africa’s turnaround william masters professor of food policy, tufts university from crisis

Africa’s Turnaround

William MastersProfessor of Food Policy, Tufts University

http://nutrition.tufts.edu http://sites.tufts.edu/willmasters

From Crisis to Opportunity in African Agriculture*

* Forthcoming in Food and Financial Crises: Impacts on Sub-Saharan Africa, David R. Lee and Muna B. Ndulo. editors. Wallingford, UK: CAB International, 2011

Harambe Entrepreneur Alliance – Fourth Annual Symposium, 25 March 2011

How much longer?

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

World agriculture is changing rapidlyMonthly 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.

http://www.fao.org/giews/pricetool

1960/1961

1962/1963

1964/1965

1966/1967

1968/1969

1970/1971

1972/1973

1974/1975

1976/1977

1978/1979

1980/1981

1982/1983

1984/1985

1986/1987

1988/1989

1990/1991

1992/1993

1994/1995

1996/1997

1998/1999

2000/2001

2002/2003

2004/2005

2006/2007

2008/2009

2010/2011

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5Rest-of-WorldWorldSoutheast AsiaSouth AsiaSub-Saharan Africa

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.

Africa’s green revolution is here

http://www.fas.usda.gov/psdonline/

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

Ruraldemography

Farm technologies

Food policies

Three big trends will change the picture

Rural population growth is a major causeof Africa’s impoverishment

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.

Rural demography • Food policies • Farm technologies

Land available per farm household (hectares)

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

Total

Urban

Rural

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

0.0

200,000.0

400,000.0

600,000.0

800,000.0

1,000,000.0

1,200,000.0

1,400,000.0

1,600,000.0

1,800,000.0

2,000,000.0

Total

Urban

Rural

Population by principal residence, 1950-2050

World (total) Sub-Saharan Africa

Source: Calculated from UN World Urbanization Prospects, 2009 Revision , released April 2010 at http://esa.un.org/unpd/wup. Downloaded 7 Nov. 2010.

2010

2010

Urban growth eventually employs all new workers


http://esa.un.org/unpd/wup

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

0

50

100

150

200

250

300

350

400 SS Africa

S Asia

SE Asia

Rest of World

Rural population estimates and projections, 1950-2030 Index1950=100

We are here:

≈480 m.

≈1.1 b.

≈310 m.

≈1.4 b.

Population

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).

Eventually land available per farmer rises

Rising rural populations reduce land available per farmer

Rural population by region, 1950-2050


Africa had the world’s fastest and longestrural population growth

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

SS Africa

S Asia

SE Asia

Rest of World

Rural population growth (decade averages), 1950-2030

Below zero = more land/farmer


Rural population growth rates by region, 1950-2030


Over 2% annual growth for 30 years!

Under 1.3% annually, and falling

Africa also had the world’s fastest urban population growth

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

SS Africa

S Asia

SE Asia

Rest of World

Urban population growth (decade averages), 1950-2030


From >5% annually

…to <4%

Zero = no change

Urban population growth rates by region, 1950-2030


Africa’s long baby boom is finally entering the workforce

30

35

40

45

50

SS Africa

S Asia

SE Asia

Rest of World

Total dependency rates (ages 0-14 and 65+), 1950-2030

Source: Calculated from UN Population Projections, 2008 revision (March 2009), at http://esa.un.org/unpp.

Child and elderly dependency rates by region (0-15 and 65+), 1950-2030


Africa had the world’s most severe demographic burden (>45% )

now a demographic gift

Conclusions #1: Africa’s demographic turnaround

• Africa is just now emerging from the world’s most extreme demographic transition, which involved:– The world’s fastest rural population growth

> 2,0 % for 30 years, 1960s-1980s– The world’s fastest urban population growth

> 4,5 % for 50 years, 1950s-1990s– The worst dependency rates (children or the elderly)

> 45 % for 60 years, 1950 – 2010

• These pressures are now easing, steadily opening new windows of opportunity


Demography is not destiny:Leadership matters!


Agricultural policy in Africa: 16 country studies*


*Plus five for cotton only

Methodology: Price distortions due to stroke of the pen policies

• Nominal Rate of Assistance:tariff-equivalent gap between

internal and foreign prices:

• Sometimes this is actually a tariff:

• Usually we observe only prices andmust infer marketing costs:

tNRA

fd PEmP **)1(

f

fd

P

PPNRA


Results: Heavy taxation of farmers and trade, followed by major reforms

Source: K.Anderson and W. Masters (eds), Distortions to Agricultural Incentives in Africa. Washington, DC: The World Bank, 2009.

Importable products

Exportable products

All farm products

This gap is anti-trade bias

This levelis netanti-farm bias


Individual countries follow varied pathsCountries’ total NRA for all tradable farm products, 1955-2004


Our common methodology allows comparison across all kinds of countries

No. of Percentage of world

countries Pop. GDP Ag.GDP

Africa 16 10 1 6

Asia 12 51 11 37

LAC 8 7 5 8

ECA 13 6 3 6

HIC 19 14 75 33

Total 68 91 95 90


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

Average NRAs for all products by year, with 95% confidence bands -1

01

2-1

01

2

1960 1970 1980 1990 2000

1960 1970 1980 1990 2000 1960 1970 1980 1990 2000

AFRICA ASIA (excl. Japan) ECA

HIC LAC

All Primary Products (incl. Nontradables)

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.

Less anti-farm bias

Less pro-farm bias


-1

.0-0

.50

.00

.51

.01

.5

6 8 10 6 8 10

All Primary Products Tradables

All Primary Products Exportables Importables

NR

A

Income per capita (log)

National average NRAs by real income per capita, with 95% confidence bands

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.

(≈$22,000/yr)(≈$400/yr) (≈$3,000/yr)

≈$5,000/yr

Africa is not yet at the income levelsassociated with costly farm subsidies


• Policy reforms have finally cut Africa’s heavy colonial and post-colonial taxation of farmers– The average burden per farmer reached US$134 in the ‘70s

• Further reduction is possible and desirable– The average burden per farmer was US$41 in 2000-04,

– …more than all public investment or foreign aid to the sector

• Later, the challenge will be to limit subsidies– As incomes rise, political pressures shift rapidly

Conclusions #2: Africa’s food-policy turnaround


1960/1961

1962/1963

1964/1965

1966/1967

1968/1969

1970/1971

1972/1973

1974/1975

1976/1977

1978/1979

1980/1981

1982/1983

1984/1985

1986/1987

1988/1989

1990/1991

1992/1993

1994/1995

1996/1997

1998/1999

2000/2001

2002/2003

2004/2005

2006/2007

2008/2009

2010/2011

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5Rest-of-WorldWorldSoutheast AsiaSouth AsiaSub-Saharan Africa

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.

What’s behind Africa’s green revolution?


http://www.fas.usda.gov/psdonline/

African agriculture is really 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

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– Slowdown in rural and urban population growth– Reduction in the dependency rate (children or elderly)

• Food policies – Many reforms done– More challenges ahead

• Farm technologies– Yields and output are rising– Technological transformation is finally under way


-

10

20

30

40

-

5

10

15

20

1975 1980 1985 1990 1995 2000 2005

Health AgricultureFood Aid Debt ReliefTotal ODA (right axis)

ODA commitments to Africa in selected sectors and total, 1973-2006(real US dollars per capita)

Source: Author's calculations, from OECD Development Assistance Committee (2008), Bilateral ODA commitments by Purpose (www.oecd.org/dac), deflated by OECD deflator (2005=100) and divided by midyear population estimates for Sub-Saharan Africa from the U.S. Census Bureau, International Database.

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.

Postscript: What role for foreigners in Africa’s turnaround?

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


http://www.atdforum.org/spip.php?article258

africa’s turnaround william masters professor of food policy, tufts university from crisis

Documents

farmer rural population

population source

population projections

rural population growth

rural populations

orggiewspricetool slide

picture slide

farm size