There are significant income inequalities between agriculture and other sectors

In sub-Saharan Africa, the vast majority of the poor live from agriculture and a large proportion of farmers are poor: this is the observation of the World Bank.[1]But what exactly do we know about the income gaps between farmers and other population groups? To answer this question, we generally compare the value added in agriculture per agricultural worker to the average gross domestic product (GDP) per worker, across all sectors. According to this indicator, in sub-Saharan Africa in 2016, an adult working in "agriculture"—a sector that also includes forestry and fishing—generated a value added equivalent to 29 billion TYP3T of the average GDP per worker (36 billion TYP3T if we exclude South Africa). The gap is considerable. Yet, it underestimates the seriousness of the situation.

This indicator does indeed have a flaw: the denominator of the ratio (GDP per worker) includes the numerator (value added per agricultural worker). If the working population includes a high proportion of farmers, which is the case in most countries south of the Sahara, it tends to underestimate income inequalities between farmers and non-farmers. Hence the calculation of a second indicator, comparing value added per agricultural worker to GDP per non-agricultural worker[2]The result is edifying: the added value of a person working in agriculture in sub-Saharan Africa represents barely 16 % of that generated, on average, by a person employed in another sector (19 % outside South Africa) (graph). In other words, the productivity of agricultural labor is five to six times lower, on average, than in industry and services, which suggests that on the African continent, farmers earn on average five to six times less than other socio-professional categories, before possible social transfers.

The situation is improving, but very slowly. In ten years (2006-2016), the labor productivity ratio between farmers and non-farmers increased from 13% to 16% (from 17% to 19% if South Africa is excluded). At this rate, income convergence between agriculture and other sectors will not occur for several decades. It could be stimulated by an acceleration in the growth of agricultural labor productivity, thanks to a stronger increase in yields and/or an expansion of farm size. There is considerable room for improvement in yields—which, in Africa, are among the lowest in the world—but little overall room for improvement in farm size. In fact, farm size is decreasing in many African countries due to population expansion.

There remains the possibility of a radical change in agricultural policies, either through a sharp increase in import protection, likely to substantially raise agricultural prices, or through direct aid to farmers. The first option aims to respond to competition from low-cost imports, which significantly hinders the development of many local sectors. It is conceivable for certain agricultural products, but seems difficult to implement on a large scale due to households' sensitivity to food prices, unless there is a major reform of trade and tax policies.[3]The second solution, direct aid, has long been adopted in Europe and North America. China has recently taken this path; India is considering it. It would be interesting for the debate to take place in Africa, particularly given the criticism of input subsidies.[4]Direct aid could indeed be linked to changes in agricultural practices that are favorable to the restoration of soil fertility and the environment, and possibly targeted at small and medium-sized farms. This touches on the fundamental objectives assigned to agricultural policies, which are now part of the general framework of the sustainable development goals set by the UN for 2030.

[1] In sub-Saharan Africa, 76% of people living in extreme poverty, or less than $1.90 a day in purchasing power parity, work in agriculture. Conversely, approximately 20% of people working in agriculture are in extreme poverty. 2013 figures, source: Who Are the Poor in the Developing World?, Policy Research Working Paper 7844, World Bank Group, October 2016.

[2] GDP per non-agricultural worker is estimated using statistics from the World Bank for GDP and the International Labour Organization (ILO) for the number of people employed in different sectors of the economy.

[3] Thus, the organizations behind the “My milk is local” campaign in West Africa recommend that the states in the region implement a series of measures to encourage the development of milk production and processing: an increase in customs duties on imports of certain dairy products (whole milk powder, skimmed milk-vegetable fat powder blend), VAT exemption for the local milk sector, the introduction of a system of variable import levies, and the use of the resulting tax revenue for programs to subsidize the consumption of local milk by the poorest social categories. See “My milk is local” campaign position paper – March 2019, Inter-réseaux Développement rural monitoring bulletin no. 357, http://www.inter-reseaux.org/publications/bulletins-de-veille/article/bulletin-de-veille-no357?utm_source=Inter-r%C3%A9seaux&utm_medium=site&utm_campaign=SUWEDI

[4] See Jean-Christophe Debar, India, Africa: agricultural policies in search of efficiency, FARM blog, February 20, 2019, https://fondation-farm.org/inde-afrique-des-politiques-agricoles-a-la-recherche-defficacite/