STATEMENT ON MARKETS AND INFLUENCE ON AGRICULTURE

DELIVERED BY HER EXCELLENCY TUMUSIIME RHODA PEACE,
COMMISSIONER FOR RURAL ECONOMY AND AGRICULTURE
AT THE AFRICAN UNION COMMISSION

ON THE OCCASION OF THE TENTH ANNIVERSARY OF THE AFRICAN AGRICULTURAL TECHNOLOGY FOUNDATION (AATF)

8 NOVEMBER, 2013, NAIROBI, KENYA

Honourable Guest of Honour representing the Host, Government of the Republic of Kenya

Professor Idah Sithole-Niang, Chair of the Board of the African Agriculture Technology Foundation

Dr. Denis Kyetere, Executive Director of the African Agriculture Technology Foundation

Dr. Jimmy Smith, Director General of the International Livestock Research Institute

Professor Gordon Conway, Chair of the Montpellier Panel

Ms. Jane Karuku, President of the Alliance for a Green Revoltion in Africa

Mr. Philip Kiriro, Chairman of the East African Farmers’ Federation

Fellow Panelists

Distinguished Participants, Ladies and Gentlemen

C o u r t e s i e s

I am delighted to be here and I wish to convey the African Union Commission’s warm greetings, congratulations and best wishes to the African Agricultural Technology Foundation (AATF) on your Tenth Anniversary of existence and operation at the service of Mother Africa in the framework of the Comprehensive Africa Agriculture Development Programme (CAADP) whose 10th Anniversary also coincides with yours. We deeply appreciate the stewardship by the leadership of AATF and the dedication and expertise of your staff to fulfill the mandate for which AATF was set up: identifying, developing, and delivering appropriate agricultural technologies especially to small holder farmers. We noted with gratification the 10 projects introduced and successfully managed by AATF in 10 AU Member States in the last 10 years.

M o n p e l i e r P a n e l

Before I turn to the topic that I was requested to address, Markets and influence on Agriculture, I would like to first commend Prof. Gordon Conway for the keynote address on Innovations for Sustainable Intensification. I found your address invaluably enriching and energising. Indeed, it is the farmer we are targeting and we cannot intensify unless inputs go to the farmer. Hence, the need for policy actions and measures to enable inputs reach the farmer. This is because the input and output markets are characterized by a number of challenges. The farmer is not going to continue to use modern technology unless the marketing system is got correct. We need marketing infrastructure. Because the farmer is risk averse, he will not produce if there is no market and so he will not go to buy seeds. I would also like to thank you again for having recently led the delegation of the Montpelier Panel to the African Union Commission in Addis Ababa where we held in-depth discussions. We are grateful indeed for the great work you are doing and we look forward to our continued collaboration through the Forum for Agricultural Research in Africa (FARA) and related Pan African regional and sub-regional institutions.

P a r t n e r s h i p

The African Union Commission considers agriculture as being key to unlocking Africa’s development potential. However, this vital sector still faces multi-dimensional challenges which call for creativity and collective thinking on the part of policy makers, scientists, farmers and entrepreneurs with respect to innovations in marketing agricultural inputs and outputs.

Markets do, indeed, influence agriculture and this is true for input markets and output markets within the marketing system that is quite broad.

I n p u t M a r k e t s

If markets for inputs like fertilisers, seeds and other implements are organized and are offering affordable prices, they provide impetus for producers to produce sustainably. If, on the other hand, input markets are not well organized and they end up, for example, getting dominated by profit motive, they turn into a disservice to the agricultural sector with discouraging prices and/or counterfeit inputs. Hence, the virtues of liberalization notwithstanding, policies to regulate input markets are key much as they should be applied without obstructing initiative.

O u t p u t M a r k e t s

Also, with respect to output markets, a guaranteed market can catalyse agricultural production. Farmers respond positively to positive output market signals but farmers are also risk averse and so, if the output markets are negative, the farmers will lower or stop production.

On the positive side, high prices incentivize farmers to produce more and reap high profits from increased sales. On the contrary, low prices discourage agricultural production. As you know, in some parts of the world, in order to keep farmers in production, compensation is provided in case market prices fall. In other instances, governments buy off the surplus agricultural production in order to maintain the farmers’ interest in production. However, the compensation and buy off, and other forms of insurance and stabilization, are expensive endeavours and only developed countries manage to sustain them despite criticisms of their distorting effect on global trade. Many countries in the developing world including those in Africa find these measures unaffordable and this leaves farmers at the mercy of distorted markets and middle-agents. The end result is to discourage production.

I n t e r d e p e n d e n c e

Input and output markets are interdependent because once farmers are discouraged by output markets, even their technology uptake as well as acquisition and application of other inputs, goes down. Yet when the output markets send positive signals, farmers of necessity increase their search and application of inputs including technology.

M a r k e t I n g I n f r a s t r u c t u r e

Also market price fluctuations do impact adversely on developing countries’ agricultural production and can also result in waste of agricultural produce especially the perishable goods. It is only in countries where there are systems of preservation and agro-processing that overproduction may not pose such a serious problem because there will be cold storage or there will be various forms of processing so that what is produced is not wasted. This, therefore, calls for investment in the entire agricultural value chain and not only in production but also in transportation, cold storage and especially agro-processing let alone insurance. Where this has been done effectively, the issue of price fluctuation has not had grace consequences.

R o l e o f A U C

The African Union Commission continues to support AU Member States at national, regional and even global levels to ensure that markets are made to support the agricultural sector. As you know, CAADP Pillar II on Market Access and Rural Infrastructure and CAADP Pillar IV on Agricultural Research, Technology Dissemination and Adoption both intend to address the issues of agricultural innovations uptake to influence positively input and output markets through National and Regional Agricultural Investment Plans. At continental level, the AUC promotes regional integration in collaboration with Regional Economic Communities as building blocks. We are convinced that when tariff and non-tariff barriers are lowered or removed, it promotes marketing including for agricultural products and further motivates agricultural production. At the international level, the AUC uses partnerships with various regional entities to secure markets for Africa’s products most of which are agriculture-based. The AUC also supports negotiations at the World Trade Organisation to favour agriculture-friendly markets. We have also been working with other partner agencies within the framework of the G20 on viable approaches for mitigating the impacts agricultural commodity price fluctuations and the G8 on bridging the gaps along the value chain which impact negatively on small-scale farmers. These have been some of the factors responsible for farmers’ low adoption of modern technologies. Addressing these challenges will increase technology uptake and lead to increased productivity on the path to prosperity.

C o n c l u s i o n

I have heard your call. As you are aware, next Year which has been declared by the AU leaders as the Yeaf for Agriculture and Food Security. We are going to have a series of ativities to ensure that agriculture is re-engineered by political leaders in recognition of the fact that agriculture is the backbone of our economies and the top employer of our citizens. We would like to see the gap bridged between scientists and politicians to support this drive and also between scientists and the media to ensure wide advocacy and public awareness on agricultural technological innovations and increase their uptake.

Having said that, I would like to reiterate that the African Agriculture Technology Foundation deserves to be commended for its interventions in support especially of small-scale farmers to improve their yields and also to cater for post – harvest processes. I was impressed by the high-content presentations this morning by AATF staff. The African Union Commission is, therefore, pleased to be partnering with AATF on the basis of the MoU signed last year in furtherance of cooperation to support African farmers modernize agriculture. I wish AATF continued steady progress in pursuit of its mandate for the benefit of African farmers and citizens.

I thank you for your attention.