Farmers in India recently staged protests against the government’s proposed agricultural reforms, which seek to reduce unsustainable state subsidies and introduce liberalisation in the sector. As in many countries in Africa, the agriculture sector in India is dominated by smallholdings, with the same chronic weaknesses of poor productivity and a need for modernisation.
Like governments all over the world, India is seeking ways to reduce public expenditure in the face of the soaring costs of the Covid-19 pandemic.
Alarm bells
The current crisis in India should ring alarm bells in African countries, where the sector has many similarities. It is the largest employer across the continent, with two-thirds of the population working in the sector, according to a 2019 report from the Oxford Business Group.
The structural problem is that these small-scale, family-run farms – estimated to account for 90% of the continent’s agricultural activity – operate with low productivity; the costs are high while returns remain stubbornly low. Around 75% of farmers in sub-Saharan Africa still work only with hand tools.
Cushioned by subsidies
Because of these inherent inefficiencies, governments across the region have over the decades been forced to intervene, boosting farmers’ incomes through subsidies to cushion them from the high costs of production.
The structural problem is that these small-scale, family-run farms – estimated to account for 90% of the continent’s agricultural activity – operate with low productivity
With current pressures on public finances, governments are likely to find this state of affairs unsustainable, which could lead them, like India, to look at liberalisation as the sustainable way forward for the sector’s future. Inevitably, this will mean that the livelihoods of many farmers already trapped in poverty will be left exposed.
Achilles’ heel
Liberalisation is undoubtedly coming closer. Under the terms of the African Continental Free Trade Area agreement, which came into effect in January, countries will have to eliminate unfavourable production advantages – subsidies, for example – so as to open up fair competition among farmers.
With many of these economies still dominated by agriculture, this will be an Achilles’ heel for many governments. I foresee the rise of nationalistic movements among farmers against the free trade area.
It is often said that Africa has the world’s largest area of uncultivated land and, as a result, could easily increase its agricultural production and revolutionise its economies. Interestingly, however, a paper in the journal Food Policy suggests that this statement is misleading, as much of the uncultivated land included is in areas of conflict, or under forest cover, or part of a conservation area, and therefore not practically or easily accessible.
The reality is that only 10% of uncultivated land is available for increased production. And even this can only be exploited with increased infrastructure investment to make it viable. In the short term, Africa’s potential to increase its agricultural output depends on raising the productivity of available land under cultivation; liberal reforms are inevitable.
