Free Farmers to Fix Famine

Last year, rising food prices and severe shortages caused riots and protests in several countries and contributed to civil unrest in others. The poorest region of the world, sub-Saharan Africa, was hit particularly hard. At the time, World Bank President Robert Zoellick warned, “[The] doubling of food prices could potentially push 100 million people in low-income countries deeper into poverty”. Though world food prices have since decreased, millions of people around the world, and particularly in Africa, remain vulnerable to disruptions in supply.

In the short run, simple technology can make a difference in the lives of Africa’s millions of rural farmers by increasing the productivity of their land and thereby increasing incomes. In Africa only 27% of land is planted with modern seeds. Compared to other developing regions, Africa’s agricultural productivity is frighteningly low—grain productivity per capita is a mere 40% of other developing areas. In contrast, in Asia 82% of land is planted with modern seed varieties that are bred to withstand specific diseases or environmental conditions. Preventing African farmers from using the best inputs and equipment available, such as hybrid seeds and basic irrigation systems, denies them the ability to maximise the productivity of their land.

There are several long-term, systemic problems that plague agriculture in Africa, such as land-tenure issues and a lack of educational opportunities. However, there are policies that can be implemented in the short term to supplement the spread of technology and increase food production and food security while adding to economic growth. These policies pertain to the following areas:

GMOs

Increasing access to credit

Improving infrastructure

Reducing barriers to trade

Genetically Modified Organisms
Genetically modified organisms (GMOs) improve productivity fairly rapidly because, once approved by regulators, they can be put to use immediately. African countries that lack the necessary capacity to manufacture GM seeds locally can piggyback off technologies researched in developed countries.

Credit
Africa needs improved institutions for the ownership and use of land, but in the short term, credit can be provided in a variety of ways. While farmers may not be able or willing to use their land as collateral, there are other models of financing that may help them to access credit such as savings groups, operating formally or informally, which help farmers to pool their limited funds and make capital purchases for their farms. Micro-finance operations are another avenue or they can gain access to credit through supply chains.

Infrastructure
Poor quality roads, or no roads at all, severely limit the ability of smallholder farmers who live in remote areas to transport goods to market on a regular basis. The high costs of transporting goods disincentivise increased production. To lower transport costs and increase food availability, the infrastructure connecting farmers to markets needs to be improved. The desperate state of roads and other infrastructure across Africa should lead governments to consider all options for improvement, including policies that would create room for private sector entrepreneurs to tackle these problems.

Reducing barriers to Trade
Developed and African countries should reconsider duties, tariffs, and supports if they want to achieve better economic outcomes for all of their citizens. Many SSA countries still continue to tax exports, although much progress has been made in this area. Taxation of agricultural exports has fallen from an average of 46% in the 1980s to 19% in the mid-2000s. Taxing agricultural products means farmers face high costs when they transport produce to foreign markets. Lowering export taxes is a promising start. To lower them still further would reduce transaction costs for farmers and make their products more competitive in external markets. Eliminating trade barriers between African nations would expand markets for smallholders. In some countries where areas with good agricultural potential are closer to markets in neighbouring countries than to large domestic markets, trade across borders would be a far better option, but only if tariffs or export taxes do not raise costs unrealistically. If a country experiences a drought or other crisis that limits food supplies, lower tariff barriers would allow the affected country’s food needs to be met by producers in other countries far more easily.

Conclusion
Technological change around the world is driven by market incentives, and agriculture in Africa is no different. Africa’s farmers need less top-down interference – not more. Many of them have already embraced new technologies. If the barriers they still face were reduced, the food crisis in Africa would be relieved.

Technical assistance with crop-growing problems, provided by companies that develop and sell seeds increases the value of their produce and contributes substantially to poverty alleviation. Banks that provide farmers with credit help them to be more productive. When farmers advance financially, they will make use of other financial services.

All the problems surrounding African agriculture cannot be solved in the short term, but technology can help to make immediate improvements in farming productivity and the standards of living of all citizens.

Author: Jasson Urbach is an economist with the Free Market Foundation and co-author with Daniel Sacks, a Research Associate at the Mercatus Center, of Fixing Famine: How Technology and Incentives can Help Feed Africa. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

FMF Feature Article / 01 December 2009