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AFRICA AGRICULTURE STATUS REPORT 2017 the Business of Smallholder Agriculture in Sub-Saharan Africa

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AFRICA AGRICULTURE STATUS REPORT 2017 the Business of Smallholder Agriculture in Sub-Saharan Africa AFRICA AGRICULTURE STATUS REPORT 2017 The Business of Smallholder Agriculture in Sub-Saharan Africa AFRICA AGRICULTURE STATUS REPORT 2017 01 Africa Agriculture Status Report 2017 THE BUSINESS OF SMALLHOLDER AGRICULTURE IN SUB-SAHARAN AFRICA Copyright @2017 by the Alliance for a Green Revolution in Africa (AGRA) All rights reserved. The publisher encourages fair use of this material provided proper citation is made. ISSN: 2313-5387 Correct Citation: AGRA. (2017). Africa Agriculture Status Report: The Business of Smallholder Agriculture in Sub-Saharan Africa (Issue 5). Nairobi, Kenya: Alliance for a Green Revolution in Africa (AGRA). Issue No. 5 Managing Editor: Daudi Sumba, (AGRA) Project Coordinator: Jane Njuguna (AGRA) Editor: Anne Marie Nyamu, Editorial, Publishing and Training Consultant Data Table Coordinators: Jane Njuguna, Josephine Njau, Alice Thuita (AGRA) Design and Layout: Kristina Just Cover Concept: Communication Unit AGRA Cover Photos: Shutterstock, AGRA, Ecomedia Printing: Ecomedia AGRA wishes to acknowledge the following contributing institutions: The opinions expressed in this publication are those of the authors and do not necessarily reflect the policies or position of Alliance for a Green Revolution in Africa (AGRA) or its employees. Although AGRA has made every effort to ensure accuracy and completeness of information entered in this book, we assume no responsibilities for errors, inaccuracies, omissions or inconsistencies included herein. The mention of specific companies, manufacturers or their products, whether or not these have been patented, does not imply endorsement or recommendation or approval by AGRA in preference to others of a similar nature that are not mentioned. The descriptions, charts and maps used do not imply the expression of any opinion whatsoever on the part of AGRA concerning the development, legal or constitutional status of any country. Table of contents Foreword iv Preface vi Acknowledgements viii Acronyms x Chapter 1 1 Why an Inclusive Agricultural Transformation is Africa’s Way Forward Annex 1 20 Operationalizing the Typology of Small Farm Households Chapter 2 24 Business Pathways to the Future of Smallholder Farming in the Context of Transforming Value chains Chapter 3 45 Engaging the Agribusiness Sector in Inclusive Value Chain Development: Opportunities and Challenges Chapter 4 65 Strengthening Financial Systems for Smallholders Chapter 5 89 Creating Resilient Value Chains for Smallholder Farmers Chapter 6 115 A Policy Agenda for Achieving an Inclusive Transformation of Africa’s Food Systems Chapter 7 134 Conclusions and Recommendations Agricultural Data 141 Foreword This year’s Africa Agriculture Status Report (AASR) is farms produce one-fifth of all the world’s food on 10% of particularly close to my heart, as it speaks to an issue that I the globe’s land. Supporting smallholder agriculture, then, have passionately advocated for all my professional life. As is not a romantic notion of doing good for the poor. It makes I indicated in my recently released book, A Bucket of Water, good business sense. when I insisted for many years that small-scale farms were as much businesses as large-scale operations, my views Turning smallholder farmers into profitable rural businesses were considered at best romantic and at worst foolish. that generate surpluses is not only the best way to achieve Never mind that 500 million smallholder farms around the global food security; it also offers a path out of poverty world provide livelihoods for more than 2 billion people and hunger. This is especially critical in Africa where and produce about 80% of the food in sub-Saharan Africa an agricultural transformation is still urgently needed and Asia. Few senior business or government leaders to safeguard the recent economic gains. However, the seriously believed that farmers working small plots of land economic context for the transformation has changed, could be considered part of the “business community”. and it is no longer enough for Africa to pursue the exact Today, the concept of smallholder farms as a business has same approach to agricultural transformation that was used become commonplace. That this Report is focusing on the by other regions of the world. Changes in diets and the “Business of Smallholder Agriculture” is a strong testimony urbanization of many food chains are creating even more that the concept has fully taken root in Africa. In fact, it is opportunities for adding value and creating employment now becoming widely accepted that smallholder farmers within the broader agri-food system. This sets the ground in Africa, who make up to about 70% of the population, for an “inclusive” transformation of Africa’s agri-food system, constitute the largest private sector group in African one that focuses on linking many more smallholders to agriculture. high value markets, and adds value and employment along value chains through growth of small and medium As we ponder the challenges that are likely to come with enterprises (SMEs). the rapidly growing population, projected to be well over 9 billion people by 2050, one would imagine that we need While larger enterprises are appropriate for richer countries grand solutions. Perhaps the world requires larger and with high labor costs, Africa is still at an earlier stage of its more heavily mechanized farms that can generate the economic transformation, and a more balanced approach much-needed food. The efficiency of modern tractors is desired. As I wrote in my preface to the IFAD Rural working large-scale farms may strike many as the obvious Development Report 2016 on “Fostering inclusive rural answer. Yet this is not the case. In Brazil, for example, transformation”, which is highly complementary to this smallholder farmers using mixed cropping on 8-hectare AASR, “Economic transformation may be inevitable, as plots generate one job, while large- scale mechanized the world changes, but inclusiveness is a choice” and monocultures take 67 hectares to create one job. In other “countries need to take specific actions and make specific words, smallholder farms are eight times more effective at policy choices and investments—to enable rural people to job creation, according to data from the Food and Agriculture seize the opportunities and deal with the threats”. Organization of the United Nations (FAO). In China, small iv AFRICA AGRICULTURE STATUS REPORT 2017 This Report delves more deeply than most into some of like agro-corridors and agro-based special economic zones. the desired policy interventions for achieving an inclusive First movers can provide platforms that enable relevant transformation. It highlights the need for a more holistic and public and private sector players to come together to better multisectoral approach to the problem, and that builds on serve groups of smallholder farms, while enabling public partnerships between the public and private sectors. And this and private investments in infrastructure, and supporting is the new, holistic, and inclusive agricultural transformation services to achieve critical levels. By leading to quick wins that AGRA advocates for Africa. But it also poses a in terms of income and employment, the visibility of first challenging agenda for many African governments, given movers can be good for developing political momentum and weak public sector capabilities, and insufficient government support for agriculture. commitment to smallholder-led agricultural development. One practical approach made is for countries to focus on first movers, such as priority value chains or spatial initiatives Dr. Kanayo F. Nwanze 2016 Africa Food Prize Laureate and Immediate former President International Fund for Agricultural Development (IFAD) AFRICA AGRICULTURE STATUS REPORT 2017 v Preface Agriculture is a proven path to prosperity. No region of the However, much more remains to be done to sustain these world has developed a diverse, modern economy without gains and truly drive the agricultural transformation needed first establishing a successful foundation in agriculture. for Africa’s development, and to ensure a better life for all This is going to be critically true for Africa where, today, of its people as laid out in the Malabo Declaration, in the close to 70% of the population is involved in agriculture as Sustainable Development Goals (SDGs), and in Africa’s smallholder farmers working on parcels of land that are, on Agenda 2063. average, less than 2 hectares. As such, agriculture remains Africa’s surest bet for growing inclusive economies and Additionally, and more crucially, these changes need to be creating decent jobs mainly for the youth. beneficial to Africa’s vast army of smallholder farmers and small and medium enterprises (SMEs) operating in the Most indications are that we are ready for take-off. The agri-food system. Given the myriad constraints they face, prospects for African agriculture looks favorable, despite and the more stringent requirements of urbanized markets, the recent slowing in economic growth across much of the there is a danger that many will be left out of this impending continent mainly due to the sharp drop in the global prices economic boom while larger commercial farms and large of oil and minerals. The African food market continues to agribusinesses reap most of the benefits. grow with World Bank estimates showing that it will be worth US$1 trillion by 2030 up from the current US$300 billion. These trends and worries are not new, and have been Demand for food is also projected to at least double by 2050. highlighted in previous Africa Agriculture Status Reports. This These trends, combined with the continent’s food import bill, fifth edition of the Report takes a business approach to the estimated at a staggering US$30–50 billion, indicate that an problem. Recognizing that Africa has experienced significant opportunity exists for smallholder farmers—Africa’s largest economic changes over the past decade, the Report calls entrepreneurs by numbers—who already produce 80% of for an agricultural transformation that is more focused on the food we eat to finally transition their enterprises into a market driven, business agenda that encompasses the thriving businesses.
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