Washington, DC — Approximately 80 percent of Africa's population is engaged in some form of agriculture - mostly subsistence. But despite this great presence on the land, food security has remained elusive. On August 26 the UN Food and Agriculture Organization released a report saying that 21 African countries face "food emergencies" and millions of people are on the brink of starvation.
In Southern Africa alone, 13 million people need food aid. In Malawi, three quarters of the population is now dependent on food aid, in a country that produced such a bumber crop of maize in 1999 that free seed and agricultural goods were given to three million farmers. That crisis brought allAfrica's Charles Cobb Jr. to the International Food Policy Research Institute (IFPRI) in Washington, DC, where he sat down with the group's Director-General, Per Pinstrup-Anderson, and three research fellows - Eleni Gabre-Madhin, Kenneth Simler and Todd Benson, to ask if any solution was in sight. Excerpts from that conversation:
Todd Benson: Malawi, perhaps in contrast to some of the other countries in the region experiencing food security problems, is quite well endowed for high agricultural productivity. It gets relatively reliable rains. It has good soils. But as a result of the good conditions it has a high population, so what we have seen over the generations is degradation, particularity in soil fertility so that most farmers are now harvesting, say, one ton of corn per hectare when they really could be harvesting six tons of corn from their fields.
One of the major problems is that although it is well-endowed from a subsistence standpoint, it is not very well endowed from a marketing standpoint. Malawi is landlocked. Transport of imports, transport of exports is very expensive.
Malawi has also been experiencing considerable macro-economic instability since the late 1980s and early 90s with it really tightening up in the late 1990s. They have been having regular currency devaluations on the order of 50 to 100 percent every twelve to eighteen months since 1994. One of the outcomes of this is very high interest rates, so farmers, if they want to get credit to use commercial agricultural technologies, even simple ones such as fertilizer or improved seeds, are facing credit charges of 40 to 60 percent a year. And given that the markets are very weak, it is very difficult to profitably employ these high productivity technologies when you're facing those sort of credit charges.
So, what you're left with is farmers working with what is primarily a subsistence orientation in their cropping. They want to make sure that they grow enough for their families and if they have a surplus for the market, fine, but the market has proven to be something of a difficult partner in advancing their livelihoods.
And there is chronic poverty; a chicken and egg thing. The rural Malawians are so poor that the markets don't develop very well. The markets are so ineffectual that the farmers can't really get ahead. I was involved with poverty analysis in Malawi and our results, which are very similar to what's found in surrounding countries, show that well over 65 percent of all Malawian houses aren't meeting their basic needs year in and year out. And this is just a very simple basic poverty line - even lower than the one dollar a day line that you often hear about.
So what do they do when faced with a food crisis such as we are seeing this year? They actually have very very few options, since they are already living very close to the edge. A typical way Malawian farmers would get by in bad years would be to go work on neighboring farms, just doing daily piece work - ganyu labor" they call it. But if your neighbor is doing bad, he's not going to be employing anybody, or she might not be employing anybody. The typical way that they might be paid is in food, but if you don't have any food in your granary, how do you pay for the labor? You get by with the labor that you have in your house.
The other idea would be to use rural non-farm income sources, but when the population surrounding you is very poor there is very little demand. There might be demand for non-farm products but if there is no case to back up that demand the source is ineffectual. Remittances - there's a history of wage-labor migration down to South Africa, down to Zimbabwe and also to the urban centers of Malawi but there is unemployment in all of those areas. Malawians are not necessarily welcome in South Africa anymore because South Africa has got their own unemployment. So that, again, as a livelihood strategy, is not as effective as it once might have been.
And then livestock and asset sales would be another way for them to get by. But because of the high population density livestock is not very common in Malawi; grazing is very difficult to find. And then asset ownership is very, very low. You don't have people with large savings accounts or any savings; it's rare to find savings. Ownership of bicycles is quite low; radio ownership is quite low; talking about furniture or improved housing, it's just not seen in the rural areas.
But underlying all of this is this very poor market system that the Malawian food producers are a part of. Communications and transport linkages are very difficult. Credit capitalization for improved production in agriculture is very difficult to find.
Eleni Gabre-Madhin: The current crisis is about the inability to get food to people who need it in a timely manner. The real question that we want to think about as we look at the situation and its underlying causes and possible solutions, is why wasn't Malawi able to effectively import food when it needed it?
It seems to us that a major issue is the weak capacity of the private sector in its ability to import food from neighboring countries. There's been a 300 percent increase in prices over last year's prices, and an estimated 600,000 tons of grain in deficit. Yet imports by the private sector have been very slow in coming. They've been coming in a trickling fashion, in an informal way, over the border from Mozambique and Tanzania as far as we've been able to discern. Even at present, when the situation has become somewhat better, most of the imports have been made through the National Food Reserve Agency (NFRA) in Malawi rather than through the private sector.
Now it's estimated that some 100,000 tons of grain still needs to be imported, and it's anticipated that the private sector may be able to do that. But the real question is why weren't they able to do more? And why weren't they able to get grain in more quickly?
Over the 1980s and early 1990s, Malawi entirely reformed its market system from structural adjustment-led programs that effectively disbanded or dismantled the official state monopoly, dismantled all price controls, and basically removed all restrictions on private trade on the assumption or understanding that the private sector could do these functions more efficiently than the state, could perform better, would be able to effectively serve the poor and the hungry.
Our study that was conducted in the late 1990s - we did an extensive study of grain markets in Malawi in 1988 and 89 interviewing some 1,500 traders and farmers around the country - found that the private sector market is a very weak marketing system. Those we interviewed were very small operators - "micro" operators - less than five employees, operating in a risky environment with very little investment and business assets. We found that only one third of traders even have the most basic of business equipment, which is the scale that you weigh grain with. Five percent had a telephone, and on average only eight telephone calls were made for business purposes. So we're talking about a very informal and rudimentary system. There was very little evidence of practices such as forward contracting or making long-distance purchasing orders by telephone. And most fundamentally, very, very high transaction costs. And what I mean is the costs of getting the food from where it's produced to where it's consumed.
We found that these transaction costs were dominated by transport costs; some 70 percent of the total marketing costs are a result of high transport costs. One of the reasons underlying these high transport costs is that the nature of transport is very short distance. On average traders are only transporting grain some 50 kilometers. Part of the reason for that is they don't have the knowledge of where grain is demanded because there is no market information system. The transport fleet itself is very weak, with high maintenance costs. Poor roads add to those costs. The other thing is, because of high market risks 70 to 80 percent of the time traders accompany the grain themselves. That adds to the cost of transport because they have their own costs as well. All of these factors combine to create a situation where we see a market failure, particularly acute in a situation such as the present, where a functioning marketing system would have indeed turned the situation of production shortfall around.
How can markets work for the poor and hungry in Malawi? In the medium term it seems that governments and the donor community need to make a concerted effort beyond 'getting prices right' which was really the dominant theme of structural adjustment and getting the government out of trade. This was the theme in the 1980s and 1990s. But now we're in a situation where getting markets right seems to be the critical issue. What investments and institutions are needed? What investments in infrastructure to create an enabling environment for the private sector to effectively function, to enable markets to function? These seem to be the critical issues.
Some of these investments are in market institutions such as trade financing. I forgot to mention that only 25 percent of the traders we interviewed had a bank account. Less than that had access to a bank loan. So there is virtually no trade financing in the system.
The other critical need is for a market information system that works for everyone, creates a transparent system, rates and standards, a legal framework in which to reduce risks and to carry out transactions, as well as roads, telecommunications systems and warehouse facilities. These are the kinds of things for the medium term that really need to be given much more serious attention in order to develop markets in a sustainable fashion.
Obviously in the short term the government needs to send strong signals to private sector that it is committed to privatization. There have been frequent reversals of policy on the part of the government. Some of these types of signals would be easing remaining restrictions on private imports. So what we're pushing for is for government to make a strong commitment to this process of privatization.
Per Pinstrup-Andersen: Privatization is not a matter of getting government out; it's a matter of getting government to do the things that will facilitate privatization. That means producing the public goods that Eleni is talking about: legal systems, contract enforcement, standards and measurements, roads. There was a great mistake made in the structural adjustment effort where the World bank, the IMF, the U.S. government, among others, thought that less government was better government. It turned out that privatization could not move ahead without these public goods. That's a key issues that is coming out of IFPRI research almost everywhere we do the work. In Vietnam, for example, where the government did invest in public goods, privatization moved ahead much faster than in some of the African countries, where governments basically were made so weak by structural adjustment and by mismanagement of their own economy that the privatization didn't work. I learned that from you, Eleni, so I take it you agree. Eleni, by the way, is from Ethiopia. She's an agricultural economist. One of the things she's worried about is how we can get Ethiopian grain surpluses moved to Southern Africa where there's a grain deficit. She might talk about that as well later on.
Kenneth Simler: I want to shift the focus a little bit away from Malawi to the neighboring country of Mozambique and also to look at the region a little bit more broadly. Firstly, the situation in Mozambique is not nearly as bad as it is in Malawi. Production is up over last year and it's higher than the five-year average. But, as is often the case, it's spotty. In the South of the country there are some serious food shortages. The problems have been alleviated somewhat because the government has pre-positioned food supplies in these areas in anticipation of further flooding like they've had over the past two years. Now its been able to be there in timely fashion, to augment the supplies because of the drought this year. But there's still a need for food aid. The latest estimates are about 70,000 tons of food aid this year to serve about a half million people that will be affected by the end of the year.
Part of the problem is the northern part of the country has a relative food surplus this year but as Eleni was talking about at high transaction costs: transportation costs, marketing problems. It's very difficult to move that food from the northern part of Mozambique to the southern central part. The way that the particular configuration of road and rail is in Mozambique, the producers in the northern part of Mozambique find that it's easier to move the food to Malawi instead of other parts of Mozambique. Mozambique, of course, had that terrible war from about 1976 to 1992, and even though there has been 10 years of peace, the infrastructure is still very fragile. The national highway gets cut once a year by heavy rains during the rainy season, likewise the rails.
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Stepping back to look at the situation from kind of a regional perspective, this situation of sufficient harvest or surplus harvest is played out, not just within individual countries, but all across the region and across all of Africa. And I think a lot of this is to be expected as just a part of the overall variability of rain-fed agriculture in an area with highly unreliable rainfall.
Growing food or other crops is always going to be a risky business. I think the challenge becomes how do you begin to smooth out this variability both on the production side, but especially on the consumption side. One important way is to reduce the cost of moving products from one point to another. Certainly, investments in infrastructure, roads and rails are important, all of the things that Eleni talked about. It's obvious that this high transport cost, or high other costs, drives the prices up for consumers at the other end and puts food out of their reach. But it also has a depressing effect on production because the producers are going to end up getting a lower price because they can't move the food out of the immediate area at a reasonable cost.
We have to make sure that once you get food to certain areas, people can afford to buy it. These areas are by-and-large very poor, and the shortfalls that we're talking about are usually expressed as shortfalls relative to normal. But normal production or consumption is usually not sufficient, or anything consistent with a healthy life. Just look at the malnutrition rates in "normal" years or child infant mortality in normal years. Obviously maintaining a "normal" situation is not good enough.
So this means raising peoples incomes - part of this, as Todd was saying, is diversifying income, having nonfarm sources of income, but also making it profitable to produce surpluses, making it easier to get credit, making it easier to save to get through the inevitable bad crop years that are going to occur. There are proven agricultural technologies - improved seeds and fertilizers that are already being used to some extent throughout the region - but not enough. There is scope for new research on drought-tolerant varieties or other improved varieties. But a lot of the improved seeds and fertilizers are already there. It's just a question of making them affordable and profitable for farmers.
Also it's investing in people. Education is a key route out of poverty and an important factor in the adoption of new technologies and an important factor in what people can do for nonfarm income-generating activities. And in light of the HIV/Aids pandemic, is even more important because we're losing teachers, we're losing a lot of trained people.
Per Pinstrup-Andersen: And underlying all of this is the desire to improve the coping ability of individuals in individual households the next time the drought hits, or the insects or the plant diseases or whatever adverse effects, so that individual households don't immediately go into serious starvation situations.
