Africa’s Turnaround

1. Harambe Entrepreneur Alliance – Fourth Annual Symposium, 25 March 2011 Africa’sTurnaround From Crisis to Opportunity in African Agriculture* William Masters Professor of Food Policy, Tufts University http://nutrition.tufts.edu http://sites.tufts.edu/willmasters * Forthcoming in Food and Financial Crises: Impacts on Sub-Saharan Africa, David R. Lee and Muna B. Ndulo. editors. Wallingford, UK: CAB International, 2011

2. How much longer? Cartoon (c) 2002, reproduced with permission by Nicholson from "The Australian" newspaper: www.nicholsoncartoons.com.au

3. World agriculture ischangingrapidly Monthly average prices for wheat, maize and rice, Jan. 2000-Feb. 2011 Source: FAO Global Information and Early Warning System data (www.fao.org/giews/pricetool), downloaded Feb 20, 2011. All are monthly export prices, normalized to Jan. 2000=100, for US No. 2 Hard Red Winter Wheat, US No. 2 Yellow Maize, and Thai 100% Broken Rice.

4. Africa’s green revolutionishere USDA estimates of average cereal grain yields (mt/ha), 1960-2010 Source: Calculated from USDA , PS&D data (www.fas.usda.gov/psdonline), downloaded 7 Nov 2010. Results shown are each region’s total production per harvested area in barley, corn, millet, mixed grains, oats, rice, rye, sorghum and wheat.

5. Threebig trends will change the picture Food policies Rural demography Farm technologies Cartoon (c) 2002, reproduced with permission by Nicholson from "The Australian" newspaper: www.nicholsoncartoons.com.au

6. Rural demography• Food policies• Farm technologies Rural population growthis a major causeof Africa’simpoverishment Land available per farmhousehold (hectares) Reprinted from Robert Eastwood, Michael Lipton and Andrew Newell (2010), “Farm Size”, chapter 65 in Prabhu Pingali and Robert Evenson, eds., Handbook of Agricultural Economics, Volume 4, Pages 3323-3397. Elsevier.

7. Rural demography• Food policies• Farm technologies Urbangrowtheventuallyemploys all new workers Population by principal residence, 1950-2050 World (total) Sub-Saharan Africa 2010 2010 Source: Calculated from UN World Urbanization Prospects, 2009 Revision , released April 2010 at http://esa.un.org/unpd/wup. Downloaded 7 Nov. 2010.

8. Rural demography• Food policies• Farm technologies Until cities grow big enough, new workers have no choice but to be farmers Rural population by region, 1950-2050 Population Rising rural populations reduce land available per farmer ≈480 m. ≈1.1 b. ≈310 m. ≈1.4 b. We are here: Eventually land available per farmer rises Source: Calculated from FAOStat (downloaded 17 March 2009). Rural population estimates and projections are based on UN Population Projections (2006 revision) and UN Urbanization Prospects (2001 revision).

9. Rural demography• Food policies• Farm technologies Africahad the world’sfastest and longestrural population growth Rural population growth rates by region, 1950-2030 Over 2% annual growth for 30 years! Under 1.3% annually, and falling Below zero = more land/farmer Source: Calculated from FAOStat (downloaded 17 March 2009). Rural population estimates and projections are based on UN Population Projections (2006 revision) and UN Urbanization Prospects (2001 revision).

10. Rural demography• Food policies• Farm technologies Africa also had the world’s fastest urban population growth Urban population growth rates by region, 1950-2030 From >5% annually …to <4% Zero = no change Source: Calculated from FAOStat (downloaded 17 March 2009). Rural population estimates and projections are based on UN Population Projections (2006 revision) and UN Urbanization Prospects (2001 revision).

11. Rural demography• Food policies• Farm technologies Africa’s long baby boom is finally entering the workforce Child and elderlydependency rates by region (0-15 and 65+), 1950-2030 Africahad the world’smostseveredemographicburden (>45% ) now a demographic gift Source: Calculated from UN Population Projections, 2008 revision (March 2009), at http://esa.un.org/unpp.

12. Rural demography• Food policies• Farm technologies Conclusions #1: Africa’sdemographicturnaround • Africaisjustnowemergingfrom the world’smostextremedemographic transition, whichinvolved: • The world’sfastest rural population growth > 2,0 % for 30 years, 1960s-1980s • The world’sfastesturban population growth > 4,5 % for 50 years, 1950s-1990s • The worstdependency rates (children or the elderly) > 45 % for 60 years, 1950 – 2010 • These pressures are noweasing, steadilyopening new windows of opportunity

13. Rural demography•Food policies• Farm technologies Demographyis not destiny:Leadership matters!

14. Rural demography•Food policies• Farm technologies Agricultural policy in Africa: 16 country studies* *Plus five for cottononly

15. Rural demography•Food policies• Farm technologies Methodology: Price distortions due to stroke of the penpolicies • Nominal Rate of Assistance: tariff-equivalent gap between internal and foreignprices: • Sometimesthisisactually a tariff: • Usuallywe observe onlyprices and must infer marketing costs:

16. Rural demography•Food policies• Farm technologies Results: Heavy taxation of farmers and trade, followed by major reforms This gap is anti-trade bias Importable products All farm products Exportable products This level is net anti-farm bias Source: K.Anderson and W. Masters (eds), Distortions to Agricultural Incentives in Africa. Washington, DC: The World Bank, 2009.

17. Rural demography•Food policies• Farm technologies Individual countries followvariedpaths Countries’ total NRA for all tradable farm products, 1955-2004

18. Rural demography•Food policies• Farm technologies Our common methodology allows comparison across all kinds of countries

19. Rural demography•Food policies• Farm technologies The global contextisbecoming more favorable, as other countries limittheir subsidies Average NRAs for all products by year, with 95% confidence bands Less anti-farm bias Less pro-farm bias Source: W.A. Masters and A. Garcia (2009), “Agricultural Price Distortion and Stabilization: Stylized Facts and Hypothesis Tests,” in K. Anderson, ed., Political Economy of Distortions to Agricultural Incentives. Washington, DC: World Bank.

20. Rural demography•Food policies• Farm technologies Africais not yet at the incomelevelsassociatedwithcostlyfarm subsidies National average NRAs by real income per capita, with 95% confidence bands ≈$5,000/yr (≈$400/yr) (≈$3,000/yr) (≈$22,000/yr) Source: Author’s calculations, from data available at www.worldbank.org/agdistortions. Each line shows data from 66 countries in each year from 1961 to 2005 (n=2520), smoothed with confidence intervals using Stata’s lpolyci at bandwidth 1 and degree 4. Income per capita is expressed in US$ at 2000 PPP prices.

21. Rural demography•Food policies• Farm technologies Conclusions #2: Africa’s food-policy turnaround • Policy reforms have finallycutAfrica’sheavy colonial and post-colonial taxation of farmers • The averageburden per farmerreached US$134 in the ‘70s • Furtherreductionis possible and desirable • The averageburden per farmerwas US$41 in 2000-04, • …more than all public investment or foreignaid to the sector • Later, the challenge willbe to limit subsidies • As incomesrise, political pressures shift rapidly

22. Rural demography• Food policies• Farm technologies What’sbehindAfrica’s green revolution? USDA estimates of average cereal grain yields (mt/ha), 1960-2010 Source: Calculated from USDA , PS&D data (www.fas.usda.gov/psdonline), downloaded 7 Nov 2010. Results shown are each region’s total production per harvested area in barley, corn, millet, mixed grains, oats, rice, rye, sorghum and wheat.

23. Rural demography• Food policies• Farm technologies African agriculture isreally distinctive Source: Reprinted from W.A. Masters, “Paying for Prosperity: How and Why to Invest in Agricultural Research and Development in Africa” (2005), Journal of International Affairs, 58(2): 35-64.

24. Rural demography• Food policies• Farm technologies Appropriate new technologies have onlyrecently been developed and disseminated Source: Reprinted from W.A. Masters, “Paying for Prosperity: How and Why to Invest in Agricultural Research and Development in Africa” (2005), Journal of International Affairs, 58(2): 35-64.

25. Rural demography• Food policies• Farm technologies Conclusions:Threeturnarounds in African agriculture • Rural demography • Slowdown in rural and urban population growth • Reduction in the dependency rate (children or elderly) • Food policies • Manyreformsdone • More challenges ahead • Farm technologies • Yields and output are rising • Technological transformation isfinallyunderway

26. Rural demography• Food policies• Farm technologies Postscript: Whatrole for foreigners in Africa’sturnaround? Foreign aid to African agriculture had dropped to US$1 per African (vs. US$4 for health, and US$38 in total). From such a small base, rapid growth is possible Reproduced from W.A. Masters (2008), “Beyond the Food Crisis: Trade, Aid and Innovation in African Agriculture.” African Technology Development Forum 5(1): 3-15.