THE GREATEST MIRAGE

“Farming is a business,” so they say. The idea of farming is not to grow and rear your own food. Surely one cannot be called a farmer if he/she does that, for any able-bodied person can do just that. A farmer thus is a person who has decided to specialize in the industry of farming i.e. to find dynamic ways of sourcing inputs and see to it that the same inputs are sweated in a mix with his physical environment to produce outputs which are more than his needs, with the rest being channeled into markets. The wealth and indeed the food of many will definitely grow, if few amongst us specialize in farming with the rest being involved in other areas of specialization. It is a concept that was explained eloquently by Adam Smith in the Wealth of Nations (1776). 

Currently, many people who call themselves farmers are definitively not farmers. Their output is dangerously low and their ventures are under-capitalized rendering their endeavors subsistence with no benefit to the nation but causing immense environmental degradation. Linked to that is overgrazing, which is caused by too many animals exceeding the carrying capacity of the land or poor grazing methods.

Why would inhabitants of ecological regions 4 & 5, situated in the Kalahari basin put so much effort and money to grow crops without irrigation infrastructure? Why would government year after year assist these same people with inputs, including hybrid maize seed suited for high rainfall areas, knowing very well that their chances for a bumper harvest are next to none? 

It is an indisputable fact that all developed countries escaped poverty because of industrialization and not through subsistence agriculture. This does not mean agriculture is not important, it is a vital sector and perhaps a spring board for sustained industrialization, but only if output is high because of consistent capital, preferably private capital, is employed coupled with technological advancement in disease and pest control and improved seed varieties. It is industrialization or value addition of agricultural output amongst other industrial activities which lift populations out of poverty. Private ownership of the land, transferability of land and collateral value of land are key factors. To exorcise the demons of poverty we ought to do the following: 

Firstly, we should acknowledge that not everyone can be a farmer. That is a simple but powerful statement, for from therein opportunities outside agriculture would be pursued. If folks are aware that there is life, perhaps a more rewarding life outside farming, then we would have partially solved the problem.

Secondly, we need a vibrant industry across Africa to serve the burgeoning populations and export markets. Industrialization of Africa should be a culmination of a well thought out and properly implemented plan leveraging on Africa’s relatively cheap labor and abundant natural resources. Currently, factors militating against sustained industrialization can be broadly categorized as infrastructure bottlenecks, trade barriers and policy issues. Allow me to briefly focus on these issues:

The current electricity supply in Africa is such that serious industrialization cannot take place. This is despite the fact that the proposed Grand Inga Dam in the Democratic Republic of Congo has capacity to generate sufficient power to cater for central and Southern Africa at current electricity consumption. What is that which makes Africa fail to unlock this critical resource? Planning of electricity supply is woefully bad, for example many governments are aware that with current urbanization electricity demand will greatly outstrip supply, but they seem oblivious to that glaring reality. Road networks, rail infrastructure, ports and pipelines are also in a deplorable state, because somehow governments thought these things will maintain themselves. The concept of depreciation completely eluded them. So even if industrialization does take place, how do we push the finished goods both within and outside Africa?

The Inga Dam on the Congo River, DRC

Trade bottlenecks result from explicit uncompetitive trading barriers between African states. Of course we are aware that developed countries have heavily subsidized their farmers thus strangulating poor African farmers. But if truth be told, the trading tariffs currently between African countries are prohibiting free flow of goods and services, thus reducing the trade volumes. Reasonable tariffs under the auspices of the World Trade Organization (WTO) to safeguard local industry may be allowed, but unreasonably high trading tariffs informed maybe by the need for increased revenues into the fiscus have an unintended effect of killing industrialization agenda in sub-Saharan Africa. 

Implicit trading barriers emanate from archaic ports of entry, manned by clearly tired personnel using outdated physical and IT infrastructure. Moving goods across countries is not only a headache but a nightmare because trucks spent days if not weeks and sometimes months clearing goods at these border posts. The costs to entrepreneurs are therefore sky-high and will naturally deter them from engaging in such endeavors robbing governments of much needed revenue and confining their citizens to poverty. 

The proximity of Africa to international markets, long considered a hindrance to trade by economists is not, in my view, a critical factor. As I pen this article and as you read this article, vessels of plunder, are harvesting fish illegally in African waters, robbing African children of their heritage and well-being. Geographically, Africa is perfectly located to conduct trade with the Western Hemisphere, The Northern Hemisphere, The Eastern Hemisphere and indeed the Southern Hemisphere. The growing African middle class will soon be sufficient to power industrialization initiatives.

In the long-term, capital shall be mobilized from both the domestic (African Markets) and external markets to build canals criss-crossing Africa to resolve the problem of high transport costs from the hinterland. Let it be emphasized that meaningful industrialization and development will take place if mechanisms have been found of reducing high transport costs incurred by manufactures in transporting both raw materials and finished products. Naturally this discussion will lead us to the problem of many African countries i.e. being land locked. Empirical evidence suggests that in majority of cases coastal areas record greater investment and prosperity than landlocked areas. There are pockets of prosperity in the interior mainly due to natural resources endowment, but these are few.

Jeff Sachs, “the doctor of the world’s financial crises”, in his work, The End of Poverty, he was spot on by declaring that, “Many of the world’s poorest countries are severely hindered by high transport costs because they are landlocked; situated in high mountain ranges, or lack navigable rivers, long coastlines or good natural harbors.” 

Policy issues relates to the policy frameworks enunciated by various African governments with respect to trade. To what extent have the concepts of active value addition and rigorous import substitution been fully integrated into the legislative and government policy? Are African countries serious in pursuing technological transfer and capacity building leveraging on South-South Cooperation? Are African governments earnestly and honestly interested in industrialization and therefore urbanization?

Besides addressing these issues which are apparently limiting industrialization and thus creating serious pressure on arable land, there are recommendations which I would like to put forward to increase agricultural productivity in Africa? 

Africa should therefore free land for commercial agriculture to feed its population and provide much needed raw materials for industrialization. This should be bold and deliberate to ensure that private capital, including resources mobilized by the financial services sector, can be directed into agriculture. The commercialization of agriculture should not result in displacement of communities, but should be carefully designed as win-win partnerships. So it is only logical that where families have ample food at prices they can afford, they would not continue to labor on infertile small plots.

Irrigation support to small but successful farmers is also recommended not solely to sustain productivity, but to supplement commercial agriculture. Contrary to popular view support of numerous small holder farmers is not a panacea to solve agricultural productivity issues and reduce poverty in Africa. Economic theory dictates that economies of scale are only possible when sufficient capital is marshaled towards a bigger plot to reduce overheads and increase revenue per unit of land. What development partners and international donors are doing to ensure food security at household level is laudable, but their interventions should be considered transitory and in the long-run a new paradigm, a new approach is needed not only for ensuring food security, but for accelerating industrialization.

Most of the cattle in my country, Zimbabwe and indeed across Africa does not constitute the commercial herd, but rather used mainly for insurance, paying bride price and pulling the plow. They are rarely slaughtered for meat consumption, because doing that borders on taboo and rightly so, for they shield these families from external shocks and constitutes family wealth and status bequeathed by previous generations. The present owners are duty-bound to see to it that they also pass on the wealth to future generations. But there are mechanisms of ensuring that the current uses of cattle are properly addressed in Africa such that very few people will desire to own them. To replace this herd would be a well run commercial herd financed by private capital, of course not owned by one entity or few individuals, but by many farmers who are adequately financed and with land with capacity to keep such livestock. I am very positive that the majority will rather work in a factory and earn money to secure an insurance policy, buy food and have a decent accommodation.

In conclusion, it is fair to say that the idea that everyone can be a farmer is the greatest mirage. The belief that small holder farmers in Africa will increase productivity of food crops both for industry and the continent’s food security is a mirage. Yes we can continue supporting them as a means of a safety net, knowing very well that a new approach is crying for implementation. Private capital should fund agriculture in Africa as has been the case throughout the world. Rural-urban migration should not be cynically viewed, but should be encouraged in our circumstances. Rural areas won’t be neglected but continue to be developed to cater for bona fide farmers who shall feed the urbanites. A select few small but productive farmers would be supported, say through irrigation, technical services and marketing to complement commercial agriculture, but by and large agriculture will be carried out by commercial enterprises.

It is no surprise that as I write this article today the Brazillian Cerrado remains the true reservoir of the world’s grain and oil seed. Here, the climate and soil types are almost the same as the African Savannah; in fact the Brazilian Cerrado is an extension of the African Savannah or vice versa, for in Gondwanaland, these constituted one stretch of land.

According to the Economist (August 2010) quoting Mauro and Ignez Lopes of the Fundacão Getulio Vargas, a university in Rio de Janeiro, half of Brazil’s 5m farms earn less than 10,000 reais a year and produce just 7% of total farm output; 1.6m are large commercial operations which produce 76% of output. So my argument that the future engine of agricultural productivity is located in commercial agriculture and not in small holder farmers is valid and already in motion.

Though the Green revolution as propounded by Norman Borlaug, an American, was based on a cocktail of interventions including but not limited to use of high yielding varieties “HYV”, synthetic fertilizers and agrochemicals, it is agreed that such interventions will not cause a significant increase in food in future, rather it will be on increase of land under cultivation caused by increased capital deployment and appropriate technology to harvest and utilize scarce water resources. For that reason, there are two places where land will come from: the Brazilian Cerrado and the African Savannah. New farms in Brazil are known to exceed 20,000 hectares, dwarfing the biggest farms known to mankind. 

A mega farm in the Brazilian Cerrado

It should be noted that the potential arable land in India and China is less than 50% of the currently cultivated land, meaning that these two emerging giants will face food sufficiency issues at current rate of population growth, unless some miracle crop and animal varieties are discovered. But they need not to worry, for the answer is the Brazilian Cerrado and the African Savannah. Serious capital is therefore required to transform these vast waste lands into high productivity farms, powering industrialization and urbanization and lifting the populations out of poverty, while feeding domestic populations with the processed food exported to feed the world, at prices afforded by everyone.