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Harambe Entrepreneur Alliance – Fourth Annual Symposium, 25 March 2011. Africa’s Turnaround. From Crisis to Opportunity in African Agriculture*. William Masters Professor of Food Policy, Tufts University http ://nutrition.tufts.edu http://sites.tufts.edu/willmasters.

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africa s turnaround

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

slide2

How much longer?

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

slide3

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.

slide4

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.

slide5

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

rural population growth is a major cause of africa s impoverishment

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.

urban growth eventually employs all new workers

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.

until cities grow big enough new workers have no choice but to be farmers

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).

africa had the world s fastest and longest rural population growth

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).

africa also had the world s fastest urban population growth

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).

africa s long baby boom is finally entering the workforce

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.

conclusions 1 africa s demographic turnaround

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
methodology price distortions due to stroke of the pen policies

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:

results heavy taxation of farmers and trade followed by major reforms

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.

individual countries follow varied paths

Rural demography•Food policies• Farm technologies

Individual countries followvariedpaths

Countries’ total NRA for all tradable farm products, 1955-2004

the global context is becoming more favorable as other countries limit their subsidies

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.

africa is not yet at the income levels associated with costly farm subsidies

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.

conclusions 2 africa s food policy turnaround

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
slide22

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.

african agriculture is really distinctive

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.

appropriate new technologies have only recently been developed and disseminated

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.

conclusions three turnarounds in african agriculture

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
postscript what role for foreigners in africa s turnaround

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.