African agriculture faces the challenge of structural transformation

The primary problem facing African agriculture is not producing more: it has made remarkable progress in this area (graph). The problem is that it is not productive enough. The poor performance recorded in this area, whether we consider total factor productivity or partial indicators (crop yields, value added of agricultural labor), has considerable human and environmental costs: endemic poverty, food insecurity, lack of international competitiveness, incentives for deforestation, etc.

Furthermore, they hinder the structural transformation of the economy, that is, the gradual transfer of resources to more remunerative activities, namely industry and services, along the lines of high-income and emerging countries. Historically, increasing agricultural productivity has been the driving force behind the transformation of economies in other regions. It has reduced food prices and increased incomes in rural areas – which have thus become, for other sectors, both an outlet for their products and a source of labor – and has made urbanization possible.[1].

However, FARM underlines in its contribution to the latest ARCADIA report[2], it is clear that Africa cannot replicate, in the short term, the development model followed in Europe and the United States, which was based on a massive rural exodus, even if the share of the African workforce employed in agriculture is decreasing. Due to population expansion, it would be illusory to think that the number of farmers will decrease rapidly on the continent, while the average size of farms is shrinking, and that industry and services will be able to absorb all the surplus agricultural labor, while they are mainly composed of small businesses operating informally. For reasons of efficiency and equity, it would also be preferable for agriculture to develop in a more sustainable manner, both socially – by including small farmers with commercial potential in value chains – and environmentally – by modifying production systems aimed at restoring soil fertility and adapting to climate change.

Public policies have a major role to play in this transformation, by encouraging agricultural research and extension and stimulating job creation upstream and downstream of agriculture. This means prioritizing the construction of sectors, rather than increasing agricultural production, and relying on an integrated rural development policy, rather than on sectoral measures.[3]Beyond improving economic performance, the challenge is to reduce income gaps between towns and rural areas, as well as between territories, to better share the fruits of growth and ensure its sustainability.

To download the ARCADIA 2019 report, click here.

[1] See in particular Timmer, CP (2009), A World Without Agriculture: The Structural Transformation in Historical Perspective,  https://econpapers.repec.org/bookchap/aeirpbook/43120.htm

[2] The result of close collaboration between Cyclope and the Policy Center for the New South, the ARCADIA (Annual Report on Commodity Analytics and Dynamics in Africa) report provides cyclical and structural analyses of Africa and global commodity markets. FARM contributed to the 2019 edition of the ARCADIA report with an article on "African Agriculture and the Challenge of Structural Transformation."

[3] See European Commission (2019), An Africa-Europe agenda for rural transformation. Report by the Task Force Rural Africa, https://ec.europa.eu/info/food-farming-fisheries/farming/international-cooperation/africa/eu-africa-partnership_en