IFPRI
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
AGRICULTURE AND FOOD SECURITYPOLICY CONSTRAINTS
OUSMANE BADIANE
Director for Africa
ONE KEY MESSAGE
Good Policies are not a solution for everything Bad Policies are a problem for everything else
Policy Reversal would jeopardize ongoing growth recovery process» Risk of return to failed policies of 60s and 70s
No institutional memoryNew generation of leadersStronger fiscal positionsMore open, democratic systemsPopulist pressures and tendencies
19611964
19671970
19731976
19791982
19851988
19911994
19972000
20030.2
0.6
1.0
1.4
1.8
SSA
TFP Eff Tech
Trends in Agricultural Productivity in SSA (1961=1)
Source: IMF (2008); WDI (2008); Benin, S. et al. ReSAKSS (2012)
POLICY REFORMS AND ECONOMIC PEROFMANCE IN AFRICA
Page 4
Martket liberalization, price margins and stability - Benin
05
1015202530354045
Regional Market Pairs
Perc
enta
ge
Before Reforms (1985-89) After Reforms (1990-95)
Change in absolute spatial marginsCfa/Kg
0
20
40
60
80
100
120
140
Local Markets
Perc
enta
ge
Before Reforms (1984-89) After Reforms (1990-95)
Change in temporal marginsPercent
0
10
20
30
40
50
60
70
Regional Market Pairs
Perc
enta
ge
Before Reforms (1985-89) After Reforms (1990-95)
Change in relative spatial marginsPercent
0
5
10
15
20
25
30
35
40
Local Markets
Inde
x of
Inst
abili
ty
Before Reforms (1984-89) After Reforms (1990-95)
Change in local price stabilityPercent
POLICY REFORMS AND PERFORMANCE OF LOCAL MARKETSCase of Maize Markets in Benin
Badiane and Resnick (2006)
POST 1980s RECOVERY: LONGEST PERIOD OF SUSTAINED GROWTH SINCE 1960S
SOURCE: IFPRI / Badiane 2011
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-6
-4
-2
0
2
4
6
8
10
12
Agriculture value added, Africa Linear (Agriculture value added, Africa)
ANN
UAL
GRO
WTH
( PE
RCEN
T)
THE GROWTH IS ACCELERATINGAS WELL AS SPREADING GEOGRAPHICALLY
SOURCE: IFPRI / Badiane and Ulimwengu
AGRICULTURAL TRADE AND ECONOMIC GROWTH
AGR. EXPORT AND DOMESTIC GROWTH
EXPORT GROWTH
INDUST. GROWTH
1%Growth
0.04%To
1.83%
AGR. EXPORT AND DOMESTIC GROWTH
0
0.5
1
1.5
2
2.5
3
Niger Senegal Zambia BurkinaFaso
Incremental income from 1$ additional revenue from agricultural tradablesSource: C. Delgado et al (1998)
AGRICULTURAL TRADE AND RURAL GROWTH IN AFRICA
Potential agribusiness growth and expected income to farmersUS$ billion
3 8
50
10 10.5
150
High value exports
Commodities Urban food
2000
2030
2.9 1.6 30Potential Increased farmer income in 2030
Expected sector growth to 2030
Increase in Demand and Incomes in Billion US$
LONG TERM TRENDS IN FOOD DEMAND AMONG AFRICAN COUNTRIES
IFPRI/Badiane
THE STABILIZATION POTENTAIL OF REGIONAL TRADE
DISTRUST OF PRIVATE SECTOR HAS NOT CHANGED MUCH
LACK OF CONFIDENCE IN MARKETS
FARMING NOT RECOGNIZED AS PRIVATE BUSINESS ACTIVITY
THEIR PRODUCTS AS SEEN AS COMMON RATHER THAN PRIVATE GOODS
LINGERING DOUBT RE EFFECTIVENESS AND COST OF ALTERNATIVE POLICIES
NO DISTINCTION BETWEEN POLICY GOAL AND INSTRUMENTS
RETURN TO SUBSIDIES AND PRICE CONTROLSCREATION OF NEW SPECIALIZED AGENCIES
LEARN FROM EXPERIENCE OF 1960 – 1980AVOID REPEATING SAME MISTAKES: SAME POLICIES -> SAME RESULTSMOVE TO EVIDENCE BASED POLICY UNDER CAAPD IS CRITICAL
RISK OF POLICY REVERSAL AND FUTURE GROWTH
WHAT IS THE PROBLEM?
PRINCIPLES OF EFFECTIVE INPUT POLICIES
IT IS THE ABSENCE OF A CRITICAL MASS OF: OPERATORS NETWORKS INFRASTRUCTURE, AND SERVICES
IN ORDER TO ENSURE THAT INPUTS ARE AVAILABLE AT TIMES AND PLACES NEEDED AT REASONABLE COST
UNDERSTANDING THE COST OF SUPPLYING FERTILIZERS
Source: Bumb, Johnson and Fuentes, 2012 *Averaged across Ghana, Mali, Senegal, and Nigeria
THEY CAN BOOST PRODUCTDION IN SHORT RUN
THEY ARE NOT CERTAIN TO RAISE INPUTS USE AND YIELDS ONCE REMOVED (BROOKS 2012)
THEY DISTORT COSTS OF FACTORS, LEADING TO INEFFICIENT ALLOCATION OF INPUTS
THEY MAY BYPASS NASCENT LOCAL INPUT DEALERS (BANFUL 2009, BUMB ET AL., 2011; TAKESHIMA ET AL, FORTHCOMING)
THEY HAVE BEEN PRONE TO BAD TARGETING AND LEAKAGES (MASON AND RICKER-GILBERT, 2012)
EXCESSIVE LEAKAGE BENEFITS LARGER FARMERSFAILURE TO REACH THE POOREST AND MOST VULNERABLE HH
1
INPUT SUBSIDY POLICIES: THE EVIDENCE
3
2
4
5
THEY ARE VERY COSTLY FISCALLY:GHANA: FERTILIZER SUBSIDIES: 17 % OF MOFA BUDGETCOSTS TRIPLED FROM GHS 29 TO GHS 90 MILL. OVER LAST 3 YEARSCOULD REACH 3 5% OF BUDGET IN 2020. (BENIN ET AL., 2012)
MALAWI: FERTILIZER SUBSIDIES: 74% OF AG BUDGET IN 2008/09 AND 6.6% OF COUNTRY’S GDP (DORWARD AND CHIRA, 2011).
ZAMBIA: FERTILIZER AND SEED SUBSIDIES: 40% OF AG BUDGET BETWEEN 2004 AND 2011 (MASON AND RICKER-GILBERT, 2012)
THEY LEAD TO SERIOUS MACRO IMPLICATIONS IN THE LONG RUNSERIOUS FISCAL DEFICIT / FOREIGN EXCHANGE SHORTAGESCURRENCY OVERVALUATIONDECREASED COMPETITIVENESSSLOWER ECONOMIC GROWTH
INPUT SUBSIDY POLICIES: THE EVIDENCE
5
6
OVERCOMING POLICY CONSTRAINTS
You need data before you need them!What to do / How:
o Data clusters: production, trade, hh status, prices, costs, expenditures, etc
oWorking Groups/Task Forces: bureau of statistics; NARs; data units in finance; trade, sector ministries
o Common platform: harmonized standards and exchange protocols
1. IMPROVED DATA SYSTEMS
OVERCOMING POLICY CONSTRAINTS
A serious policy maker has to have constant access to high quality technical team
What to do/How: o Network: build AND maintain a network of
leading national centers of expertiseo Engagement: create mechanism with a
plan to engage and use local expertise agreement on long term strategic research vehicle for ad hoc, short term technical input
2. READY-TO-USE TOP EXPERTISE
OVERCOMING POLICY CONSTRAINTS
First priority post Dakar!What/how:
o Dream team: assemble qualified team, first from existing staff, later dedicated team
o Feed the beast: define demand for policy research and link to research networks
o Connect!: ensure access to evidence and its use in policy formulation
3. EFFECTIVE COORDINATION / BROKERING FUNCTION
OVERCOMING POLICY CONSTRAINTS
Make it your 2014 Resolution! What/how:
o Infrastructure: create up-to-date IT platformo Knowledge base: build, maintain, and expand
knowledge base: start with collecting existing key data, reports, and policy documents
o Right to know: eliminate barriers to accessing knowledge
o Never Forget: build memory of actions, processeses, outcomes – lessons learning to avoid past mistakes
4. OPERATIONAL KNOWLEDGEMENT MANAGEMENT
OVERCOMING POLICY CONSTRAINTS
Collective wisdom is best What/how:
o Dialogue platform: institute broad, informed debate about key strategic issues and choices
o Review culture: evaluate and track commitments, performance and progress
5. INCLUSIVE POLICY DIALOGUE
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