Study the New Alliance for Food Security and Nutrition in Africa
Autor (s): Policy Department, Directorate-General for External Policies, European Parliament
Date of publication: November 2015
Original document (here)
The New Alliance for Food Security and Nutrition in Africa (NAFSN) was launched in May 2012 under the auspices of the G8. Its aim is to attract private investment in agriculture, to complement public investment, by creating the conditions that will allow the countries concerned to improve agricultural productivity and develop their agrifood sector.
This is to be achieved by a package of reforms that present strong similarities to the ‘green revolutions’ of the past, by their focus on irrigation, on encouraging the use of improved varieties of seeds and of external farming inputs, and on mechanisation of production. Ten African countries have joined the initiative: Burkina Faso, Côte d’Ivoire, Ethiopia, Ghana, Mozambique and Tanzania did so in 2012, and Benin, Malawi, Nigeria and Senegal joined in 2013. These countries adopted ‘country cooperation frameworks’ (CCFs) that list their policy commitments, as well as the commitments of development partners supporting this effort; the CCFs also refer to the ‘Letters of Intent’ in which companies identify the areas in which they intend to invest, and the volumes of such investments.
The background: Reinvesting in African agriculture
The global food price crisis of 2008: Immediate and structural causes
The so-called ‘global food crisis’ began when the prices of agricultural commodities on international
markets began to surge in late 2007, reaching its peak in June 2008: at that point the prices of major
commodities (rice, maize, wheat and soybean) were more than double their pre-crisis levels
The removal of subsidies to agricultural producers and the dismantling of extension services were shocks with which many smaller farmers were unable to cope.4 In addition, although trade liberalisation was part of the package of reforms conducted in the name of structural adjustment, the lowering of import tariffs exposed the less competitive food producers of developing countries to competition from abroad.
The ‘competition’ that resulted was particularly unfair: the governments of the least developed countries (LDCs) were often unable to support their producers exposed to the dumping of agricultural products from Organization for Economic Cooperation and Development (OECD) countries, who sold various products, at often highly subsidised prices, on the domestic markets of LDCs. Small-scale farmers were especially hard hit. In contrast to middle-size or larger farmers, they could not switch to producing cash crops for export markets and thereby adapt to the new international division of labour that was being encouraged by trade liberalisation.
Finally, further fragilising the agricultural sector in LDCs in the 1980s and 1990s, official development assistance (ODA) moved away from agriculture, which donors did not see as offering a strong potential for development: In 2008, the World Bank reported that the share of ODA resources devoted to agriculture declined from 18 % in 1979 to 3.5 % in 2004, and that it declined in absolute terms from USD 8 billion (in 2004 USD) in 1984 to USD 3.4 billion in 2004. According to other (converging) estimates, ‘ODA support to agriculture reached a peak of about USD 23 billion (2009 constant USD) in the mid-1980s, and then declined to approximately USD 5 billion in the mid-2000s, before climbing back up to almost USD 10 billion in 2009. Similarly, the share of agriculture in total ODA declined from 18 % to 4 % between the mid-1980s and mid-2000s, but grew to 6 % in 2009
The reactions of the EU and the G-8 to the global food price crisis: The L’Aquila Food Security Initiative
The EU responded swiftly, with the establishment in December 2008 of the EUR 1 billion Food Facility, to raise the productivity and incomes of small farmers in the fifty worst affected countries, by strengthening farmers’ organisations, developing rural infrastructures and services, and linking farmers to markets. The Regulation came into force on 1 January 2009.
A first set of projects was approved on 23 March 2009, covering 23 developing countries (including 14 in Sub-Saharan Africa) for a total amount of EUR 313.9 million; a second set was approved on 24 April 2009, covering EUR 393.8 million; further projects were approved in batches on 9 December 2009 (EUR129.7 million) and on 22 April 2010 (EUR 145.3 million). By 31 December 2011, all contracts had been completed. It has been estimated that, altogether, the 232 projects funded under the EU Food Facility improved the lives of over 59 million people in 49 countries; 93 million others benefited indirectly, for instance through or by learning from farmers directly supported by the EU programme.
In July 2009, a year within the crisis, the G-8 Leaders, together with a number of partners, joined to discuss food security at a session convened in L’Aquila under the Italian presidency of the G-8.
In adopting the L’Aquila Food Security Initiative (AFSI), they committed to ‘substantially increasing aid to agriculture and food security including through multiyear resource commitments’, announcing commitments amounting to a total of USD 20 billion for the period 2009-2012 in support of a ‘coordinated, comprehensive strategy focused on sustainable agriculture development, while keeping a strong commitment to ensure adequate emergency food aid assistance’.
From the L’Aquila Food Security Initiative to the G-8 New Alliance for Food Security and Nutrition
At the heart of the G-8 New Alliance for Food Security and Nutrition, lies therefore the recognition that African governments alone — public investment in poor countries combined with official development assistance — shall not suffice to compensate for underinvestment in agriculture since the early 1980s. The New Alliance was announced at the G-8 Summit convened in Camp David on 18-19 May 2012. The Summit brought together the leaders of the United Kingdom, Canada, France, Germany, Italy, Japan and Russia, under the Presidency of the United States. The Camp David declaration included a statement praising African governments for committing to ‘increase public investments in agriculture and to adopt the governance and policy reforms necessary to accelerate sustainable agricultural productivity growth, attain greater gains in nutrition, and unlock sustainable and inclusive country-led growth’ through the African Union’s Comprehensive Africa Agriculture Development Programme (CAADP), and continued.
The NAFSN can be described as an attempt to mobilise the private sector into investing in food security and nutrition, in order to compensate for the inability of public budgets to make up for the financing gap. To this end, the participating countries negotiate country cooperation frameworks (CCFs), setting out a number of commitments to facilitate private investment in the areas concerned.
The NAFSN can be described as an attempt to mobilise the private sector into investing in food security and nutrition, in order to compensate for the inability of public budgets to make up for the financing gap.
Implementation of commitments: The state of play
Three years after the initial announcement of the NAFSN, it would still be premature to provide a comprehensive assessment of the impacts on the ground of the policies that were announced at the time, and in the CCFs adopted by the ten countries who joined the programme in 2012-2013. Although many policy commitments were already present in the national plans adopted under the CAADP framework, such promises take time to materialise, and the private sector has complained that certain reforms (particularly a clarification of tenure rights on land and water) were a condition for their arrival in the countries concerned.
The following table illustrates that the areas in which policy reforms have been most difficult to implement are the clarification of land and resource rights, nutrition-specific reforms, and access to financial instruments and insurance against risk
Development partners’ commitments. In total, for the ten participating countries, development partners committed to support the national action plans for food security for a total amount of USD 6.2 billion. By June 2014, the donors had disbursed USD 2.1 billion, or about 72 % of the commitments that they had pledged by that date.
Private sector commitments. For the ten countries concerned, 180 companies pledged in their ‘Letters of Intent (LoIs)’ to invest a total of USD 8 billion in agriculture; though private investors were slow at delivering at first (only USD 60 million were invested in 2012 on the basis of the LoIs), about USD 1.1 billion investments had been made by the end of 2013.
The data show that, whereas some Africa-based companies play an important role in the NAFSN (as calculated by the anticipated size of the investments pledged in the ‘Letters of Intent’ included in the New Alliance Country Cooperation Frameworks), two companies are significantly leading: the Swiss seed company Syngenta and the Norwegian fertiliser company Yara International (who pledged USD 500 million and USD 1.5 billion respectively).
This pattern explains why many observers consider the NAFSN to be a Trojan horse for Western multinational firms, eager to expand their markets by taking part in the relaunching of African agriculture — but imposing, in the process, their own views of the trajectory to be followed, and of the associated agronomic and economic choices. How real is this risk? As an attempt to coopt the private sector in the broader effort to reinvest in agriculture in Africa, the NAFSN gave rise to an important debate around the role of private investment in support of this effort. Is private investment a necessary complement to the efforts of governments? What are the dangers associated with governments partnering with private companies — agrochemical companies and seed companies, commodity traders and agrifood processors — who have in mind, not the interests of the local communities, but the increase of their profits and the expansion of their markets?
The second generation ‘Green Revolution’
The NAFSN thus contributes to an agenda described as a new ‘Green Revolution’ in Africa, as a means of catching up with the higher productivity levels of other regions by a package of reforms introducing more ‘modern’ technologies into agriculture.
To a large extent, whether the New Alliance on Food Security and Nutrition shall make a positive contribution to the alleviation of hunger and malnutrition in the participating countries shall depend on how such alignment is achieved. Shall the commitments made by the parties involved — the government concerned, the international community, and the private sector — be aligned with the local needs as they have been identified in fully participatory processes, with a focus on the most marginalised food producers, and taking into account the specific needs of women? Or will the New Alliance’s insistence on facilitating the role of the private sector (as private investment is increasingly seen as a substitute for the inability of governments to make the required budgetary commitments towards the relaunching of agriculture) instead divert scarce public resources away from rural poverty reduction and rural development, to benefit ‘growth corridors’ aimed primarily at export-oriented agriculture, in which middle-size and large-size agricultural producers are given priority? Will private investment be aligned with local priorities, or will local priorities be tailored to suit the needs of private investors?
Aligning private investment with nationally-owned development plans, or aligning plans with the needs of the private investors? — The case of Malawi
In joining the New Alliance for Food Security and Nutrition in 2013, the Government committed to strengthen extension services to support export growth clusters. While this is promising, it is unclear whether, as result of such strengthening, the extension services will also reach the most vulnerable farmers: if the growth of extension services targets as a matter of priority the producers that contribute to the National Export Strategy or are involved in the development of large-scale commercial agriculture, this will represent a huge diversion of scarce public resources, with limited impacts on the reduction of rural poverty, and with potentially regressive impacts within the rural population.
Another commitment of Malawi under the Country Cooperation Framework is to release 200 000 hectares of land to investors, ‘after conducting a survey to identify idle land and crop suitability under both customary [tenure] and leasehold’. 2.4 million hectares of land have been identified as ‘underutilised’, and the intention of the government in 2013 was to favor the exploitation of this land, inter alia by expanding the area under irrigation through the Green Belt Initiative, from 90 000 hectares to 400 000 hectares.26 It is likely, however, that the 200 000 hectares of land that are intended to be ‘freed’ for investors shall be given priority in this regard, and that this land will be the best quality land, with the most desirable geographical location alongside Lake Malawi.
Access to land and security of tenure
Notwithstanding the reference to the Voluntary Guidelines on responsible governance of tenure of land, fisheries and forests (VGGT) mentioned above, the CCFs approach the question of land policy by an almost exclusive focus on the certification of land (or titling). This is understandable: whereas the rolling out of titling schemes is not inexpensive, it is certainly less costly than agrarian reform that would involve the provision of strong support to small-scale farmers to ensure that they can use their land productively; moreover, external donors appear willing to support such titling progress.
The promoters of titling programmes and land registration schemes see them as presenting a number of advantages. First, the security of tenure favoured through titling should encourage individual landowners to make the necessary investments in the land, not only because they will be protected from the risk of losing it, but also because titling of their property allows the owners to mortgage their land, and thus to obtain access to credit, allowing them to make such investments. It also functions as a signalling device that provides information about the trustworthiness of the borrower: local banks may see titling of their property as proof that the household will be able to repay the loan, independently from the use of the property as a collateral.
Second, the clarification of property rights should encourage the emergence of efficient land markets, conducive of economic growth: lowering transaction costs, it is supposed, shall result in the land going to the most productive user, thus maximising the productivity of land as an economic asset. Third, the clarification of property rights and the development of markets for land rights should attract foreign investors: the easier it is to register property rights, the faster and the cheaper the procedures are for transferring property rights, the more investors will be willing to enter the country concerned and thus, it is hoped, to contribute to its development.
It is nevertheless troubling that most CCFs adopted under the New Alliance chapeau uncritically refer to titling (or ‘certification’) as the key instrument of their land policy — or even as its sole component. There are three reasons to be sceptical about such an approach. The arguments put forward in defence of land registration and titling are inherently contradictory. On the one hand, the clarification of property rights is to provide security of tenure: to allow slum dwellers to be recognised as owners of their home in the informal settlement where they are staying, or to allow small farmers to be protected from eviction from the land which they cultivate.
On the other hand however, the clarification of property rights is justified by the need to establish a market for land rights, allowing a more fluid transfer of property rights — a lowering of transaction costs, increasing the liquidity of these markets. Yet, the commodification of property rights can be a source of exclusion, and increase insecurity of tenure. Such exclusion may happen by four mechanisms. First, the process of titling itself may be captured by the elites, or tainted by corruption; or the formalisation of property may be too costly or complex for the poorest segment of the population to benefit. Second, once property has been formalised and land demarcated, taxes may be imposed, and more easily collected, by the public authorities.
While this may present an opportunity to better finance public services, it may also have exclusionary effects: it may occur that the poorest shall not be able to pay those taxes and shall be forced to sell off the land as a result.
Third, whether to pay those taxes or whether to make the necessary investments in their houses or on their cultivated lands, the poor (who by definition have no capital of their own) shall be tempted to mortgage their land in order to have access to credit. But even if this works — even if, that is, lenders are willing to provide loans –, the risk is that the debts will accumulate, and that the land will finally be seized by the lender : the commodification of land, in such a case, shall have made the loss of land possible, rather than having protected the land user from its risk.
Fourth, the rural poor may be tempted to sell off land in order to overcome temporary economic hardship such as bad harvest or a fall in the farm gate prices received for their crops, a phenomenon referred to as ‘distress sales’. In other terms, it appears that the counterpart of the improved security of tenure that formalisation of property allowed, is the insecurity resulting from the possibility of losing property — whether because the household finds itself unable to reimburse the lender after having mortgaged the land, because the levels of taxes makes them unaffordable and forces the family to leave, or (where rural farming households are concerned) because the household finds it impossible to expand its property following the speculation fuelled by the titling process, and thus cannot achieve the economies of scale required to be competitive on markets.
Even more troubling is the fact that were titling schemes have been implemented, they often led to increased inequalities, making the poorest even worse off, as the national elites, who have a superior purchasing power, may emerge victorious from the auctioning of land that titling schemes in fact lead to. This effect may be further strengthened where investors from abroad seek to acquire large areas of land in order to develop agriculture for export, and are encouraged in their quest by the creation of a market for land rights.
As such markets develop, speculation over land increases, and so does land concentration: foreign investors are mostly interested in developing large-scale plantations, that are relatively non-labour-intensive and contribute relatively little to rural development; and conflicts over land increase as land becomes a valuable asset
This is clearly an area in which the CCFs could be improved. Under certain conditions, contract farming can help in the development of localised food chains, for instance by linking farmers’ cooperatives to the local food-processing industry or to local fresh produce retailers serving urban consumers. At the same time however, farmers can easily become disempowered by the process. Five key criteria may be relevant to assess the adequacy of a particular contract
Economic viability for all parties. If the contract appears unviable to the buyer, the contract may be terminated or the buyer may renege on obligations when under financial stress, with detrimental consequences for the livelihoods of farmers. Conversely however, if the arrangement is not viable for the farmer, for instance because of an unsustainable debt, the buyer will face supply problems in the short term, and will incur high reputational costs with other farmers which may make it more difficult for him to enter into arrangements with other producers in the longer term.
Fairness in negotiations. Farmers typically have less information and negotiating skills than their business partners, and a lower degree of legal literacy.64 The way prices are determined, the deductions for the provision of inputs, the conditions under which the contract can be terminated, or the way the quality grading of the produce is assessed are all areas in which contractual clauses may be heavily biased in the favour of the buyer.
Respect for women’s rights. Contracts tend to be in the name of the male head of household or the male holder of the title to the land cultivated. As a result, unless proactive action is taken, women will benefit less than men from contract farming.65 The ability for women to benefit from contract farming is mediated by their rights over land, and by the power relationships both within households or, when the contract is negotiated through representatives of the community or the farmers’ organisation, within these groups.
Clarity in the use of quality standards. Standards must be clear and specific so that firms cannot manipulate the application of vague standards. On the other hand, they should not be too complex, which could also allow firms to manipulate standards. Firms should demonstrate the standards visually to farmers, and explain in advance how crops are graded.
Support to sustainable agriculture. Contract farming, just like cash crops in general, is generally associated with monocropping schemes and with forms of production that rely heavily on chemical fertilisers and pesticides, often with adverse repercussions for human health and for the soils. To counter this, contract farming could include incentives for moving towards more diverse farming systems, using a combination of plants, trees and animals according to the principles of agroecology. And, while contract farming often involves the provision of inputs, including mineral fertilisers, by the buyer, it may also include provisions that oblige the producer to comply with certain environmental conditions, for instance a more cautious use of pesticides.
Dispute settlement. Contracts should facilitate communication between parties through appropriate management structures and should identify ways of resolving disputes. In the vast majority of cases where one of the parties fails to comply with the requirements of the contract, there is no resort to courts because the sums involved are too small and because, in many developing countries, courts are in practice inaccessible to the rural poor.
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