THE CHALLENGE OF AGRICULTURE IN GHANA:WHAT IS TO BE DONE? By Gobind Nankani Agriculture as Pro-poor Development: Agriculture plays a strong role in reducing poverty. The most compelling evidence for this comes from comparing China and Africa. Chinas poverty rate fell from more than 50 percent in 1981 to about 20 percent in 1991 and 5 percent in 2005. In 1981, Chinas poor outnumbered Africas by almost 4:1. Yet by 1996, SSA had more poor people than China: 500 million Chinese moved above the poverty line, between 1981 and 2004, whilst 130 million more Africans moved below the poverty line in the same period. What caused this great achievement in China? A combination of crisis, political leadership, reforms, supportive conditions and managing the stakes between potential gainers and losers, all played their role. As is often the case, these reforms grew out of a crisis of food insecurity, through which the leadership managed to carefully make a case for reform. Important preconditions assisted the process: prior investments in rural infrastructure and the high level of literacy among Chinas peasants helped. Resistance from local cadres, whose power and privileges were under threat, was managed by giving them a stake in the new system: they became the new entrepreneurs for rural non-farm enterprises ( ie the Township and Village Enterprises or TVAs). Making the reforms stick was aided by the fact that the center avoided imposing a single model, but rather gave farmers and cadres a choice among broad options. Chinas experience is fully consistent with the view that promoting agricultural and rural development is crucial to pro-poor growth, particularly at the early stages, given the potential for smallholder farming to rapidly absorb unskilled labor. Christianson and Demery have argued that an African development strategy that is firmly grounded in agricultural and rural development can result in a more sustained impact on poverty. Just as in China, there will be a time when the emphasis in Africa will shift to secondary and tertiary sectors. But with land abundance in Africa, an agriculture based strategy must for now be at the core of any effective route out of poverty, just as it was in China in the 1980s. Agriculture as a Lever for Growth Countries typically move through three phases from agriculture-based, to transforming and then to urbanized: China and India have moved from being agriculture-based to transforming in the last 20 years. In addition, many countries have deep inter-regional differencesBihar in India, Chiapas in Mexico, and Piaui in Brazil, are all examples of agriculture-based regions within transforming or urbanized countries. The main point to note is that agriculture can be a lead sector for overall growth in the agriculture-based countries. Rapid agricultural growth in China, India and Vietnam was the precursor to the rise of industry and services. This is because their comparative advantage lay initially in their primary activities (agriculture and mining), because of resource endowments and the difficult environment for manufactures. Growth in agriculture also induces strong growth in other sectors of the economy, such as transport, processing, etc. through multiplier effects. Agriculture has thus helped generate growth in the rural non-farm sectors of China, India and Vietnam. The basic ingredients of a dynamic rural nonfarm economy are a rapidly growing agriculture and a good investment climate, where the latter includes infrastructure, business services and market intelligence. Agro-based clusters have been effective in the San Francisco valley of Brazil, and in dairy production in India, Peru and Ecuador, for example. Agriculture for Food Security The 2008 food price crisis drew attention once more to food security questions. Prices of commonly traded foods such as rice and wheat rose by 50 to 75 percent over a matter of weeks. Countries such as Argentina, India and Thailand restricted exports of foods, as other countries like the US increased demand through subsidies on biofuels. Food security had become a live political issue again. Food security is a wide concept, ranging from the household to the national level. It is not the same as food self-sufficiency. It allows for production to be undertaken where the comparative advantage is greatest, and for trade to complement domestic food production. Three points are noteworthy: First, for Ghana, and most African countries, with a comparative advantage in agriculture, increasing agricultural production based on productivity growth is a necessary condition for food security. Second, trade in food items needs to be increased, to complement food production in countries. Unfortunately trade has been distorted by many indefensible public interventions, such as subsidies in the EU and the US as well as in many developing countries, such as India. There is a need to streamline these public interventions, leaving in place only those minimum interventions that are justified by market failures. Third, the recent food crisis has reminded countries that some residual capacity to deal with crises may be warranted, much as the East Asia crisis in 1997 led to countries building up larger foreign exchange reserves, which are coming in handy in todays financial crisis. What such residual capacity might be has to be based on country specifics. For Ghana, there is clearly an impetus here for finding a way to support greater private investments in food processing to permit better storage, as well as to possibly maintain larger buffer stocks than in the past.
Posted on: Wed, 16 Oct 2013 15:45:20 +0000
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