It has been a very exciting first decade of what is promising to be the defining century for southern African agriculture. Following an acknowledgment of the failure of strictly market-orientated structural adjustment policies in the late 1990s, states in the Southern African Development Community (SADC) have begun to work out a new balance between these policies, and the heavy state interventions in agriculture that preceded them in the immediate post-colonial period.
The big story has been that several countries, notably Malawi, have begun experimenting with various forms of input subsidies for agriculture, mainly targeting subsistence farmers with cheap or free fertilizer and seed. The results have been impressive, with the country in 2007 producing almost three times as much corn as in 2005.
However questions are being raised about the long-term sustainability of these programmes, with donor funding as well as the majority of an already large agricultural budget being spent on the subsidies. Meanwhile other important governmental functions, such as agricultural science and even road building, may be neglected, and local markets for agricultural inputs are driven out of business. It has been argued that, free agricultural inputs are nothing more than an advanced, more effective form of emergency food aid.
Other countries, notably South Africa and Zambia, are still sticking with what they know; aiming to provide an enabling environment for commercial farming. The problem, of course, is that in developing countries the invisible hand of the market may take generations to reach the millions of small farmers who are struggling to survive, let alone feed their fellow citizens. At the same time, big players are taking more and more control of the marketplace, and in some cases foreigners and foreign governments are buying up large tracts of valuable land.
Most countries are somewhere between these two approaches, tentatively exploring the possibilities. An overall consensus is emerging that, in addition to creating an enabling environment, the state should be involved to some extent in kick-starting the market by giving substantial assistance to farmers in poor rural areas. This includes providing finance, extension services, input supplies and subsidies and working to create necessary structural changes in the economy, for example, through land reform. However, it is recognised that this support should be very carefully managed, and slowly withdrawn as the agricultural economy develops. Also, direct support should only be used where the state is simultaneously creating an enabling environment for agricultural markets to flourish, otherwise, no matter how much stimulus the markets are given they cannot take off.
Agriculture is expensive
While these developments should all be positive, the concern is that SADC countries are still either unwilling or unable to budget enough to make their policies do the work that is required of them.
The European Union’s (EU) decades-old Common Agricultural Policy (CAP) provides an example of a subsidy system that has worked very well for farmers, at least those in Europe. The CAP is a large and diverse range of agricultural subsidies and programmes that cost just under 50 percent of the EU’s entire budget (US$52 billion in 2010, not counting inflated food prices paid by consumers), which gives an idea of the massive prioritisation required to sustain comprehensive subsidy programmes.
Creating a genuinely enabled environment for agricultural markets to thrive requires similar levels of fiscal generosity. Roads need to be built in inaccessible rural areas, massive irrigation schemes must be set up, and a wide range of highly functional scientific support institutions has to be maintained.
Few SADC countries are even beginning to get this right.
What comes first?
In many cases, there just aren’t the funds available, and countries are forced to prioritise certain types of agricultural policies over others. This requires tough choices, and some international organisations providing guidance would do well to take funding constraints into account more clearly.
Meanwhile, Malawi’s experiments with spending everything it can on subsidies are being watched with keen interest, while various means of improving the distribution of subsidies are being discussed, particularly using vouchers.
However, many development experts have reservations about the focus on subsidies. International organisations like the International Food Policy Research Institute, advocate for agricultural budgets to prioritise agricultural research and extension services above all else. Professor Nick Vink, chairperson of the Department of Agricultural Economics at South Africa’s University of Stellenbosch, says the single most important focus should be upgrading rural infrastructure networks and creating regional markets.
‘Across the region, agricultural production is increasing in per capita terms. The reason is that there have been fairly positive rates of economic growth and people have more money to spend on food. But the biggest increase has been in the amount of food that is imported. That is because farmers can’t get what they produce to the urban centres, so the food comes in from outside instead.’
Vink argues that sometimes, things are done in the wrong order. ‘Subsidies have potential, but at best they should be an add-on to other things. African countries are importing from outside of Africa, although the possibilities for production are often very good. What I would have liked to have seen is if Malawi had said, ‘Let’s try providing South Africa with a million tons of wheat a year,’ and then they organised the logistics and the trade access, and only then did they say, ‘To achieve this, we’re going to give the farmers fertilizer subsidies and we’re going to target the smallest farmers so they can get into the action.’ Then it starts becoming sensible, and you can happily take the risk of it being fiscally unsustainable,’ says Vink.
Where is the money?
But while budgetary constraints are always a factor, it is also true that many countries simply do not have agriculture as a key priority, at least in so far as their budgeting is concerned. All SADC countries have signed NEPAD’s 2002 Comprehensive Africa Agriculture Development Programme (CAADP), committing to spending 10 percent of their budgets on agriculture and achieving a six percent annual agricultural growth rate by 2015. However only 10 out of 57 African countries, one of which is Malawi, have got the budgeting right, and no SADC countries are on track to achieve the 2015 target.
All SADC countries have signed NEPAD’s 2002 Comprehensive Africa Agriculture Development Programme (CAADP), committing to spending 10 percent of their budgets on agriculture and achieving a six percent annual agricultural growth rate by 2015. However only 10 out of 57 African countries have got the budgeting right, and no SADC countries are on track to achieve the 2015 target.
More regionally, the 2004 SADC Declaration on Agriculture recommitted states to the CAADP objectives, and provided a comprehensive list of short and long term objectives, all of which it was hoped would be completed by 2010. This was hopelessly ambitious, with few states having achieved even one or two of the declaration’s sub-objectives.
A key reason for the lack of money is the legacy of structural adjustment policies, which severely curtailed spending on agriculture. It is also true that many of the interventions required to develop agriculture in SADC countries are not the responsibility of a department of agriculture, and other departments who need to play a role may still not see agriculture as a priority. These shifts in mindset take time.
A new dawn?
But the tide seems to be turning in favour of agriculture. Another major event of the last decade was the world food price crisis of 2007 and 2008, which put food security firmly back on the agenda. It is now also recognised that developing small-scale farmers is key to reducing poverty by increasing income and providing employment in rural areas while reducing food prices in urban areas and growing the economy.
This year there has been a spate of new commitments to agriculture. For example, at a meeting of the World Economic Forum in Dar es Salaam in May 2010 African leaders concluded that agricultural development was the most effective strategy for boosting economic growth in Africa. At the Annual Session of African Ministers of Finance, Planning and Economic Development, held in March 2010 in Malawi, African ministers recommitted to boosting investment in agriculture and allocating a substantial share of national budgets to the sector.
However, at the latter event, there were also murmurs of discontent. Mozambique initially called for the 10 percent agriculture budgeting targets to be scrapped completely, while delegations from South Africa, Rwanda and Egypt succeeded in deleting any reference to Millennium Development Goal budgetary targets for education, health, agriculture and water in the conference report and resolutions.
This is distressing, but it may also just be a different approach to improving agricultural output. While countries may not want to increase the budgets for their agriculture departments, they may still be getting other government departments involved to build roads, improve trade movement, increase rural education and secure water supplies.
- This article was first published in the June to August 2010 edition of CHANGEMUDANÇA. It is republished here with the permission of Africa Monitor, a NGO acting as a catalyst to monitor development funding commitments, and impact on the grassroots and to bring strong African voices to the development agenda