Monday, September 27, 2010

Transforming integrated cash crop chains for food security in Africa (my essay for the World Policy Institute contest)

Food producers in Africa have insufficient access to inputs, information, and capital. Ironically, in the past many African countries possessed a robust system of agricultural support services for cash crop production. This essay proposes that African governments (possibly aided by donors) provide inputs, extension, credit, and improved marketing channels for food crops, using the same integrated chain that was established in many countries for export crops. This would comprise a state-funded support to the production and marketing of food, while allowing government to collect taxes to finance this and other state services.

In most African countries agriculture is the predominant sector, so taxes raised from agriculture are crucial to pay for government services and infrastructure. This was initially the logic behind the vertically-integrated production chains that francophone African governments implemented for cash crops like cotton, peanuts, and cacao. The state encouraged production of the export crop (mainly by providing agricultural inputs on credit), bought all national production at a guaranteed price, and sold it on the world market for a profit. The revenue was used to fund roadbuilding, industrialization, and general government functions. Even in the best scenarios, reliance on a cash crop undercut food security at the same time as it created national wealth, and when commodity prices began to trend downward, as they have consistently done in the past decades, the system entered in crisis. Today countries like Benin maintain this vertically-integrated system for production of crops like cotton, but the channels for provision of inputs and payment to farmers do not function effectively. Many farmers want to transition away from cotton, but the state provides inputs such as pesticides and fertilizers only if farmers plant cotton. Benin's government is left with accounting problems, as the subsidized inputs it provides for cotton are often applied to corn or other food crops, which are more useful and profitable for farmers.

Such countries could surmount this impasse if they were able to incorporate food crops into the vertical integration systems originally set up for cash crops. If the state were to retool its apparatus slightly, it could manage food crops in a similar way to the cash crops it has long relied on for revenue.

There are two options for accomplishing this retooling. The first would be a copy of the vertically-integrated cash crop system. The state would buy food crop production at a higher price than middlemen offer the farmers, store the crop, and sell it on national and regional markets when prices rise. This would be similar to Benin's treatment of cotton, with the state receiving revenue not from outright taxation but from managing price fluctuations. A welcome difference from cotton or other cash crops is that regional food crop prices, sustained by demand from burgeoning cities, will likely not experience the type of downward trend that cash crops have seen on the global market. At the same time, by buying massive quantities at harvest time (when prices are low) and selling when prices rise, the government would serve as a de facto food reserve and price stabilizer.

If governments are uncomfortable with participating so directly in the market, there is a second option based on farmer cooperatives. As was done in the 20th-century US, farmers can be encouraged and supported in forming cooperative grain elevators to buy and store production. These cooperatives would function in the same way as the government in the previous example. They would buy grain from farmers at harvest time, and sell it when prices rose. Part of the profits thus gained would be taxed by the government, and the rest invested as the cooperative saw fit.

The proposed system of large-scale buying and storing of food crops could be applied not only to the major grain staples of corn, sorghum, and millet, but also to beans, soy, palm oil, rice, and peanuts. Even perishable cassava, plantains and yams could be processed into meal or flour in government plants, and thus held for storage during long periods. Eventually meat and milk could also be managed in this way, though their short shelf-life would change the specifics of the process.

The strengthening of the farm-government-consumer nexus would allow for new expressions in the future. As cities implement and improve waste and sewage treatment facilities, the sludge and organic waste coming out of the cities could be transported to the countryside as one of the inputs offered to farmers through government channels. This would close the nutrient cycle in the country, build organic matter in impoverished soils, and lessen economic dependence on imported fertilizer

There are obviously a few potential pitfalls to address in this proposal. The government or cooperative would have to assure higher prices than independent middlemen, because otherwise farmers would sell preferentially to the latter. But the size and storage capacity of the large institutional buyers should assure their ability to outbid middlemen.

Also, storage of crops like corn or sorghum creates an incentive for standardization. A typology would be necessary to separate different classes of a given grain, much as grain elevators in the US separate soft red wheat from hard red. The centralization of marketing channels would encourage a focus on a few standardized varieties of each crop. This is good for industrial purposes, but a plan should be developed to avoid the loss of crop diversity and local varieties.

Perhaps the biggest challenge to the present proposal has to do with gender. Most cash crop farmers in Africa are men, and the government channels for agricultural support and marketing are male-focused. However, most food in Africa is produced by women. For this proposal to be successful, the farmers and farmer groups with which the government deals would have to be composed predominantly of the women who produce Africa's food. This presents logistical as well as social difficulties, as the government would have to create or link up with a new network of producer groups, while men are sure to resist the economic empowerment of their wives and female neighbors.

Many African governments have systems in place to support cash crop production, which generates revenues for the state. These systems are currently in crisis due to low world commodity prices, but could be retooled to promote food crops for national and regional consumption. If farmers of staple crops were eligible to receive inputs, extension, and credit to increase their production, and storage and marketing assistance to maximize their received prices, this would greatly improve food security in most countries of Africa. Farmer income and access to food would improve greatly, which is especially important considering that it is in rural areas that most poverty and hunger occurs. Rural life would become more viable economically, so the incessant flow of migrants from the countryside to urban slums would slow and even reverse itself. Cities would enjoy abundant, nationally-produced staple foods at low, stable prices. Replacement in cities and the countryside of imported food by indigenous products would decrease reliance on food imports, as well as rejuvenating traditional food culture and the use of locally-adapted crops. In short, the state would drastically improve food security by favoring food crops for local consumption over cash crops for global markets.

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