Reality in Africa: Agriculture is both a business and a science
By Dr Thulasizwe Mkhabela
AFRICAN agriculture has been received with much fanfare for a while now but with incommensurate commercial success, despite the abundant opportunities that exist for a successful commercial take-off.
By 2050, the world will need to feed more than nine billion people, requiring nearly 70 percent more food than we consume today.
Moreover, the expanding global middle class will demand more meat and other protein-rich foods, while extreme weather and the often associated pests and diseases could drastically reduce yields in important agricultural regions.
This as maize, wheat and rice prices and other staple food commodities continued to rise in the past decade.
Given that price volatility is a function of supply and demand, exogenous shocks to the agri-food sector, such as the current Covid-19 pandemic, are likely to exacerbate the phenomenon.
Viewing agriculture as both a business and a science is likely to lead to the much needed transformation of African agriculture, such as changing the structure and approach to an economic sector rather than the often misconstrued and narrow definition of altering the ownership demographics.
South Africa is more prone to viewing transformation along racial lines rather than in its entirety.
However, the fundamental issue holding back the successful take-off of the agri-food sector is that many countries devote scarce resources that they can ill afford to short-term approaches, such as subsidies, food and cash transfers, and emergency-relief plans.
This relegates nations’ food systems to social security systems, thus becoming fiscal burdens rather than investment opportunities.
Tipping the scale in favour of strategic investments could turn into sources of economic opportunity and create an enabling environment for the sector to become resilient in the long-term.
This is not a pie-in-the-sky. Other countries and regions have launched effective transformations that improve food security and resilience and enhance economic opportunity.
In all cases, a resilient food economy, defined as one that can adapt to change and cope with negative shocks, is predicated on four building blocks:
■ Efficient agricultural production that takes advantage of innovative technologies and practices.
■ Tailored trade and investment approaches.
■ Well-functioning domestic markets.
■ Strategic reserves of food and water.
A review of indicators to assess a country’s overall food availability, affordability, and quality yields findings that underscore the progress that has been made.
For example, the dozen most productive countries deliver maize yields that are 10 times higher than those of the least productive. Despite advances in seeds and cultivars, irrigation, crop protection, and other techniques in more than 20 countries, at least a quarter of the population is chronically undernourished.
Sub-Saharan Africa has more than four times the global average of arable land, but low productivity has seen using limited foreign reserves to import a high percentage of food requirements, rendering them vulnerable in times of crises.
To turn the situation around, an integrated food economy approach is required. That is, a cohesive strategy that strengthens the entire system.
This is a complicated topic, and there is no single right answer to define a nation’s ideal food system, but empirical evidence shows that many countries do not yet think holistically.
A structured way of thinking about sustainable food systems, including innovative ways to balance scarce natural and financial resources is at the heart of successfully transforming African agrifood systems.
Countries can move toward a well-functioning food economy if the public and private sectors work together to plan and invest for the long term.
A forward-looking national agriculture strategy discourages the production of crops not well suited to the local environment and rather promotes a production strategy that builds on a country’s comparative advantages.
Countries can develop competitive advantages in certain agricultural commodities over time, but such decisions should be on national strategic imperatives. They have tools to guide production choices.
While cash subsidies can help producers enter global markets, they often last beyond initial adjustment periods and are used to maintain irrational production systems that suit short-term political or social objectives.
The most effective policies facilitate end-to-end value-chain development, from promoting the right inputs to encouraging creative business models to enabling low-interest financing and risk sharing.
A good international trade and investment strategy can help hedge against volatility and food shortages while spurring a country’s economic growth. One place to start is with the basics – getting goods into and out of the country.
Creating trading and processing hubs can help a country gain access to food supplies, even if it has limited production or resources of its own.
Efficient domestic markets matter, because the route from farm to table is long, complex, and subject to disruption.
A single bottleneck can lead to losses for producers and shortages for consumers.
Dr Thulasizwe Mkhabela is an experienced agricultural economist and group executive of impact partnerships at the Agricultural Research Council