers.
“While National Medical Stores (NMS) is obliged to distribute drugs to health centres every month, it does not deliver veterinary medicine to the veterinary facilities especially in the cattle corridor,” he said.
The Speaker of Parliament, Rebecca Kadaga, said the issue of drug supplies, availability and quality has been long-standing and needs to be dealt with urgently
Tracking the Missing Link: Why Uganda is missing out on the Cocoa windfall
On the Campaign Trail in 2016, Uganda’s President Yoweri Museveni who was campaigning for a 7th term, stopped in Bundibugyo District, Western Uganda. Bundibugyo District is Uganda’s leading Cocoa producer. The president promised the cocoa farmers Government support in the development of the Cocoa value chain from production to marketing. Instead what he has delivered is 1 million seedlings and left the Marketing to private sector middlemen. Why the detached interest?
By Collins Hinamundi
In the Rwenzori Mountain Ranges, about 350 Kilometres West of Kampala, Jockus Matte and over 2000 other farmers grow Cocoa in Bundibugyo district. It is a crop that was popularised in Bundibugyo in the year 2000 by Olam Uganda Limited a cocoa and coffee exporter. Matte, 56, grows Cocoa on 5 acres of land in Bubukwanga Sub-county. He lost more than 4 acres of cocoa when Machete-wielding attackers raided his farm in the 2014 ethnic violence that rocked Bundibugyo district. Like many other cocoa farmers in the district, he started growing Cocoa in the early 2000s.
‘’Before that, I was growing beans, cassava, Maize and other food crops but they were not bringing in enough money, then the men from Olam started teaching us about Cocoa’’ He says.
“Cocoa fetches more money without necessarily working hard; you harvest every after two weeks’’ Matte adds, revealing for the first time, the windfall that comes with growing Cocoa during a price surge.
Swiss Contact, an organisation promoting Cocoa growth in Uganda, says that Cocoa used to be at 500 shillings per kilogramme in 1997, but now costs upwards of 8000 shillings a kilogramme.
Cocoa has its Origins in South America but It was a Swedish botanist, Carl Linnaeus, who classified cocoa and renamed it Theobroma Latin to mean food for the gods. Cocoa entered a phase of Mass consumption in 1876 with the creation of Chocolate Milk; the first Cocoa Plant in Uganda was planted at the government-owned Entebbe Botanical Gardens in 1901 by a British Colonial Officer and when it thrived, it was taken to other parts of the country.
According to Joseph Kimera, a Project Officer at the Cocoa Development Project, “Commercial exports started in 1917 but the growing of cocoa was abandoned in 1924 due to a drastic drop in international prices. Pests and diseases also attacked the crop. However, it was reintroduced in 1954 in order to diversify export earnings.”.
By 1965, 462 Hectares of cocoa had been planted in Mukono, Bundibugyo, and Hoima. In 1972, the Cocoa Development Project was formed in the Ministry of Agriculture with the aim of increasing the amount of cocoa grown in the country. This led to an increase in the Cocoa acreage and as General Idi Amin’s government collapsed around him in 1979, the figures from that year show the acreage on which the plant was grown, had increased by 2700 percent to 13,000 Hectares.
Swiss Contact estimates that there are currently over 13,000 farmers growing cocoa in Uganda on about 25,000 Hectares of land. These farmers, according to the Uganda Bureau of Statistics’ Statistical Abstract for the year 2016, earned the country more than $56m (Ushs180bn) in foreign exchange. This is money that can finance the annual budget of Uganda’s Ministry of Information and ICT, and the Ministry of Science and Innovation.
Cocoa is one of the top foreign exchange earners in the Agriculture sector. The crop ranks higher than cotton. According to the latest export statistics, Cotton exported in 2015/16 was valued at $20m and is still considered a strategically important crop. The cotton sector is regulated by the Cotton Development Organization to oversee the production, marketing and export of coffee whereas Cocoa, which was introduced around the same time as cotton and earns more for the country, has largely been left in the hands of the private sector. The Government’s intervention has largely been limited to supply of seedlings via the Cocoa Development Project and the Ugandan Army’s Operation wealth creation.
David Kyeyune, the project manager at Swiss contact, told this reporter on the sidelines of the Cocoa Producers Association launch that for a while now, the cocoa value chain has been disorganised and marginalised despite fetching quite a significant chunk of foreign exchange.
“With difficulty, we have been trying to drive and push for the recognition of the cocoa value chain but nobody could listen because the sector was disjointed and lacked a voice from the players,” he said.
John Musisi who works with the Cocoa Development Project blames the sidelining of the Cocoa value chain on the lack of information.
“Not many Ugandans know that cocoa is grown in the country. The school’s curriculum mentions that cocoa is grown in Ghana and Nigeria and not in Uganda,” he says.
Musisi also goes to argue that land fragmentation by Ugandan farmers has made it impossible for Cocoa to grow on a large scale.
‘’Much of the arable land has been divided into small plots as families expand and smaller units are handed down, often leading to ownership disputes,’’ he says.
However, John Bosco Ochira a Cocoa exporter accuses the government of not being interested in the development of cocoa.
‘’The Uganda Government has been left out of the global Cocoa marketing procedures, international cocoa control bodies such as the International Cocoa Organisation (ICCO), do not recognize Uganda on the charts of the world cocoa trading terminal in the EU and USA countries, because Uganda as a country of cocoa origin has never bothered to become a member of ICCO by registration, increase Cocoa production, control prices and quality’’ He says.
He adds that Uganda at present production volumes, cannot even meet the supply demands of only one Buyer in Europe, giving the example of ICAM Uganda Limited that is supposed to supply 5000 tonnes of Cocoa beans to ICAM Italy Ltd but can only make 2000 tonnes.
According to the International Cocoa Organisation (ICCO), the annual turnover of Cocoa is $83bn, with the leading producers being Côte d’Ivoire, Liberia and Ghana. These supply about 70 percent of the world’s cocoa. The rest comes from Indonesia, and South America countries like Brazil, the largest markets for the Cocoa is Europe and North America,
However, with the demand for chocolate products surging worldwide, particularly in developing countries, the demand for Cocoa has also increased. Last year, the world consumed more than 4.3 million tonnes of cocoa beans, a 32 percent increase in a decade.
Chocolate Sales in Asia are forecast to grow by 23 percent over the next five years, and by almost 31 percent in Latin America, according to London-based research firm Euromonitor International. That compares with growth of 8.3 percent in North America and 4.7 percent in Western Europe over the same period.
Those projections offer opportunities for new suppliers to corner the market, unfortunately, Uganda is not ready.
“Uganda’s cocoa production is still too low to attract credible investors into value addition. If we are to sell intermediate products like cocoa butter or cocoa powder we would earn three times more than what we earn when we export raw cocoa beans. According to the potential investors, our production levels are still low because their heavy machinery can’t run all year round on just 25,000 metric tonnes,” Musisi says.
Adding “A comparison in the export competitiveness of different commodities in Uganda indicates that At 4 percent contribution to exports, cocoa compares very well with electricity, Arabica coffee and yet these are the commodities considered to be of higher export value in Uganda, we need to change that.”
Philip Betts, the managing director at Esco Uganda Ltd, an exporter of organic cocoa and vanilla, says although cocoa production is growing, it is at a rate slower than the growth in global demand. “Cocoa production is increasing. but the demand is growing much faster, resulting in high prices,”.
The High farm gate prices would be good for Matte and other Cocoa farmers in the Rwenzori sub-region, but is it not sustainable because while Uganda is growing less cocoa, another farmer in another country is trying to meet the demand and prices will fall at some point as supply increases.
Hope rises anew
However, all is not lost, there is a concerted effort to increase Uganda’s cocoa exports, The Cocoa Development Project plans to double production levels from the current 25,000 metric tonnes to 50,000 by 2019.
“We plan to expand the cocoa growing hectares and also provide farmers with the required resources and technological knowledge in order to boost production levels from the current 25,000 metric tonnes to our target of 50,000 metric tonnes by 2018,” Musisi explains
This is being done through mass distribution of Cocoa seedlings to farmers and according to Musisi, more than 1 million seedlings have so far been distributed by the Cocoa Development Project, through the Army’s Operation Wealth Creation, but in 2 years when some of those 1 million seedlings start bearing fruit, most farmers will learn the harvest and processing process the hard way, they will also have to haggle with middlemen for prices far below the market value of their Cocoa beans. Because the government didn’t do its part and left everything to Farmers and the private sector.
A 30-year-old Entrepreneur, says he would like to change all that. Stephen Sembuya wants to turn the $59m Uganda earned from cocoa into 1 billion dollars and to do that, he is setting up a chocolate making factory, is offering to help farmers become artisanal chocolate makers so they can supply his factory, and is promising an above market price for their beans.
When I ask Jockus Matte the Cocoa farmer in Bubukwanga village, who is also a member of Bundibugyo Cocoa Farmers Association what he thinks of Sembuya’s offer, he sighs, and betrays the age-old suspicion Older men have of young men and their ambitions, ‘’ we were told about his plans at the co-operative, but I hope he can keep his promises’’.
The Main Cocoa Buyers in Uganda
The major companies involved in the cocoa trade are Esco Uganda Ltd, Olam Uganda Ltd, Bricam, ICAM Chocolate, UgaDen, Bakwanye Company Ltd.
This story was supported by a grant from the African Centre for Media Excellence.
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