Managing Post-harvest Systems to Enhance Agricultural Productivity Competitiveness and Markets in Western and Central Africa by Dr. Geoffrey C. Mrema Director Rural Infrastructure and Agro-industries Division Food and Agriculture Organization of the United Nations (FAO) Effects rise in food prices and financial crisis Because of high food prices, the import bill for cereals of African countries rose substantially by 49 percent in 2008 alone. The financial crisis led to a slow down in economic growth from 6.0% in 2007 to 5.1% percent in 2008. 2 Ratio of Share of Agri-enterprise and Agriculture in GDP Share in GDP Agriculture (1) Agri-enterprise (2) Ratio of (2) to (1) Agriculture Based Countries 0.39 0.22 0.57 Transforming Countries 0.16 0.32 1.98 Urbanized Countries 0.08 0.27 3.32 USA 0.01 0.13 13.00 3 Structural Changes and Agro-industries Development Empirical data show that: In agricultural countries that have not undergone a structural transformation, 63% of the value added in the agri-food system was created on the farm. In the USA, by contrast, farming accounted for only 7 percent, with the remaining value being created by input producers, agro-industries, transport firms, retailers, restaurants, and others in the agribusiness system. 4 Capital Requirements to Overcome Hunger Cumulative Investments over 44 year period to 2050 in billion US$ ITEM 1. Primary Production (including mechanization & other power sources) 2. Downstream Support Services Sub-Saharan Africa 496 (storage; markets & first stage processing) 444 TOTAL 940 Source: Capital Requirements for Agriculture in Developing Countries to 2050, FAO, Rome, 2009 US$ 15 billion/year in additional investment needed 5 Post-harvest Losses (PHL) Assuming very conservative estimates of quantitative PHL of 10% in cereals, 30 percent in fruits & vegetables and 20% in root & tubers, and using 2007 production data for the 22 CORAF/WECARD countries, quantitative losses in the region are: 5.37 million tonnes of cereals 2.43 million tonnes of fruits and vegetables and 27.59 million tonnes of roots and tubers This amounts to a total monetary value of US$17.46 billion. 6 Regional and Local Market Opportunities Demand for agricultural commodities and highvalue products across Africa is expected to grow from US$ 50 billion in 2000 to US$150 billion in 2030. The potential income that farmers could derive at the farm level from increased trade in domestic and cross-border markets is expected to grow to US$30 billion in 2030; Developing the necessary market links could increase rural incomes by up to another $60 billion. 7 Population Figures for CORAF/WECARD Countries Population of the 22 countries considered together will increase from current level of 417 million to 527 million in 2020 and over 883 million in 2050. By 2020, an equal number of the population will live in rural and urban areas. Beyond 2020, the urban population is projected to rapidly outgrow the population in rural areas. By 2050, 67% of the region’s population will live in urban areas. 8 Population Centers in West and Central Africa 9 Africa in Global Trade and Value Addition African countries contribute less than 10% to global value addition. Africa’s share in world agricultural trade declined from 15% in the 1960s to 5.4% in the 1980s and 3.2% in 2006. Africa’s international trade is dominated by primary commodity exports - almost 60% of total export value, remaining 40% being fuels/petroleum. Non-fuel primary commodity exports, agricultural products account for more than 25% of trade revenues Intra-African trade barely 10% of Africa’s total agricultural trade. Intra-regional exports averaging US$ 3.8 billion between 2000 and 2005 while imports of agricultural commodities from outside Africa averaged US$ 33 billion. 10 Rice Import Figures RICE IMPORTS IN SSA AND WCA REGIONS 2005 (in 1000 MT) Global Rice Imports SSA Total Imports (% global) West & Central Africa Region (% global imports) 29,580 11,050 7,756 Benin 710 Cameroon 751 Congo (Bra) 92 Cote d’Ivoire 1160 Gambia 116 Ghana 627 Guinea 158 Liberia 168 Mali 173 Niger 60 Nigeria 1841 Senegal 1319 Sierra Lone 108 Togo 473 Sub-total WCA Region (as a % SSA) 7,756 37.4% 26.4% 70.2% Source: World Grain Statistics (2007), International Grain Council, London (August 2008) 11 Key Intervention Areas Four main areas of support are essential for development of postproduction agro-enterprises and agro-industries: 1. Enabling policies & public goods; 2. Value chain skills & technologies; 3. Post-production institutions & services; 4. Reinforced financing & risk mitigation mechanisms 12 Enabling policies and provision of public goods Sector Strategies & Plans; Legal and Regulatory Frameworks; Grades & Standards; Agricultural Mechanization; Markets & Trade Infrastructure; National & Regional Trade Policies 13 Skills & technologies Development of skills & technologies needed for postproduction segments of agricultural value chains should address: Producer, Commodity & Industry Associations; Value Chains Facilitation; Business Development Services Producer & SME Skills Building; Technology Development & Transfer; Vocational, Business & University Training 14 Innovative Institutions and Public Services Contract Farming & Outgrower Schemes; Business Incubators, Hubs & Clusters; Research, Technology & Agro-Food Parks; Product Labeling & Certification Schemes; Commodity Exchanges & Market Information 15 Finance & Risk Mitigation Public-Private Partnerships Loan Guarantees Investment Funds Value Chain Finance Risk Mitigation Products 16 HLCD-3A Co-organizers • Government of the Federal Republic of Nigeria (Hosts) • African Union Commission (AUC) • African Development Bank (AfDB) • Food and Agriculture Organization of the United Nations (FAO) • International Fund for Agricultural Development (IFAD) • United Nations Economic Commission for Africa (UNECA) • United Nations Industrial Development Organization (UNIDO) 17 17 3ADI Main Objective To increase private sector investment flows going into the agriculture sector in Africa by mobilizing resources for agribusiness & agro-industrial development from domestic, regional & international financial systems 18 3ADI - What the Initiative will do? Specifically the Initiative will: 1. Leverage current attention to agriculture in Africa to accelerate the development of agribusiness & agro-industries sectors that ensure value-addition to Africa’s agricultural products; 2. Support a well coordinated effort to share knowledge & harmonize programmes in ways that capture synergies, avoid fragmented efforts, & enhance developmental impacts; 3. Support an investment programme that will significantly increase proportion of agricultural produce in Africa that is transformed into differentiated high-value products. 19