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Title: Statement of Alexander R. Love, Deputy Assistant Administrator for Africa Agency for International Development, before the Senate Foreign Relations Committee
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Title: Statement of Alexander R. Love, Deputy Assistant Administrator for Africa Agency for International Development, before the Senate Foreign Relations Committee
Physical Description: Book
Language: English
Creator: Love, Alexander R.
Publication Date: August 6, 1982
 Subjects
Subject: Africa   ( lcsh )
Farming   ( lcsh )
Agriculture   ( lcsh )
Farm life   ( lcsh )
Spatial Coverage: Africa
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Funding: Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.
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Bibliographic ID: UF00054661
Volume ID: VID00001
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/5 o(oy


STATEMENT OF


ALEXANDER R. LOVE


DEPUTY ASSISTANT ADMINISTRATOR FOR AFRICA


AGENCY FOR INTERNATIONAL DEVELOPMENT




BEFORE THE


SENATE FOREIGN RELATIONS COMMITTEE


SUBCOMMITTEE ON AFRICA




AUGUST 6, 1982


~_~B~t~_-esC--


'










It is a pleasure for me to appear before the subcommittees

today to discuss the problems and promise of the agricultural

sector in Africa, and some of the actions which we in the Agency

for International Development have taken and are planning for the

improvement of African agriculture, particularly food production,

which is the object of the majority of our efforts.



Agriculture in sub Saharan Africa is in crisis. It is the

only major region of the world where per capital food production

S is declining. Per capital food production in the 1960s remained

stagnant, and throughout the 1970s it has declined by about one

percent per annum. That trend has carried over into the 80s.

Not only has food output per capital declined, but output relative

to rural population has also declined, suggesting that labor

productivity has done likewise. The increases in food production

which have occurred have been largely associated with cultivation

of new, and presumably more marginal land; a process which cannot

continue indefinitely.



These conditions have been accompanied by burgeoning food

imports, financed both concessionally and commercially, and a

continued deterioration of nutritional standards throughout the

continent. To make matters worse, sub Saharan Africa's exports

and therefore its ability to meet shortages through imports, have

been declining at a rate -0.8 per cent per annum throughout the







-2-


70s. These events occurred despite the fact that thf ._- --vaiue

of Official Development Assistance (ODA) received by sub Sahara-n

African countries during the 70s nearly tripled, and the ratio of

ODA to Gross Domestic Product (GDP) nearly doubled. These data

understate the volume of development assistance because they

refer to net disbursements of medium and long term loans and

grants, but do not include technical assistance.



The evidence is conclusive that we must look to factors in

addition to improving agricultural production technology and

training efforts and examine the elements of the economic and

administrative context in which these events have been occurring.

We must also look beyond international economic conditions such

as high oil prices and slack demand for African exports. These

factors have contributed to the problem, but they did not cause

it. The World Bank lists three areas of domestic policy

inadequacies which have played a critical role in the development

of Africa's agricultural crisis. They are, 1) trade and

exchange policy which has over protected industry, held back

agriculture, and absorbed much administrative capacity; 2) too

little attention paid to administrative constraints in mobilizing

and managing resources for development; and 3) a consistent bias

against agriculture in price, tax and exchange rate policies. To

this must be added the failure of donors, all donors, to

adequately coordinate their efforts and focus the attention of

African governments and the donor community on the policies which

have contributed to the agricultural crisis in Africa.






-3-
Trade and Exchange Policy: All African countries hav-

and foreign exchange controls to a greater or lesser degree.

Half of the countries of sub Saharan Africa have artificialiv

controlled exchange rates and inconvertible currencies with the

attendant illegal market for their currency. All control the

licensing of imports as a means of allocating foreign exchange.



Currency inconvertability, and the overvalued exchange rates

which such inconvertability supports, is usually defended on an

social equity grounds. It is argued that by maintaining an

artificially high exchange rate and control of import licenses,

the use of foreign exchange can be channeled from consumption, in

particular luxury consumption, to socially desirable investment,

or to provide "necessities" at "low prices" which the poor can

afford.



Whatever the theoretical merits of these arguments may be,

in practice, overvalued exchange rates have proven

counterproductive to development, and provided disincentives and

distortion in the agricultural sector.



An artificially high exchange rate means that imports will

be favored and exports discouraged. The greater the

overvaluation, the greater the distortion of the economy and the

disincentive to produce and invest. Where countries with

malaligned exchange rates are food importers, those imports

depress food prices, encourage consumption and discourage local

production.










At the same time, because there is now an artificial

"shortage" of foreign exchange, imports are "rationed" through

the licensing process. While such a process could in theory

offset the disadvantages of the agricultural sector, in fact the

opposite has occurred. African governments have been strongly

biased against agriculture and in favor of state owned industrial

enterprises. The result has been a chronic and worsening

shortage of agricultural inputs, including machines, spare parts,

pesticides and seed. While it can be argued that the exchange

rate subsidizes agricultural inputs and thus at least partially

offsets depressed agricultural prices, in practice the net result

of overvalued exchange rates has been distinctly negative.



The same is true, only to a lesser extent, in those

countries with convertible currencies, but which ration import

licenses administratively. The agricultural sector has been

penalized in favor of the industrial sector.



Credit policy has likewise penalized agriculture. For

almost every country, interest rates are administratively set

below the rate of inflation and are therefore negative. This

discourages savings and capital formation and encourages

consumption and/or capital flight. The administrative allocation

of credit has heavily favored the financing of government

deficits and usually inefficient parastatal industries. Like







-5-

foreign exchange, even when credit is available, it is often

available at the wrong time in the agricultural cycle.


Trading Policy: Virtually all of the countries in Africa

rely on government parastatals to purchase agricultural products

at "official" prices. Of 39 countries studied by the World Bank,

only two relied upon the private sector for the importation of

agricultural inputs (Zimbabwe and Swaziland), 19 had mixed

government and private import regimes, and 18 were government

monopolies.



Official prices below market are mandated for same or all

exports in virtually all of the countries, and for food crops in

the vast majority of the countries. The capacity of governments

to effectively commandeer crops at nonmarket prices varies. In

some it is minimal, and the effect is similar to a producer tax

on those caught by the net. In others the effect is far greater.

All other things being equal, the greater the capacity of the

government to impose low prices, the greater the damage to the

agricultural sector.



Likewise, the farther official prices are out of line with

market prices, the greater is the incentive to corruption and for

sale of goods in the "parallel" market, or to smuggle them to a

neighboring country. This applies to both food and export crops.



The World Bank Report indicates the impact of unsound

agricultural pricing policies. "It is now widely agreed the







-6-


insufficient price incentives for agricultural producers are an

important factor behind the disappointing growth of African

agriculture. The importance of price policy comes out strongly

in project experience. A recent review of 27 agricultural

projects undertaken by the World Bank noted the almost overriding

importance of producer prices in affecting production outcome and

production levels, often cutting across the quality of technical

packages and extension services. Seven out of nine projects

implemented under favorable prices achieved or surpassed their

production objectives; 13 of the 18 under unfavorable prices

failed to do so. This idea is also borne out strongly in micro-

level studies, which indicate substantial farmer responsiveness

to price.



OTHER FACTORS: The lack of adequate infrastructure is a

pervasive problem. First, the lack of adequate road, market

places, storage facilities, transportation equipment and

processing units is a major disincentive to production in many

countries. Second, resources, both financial.and technical, are

too often not available to properly maintain those elements of

infrastructure that are in place now. In some countries such as

Ghana and Zaire, there is evidence that road and transportation

equipment have been allowed to fall into such disrepair that

farmers are reverting to subsistence agriculture because

production for market is no longer profitable or is some cases

possible.


While we normally think of developing countries as having an




-7-


abundance of labor, in Africa the absence of adequate ;p~wier at

key times in the growing cycle is a constraint on production ir

certain areas. This is largely the result of migration of males

to urban centers in search of work, leaving behind the aged and

the women and children. Adequate farm prices and policies could

do much to slow down this rural urban migration with all of the

problems it creates.



The effect of various modes of African land tenure on

incentives to invest in the land also requires far more careful

study.



The evidence speaks for itself. For seven of the fourteen

leading crops in Africa, yields per hectare declined in the

period 1977-79 versus 1969-71. Four of the seven crops where

yields increased were export crops; tobacco, sugar, groundnuts,

and tea. Of the three food crops which registered increases in

yields during this period, two, sorghum and pulses were still

only 93% and 90% respectively of the yield in the 1961-63 period.

Of the food crops, rice alone registered a yield per hectare

increase in both periods.



In only two of the fourteen leading crops did Africa

register yields per hectare greater than world wide yields and

those of other developing countries in the period 1977-79. These

were tea and sugar cane. African yields relative to world yields

per hectare in eleven of the crops were less in the period 1977-

79 than in 1961-63.



These relative declines are all the more striking in light






-8-


of the fact that African fertilizer consumption increased at a

compound annual rate of 23.1% per annum in the period 1962-66

through 1069-71 and at an annual rate of 9.7% per annum during

the period 1969-71 through 1977-78.



Clearly the return to the factors of production is

declining. It is also evident that the economic policies and

administrative practices of the governments in Africa play a key

role in the decline. It is equally evident that the donors must

reassess the effectiveness of their efforts in the light of these

bleak statistics.



It is worth emphasizing again what has been noted above; in

those instances where governments have relied upon price

incentives, African farmers in the traditional as well as the

commercial sectors have responded well. The recent dramatic

response of the traditional sector to price incentives in

Zimbabwe is only one case in point.



It has become clear to us in A.I.D., our colleagues at the

World Bank, and other donors that if very serious consequences in

agriculture and therefore in the economies of Africa are to be

avoided or mitigated, it is essential that African governments

promptly adopt economic and administrative policies which are

conducive to maximizing agricultural productivity, particularly

in the traditional sector which has so long been ignored. Donors






-9-


must actively encourage such change with both program a-.' -.ject

support. In the absence of such changes, it is difficult to be

optimistic about the success of technical agricultural programs

and projects.



The picture is not unrelievedly bleak. The recent study of

food problems in Africa performed by A.I.D. together with

U.S.D.A., and that of the World Bank have had a significant

impact upon African and donor governments alike. There is

evidence that some African governments are seriously studying

their agricultural problems and how they can solve them.



A.I.D. stands prepared to help. A.I.D.'s four areas of

emphasis, policy reform, private sector development, institution

building and agricultural development are designed to get to the

heart of Africa's agricultural problem. Because of the urgency

of the situation, it is essential that increased productivity be

the central objective of our efforts.



Besides the economic constraints noted above, there are also

major administrative and technical constraints that are retarding

agricultural growth. These constraints in turn reflect the lack

of institutions and infrastructures in Sub-Saharan Africa

required to support agricultural development. On the

institutional side, there is inadequate skilled manpower both at

the administrative and technical level. Some African countries

have only a handful of skilled agriculturalist and/or

administrators to support an entire agricultural sector. Most






-10-


African countries have not yet tapped the potential resources of

the private sector. Too much of African agriculture is managed

by the State. The problem is aggravated by the fact that the

public sector usually does not have the financial or managerial

resources to carry out this responsibility. Research, extension

and training are the critical areas of institutional needs of

most African countries.



Food and agricultural production are the centerpiece of the

Africa Bureau's assistance strategy. The Bureau's response to

the deteriorating food and agricultural situation is to focus on

the following program priorities:

1. Support for the creation of national policies and

programs which rely largely upon free market mechanisms to

give African farmers incentives to expand agricultural

output, especially food.

2. Building of self-sustaining African institutions that

provide appropriate technology, inputs and services at the

time and in the quantity necessary for increased production

and distribution of agricultural and food products, with

particular emphasis on expanding the role of the private

sector in these areas.

3. Support for institutional and human resources development

programs that provide the means for greater participation by

farmers in the development process, including policy

planning, to build popular support and acceptance of

policies, administrative procedures and programs necessary

for self- sustaining growth.


I -






-11i-


This strategy is directed at the basic causes of poor

performance of the agricultural sector. While some elements of

the strategy particularly in the policy area should result in

short term increases in agricultural production, a significant

portion of this strategy is of necessity of a long term nature.

It is appealing, as some quarters have suggested, to believe that

a massive influx of resources directed at "getting food growing

in Africa" would provide a quick and relatively easy solution to

Africa agricultural, and by proxy, economic problems.

Unfortunately, a more detailed examination of the African

agricultural situation would indicate that however appealing such

an idea may be it will not work. For this reason, A.I.D.

proposes to make a long term effort to assist in the

establishment of the necessary programs and structures to create

the appropriate policies, technology, institutions and

infrastructure that will form the basis of future sustained

agricultural growth.



At the same time that A.I.D. commits itself to stay the

course for this long term effort, the Agency is equally aware of

the need to address the more immediate needs created by the

economic crisis prevalent in so many African countries. African

governments, together with the international donor community,

including A.I.D., must find ways of breaking the vicious cycle

that typifies too much of African agriculture.



While this situation is difficult, it is not impossible.

Efforts now being made by A.I.D., and others of the international






-12-


donor community including the World Bank and the IMF, to work

more closely with African governments, offer hope that African

agriculture can begin to achieve its enormous potential.



To accomplish this goal, A.I.D., and particularly the Africa

Bureau, has substantially increased its efforts to promote donor

coordination of both programs and policies. This is a large

task. There are no less than 56 donors in Africa, each with its

own policies and perceptions of the problem.



Most of the efforts addressing immediate economic questions

now underway in Africa link the needs for economic and

administrative policy reforms with long term restructuring of the

economy. A.I.D. has been actively participating in several of

African countries' consultative groups. These consultative

groups provide a mechanism for joint examination of the overall

political and economic situation, including the agricultural

sector, among donors and a government. This examination can be

used as a basis for coordinated action to address the urgent

economic needs of the country concerned. A.I.D. is now working

the with five currently active consultative groups in Sub-Saharan

Africa.


Besides efforts in consultative groups, A.I.D. works

closely, formally and informally, with the IMF on extended fund

facilities arrangements and with the World Bank where it has made

or is making structural loans. In Uganda, an A.I.D. sponsored

study of coffee production and marketing was used by the IMF as






-13-


part of setting conditions for an extended facilities:

Liberia, A.I.D. is in the process of completing a joint

agricultural sector survey with the World Bank. This joint

effort will serve as a basis for policy reforms and determination

of investment needs as part of an economic'restructuring effort

by the IBRD in Liberia.



A.I.D. took the lead this year in its role as chairman ad

interim of the CDA (Cooperation for Development in Africa). CDA

is a coordinating mechanism consisting of the seven major OECD

donors in Africa; Germany, France, Britian, Belgium, Canada,

Italy and the United States. A.I.D. recently sponsored a

conference in Abidjan between CDA donors and African development

experts at which means for more effective coordination among

donors were discussed. The proceedings of that conference will

be a basis for the policy discussions at the CDA plenary

conference to be hosted by A.I.D. in Washington this Fall.



Substantial progress has already been made in two areas

where the U.S. has provided active leadership by using the CDA

mechanism to assure that the bilateral programs of the donors are

mutually consistent and reinforcing. A.I.D. is providing

leadership in agricultural research, and in forestry/fuelwoods.

We believe that the practical progress made by A.I.D. in the CDA

through focusing on individual sectors, country by country,

offers a promising mode for the expansion of donor coordination

in a non-confrontational manner which will be well received by

host governments.



A.I.D. is making a major effort on the CDA agricultural








research initiative. In a series of meetings of CDA technical

working groups, an initial plan of action has been agreed to.

Five major agro-climatic regions in Africa have been delineated

and responsibility among CDA member states for each region

determined.



In addition to the above, A.I.D. is continuing its support

of regional Sahel programs through the Club du Sahel/CILSS and

the Southern Africa Development Coordination Conference, SADACC,

in Southern Africa. An emerging initiative for regional programs

for A.I.D. is the development of "common themes" around which

coordination and networking of A.I.D. programs and projects in

agriculture can occur. This common theme approach promises to

provide greater and more broadly based results for A.I.D.'s

agricultural development efforts in Africa. Eight common themes

have been identified and prioritized. These are:

a. Farming System Approach to Applied Research

b. Commodity Research (sorghum, millet, maize, cossava,

cowpeas, phaseolus beans, peanuts)

c. Agricultural Sector Planning/Policy Analysis, including

landuse planning

d. Agro-business Development (constraint removal, market

services, management skills)

e. Water Management in arid and semi-arid areas

f. Pest Management (major food crop pests)

g. Agro-forestry

h. Livestock Development (major diseases, forage crops,

draft powered implements)







-15-


As noted elsewhere, a proper policy environment is the most

important issue in increasing agricultural development in most

African countries. An essential element of the long term answer

to Africa's problems is to provide governments with the capacity

for data collection, policy analysis and policy making. A.I.D.

is undertaking a major increase in project activity to develop

this ability. We are substantially expanding our efforts in this

regard. There are now on-going or planned policy/planning

projects in 16 of the 32 countries where A.I.D. is working in Sub-

Saharan Africa.



In Rwanda, for example, A.I.D. is financing a project to

carry out the first agricultural survey ever done in the country.

Additionally, A.I.D. is also providing the means to analyze and

use the data from this survey by Rwandan policy makers. This

project is being undertaken with the U.S. Bureau of Census. In

Kenya, A.I.D. has supported a policy analysis team from the

Harvard Institute of International Development to advise the

Kenyan government on policy questions. Sudan also has a project

in agricultural statistics and planning supported by A.I.D. Land

use and production related data are being collected and analyzed

through the assistance of a U.S. Department of Agriculture team

for use by the Sudanese government to better develop policy

related to land use and agricultural production.



Aside from project related activities, in the last year

A.I.D. has undertaken a number of special initiatives related to

the agricultural policy area. Six agricultural assessments were






-16-


undertaken to help A.I.D. missions and host governments to

develop assistance strategies and to examine effects of present

agricultural policy. Under the PL 480 program several policy

studies were undertaken. In Tanzania, for example, such a study

was used as a basis to begin a serious policy dialogue with the

Tanzania government.



A.I.D., working through the CILSS with France, is assisting

the Malian government to undertake a Food Sector Survey. The use

of Food Sector Surveys has been promoted by the World Food

Council as one way to get a comprehensive look at policies and

issues related to the overall food situation of a country. The

A.I.D. financed team was able to bring together key members of

the Ministries of Agriculture, Plan, Finance and Commerce to

focus not only on increasing agricultural production, but also on

how the agricultural sector can provide the food or the foreign

exchange to purchase food to supply the needs of the Malian

population.


Finally, in Liberia, A.I.D. and USDA are working with the

Liberian government to provide a high level agricultural task

force under the aegis of the initiative proposed by President

Reagan at Cancun, Mexico last year. This task force will provide

advice to the government of Liberia on policy and other question

related to agricultural development and expansion of the private

sector in agriculture.



In the area of institutional development in Sub-Saharan

Africa, A.I.D. has put a major emphasis on agricultural research.






-17-

There is relatively little viable technology to impr -

productivity of African crops, particularly in the traditional

smallholder sector. An effective research capacity is essential

to solving Africa's agricultural problems.



An earlier project in Kenya from 1963 to 1977 helped the

Kenyans develop new maize varieties. The resulting "Kitale

Maize" introduced in 1966 resulted in use of improved varieties

of seed by 75% of Kenya's small farmers and virtually all of the

commercial farmers. These varieties increased yields for small

farmers by three to four fold. Large commercial farmers

experienced yield increases of 25% to 30%. Use of these seeds

spread throughout East Afria and changed the approach to maize

breeding.



The regional research effort which A.I.D. has undertaken

through CDA is complemented by another research related regional

project which A.I.D. has just begun in Eastern and Southern

Africa. It is a Farming System Project working through CIMMYT

(the international research organization that produced the

"miracle wheats" in Mexico). This project is to provide funding

for a series of workshops, seminars and other forms of

information exchange among the various research programs in

Eastern and Southern Africa to encourage and support joint

efforts among the countries and donors to address regional

problems.



Besides regional activities, A.I.D. is funding major

research projects is nine African countries. In Malawi, for

example, a team from the University of Florida is working on a






-18-


major research effort directed to smallholder production.

Washington State University is developing a crop/livestock baed

farming system research program in Lesotho. A second phase of

the Tanzania research effort is being launched to focus on field

testing and farmer adoptionof new varieties now developed.

Regionalization of the research organization in Senegal is being

undertaken thought multi-donor support. A.I.D. is funding a team

from Michigan State University to cooperate in developing an

institutional structure to provide farm household information on

research results and priorities.


Finally, institutions must build on a pool of qualified

personnel. In recognition of this fact, A.I.D. is providing

funding for participant training in most of our projects.

Besides this, A.I.D. has begun an important new project to create

a land grant type of agricultural university in the Cameroon.

This is the first important center of higher learning in

agriculture which A.I.D. has supported in Sub-Saharan Africa in

many years. Graduates of this university will provide the core

technical and administrative personnel for the agricultural

research and extension for both the private and public sector

management requirements in the Cameroon, and to a lesser extent

other African countries. Experience from India would indicate

that this investment should have high return for Africa's

agricultural sector and economy as a whole.



Internally, we are also working toward the establishment of

more effective means for the coordination of the various elements






-19-


of the U.S. government through closer consultations .: .D.,

State, Treasury and the U.S. governors at the IMF and the World

Bank, to assure that the various elements of the U.S. government

are mutually supportive in their policies and programs.


In these coordinating efforts as well as in our bilateral

programs, A.I.D. will make a maximum effort to support economic

and administrative reforms which will facilitate the expansion of

agricultural output. Particular attention will be given to

support of government divestiture of parastatals, particularly

the trading parastatals which have had such deleterious effects

on agriculture. We believe that the private sector has a key

role to play in building viable agricultural sectors in Africa.

Special emphasis is being placed upon promoting, using and

supporting the private sector wherever possible in all of our

projects and programs.



We have also taken steps to assure that all of our Country

Development Strategy Statements (CDSS), Annual Budget

Submissions, and all project papers carefully review the policy

context of the host country and the implications which that has

for our strategies and programs. There is particular emphasis on

the role of the private sector, not only because it is more

efficient and productive than the public sector, but also because

it frees up the scarce administrative talents of governments to

perform the tasks appropriate to government.






-20-


Emphasis is being placed upon "policy dialogue". Obviously

that will take a different form from country to country. But in

view of the critical nature of the policy problem, we believe

that it is crucial that our missions'pursue the task of exerting

constructive policy influence with our African friends whenever

possible.



This is a tall order, and it is important for us to keep our

limitations in mind. We are one of the major donors in Africa,

but our bilateral ODA accounts for only 7% of total ODA.

Offsetting that limitation is the leadership role which the U.S.

has historically played and which is still welcome in most of

Africa. But in the final analysis, we must recognize that

Africans themselves must make the politically difficult

fundamental changes which are necessary for A.I.D.'s efforts to

succeed.



We believe that African receptivity to our approach is

growing, as is the willingness of various donors to cooperate

with one another. We believe that the current priorities and

policy emphasis of A.I.D. are sound and relevant to the pressing

problems of the African continent, and that together in

cooperation with other donors and African governments, they offer

hope of turning Africa's agricultural sector around and placing

it on the road to modernization and prosperity.



We must recognize however, that there are no quick fixes to

Africa's food crisis. The policy and institutional reforms






-21-



required -- the development of human and physical infrastructure

-- the development of new technologies all will take a long time.

We must be prepared to stay the course if we expect the food

problem in Africa to be significantly improved by the end of this

century.


I




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