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West & Central Africa Fourth Agricultural Sciences Week, Niamey, 16-20 June 2014)

Agriculture Transformation Through Commodities

Value Chains Development

Dougou KEITA, Manager, AfDB

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AGRICULTURE : A KEY AFRICA GROWTH ENGINEShared growth engineAbout 1/3 GDPECOWAS: 36% (2000-2009)1st employer

About 70% of africans majority of whom are women in agricultre sectorS=

budgetInvesting in AgricultureAgriculture Subsidy

External Accounts balanceHigh food importImpact of global food prices

Climat & environment Sustainable growth Environnemental protection Green growth

Croissance économique du continent

AGRICULTURE

ECOWAS

5,1%

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AFRICAN DEVELOPMENT BANK GROUPopportunities Challenges

-2,000,000 4,000,000 6,000,000 8,000,000

10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

Num

ber

Number of people affected by Natural Disasters

Recurent food crisis due to drought Impacts of climat change; soil degradation; food price volatility; high demography; urbanization;

Existence of important regional markets (high demands due to high income, urbanization & high demography); large transboundary river bassins; Important irrigation potential; large yield increase potential; NEPAD / CAADP; ECOWAP

Regional markets

Natural disaster victims (nber)

River Basins Niger ABNSénégal OMVSLac Tchad CBLTBassin du Congo ...

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AFRICAN DEVELOPMENT BANK GROUP Key sector constraints include:

Lack of access to production and productivity enhancing technologies

Limited capacity of sector institutions Poor production, processing and

marketing infrastructure Poor incentive system

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Increasing agricultural growth and productivity will require a wide range of actions to address the challenges set out above.

Priorities can be summarised in terms of “the four Is”:

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Adequate Incentive system;

Adequate production, processing and marketing Infrastructure;

supporting Innovations; and

Strengthening institutional capacity

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How to efficiently support agriculture sector development for

Wealth and employment creation Food and nutrition security ?

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LessonsPast interventions in agriculture addressed on-farm production constraints, without due consideration to value addition, marketing and other backward and forward linkages.

Such projects had limited success and were not effective in:

achieving their expected results ensuring sustainability Impacting gender protecting the environment

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Commodities Value Chain Development

gives equal attention to:production and productivityvalue addition through processing marketing.

is demand-driven, public sector enabled, and private sector led.

links small/medium scale producers with private operators.

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promotes contractual relationship between private operators and farmers’ groups, private operator providing services, such as:

credit for inputs training in good agricultural practices transportation guaranteed market for smallholders’

produces

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targets two major groups of beneficiaries:

economically active smallholders willing to participate in commercial agriculture;

existing or potential small-scale entrepreneurs and business associations who provide services to rural households.

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• Commodity Business Plan (CBP) constitutes the basis for investment decisions.

market potential financial viabilitywomen preferences

focuses on limited number of commodities, selected based on:

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Commodities for Ghana NRGP included: Industrial crops( soybean; cowpeas, groundnuts;

brewery sorghum); Women commodities (sheanut, sesame,

moringa, rice);Four animal products (small ruminants, pigs,

guinea fowl, and fish); Export fruits and vegetables (okra, chilly, French

beans, other vegetables, papaya, mango); Certified seed production.

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Incentives for Private Sector Engagement

0% duty on imports of agricultural machinery and equipment

Removal of restrictions on areas of investment and maximum equity ownership by foreign investors

No currency exchange controls – free transfer of capital, profits and dividends

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Constitutional guarantees against nationalization / expropriation

Pioneer tax holiday for agricultural investments Infrastructure, Innovations and Institutional

capacity support Alignment of stakeholders’ interests

Land tenure Competitiveness risks (unfair trade practices - raising tariffs to mitigate)

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Uganda – AAMP & CAIIP: Some Results

Increase yields by more than 50% from 2002 to 08 Increase households’ income by 15% (2002 to 08) 24% of subsistence farmers moved to commercial

farming from 2002 to 2008 Number of traders accessing markets increased by

72% on busy market days and 35% on non-busy market days

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Increased of commodities farm gate prices Irish potatoes: from UGX 12,000 to 25,000

per bag Pineapple: UGX 300 to 800 / fruit Milk: UGX 100 to 300 / l Bananas: UGX 500 to 3000 (bunch)

Post-harvest losses reduced by over 20%

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Conclusion

Interventions using the commodities value chain approach have a greater chance to transform agriculture.

They are more likely to: build the capacity of the agriculture sector

institutionsprovide incentives for the sector growth and

performance

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promote the use of innovations (science & technology)

develop production, processing, and marketing infrastructure

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Messages

Agriculture specialists would do well to promoting this approach. It is an efficient strategy to:

create shared wealth and employment contribute to food and nutrition

security,green & inclusive economic growth, on a sustainable basis

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Thank you