State monopolies strangle agriculture growth in Africa

posted in: Africa

Akinwumi Adesina

Addis Ababa, Ethiopia (PANA) – The failure to rapidly grow the agricultural sector in Africa has been caused by weak and old-fashioned policies favouring state-run companies in the supply of agricultural produce, ministers said last week.

Nigerian agriculture minister Akinwumi Adesina, said at this week’s opening of the African Green Revolution Forum (AGRF), that ending the government’s monopoly over fertilisers, seeds and other inputs, was key to industrializing agriculture.

“What is important is to develop ways of effectively targeting support to reach farmers, while ensuring that the private sector, not the government, delivers farm inputs to farmers,” Adesina told the Forum in Addis Ababa in his keynote speech.

While insisting that African governments must boldly support their farmers, Adesina said the governments have a responsibility to ensure input markets work for farmers.

“Some may argue that supporting farmers in Africa via subsidies is not sustainable. I argue that poverty is not sustainable. Africa cannot become a museum of poverty. Poverty is not tradable and is not an industry. Africa must not grow poverty,” he said.

Nigeria ended its 40-year-old fertilizer sector corruption within 90 days under Adesina as the agriculture minister.

Part of the policy reforms introduced by Adesina, who previously worked for the Alliance for Green Revolution (AGRA), the conveners of the weeklong forum, was to target state support to farmers through the private sector.

The Nigerian government stopped the state monopoly in the buying and distribution of seeds and fertilizers and allowed a private sector-driven system to flourish.

“The role of government shifted to providing targeted farm support directly to farmers for seeds and fertilizers via electronic coupons on mobile phones or ‘e-wallets’,” Adesina explained. The new approach enabled 14 million farmers to receive farm inputs between 2012 and 2014, using electronic vouchers on their mobile phones.

The policy reforms also opened up the seed industry to the private sector. Spurred by the demand for seed through the e-wallet system, the number of seed companies in Nigeria rose from 5 to 80 within three years.

Rhoda Tumusiime, the African Union Commissioner for Rural Economy and Agriculture, said through new policy reforms, African countries could transform the agriculture sector and create wealth amongst poor women and the youth.

“The agriculture policies must be tailored to favour the sector and the farmers,” Tumusiime said. “The agriculture sector has to lead to the transformation of Africa. We must get women to be active in agriculture and protect their rights to land.”

At the AGRF, talks focused on why African countries remained major food importers despite the presence of large tracks of farmland.

Michael Mack, President of Syngenta, a global agricultural research firm known mostly for the supply of seeds, said several factors “conspired to make opportunities for the development of seeds in Africa by African companies really narrow”.

Most countries still import seeds from Russia and Asia. The ability to produce seeds for the growth of major agricultural crops, including sunflower, remain under utilized.

“We need enough people to mobilise action. Why do we still import vegetable seeds. The challenge is still what it will take to mobilise action. We must have the parties to do these investments,” said Mack.

Experts say with a large population to feed, all countries in Africa should be in a position to sunflower seeds and other vegetable seeds which are mostly imported. This would enable firms that produce cooking fat to operate in Africa to cut these imports.

In Kenya, Principal Secretary of the Livestock Ministry, Prof. Fred Segor, said monopolies in the seed and the animal feeds industry were still to blame for the high costs of the produce.

“The reasons of the high priced animal feeds is the monopolies. We are working towards liberalizing the sector to create good prices for the farmers,” Segor said.

Meanwhile, Kenya’s Agricultural Finance Corporation (AFC), a state- run financial institution geared towards support for farmers, is to launch a pilot project to supply maize farmers with US$500,000 loan to build milling plants for maize.

AFC Chief Executive Officer, Lucas Meso, said the commercial Maize automation plant is a project to boost value chain by enabling farmers to control milling of their crop and its sale to the market. AGRA is jointly supporting the plan.

Photo credit: AGRA

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