Symposium Abstracts

Day 3

Expanding the frontiers of Agricultural Economics to meet the future challenges of agricultural development (Abstract 3.1)

Johann Kirsten

In this paper I challenge the theoretical building blocks of agricultural economics and then provide some indication of how the discipline has rectified some of its shortcomings. The introduction of the New Institutional Economics into our discipline has been a major improvement. I have then argued that the challenges facing our profession are so huge that we need to think about further adaptation by making more use of other social sciences such as sociology and anthropology. This could help us understand the major complexities of dealing with the challenge of black economic empowerment in agriculture. This will however, also be necessary for us to adjust our research paradigm. This argument is well articulated by Doyer and Van Rooyen (2001) when they motivated a research method to study agribusiness supply chains. The challenges highlighted and that for agricultural economic analysis to capture complex business reality and decisions to explain and predict the institutional and governance structures and optimal resource allocation behaviour of firms, makes the combination of positivist and constructivist approaches to research quite sensible. The combination of these approaches enables a holistic approach to the research problem.  Positivism’s strong explanatory and prediction capabilities are combined with the strong understanding and reconstructive capabilities of the constructivist approach. Throughout this process, qualitative and quantitative data can be used in combination. Since our research work also needs to focus more on structural and institutional issues it seems quite evident that we have to adopt a more eclectic research approach making much more use of case studies. The skills from the other social sciences will desperately be required here to advance our discipline into previously untreated terrain. This is necessary to make sure we make the important contribution to the most important task of building Africa’s Agriculture.

Improving estimation of agricultural production function for sustainable agricultural policy in sub-Saharan Africa: Evidence from Togo (Abstract 3.2)

Egnonto M. Koffi-Tessio

In Sub-Saharan Africa, the bulk of agricultural output is produced by small holder farmers who continue to depend on rainfall. As such, agricultural economists often use average rainfall as a summative environmental indicator in estimating agricultural production function. This methodology is flawed. A close scrutiny of agricultural practices /agronomic sciences reveals that agricultural output is more determined by rainfall distribution than average rainfall. This relationship is explored in the Togolese context. The conclusion reached is that, between 1965 and 1992, intra-annual rainfall distribution measured by its standard of deviation has not been relevant in explaining the variation of food production in Togo due to the continuous degradation of the ecosystems. This result provides additional information for improved decision making and calls for urgent account of environmental aspects in the formulation of sustainable agricultural policies in SSA.

Priorities and Preconditions for Successful Investment in Smallholder Agriculture in Sub-Saharan Africa (Abstract 3.3)

 C. Poulton, A. Dorward, A. Jowett, C. Peacock and I. Urey

 In the past couple of years, there has been a resurgence in interest in smallholder agriculture as a potential driver for growth and poverty reduction in Sub-Saharan Africa. However, there remains considerable skepticism as to whether public investment in smallholder agriculture will lead to the desired growth and poverty reduction, given a general pessimism about “absorptive capacity” for (public) investment in Africa, the perception of failure of past agricultural investment and the observation that current conditions are unconducive to agricultural growth in Africa. This paper combines experiences of two UK-based NGOs dedicated to promoting smallholder agriculture and strengthening rural livelihoods in Africa with insights from academic literature on African agriculture and rural markets to set out an agenda for investment in smallholder agriculture in Africa. It identifies priorities for public investment, but also key issues related to “absorptive capacity” that need to be addressed if such investment is to succeed in generating agricultural growth and poverty reduction. Particular emphasis is placed on: a) investment in human and organisational capacity of smallholder farmers; b) investment in coordinated service provision to equip producers to respond to evolving market opportunities; c) the process of developing and implementing credible agricultural development strategies at both national and local level; d) reform of Ministries of Agriculture to support this process.

Socioeconomic Analysis of the Roles of Agriculture in Morocco (Abstract 3.4)

Mohamed Moussaoui

The study conducted in morocco, within FAO/ROA project, showed that agriculture, while being affected by exogenous natural conditions and macroeconomic factors, contributes significantly to environmental amenities, poverty alleviation, social viability and national culture. The analysis of environmental roles showed an asymmetry of information in favor of negative externalities. However, agriculture provides positive externalities as demonstrated through the economic evaluation of three cases concerning landscape beautification, agro tourism and animal biodiversity conservation. Poverty has been exacerbated in depth, volume and severity and remains a rural phenomenon with a visible concentration in areas characterized by limited land endowments, low productivity activities and weak levels of economic development. Though referred to as a national sovereignty attribute, food security has clearly deteriorated, during the 1994-2000 period, as evidenced by staple food availability, access and stability. Despite this evolution, agriculture still contributes to social viability in terms of spatial distribution of the population, the regulation of migratory flows as well as in terms of the preservation of community solidarity and the formation of social capital. Focus group interviews showed, in particular, that agriculture and rurality are closely related and that both have been subject to transformations which have affected people perceptions of agriculture contributions to society.  The analysis, also, revealed the existence of linkages among externalities associated with the different roles of agriculture. Existing synergies or conflicts are crucial to the level of agriculture performance. This complex implies adoption of a holistic approach in designing integrated policy alternative. The latter should combine agricultural and non-agricultural sector policies and macroeconomic policies. Therefore, implementation of new options, in the absence of adequate and functional institutions, requires government intervention in order to prevent increasing uncontrolled market liberalization that may be detrimental to the stability the whole national country. 

Roles of Agriculture in the Development Process: Recent Experiences from Ghana (Abstract 3.5)

Samuel Asuming-Brempong

Economic policies have had important implications for the roles of agriculture in the socio-economic development of Ghana because of agriculture’s dominance of the economy. The performance of the agricultural sector has generally directed the overall economic performance since independence. The policy of market deregulation in Ghana, including agricultural markets, has not achieved the expected results due to many constraints, the key of which are institutional failures and the slow response of the private sector to take up the agricultural input markets. These have been compounded by the rain-fed agriculture that is predominant in Ghana, such that bad rainfall years have been characterized by low harvests of staple food crops and high food prices, and vice versa, resulting in high price volatility during the post liberalization years. In addition, under developed rural financial markets make it such that farmers are unable to invest much in new technologies and agricultural land development, thereby increasing pressure on farmlands as population increases. The paper highlights the key roles of agriculture, including environmental, poverty alleviation, food security, buffer, social viability, and cultural perceptions. The failure of policy to adequately address the myriad of problems confronting agriculture has been in part because of institutional failures, and in part due to bottlenecks in the distribution system. Future agricultural research and policies should therefore target developing rural institutions, in particular, agricultural institutions, to respond adequately to new technologies and improvements in agricultural production, processing and distribution.

Roles of Agriculture in the Development Process: Recent Experiences from Mali (Abstract 3.6)

Ousmane Sanogo

The economy of Mali relies mainly on the rural sector, which contributed at least 45% of GDP (1994-1998) with an annual growth rate of at least 3.6%. This growth is mostly contributed by cereals (especially rice), of which the global production had reached almost two tonnes by 1998. The production of cotton has doubled since 1994 to around 525000 tones. Breeding activities have largely benefited from the revival of Cheptel. FAO, on the basis of several reports, initiated a number of projects on the evaluation of socioeconomic returns from public investments in agriculture. The results of the study in Mali indicate that the agricultural sector plays a big role in the economy of the country. Its role in the food processing sector is well recognized, the results of this study demonstrates that other roles are less known and consequently not valued. The study has shown that the role of agriculture in the reduction of poverty seems to be very important. The farmers’ opinion in the areas where the evaluation was conducted indicated that there are less poor people than ten years ago. This situation would be best explained by the agricultural growth rate of the last ten years which has had an impact on the revenue generated by the farmers in the cotton growing zone compared to other zones. However, the lack of infrastructure and the asymmetry of information, and the absence of markets for certain goods and services (property, credits) undermines the growth of farmers’ revenues. It appears like social infrastructure exists which would lead to reduction of rural and urban poverty. During the period of harvesting, the tradition is such that parents give cereals to children living in the cities.  As far as the environment is concerned, the current rural production systems contribute to mitigation against adverse environmental effects. The negative externalities associated with rural agricultural systems seem to be more important than the farm-level externalities. The degradation by water erosion in the cotton-growing zone is caused mainly by salinisation and alkalization of the official farming zones of Niger. The contribution of rural agriculture to national food security is significant in the economy. The growth rate of the agricultural production in cereals was higher than population growth during the period under consideration. The proportion of cereals exported (rice) was significantly higher than those imported (maize, sorghum, millet). This signifies the resilience of the agricultural sector to meet both internal needs and have surpluses for export. The diversity of agricultural products contributes to improved nutritional status of both urban and rural households. Agriculture has strongly contributed to slowing down the rural-urban migration by creating income generating opportunities in the rural areas. The two zones studied offer an example of direct creation of employment through the intensification of agricultural production and other complementing activities such as trade. Although the rate of urbanization has increased in the recent years,  Mali still remains a predominantly rural economy. The migration to European countries and the United States of America seem to have been under-estimated in terms of its negative or positive contribution to rural agriculture. In Mali, agriculture is not just an occupation but a social engagement with a lot of attachment by both rural and urban dwellers. The majority of rural communities value the role played by agriculture in socio-economic set-up of their areas. However, the role of such high regard for agriculture by the rural dwellers has note been given adequate policy consideration. The emerging political interest in improvement of agricultural production is likely to impact positively on the development of the agricultural sector, particularly with increased investment in infrastructure such as irrigation, markets and the roads network. The establishment of micro-credit institutions targeting the poor will also impact positively on agricultural development through enhanced access to credit for purchase of farm inputs and marketing.   The creation of regional market blocks will help eradicate tariffs and eliminate inter-country taxes, which will improve access to agricultural market outlets.

The Roles of Agriculture in the Development Process: Lessons and Recent Experiences from Ethiopia (Abstract 3.7)

 Samuel Gebre-Selassie

Political and economic reforms have been implemented for a number of years to alter the institutional, infrastructural and financial/economic environment in which Ethiopian agriculture operates. Changing the environment in which agriculture operates may be an intermediate goal; at the end, the question remains; have the new reforms and policies had the capacity to improve the performance of the sector and its roles in the development process of the economy? And have they contributed to the generation of positive environmental externalities? In comparison to the two decades (1970s and 1980s) that precedes the reform of the 1990s, Ethiopian agriculture has been doing better since the reform. Total production of food crops has been improved and the rate at which per-capita production has been declining is narrowed. Moreover, the volume of agricultural commodities exported has slightly improved; while new non-traditional commodities like flower have joined the list of exported commodities. But all those improvement have not been sufficient to lift up agriculture’s role in the development process of the Ethiopian economy nor have they brought a full and sustainable recovery to the sector. Ethiopian agriculture should still demonstrate the following desirable characteristics if it is able to serve as the engine of Ethiopian economic growth: it should grow at sufficiently higher rates over a number of years; any development in the sector should be able to improve rural labour productivity which is an important precondition to stimulate the non-agricultural sectors and transformation of the sector; the source of growth should principally originate from increased investment and efficient use of resources rather than from the use of additional scarce natural resources especially land; and, agriculture should also be supported to establish strong and dynamic linkages with other sectors especially with the industry sector.

Economic Analysis of Pesticide Use and Potential for Bt Maize in the Control of Maize Stemborer in Kenya (Abstract 3.8)

Wanyama J.M., Hugo De Groote, M. Odendo, J.O. Ouma, G. Owuor, M. Luta, Danda, and C.M. Mutoko

Maize is the staple food crop and income generation for majority of the Kenyan population and many sub-Saharan African countries. The increasing Kenyan population demands an increase in maize production if intermittent food deficits have to be averted. Since the introduction of improved maize varieties in mid 1960’s, The green revolution, maize yields increased drastically upto 1970s and started declining from 1980’s to-date. The key contributory factors are nutrient mining, sub-optimal input use and insect pest damage. Of the insect pests, stem borer is of economic importance. KARI and CIMMYT are developing maize varieties that are tolerant to stemborer damage. In order to evaluate the impact of these interventions economics of stemborer control at farm level was evaluated. Surveys complemented with on-farm trials were executed in six major maize growing zones of Kenya. Farmers were randomly selected and a sample-frame established after which a total of 1600 households were randomly selected using random sampling technique. Each household was interviewed using structured questionnaire. Data on method of stemborer controls and the type pesticides used was collected. Partial budget and economic surplus models were used. The results indicated that very few farmers control stemborer in maize despite significant stemborer losses of about 15%. Therefore if Bt maize is introduced in Kenya it is likely to reduce these losses. This will benefit many Kenyans who are faced with hunger and surplus for sale to compliment household financial obligations which is line with Government policy of food security and poverty eradication.

The Welfare Impacts of Regional, National and International Agricultural Efficiency Gains: A South African Case Study (Abstract 3.9)

Scott McDonald, Kalie Pauw and Cecilia Punt

A large proportion of the on-going reductions in global food prices are attributable to the efficiency gains associated with various ‘green revolutions’. Unfortunately the welfare gains associated with such productivity growth are unevenly distributed, with many African states reaping relatively few benefits. One possible reason for this is the failure of African agriculture to retain its relative competitiveness in global agricultural and food markets, and hence, the welfare gains associated with reductions in consumer prices are largely offset by the welfare losses associated with reductions in producer prices. The analyses reported in this paper explore how changes in domestic and international agricultural efficiency will impact upon the welfare of households and the profitability of agricultural and food industries in South Africa. The results are generated from a computable general equilibrium (CGE) model for South Africa with highly disaggregated food and agricultural sectors. The scenarios reported focus on three dimensions of domestic technology change; changes in the efficiencies with which intermediate inputs, primary inputs and land are used, and one international dimension; changes in the world prices of agricultural and food products. The results indicate that both domestic and international efficiency gains have positive net welfare effects for South Africa. In the case of domestic efficiency gains the net benefit is marginally greater, mainly because of the smaller negative welfare consequences for domestic producers. This can be explained by domestic producers’ increased penetration of export markets, which offsets the negative welfare effects associated with a reduction in producer prices. The paper concludes with an assessment of the differential impacts upon the agronomic regions of South Africa and the different household types. These results suggest that while the distribution of the consumer benefits is biased towards poorer households, the distribution of the producer benefits is biased towards relatively richer agricultural areas. 

The Effects of HIV/AIDS on Agricultural Production and Poverty in Kenya: A Case Study of Eastern Province (Abstract 3.10)

Lydia Ndirangu and Paul Kimalu

Although HIV/AIDS prevalence in Kenya has shown a downward trend in the recent years, it continues to impact negatively on agricultural production and food security in rural areas. The declining trends in crop production remain a challenge for development efforts. This study examines the extent to which AIDS has impacted on agricultural production, incomes and food security. Using a sample of 212 households, the study examines changes in welfare of households experiencing death and illness associated with HIV/AIDS condition. Poverty incidence and severity are observed to be higher among affected and non-affected households. The higher poverty levels among the ‘affected’ cohort can partly be explained by lower crop and livestock production. In the absence of formal insurance mechanisms, medical costs take precedence over crop and livestock intensification; any credit that may be available goes to cater for medicare; the few assets available are disposed for purposes of meeting health needs. There is less land under crops and more fallow among the affected households.  The effects are worse for farm households in the marginal areas an indication that there may be need for special programmes for arid and semiarid areas. Given that poverty seems to reinforce the spread of the HIV/AIDS and that once AIDS strikes it becomes a driver of poverty, the study adds further support to views that intervention strategies need to deal with poverty and HIV/AIDS problems concurrently.

Sub-sector analysis of vegetable production in West Africa: Consumers’ Perceptions and Willingness to Pay for organic vegetable in Benin and Ghana (Abstract 3.11)

Theodore Nouhoheflin, Ousmane Coulibaly, Andy J. Cherry, Ramatu Al-Hassan and Patrice Y. Adegbola

Vegetable plays important roles in the socio-economic development in West Africa. It contributes to insuring food security, provides raw materials for local industries, generates foreign exchange and provides employment and incomes for most of the population. However, some health hazards are caused by the misuse of chemical on vegetable. This study is undertaken within the framework of the research project: ‘Public-private partnerships for development and implementation of entomopathogenic viruses as biopesticides for key lepidopteran pests in Ghana and Benin’. It assesses the potential market of organic vegetables and analyses consumers’ awareness and perceptions of chemical pesticide residues in vegetables and assesses the premium levels that consumers are willing to pay for chemical free vegetables. Data were collected through a formal questionnaire on consumers’ perceptions of produce quality problems, their level of awareness of heavy chemical pesticide use on vegetable and their willingness to pay for a vegetable if it is chemical free. A Hedonic-pricing model was used to identify the key factors most likely to affect consumers’ willingness to pay for bio-vegetables. The results show that consumers are aware of the heavy use of chemicals on vegetables. The level of awareness of health hazard linked to chemical pesticides among consumers is more widely spread. The characteristics that consumers are looking for in assessing the quality of vegetable are: damage free, freshness, size, bright colour and hardness. Consumers are willing to pay more than 50% as price premium for chemical free vegetable. The most likely factors influencing consumers’ willingness to pay for chemical free vegetable are the socio-professional category acting as a proxy for income level, the awareness of chemical residue, the availability, the label and the taste. In conclusion, this study showed that there is a consistent potential demand for organic vegetables if they meet characteristics above mentioned.

Household Water Coping Behaviour and Costs in the Volta Basin of Ghana (Abstract 3.12)

Yaw Osei-Asare

Ghana is abundant in water resources but frequently experiences seasonal and periodic water scarcities. Households therefore adopt coping strategies and various activities to ensure continuous flow of adequate safe water at the household level. These strategies involve opportunity costs and some amount of financial outlay. Using revealed preference data for 20 randomly selected rural communities in the Volta basin of Ghana this paper employs the coping costs approach to derive the costs of coping with water insecurity. Explicit costs in the form of investments in water storage facilities and costs of water treatment are estimated. Implicit costs (opportunity cost of time) associated with water collection, which varies by season and ecological zone, is valued using the average basic hourly wage of rural women engaged in agriculture. The results of the study show that costs of coping with water insecurity are higher in the dry season and for forest ecology households. The often-stated claim that rural households cannot and should not pay for the full cost of water delivery is not supported by this study. The paper concludes that rural consumers are paying at least as much as their urban consumers for unimproved water. Hence, this paper is of the view that rural consumers have the ability to pay for improved water but may not be willing to do so probably due to their perceptions and attitudes concerning the public good nature and benefits of improved water supply.