Smallholder Agriculture in East Africa: Trends ...

[Pages:52]No 105 - April 2010

Smallholder Agriculture in East Africa: Trends, Constraints and

Opportunities

Adeleke Salami, Abdul B. Kamara and Zuzana Brixiova

Editorial Committee

Kamara, Abdul B. (Chair) Anyanwu, John C. Aly, Hassan Youssef Rajhi, Taoufik Vencatachellum, Desire

Coordinators

Salami, Adeleke Moummi, Ahmed

Copyright ? 2010 Africain Development Bank Angle des trois rues: Avenue du Ghana, Rue Pierre de Coubertin, Rue H?di Nouira BP 323 -1002 TUNIS belv?d?re (Tunisia) T?l: +216 71 333 511 / 71 103 450 Fax: +216 71 351 933 E-mail: afdb@

Rights and Permissions

All rights reserved.

The text and data in this publication may be reproduced as long as the source is cited. Reproduction for commercial purposes is forbidden.

The Working Paper Series (WPS) are producced by the Development Research Department of the African Development Bank. The WPS disseminates the findings of work in progress, preliminary research results, and development experience and lessons, to encourage the exchange of ideas and innovative thinking among researchers, development practitioners, policymakers, and donors. The findings, interpretations, and conclusions expressed in the Bank's WPS are entirely those of the author(s) and do not necessarily represent the view of the African Development Bank, its Board of Directors, or the countries they represent.

Working Papers are available online at http:/

Correct citation : Salami, Adeleke; Kamara, Abdul B.; Brixiova, Zuzana (2010), Smallholder Agriculture in East Africa: Trends, Constraints and Opportunities, Working Papers Series N? 105 African Development Bank, Tunis, Tunisia.

AFRICAN DEVELOPMENT BANK GROUP

Smallholder Agriculture in East Africa: Trends, Constraints and Opportunities (1)

Adeleke Salami, Abdul B. Kamara and Zuzana Brixiova

Working Paper No. 105 April 2010

______________

(1) Adeleke Salami, Abdul B. Kamara, Zuzana Brixiova are Research Economist, Research Division Manager and Principal Research Economist in the Development Research Department of the African Development Bank. This Working Paper was produced out of the study on the Future of Smallholder Agriculture in Africa, implemented by the Development Research Department (EDRE). The background study was conducted by a consultant, Abiodun Falusi. The authors are grateful to John Anyanwu, Nizar Jouini and Abderrahim Kauther of Development Research Department; Justus Joseph Kabyemera, Agriculture and Agro-Industry Department, (OSAN); and Lachaal Lashad, Joint African Institute, for their insightful comments and input

Office of the Chief Economist

Abstract

Adeleke Salami, Abdul B. Kamara and Zuzana Brixiova

Smallholder agriculture continues to play a key role in African agriculture. This paper investigates trends, challenges and opportunities of this sub-sector in East Africa through case studies of Kenya, Ethiopia, Uganda and Tanzania. In these agriculture-based economies, smallholder farming accounts for about 75 percent of agricultural production and over 75 percent of employment. However, contributions of smallholder farming, and agriculture in general, to the region's recent rapid growth during 2005 - 08 have remained limited. Instead, growth was driven by services, in

particular trade. This paper finds that at the national level, weak institutions, restricted access to markets and credit. These factors, including inadequate infrastructure, have constrained productivity growth of smallholder farming. Measures needed to improve productivity of smallholder farmers include ease of access to land, training to enhance skills and encourage technology adoption and innovation, and removal of obstacles to trade. At the regional and global levels, international trade barriers need to be addressed.

Keywords: Smallholder agriculture, institutions, productivity, case studies, East Africa JEL classification: O13, Q1, P52

Contents

ACRONYMS AND ABBREVIATIONS....................................................................................... 6 1. INTRODUCTION .................................................................................................................. 8 1.1 Background ...................................................................................................................... 8 1.3 Methodology .................................................................................................................. 10 1.4 Structure of the Study .................................................................................................. 10 2. TRENDS IN SMALLHOLDER AGRICULTURE IN EAST AFRICA ............................ 11 2.1 Smallholders and Agricultural Development ............................................................... 11 2.3 Agricultural Productivity.................................................................................................. 16 3. CONSTRAINTS TO SMALLHOLDER AGRICULTURE IN EAST AFRICA .............. 21 3.1 Long-standing Constraints to Smallholder Agriculture .............................................. 21

3.1.1 Land Tenure, Access Rights and Land Management ................................................. 21 3.1.2 Financing Agriculture and Access to Credit............................................................... 22 3.1.3 Access to Input and Output Markets .......................................................................... 26 3.1.4 Infrastructure ............................................................................................................. 27 3.1.5 Agricultural Extension and Innovation...................................................................... 28 3.1.6 Policy-Related and Institutional Constraints ............................................................. 29 3.2 Constraints related to the Food and Financial Crises ............................................... 32 3.2.1 Smallholder Farmers in the Context of the Food Crisis ............................................. 32 3.2.2 Implications of Volatility in International Fuel Prices ............................................... 34 3.2.3 Implications of the Global Financial and Economic Crisis ........................................ 35 4. OPPORTUNITIES IN EAST AFRICAN SMALLHOLDER AGRICULTURE .............. 36 4.1 Investment Opportunities ............................................................................................... 36 4.2. Other Opportunities for Revitalizing Smallholder Agriculture................................... 38 4.2.1 Rising Global demand ................................................................................................ 38 4.2.2 Discovery of Mineral Resources ................................................................................ 39 4.2.3 Success Stories from other Developing Countries ..................................................... 39 4.2.5. Market Information and Partnerships ......................................................................... 40 4.2.6 Food Insecurity in East Africa.................................................................................... 40 4.2.7 Supermarkets, Contract Farming and Collective Action............................................ 41 5. CONCLUSIONS ................................................................................................................. 43 BIBLIOGRAGPHY...................................................................................................................... 44

ACRONYMS AND ABBREVIATIONS

ACP ADLI AEO AERC AfDB AGOA AGRA ARD AU BROSDI CAADP CERUDEB CIRP?E COMESA DFID DPPA DSGD EAC EAC EBA EDRE EGTE EU FAO FDCF FDI GDP ICT IFAD IFPRI IGAD IIED IMF ITC KACE KTDA

Africa Caribbean and Pacific Agriculture Development Led Industrialization African Economic Outlook African Economic Research Consortium African Development Bank African Growth and Opportunities Act Alliance for a Green Revolution in Africa Agriculture and Rural Development African Union Busoga Rural Open Source Development Initiative Comprehensive African Agriculture Development Program Centenary Rural Development Bank Inter-University Center on Risk, Economic Policies and Employment Common Market for Eastern and Southern Africa UK Department for International Development Disaster Prevention, Preparedness Agency Development Strategy and Governance Division East African Co-operation East African Community Everything But Arms' Development Research Department Ethiopian Grain Trade Enterprise European Union Food and Agriculture Organization Financial Deepening Challenge Fund Foreign Direct Investment Gross Domestic Product Information and Communication Technologies International Fund for Agriculture Development' International Food Policy Research Institute Inter Governmental Authority on Development International Institute for Environment and Development International Monetary Fund International Trade Centre Kenya Agricultural Commodity Exchange Kenya Tea Development Authority

MAAIF MDGs MCA MFPED MOFA MTID MTTI NEPAD NGO NMB NSE NTBs ODA ODI OECD OSAN PEAP RATIN R&AWG ReSAKSS RIFF RMC SADC SSA TAI UN UNCTAD UNDP UNIDO USAID WFP WOUGNET WTO

Ministry of Agriculture, Animal Industry and Fishers (Uganda) Millennium Development Goals Millennium Challenge Account Ministry of Finance, Planning and Economic Development (Uganda) Ministry of Foreign Affairs ( Uganda) Markets, Trade, and Institutions Division Ministry of Tourism, Trade and Industry (Uganda) New Partnership for Africa's Development Non Governmental Organizations Tanzania's National Microfinance Bank Nairobi Stock Exchange Non-Trade Barriers Official Development Assistance Overseas Development Institute Organization for Economic Cooperation and Development Agriculture and Agro-Industry Department Poverty Eradication Action Plan Regional Agricultural Trade Intelligence Network Research and Analysis Working Group Regional Strategic Analysis and Knowledge Support System Regional Integration Facilitation Forum Regional Member Countries Southern African Development Community Sub-Saharan Africa UNDP Achievement Diffusion Index United Nations United Nations Conference on Trade and Development United Nations Development Programme United Nations Industrial Development Organization US. Agency for International Development World Food Program Women of Uganda Network World Trade Organization

1. INTRODUCTION

1.1 Background

Until recently, the African agricultural landscape was characterized by sluggish growth, low factor productivity, declining terms of trade, and often also by practices that aggravated environmental problems. Since the late 1970s to mid 1980s, many African countries have implemented macroeconomic, sectoral and institutional reforms aimed at ensuring high and sustainable economic growth, food security and poverty reduction. Some recent agricultural growth accelerations notwithstanding, the sector's growth remained insufficient to adequately address poverty, attain food security, and lead to sustained GDP growth on the continent (Dessy et al., 2006 and World Bank, 2008).

All four East African countries examined in this study - Ethiopia, Kenya, Tanzania and Uganda - can be characterized as "agriculture-based," that is, agriculture is the backbone of these economies.1 Agriculture is dominated by smallholder farmers who occupy the majority of land and produce most of the crop and livestock products. The key long-standing challenge of the smallholder farmers is low productivity stemming from the lack of access to markets, credit, and technology, in recent years compounded by the volatile food and energy prices and very recently by the global financial crisis. Despite the number of sound agricultural policies adopted by most countries, implementation has been lagging. Moreover, growing disenchantment of some donors with the sector amplified the gap between policy formulation and implementation. Continued involvement of a few donors, including the African Development Bank (AfDB), notwithstanding, investment in agriculture has suffered from a declining trend in several decades before the crisis. The recent surge in food prices as well as the need for greater diversification towards domestic-oriented production brought about by the financial crisis could serve as a wake up call for the sector to receive due attention, given its importance and untapped potential.2

African smallholder farmers can be categorized on the basis of: (i) the agro-ecological zones in which they operate; (ii) the type and composition of their farm portfolio and landholding; or (iii) on the basis of annual revenue they generate from farming activities. In areas with high population densities, smallholder farmers usually cultivate less than one hectare of land, which may increase up to 10 ha or more in sparsely populated semi-arid areas, sometimes in combination with livestock of up to 10 animals (Dixon et

1 In agriculture-based economies, rural population accounted on average for almost 70 percent of total population, while agriculture amounted on average to 29 percent of GDP in 2005. Annual agricultural growth during 1993 -2003 amounted to 4 percent and slightly exceeded that of non-agricultural growth (3.4 percent). At 51 percent in 2002, rural poverty remained substantial (World Bank, 2008).

2 The African agriculture is believed to have an enormous potential for growth given the continent's natural resource endowment (FAO, 2009).

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download