Investing in agriculture is one of the most effective ways of reducing hunger and poverty via promoting farming productivity and enhancing environmental sustainability. However, for any investment to have a positive impact on agricultural production and productivity, it must contribute to capital formation at the farm level.
Taking this fact into account, The Ethiopian Herald conducted an exclusive interview with Alemayehu Lemma, an agro-economist graduated from Haramaya University in agro-economics, to receive a professional comment on the significance of investing in agriculture for sustainable food security.
"Investments made by the farmers themselves are indispensable as these moves constitute the foundation and the engine for sustainable development and the reduction of poverty and hunger. For farmers, the main sources of investment finance are their own savings and their fixed capital, which are used as collateral for credit. Capital formation is certainly higher for farming households with positive savings and clear, legally recognized possession of land," Alemayehu said.
He added that, apart from the capacity to invest through the generation of savings and fixed assets, the factors driving investment for farm-level capital formation are the growth of the food value chain from producers to consumers, which includes agro-industries and the provision of public goods in the form of basic infrastructure, such as roads, electricity, education and technology.
Here, there has to be a need for new investment strategies that are centered on agricultural producers and focus public resources at all levels on the provision of public goods and vital crops.
True, improving productivity and food availability, he said, has to be taken as a very good and foremost step towards sustainable food security in Ethiopia and the east African region. The most important approach to promote agricultural productivity growth towards achieving sustainable food security in the country is giving special attention the role of investment, both in fiscal and human capital, in maintaining and increasing agricultural production and productivity.
He said, "Ensuring food for all, today and in generations to come, is one of the greatest challenges facing Ethiopia, the African continent and even the world community at large. Food security is the ability of people to meet their required level of food consumption at all times; it is considered by many to be a basic human right. However, numerous people lead life in poverty as food-deficit developing countries cannot meet such basic needs."
The rapidly growing economies enjoy abundant, affordable food supplies, while poor, slow-growing countries suffer from food scarcity and malnutrition. This means that not only is shortage but also imbalance in distribution is a food security problem. This trend has to be well bridged via drawing important lessons from one another, he added.
As to Alemayehu, another aspect of food security is sustainability. Food production continues to keep up with demand in generations to come and the prosperity of the current generation at the expense of the future. Here, as over-exploitation has resulted in natural resources being depleted and the environment being damaged and the greater intensity of use of land and water resources as well as chemicals has created problems such as soil erosion, water pollution, pest resistance, etc, the government needs to attach due emphasis to all these challenges to confidently ensure food security via expanding the agriculture sector and backing the industry, manufacturing and investment.
As to Alemayehu, when and how food security can be achieved depends on a number of economic, social and political factors, at the national, regional, continental and even at international levels. Socio-economic factors with potentially significant effects on future developments in food situations like population and income growth, demographic changes and urbanization on the demand side, as well as technological change and productivity growth on the supply side, need to be made congenial as much as possible.
Therefore, he added future agricultural production and productivity growth depend on, among others, a combination of agricultural, investment, environmental, trade manufacturing and macro-economic policies at a larger scale.
Although food security issues are multi-faceted, the focus has to embark on food availability and production in Ethiopia, East Africa, Africa and other parts of the world as a first step towards addressing such trying issues. Particular attention has to be paid to the role of investment and agricultural productivity as these sectors are of paramount importance in meeting the challenge of sustainable food security.
It is well recognized that when evaluating the performance of a production unit or the agricultural sector, it is common to use production, productivity or efficiency, actual output relative to the potential output or best practices, he opined.
He further stated that agricultural output and productivity vary greatly with the stage of economic development, resource endowments, government policy and agronomic-ecological conditions.
If adoption of new technology requires additional investments, lack of access to credit and additional inputs may prevent or slow down technology adoption. Here, all impediments to technology adoption, which means careful planning and provision of necessary infrastructure, are expected to be well promoted as they are essential to capture the full benefits of new technology, as to Alemayehu.
Human capital refers to knowledge, experience and skills possessed by people involved in the production process. It is influenced directly by education, training and extension. Its importance lies in the fact that it has a significant impact on the adoption and the utilization of technology, which in turn, affect the allocation of resources and productivity thereby ensuring food security and production surety. This ability is becoming ever more important in an increasingly real economic growth, by which food security can be guaranteed.
He said, "The importance of policy reform is increasingly viewed as fundamental for agricultural productivity gains, especially for countries like Ethiopia, where government intervention in agriculture has been strong. Removing market distortions and allowing market signals to be transmitted to producers is the main objective of structural adjustments."
Concerns over food security are driven by the need to feed an increasing population and to protect the environment. One means of addressing these concerns is to increase the food supply locally by improving agricultural productivity. Although productivity varies across commodities and localities according to stage of economic development, government policy and agronomic-ecological conditions, long-term growth in agricultural productivity depends primarily on technological change, improved input use efficiency and conserving the resource base. All of which, in turn, depend crucially upon investments in agricultural research, extension, and human capital ultimately contributing to the effort geared towards ensuring food security.
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Due attention attached by the government is also of significantly useful in providing the farming community in particular and those who are actively engage in agricultural investment. Not only are these bold moves significantly useful in augmenting production and productivity and promoting economic growth but they are also of instrumental in coming up with viable means towards ensuring food security, he underscored.
The role of government is to promote investment on agriculture, human capital and infrastructure, manufacturing, private investment thereby reinvigorating production, productivity and other related avenues to confidently ensure food security coupled with more open and doable policies towards stable and sustainable economy.
Alemayehu further stated that more importantly, the lands acquired by investors which tend to be among the best ones, with good soil quality, high production potential, irrigation and proximity to infrastructure and markets should be made much more active and lucrative in a bid to ensure food security.
In sum, the net effect on food security will also depend on the additional income generated by devising many more projects, its sustainability and how this income is distributed in the local economy has to be well scrutinized, too. To this effect, he said lack of good governance, absence of rule of law, shortage of transparency and other factors contributing to low level of production and productivity have to be well addressed.
