Keynote address by the South African Minister of Agriculture, Forestry and Fisheries, the Honourable Tina Joemat-Pettersson to the International Fund for Agricultural Development (IFAD) Discussion Forum on New challenges, new opportunities: African Agriculture in the 21st century: Cape Southern Sun Hotel, Cape Town, South Africa
3 May 2011Kanayo F Nwanze: International Fund for Agricultural Development (IFAD) President,
Agnes Matilda Kalibata: Minister of Agriculture and Animal Resources of the Republic of Rwanda,
Pascal-Firmin Ndimira: Advisor to the President of the Republic of Togo,
Ibrahim Mayaki, CEO of New Partnership for Africa's Development (NEPAD),
Akin Adesina: Vice President: Alliance for a Green Revolution In Africa,
Martha Bridgman: Chair of the Western Cape Branch of the SA Institute for International Affairs,
Edward Heineman: IFAD Rural Poverty Report,
Kavita Prakash-Mani: Global Head Of Food Security Agenda: Sygenta International;
Mohamed Béavogui: Director West and Central Africa Division, IFAD,
Komla Dumor: BBC Africa Business Report,
All African Ministers of Agriculture,
All IFAD officials; dignitaries,
Ladies and gentlemen
Greetings to all of you gathered here this morning in this beautiful city – Cape Town!
We are honoured as South Africa to be hosting this very important discussion forum under the auspices of this august institution – the International Fund for Agricultural Development (IFAD).
I have no doubt that at the end of the day’s discussions and deliberations – armed with the calibre of academics, researchers, non-governmental organisations (NGOs) and eminent politicians - we will adopt concrete resolutions that will address the new challenges and new opportunities facing African Agriculture in the 21st Century.
This all-important meeting which brings together heads of state and other key leaders from the region’s government, business, media, non-profit and academic sectors - is taking place just prior to the World Economic Forum’s Africa meeting in Cape Town.
In discussing the outlook of the global economy, the International Monetary Fund and World Bank Spring Meetings have warned of uncertainty.
The surge in food prices is the biggest threat to the world’s poor, pushing 44 million people into poverty over the past year. The world is risking losing a generation due to the impact of food prices on the world’s poor.
While the world economy has grown exponentially during the past 50 years, it is clear that designing appropriate poverty alleviation tools remains a challenge.
It is also clear that the gap between the haves and have-nots continues to grow.
It means the world has not learned from the warnings of the past, such as the words of Mahatma Gandhi who declared poverty “a worst form of violence”.
Our very own former President Nelson Mandela once said that, “massive poverty and obscene inequality are such terrible scourges of our time – times in which the world boasts breathtaking advances in science, technology, industry and wealth accumulation – which they have to rank alongside slavery and apartheid as social evils”.
We have seen food shortages and where rising food prices have sparked unprecedented uprisings in some parts of the world. Alleviating poverty by increasing the productive capacity of some of the poorest parts of the country is one of the most effective ways of mitigating the effects of high global food prices, and we are striving to do just that.
We are not alone in this: Africa as a whole has some 47% of its arable land uncultivated, and a recent Harvard study shows that the continent could increase food production by at least 1.5% a year. So, we all have a lot of work to do.
Our Government has heeded the call and is paying particular attention on poverty alleviation.
Realising the severity of unemployment in South Africa, a special cabinet meeting was convened late last year to discuss the key economic challenges facing the country and a New Growth Path (NGP) Framework that intends to place employment at the centre of government’s economic policy was endorsed.
It is well documented in the economic development literature that agriculture plays a crucial role in economic development through employment creation, income generation, poverty reduction, food security, economic growth and equity.
Hence the agricultural value chain was identified by government as one of the six key job drivers to unlock the employment potential in the economy.
The New Growth Path should be seen as a framework that the President spoke about in his inaugural State of the Nation in June 2009. President Zuma stated thus:
"It is my pleasure and honour to highlight the key elements of our programme of action.
"The creation of decent work will be at the centre of our economic policies and will influence our investment attraction and job creation initiatives.
"In line with our undertakings, we have to forge ahead to promote a more inclusive economy."
In South Africa, we are guided by broader government policy documents such as the Industrial Policy Action Plan (IPAP) and the New Growth Path (NGP) Framework, both of which have identified the agricultural sector as one of the sectors in which there is significant potential to create jobs.
One significant aspect of improving access to markets is what we call the “Zero Hunger Plan”, modelled on a similarly named Brazilian programme which uses government’s procurement systems to purchase food from smallholders, which is made available for free or at subsidised rates to those in our communities who are hungry.
Government buys an enormous amount of food each and every day, and these purchases need to be strategically targeted to support the emerging sectors.
Rural poverty in the developing world
Despite massive progress over the past two decades in reducing poverty in some parts of the world – notably East Asia – there are still about 1.4 billion people living on less than US$1.25 a day, and close to 1 billion people suffering from hunger.
At least 70 percent of the world’s very poor people are rural, and a large proportion of the poor and hungry are children and young people. Sub-Saharan Africa, with the highest incidence of rural poverty, is the region’s worst affected by poverty and hunger.
Agriculture plays a vital role in most countries, and typically it is the poorest households that rely most on farming and agricultural labour.
Sub-Saharan Africa, with the highest incidence of rural poverty anywhere in the world, is the region’s worst affected by poverty and hunger. It is the only region in the world where the numbers of rural people living in extreme poverty is still on the rise, although the percentage of all rural people who are extremely poor has actually fallen over the last decade. The region also has the least diversification away from agriculture – something that is normally identified with overall economic advancement.
IFAD's Rural Poverty Report 2011 quotes some bleak statistics that indicate the following:
The largest percentage increases in the numbers of hungry people from 2008 to 2009 were in the Middle East and North Africa (MENA).
- While overall the developing world’s rural population will peak and begin to decline in 2025, in sub-Saharan Africa this will not occur until 2045.
- In sub-Saharan Africa and South Asia, more than three-quarters of the poor live in rural areas, and the proportion is barely declining, despite urbanisation.
- On-farm production is a particularly important income source in sub-Saharan Africa: at the national level, between 40 and 70 percent of rural households earn more than three-quarters of their income from on- farm sources.
- Children and youth comprise 62 percent of the total population in sub- Saharan Africa, and among poor rural populations their proportions are likely to be even higher.
- Urban food markets are seen as offering enormous potential for creating opportunities for regional intra-trade in sub-Saharan Africa.
- Africa’s soils are often of low inherent fertility and they have been degrading.
- In sub-Saharan Africa, only one in five people has access to a national electricity grid.
The 14 percent average increase was due not only to the 2008 food price hikes, which added about 100 million to the global number of hungry people, but also to broader underlying problems.
The crisis occurred within an environment characterised by a rising demand for food products and long-term growing food insecurity; a declining farming population; and a deteriorating base of natural resources.
With a growing dependence on food imports, severe water scarcity and demographic pressures, the region is facing daunting challenges, not least the demand to develop the right policies and new approaches to rural development that would help the agricultural sector become an effective driver in the eradication of rural poverty.
New opportunities to combat rural poverty in sub-Saharan Africa While Africa continues to face enormous challenges in reducing rural poverty, a vision of economic renaissance led by smallholder farmers is beginning to take hold.
There is growing belief that Africa can produce enough not only to feed its own citizens but to export a growing surplus. Africa can make a real contribution to ensuring food security for the world while also growing its economy and pulling its citizens out of poverty. The following related advances are already taking place:
As a result, smallholder farmers have become more productive and more prosperous. While noting the persistence of poverty in many areas of Africa, IFAD’s Rural Poverty Report also points out the decline in the proportion of extremely poor people among all rural people over the last decade. Clearly the seeds have been planted to harvest a turnaround in Africa’s fortunes.
- In the past decade, real gross domestic product (GDP) across the continent grew at twice the level of the two previous decades.
- The African Development Bank predicts that six African countries will achieve seven percent growth this year. Another 15 countries will see five percent growth, and 27 countries will have growth above three percent.
- The International Monetary Fund believes that Africa will have as many as seven of the 10 fastest-growing economies in the world over the next decade.
- Governments have been channelling more resources into agriculture, pursuing the African Union’s goal of increasing public investment in agriculture to 10 percent of national budgets per year.
- In many areas, partnerships are improving access to higher yielding seeds and fertilisers, improving soil fertility, strengthening technical training and boosting access to credit.
Investing in African Agriculture: Key to Global Food Security in the 21st Century Global population will continue to grow over the coming decades, and it will grow fastest in cities. To feed the world’s estimated nine billion people in 2050, agricultural production will have to rise by 70 percent. Much of that increase will need to come from developing countries.
Raising their agricultural production is critical to global food security in the coming decades. According to the IFAD report, profound changes in agricultural markets are giving rise to new and promising opportunities for smallholder farmers in developing countries. As a result, farmers will have more incentives to boost their productivity. But helping them get access to these markets – and increase their negotiating power in them – is key. So is providing farmers with support to make their farming systems more productive, more sustainable and more resilient.
Using resources efficiently and adapting to the effects of climatic and other shocks will be the hallmarks of smart farming in the coming decades. On this note of climatic changes, we will be meeting soon as African Ministers of Agriculture to chart ways of putting agriculture on the COP 17 agenda which is taking place in South Africa later this year.
In some sub-Saharan African countries, more than 60 percent of the population is under 25 years old. While young people are a huge potential resource, many are migrating to cities in search of opportunities, leaving behind an increasingly ageing population.
It is vital and ultimately beneficial for everyone – to turn this trend around. Reality will quickly dim the bright lights of the city for this generation. But if they stay on the farm, these upcoming smallholder farmers will be in the forefront of innovative, knowledge-intensive agriculture.
Substantial and sustained investments focused on young farmers are essential to harness their energies and ambitions. Clearly, it is time to look at poor smallholder farmers in a completely new way – not as charity cases but as people whose innovation, dynamism and hard work will bring prosperity to their communities and greater food security to the world in the decades ahead.
IFAD’s Rural Poverty Report highlights four areas where particular attention and investment are needed. These areas are:
Agricultural markets for increased incomes
- Rural areas must become a place where people want to live and do business: there is need to invest in infrastructure, utilities and services, and improve the governance of the rural areas.
- Poor rural people need the skills to manage the multiple risks they face, which often prevent them from taking advantage of economic opportunities: The rural environment must be made less risky, and people must be helped to better manage risk, both in their agricultural production systems and in their broader lives.
Well functioning agricultural markets are essential for rural growth and poverty reduction. Most rural households are connected with markets, as sellers of produce, buyers of food, or both. However, the extent to which they are involved varies considerably. Market participation is often uncertain, risky and conducted on unfavourable terms. Under such conditions, many households seek to grow their own food rather than buying it in local markets, while others limit their investments in market-oriented crops in the absence of reliable produce markets.
By contrast, access to remunerative and reliable produce markets can enable farming households to commercialise their production systems and increase their farm incomes. The rewards, costs and risks of doing so are all context- and value chain-specific, and they vary for different producers.
However, it is generally a challenge for poor rural people to seize rewarding opportunities in produce markets and to cope well with the attached risks.
Agricultural produce markets have undergone profound transformation in the past two or three decades, in terms of the scale and nature of demand, and the organization of supply or market governance.
In most developing countries, demand for agricultural products, particularly high-value ones, is increasing rapidly, with the demand driven by the growing numbers and increased incomes of consumers in urban areas.
The rapid emergence of supermarkets is spurring the establishment of modern value chains, particularly for high-value foodstuffs. These are typically better organised, coordinated, and have higher standards than traditional markets, though the latter continue to play an important role in national food supply systems in most countries.
Restructured or modern markets and value chains offer a new environment for smallholders, with potentially profitable opportunities set against higher entry costs and risks of marginalisation. But traditional markets can offer an important alternative, and sometimes a fall-back option.
Global and regional agricultural markets are also becoming more integrated and concentrated in their structure. The map of global trade in agriculture has been changing, with some fast-rising economies playing a growing role.
Many export markets tend to exclude small-scale suppliers, a process that has intensified with the imposition of higher product and process standards by northern retailers. But some global value chains offer important opportunities for smallholder suppliers – and for other rural people working in agro-processing or in ancillary industries. Smallholders need to be able to identify the costs and benefits of participating in modern, traditional, domestic and global markets on a case-by-case basis, and to respond accordingly.
Reducing risk and transaction costs along value chains is important for determining whether or not smallholders can engage profitably in modern agricultural markets.
Strengthening their capacity to organize is a key requirement to participating in markets more efficiently and to reducing transaction costs for them and for those that they do business with.
Infrastructure is also important – particularly transportation, and information and communication technology – for reducing costs and uncertainty, and improving market information flows.
Contracts can help as they often build trust between smallholders and agribusiness. They also facilitate farmers’ access to input credit and other financial services. The growing importance of a corporate social responsibility agenda within the global food industry provides an increasingly positive context for the establishment of such contracts.
Policymakers, civil society organisations, NGOs and donors can play a key role, working with smallholder farmers and market intermediaries to help them establish and scale up sustainable market relations.
At the same time, there is a need to look at agricultural value chains not only as a source of opportunities for smallholder farmers, but also as a means of creating demand for labour and services from other rural people.
And to give policy attention to creating opportunities and reducing risks for rural people as employees and service providers.
I wish you a successful discussion and a blessed stay in Cape Town!
I thank you!
Issued by: Department of Agriculture, Forestry and Fisheries
3 May 2011
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