Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

21 June 2011

What are the realities of farming in sub-Saharan Africa?

There is enormous agricultural potential in many parts of Africa. There is no reason why Africa cannot be a major producer of agricultural products on a scale equal to South America. But it will take heavy investment by the private sector to realise the potential.

Why has there been so little private investment in agriculture to date? It is certainly not a lack of finance. There is more international interest in investing in Africa now than ever before.

The real problem is a lack of sufficient profitable opportunities. Agriculture in Africa is an infant industry. It faces high start-up costs and lacks supporting infrastructure. In contrast, international markets are highly competitive and benefit from economies of scale.

The challenge is how to get things started. How to deploy public sector resources to overcome barriers to entry and stimulate rapid growth of profitable and socially-responsible commercial agriculture?

At the Agriculture Investment Summit 2001 (London 21-23 June), Chris Isaac, Business Director of AgDevCo, a social investor and project development company, will describe approaches which are helping “kick start” investment in African agriculture:

Agricultural Growth Corridors in Tanzania and Mozambique
• A Public-Private Capital Fund to stimulate profitable investment in early stage agriculture

AgDevCo has a strong portfolio of investment opportunities which can achieve major social impact and deliver good financial returns. The presentation will be available on the AgDevCo website soon.

15 June 2011

HIlary Clinton backs Tanzania's Southern Agricultural Growth Corridor

Speaking at a women farmers' cooperative in Dar es Slaam earlier this week, US Secretary of State Hilary Clinton announced a major increase in support for the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). She said:

"The United States will invest nearly $70 million in agricultural development and food security in Tanzania over. This is a 14-times-greater investment than we made in 2008 and 2009...Now, to take advantage of Tanzania's fertile farm land, we will pool more than 80 percent of our Feed the Future investment in this southern growth corridor. We have decided to concentrate our resources here in line with the country-led vision laid out by the government of Tanzania."

14 June 2011

Land grabs or economic development?

An interesting article on the land grab phenomenon by Professor Calestous Juma of Harvard University, author of The New Harvest: Agricultural Innovation in Africa appears in Kenya's Daily Nation. Juma argues that campaiging organisations like the Oakland Institute are wrong to paint all private sector investment in African agriculture with the same brush. It is true, he says, that many of the mega-land deals on the continent are not structured to benefit local communities. But a moratorium on all foreign investment would, in his view, amount to economic suicide for Africa, where access to infrastructure, skills and technology to drive increases in agricultural productivity is desperately needed. For example, only seven per cent of African agriculture is irrigated — 3.6 per cent in sub-Saharan Africa — compared to 47 per cent in south Asia. The challenge is to find ways of promoting socially-responsible investment where benefits are widely shared with local farmers and communities. Get this right, Juma argues, and Africa could feed itself within a generation.

3 June 2011

Is Small always Beautiful in agriculture?

Oxfam’s report Growing a Better Future brings urgency to the debate about food security and poverty. It shows how a billion people worldwide are going hungry, more than at any time in human history.

With climate change, population growth and rising food prices the situation is likely to get worse. Against this background of human misery, the report points out the inequity in a global food system which contributes to unprecedented levels of obesity and food waste in wealthy countries.

So what is to be done? Oxfam calls for massive, government-led investment in smallholder farming and supporting infrastructure. While warning against large-scale “land grabs”, Oxfam also recognises the private sector has a role to play in linking smallholder farmers to international markets.

The report is an important call to action backed up by sound analysis. But one section of the report does not ring true: the claim that smallholder farming is typically more efficient than large-scale farming. Big is not beautiful in agriculture, the authors say. “Surveys often find that, when the focus is shifted from yields to total productivity, small farms are more efficient”.

Is that correct? The research is not clear cut. Professor Paul Collier of Oxford University disputes the view in his paper African Agriculture in Fifty Years. He writes: “The evidence is far more mixed than the exclusive emphasis upon the smallholder approach would lead us to believe. Indeed, much of the focus on smallholders may actually hinder large scale poverty reduction.”

In AgDevCo’s experience smallholder farmers in Africa with access to modern inputs can achieve yields equal or greater to commercial farms, for certain types of crops. But the cost of labour is usually not factored into productivity calculations, or is given a very low value. Furthermore for some crops, such as barley and wheat, mechanisation is essential if African farmers are to become internationally competitive.

We need to move beyond the simplistic debate about small versus large-scale farming. Both can and should co-exist in ways that benefit local communities. The agricultural growth corridors in Tanzania and Mozambique, for example, are an attempt to promote balanced and sustainable agricultural development.That message may have less public appeal than the Bill & Melinda Gates Foundation's new campaign Smallholder Farmers are the Answer, but it is closer to reality.

As E.F. Schumacher, author of Small is Beautiful, and my grandfather, said what matters is finding the appropriate scale when tackling a given problem. Writing in the early 1970s he observed “an almost universal idolatry of giantism” and wished to correct the balance. He continued: “If there were a prevailing idolatry of smallness, irrespective of subject or purpose, one would have to try and exercise influence in the opposite direction.”

The need to invest in smallholder farming is indeed urgent. It requires smart combinations of government spending, overseas aid and private investment. But let’s not to dismiss the role of larger farming enterprises – where appropriate – in addressing global food security. With the stakes so high we should be careful to avoid an idolatory of smallness.