Africa: Agriculture an underestimated "safety net"

JOHANNESBURG, 9 June 2009 (IRIN) - Investment in agriculture in developing countries, where most of the workforce consists of small-scale farmers, is akin to beefing up a "safety net" as the world struggles to limit the impact of the economic crisis, a UN agency head told IRIN ahead of the three-day World Economic Forum (WEF) meeting in Cape Town.

Kanayo Nwanze, president of the UN International Fund for Agricultural Development (IFAD) pointed out that 80 percent of the workforce in Africa consisted of small farmers, and agriculture accounted for 40 percent of the region's gross domestic product (GDP).

The World Bank's 2008 report, Agriculture for Development, commented that the sector was "'farm-financed social welfare' when there are urban shocks", and pointed out that three out of every four poor people in developing countries lived in rural areas.

Instead of pouring money into "subsidising imported food to keep urban populations happy, fearing the possibility of a social unrest", Nwanze said governments should realize that "there is no safety net like food security," and funding agriculture helped alleviate rural poverty.

He cited the World Bank report which found that in China, the world's fastest growing economy, agricultural growth was 3.5 times more effective in reducing poverty levels than expansion in other sectors.

Nwanze told IRIN that job loss trends prompted by the economic slowdown had shown that "reverse migration of people from the urban areas to rural areas is taking place", which strengthened the case for investment in rural economies.

With remittance flows and official development aid set to decline, Africa should look to forging private-public sector partnerships. "The most important aspect should be to organize the small-scale farmers and improve and provide linkages to commercial markets, and provide access to financial services," he said.

In Kenya, small-scale farmers exporting cut flowers to Europe had put "the horticulture industry ... on a par with Kenya's traditional hard currency earners - tea, coffee and tourism - in revenues," according to the UN Food and Agriculture Organisation (FAO), although the global economic downturn has since caused a contraction in the industry.

Vietnam, which was importing food only two decades ago, had become the world's fourth largest producer of rice, largely on the shoulders of its small-scale farmers, Nwanze pointed out. Investment in agriculture in Burkina Faso, in West Africa, had also seen food production double in the last decade.

Investment opportunities

The IFAD official said he considered the large-scale acquisitions of farmland in Africa, described as "land-grab deals", as opportunities to draw much needed resources into agriculture. Governments should become proactive to ensure that investment in land deals maximised their contribution to sustainable development and were transparent.

Nwanze said IFAD was involved in a process, led by FAO, to develop Voluntary Guidelines for Responsible Governance of Land and Other Natural Resources, which would examine land ownership and distribution reform, and provide guidance for "land-grab" deals. Many small-scale farmers in Africa have insecure property rights, which these deals have underlined.

According to the World Bank report, land reform could promote the entry of small-scale farmers into the market, reduce inequalities in land distribution and increase efficiency.

The UN Economic Commission for Africa and the African Development Bank are to address some of these issues in a Framework and Guidelines for Land Policies in Africa, being developed under the leadership of the African Union.

Nwanze said investment in agriculture was now an imperative. The World Bank has projected that food imports into Sub-Saharan Africa will more than double in two decades.

The new Food Outlook by FAO noted that a combination of falling incomes and declining real exchange rates in much of the past 12 months had eroded purchasing powers worldwide, affecting the affordability of food.