Agriculture is the fuel that will drive industrialisation of African countries

Saturday May 26 2018

farmer

An African farmer. Commercialisation of markets has to work for all farmers – subsistence, medium scale and large-scale. The three should never be in competition with each other. PHOTO | FILE | NMG 

By Benjamin Ouma
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No country has ever industrialised without growing its agricultural sector. By extension, it is agriculture that will power African economies because it is all-encompassing, affecting food security, rural economies, political stability, basic nutrition as well as job creation.

Most African countries have stagnated in their growth because of poor policies that focus on wrong sectors and ignore agriculture. Others, like Ghana, however, have put in place systems to boost food production. Ghana has a Planting for Food and Jobs programme, through which the government spends $1 million per constituency per year on agriculture. Through this programme, the government intends to shift the whole industrialisation process to the rural population. Close to 90 per cent of the work in agriculture is done by women. Because of this, the lion’s share of the funds for the programme will end up in the hands of women, who will then be the drivers of the country’s agricultural revolution. Ghana imports $2.3 billion worth of food, which does not make much sense for a country with an abundance of land, water, rain and sunshine, all of which are conducive for food production.

MIDDLE CLASS

On the sidelines of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa last week, the African Centre for Economic Transformation launched the African Transformation Report, 2017. Titled Agriculture Powering Africa’s Economic Transformation, the report contains interesting insights on agriculture on the continent.

Africa’s farmers are usually viewed as poor people with little chance of ever moving into a middle class lifestyle. Yet opportunities abound that could transform their fortunes with the right targeted support from the government. The first step towards this transformation is modernising agriculture at the farm level. This should be followed by connecting agriculture to the other sectors of the economy. The input sector needs to be closely linked with others downstream like processing, logistics, marketing, rebranding and retailing.

Through these connections, millions of jobs will be created for entrepreneurs. At the branding level, for example, some marketers who buy cocoa from farmers in Cote d’Ivoire and Ghana brand it and sell it as a unique product, and end up capturing 40 per cent of the value chain. The same applies to other products like coffee and tea, whose value chain can be utilised by African governments to create jobs and improve incomes.

AGRO-PROCESSING

Interestingly, though poorly funded, agriculture still manages to account for up to 25 per cent of the GDP of an average African country. When this is combined with the employment within the value chain, this could rise to as high as 60 to 70 per cent in some countries.

Modernising agriculture means getting the masses to benefit from agro-processing and other forms of value addition for their produce. This is the road to industrialisation.

Efficient agricultural production means lower cost of food which, in some households, can be as high as 70 per cent of the budgets. Increasing productivity and lowering the cost of food, therefore, means households will spend less of their incomes on food, which releases funds for other essentials such as health and education.

High productivity of cheap raw agricultural materials can also support the agro-processing industry. Cheap, high quality and consistent raw materials can only be acquired through a modernised agricultural system. These can be used to produce more goods locally which, in turn, means more jobs and revenue for the government. This also leads to a higher demand for goods and services other than just food.

MECHANISATION

The biggest challenge facing agriculture in Africa, however, is land. About 90 per cent of land in Africa is administered under customary law. African governments must seek ways of securing land rights and easing access to it, but also ensure that commercialisation of agriculture does not dispossess poor people of their land.

They can borrow a leaf from Uganda, which has implemented a land information system that has cut the period one needs to complete the acquisition process from 227 to about 27 days. This has had the added benefit of reducing the period of mortgages processing from 50 to about five days, and raising government revenue from land transactions substantially.

An effective land administration system, thus, has plenty of cascading benefits that can reach down to the rural farmer.

At the heart of the African agricultural revolution, however, is boosting productivity. Asian countries first started their economic transformation through a green revolution. There are examples that show that it can be done in Africa as well. The Kpong irrigation scheme in Ghana now produces 4.5 metric tonnes of rice per hectare, which is at par with Asia’s production level.

Also interesting is the obsession of African farmers with the hoe. African farmers have only 10 tractors per 100 hectares, while in India the ratio is 120 tractors per 100 hectares.

GREEN REVOLUTION

Mechanisation does not limit itself to tractors, it also involves a business model. How does a poor farmer acquire a tractor? How does he gain access to mechanisation services? Medium scale farmers who own tractors can be encouraged to provide mechanisation services to their counterparts. Farmers’ organisations can also buy tractors and hire them out to members.

Local fabricators can also be encouraged to make simple farm equipment like two-wheel tractors for smallholder farmers. This creates jobs, but also helps the farming sector. Without mechanised agriculture, the green revolution will be stillborn.

After mechanisation, farmers have to then commercialise production. Subsistence farming is a big handicap. Consuming what one has produced and only selling the surplus means farmers only produce what they like eating, not what is in demand in the market. If, for example, industries demand for high starch cassava, they might not get the quality they need as farmers will be producing the variety they can eat. However, farmers who understand the market will quickly shift to the commercial variety. This can only happen with a change of perception.

It is also noteworthy that subsistence farmers are averse to taking risks, and will not take up the commercial opportunity to invest in what the market wants fast enough. The best thing to do is to make the food market work: Assure the subsistence farmer that he can grow a cash crop and still buy his food at an affordable price at the local market.

GOVERNMENT ROLE

This commercialisation of markets has to work for all farmers – subsistence, medium scale and large-scale. The three should never be in competition with each other. In Kenya, for example, small-scale farmers buy dairy cows from medium scale breeders who, in turn, buy semen and technology from large-scale farmers who can afford to import the latest dairy technology from the First World.

In essence, agriculture and industrial development are two sides of the same coin. The government comes in to ensure that the two work together.

As the report says: “The government’s role in agricultural transformation extends beyond the ministry of agriculture to finance and planning ministries, trade and industry ministries, education, training, science and technology ministries and government agencies promoting investment. In effect, a “whole government approach is required.”

Mr Ouma is the Chief Sub-Editor of the Saturday Nation.