• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Introduction
 Scope and objectives
 Drought in Africa
 Policy issues in Africa
 Trends in African agricultural...
 The current policy debate
 Profile of a drought-prone agricultural...
 Agricultural policy as a constraint...
 Conclusions
 Reference














Title: Government policy as a constraint to agricultural development in drought stricken Africa
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Permanent Link: http://ufdc.ufl.edu/UF00080665/00001
 Material Information
Title: Government policy as a constraint to agricultural development in drought stricken Africa the Botswana case
Physical Description: 38 leaves : ; 28 cm.
Language: English
Creator: Isaacson, Bruce
Publication Date: 1986
Copyright Date: 1986
 Subjects
Subject: Agricultural productivity -- Government policy -- Botswana   ( lcsh )
Agriculture -- Economic aspects -- Botswana   ( lcsh )
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
Spatial Coverage: Botswana
 Notes
Bibliography: Includes bibliographic references (leaves 37-38).
Statement of Responsibility: by Bruce Isaacson.
General Note: Typescript.
General Note: "A paper submitted as partial requirement for a certificate in tropical agriculture from the Center for Tropical Agriculture, International Programs, Institute of Food and Agricultural Sciences, University of Florida, June 19, 1986."
 Record Information
Bibliographic ID: UF00080665
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 154318544

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page
    Introduction
        Page 1
        Page 2
    Scope and objectives
        Page 3
    Drought in Africa
        Page 4
        Page 5
    Policy issues in Africa
        Page 6
    Trends in African agricultural policy
        Page 7
        Page 8
        Page 9
    The current policy debate
        Page 10
        Page 11
        Page 12
    Profile of a drought-prone agricultural sector: Botswana
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
    Agricultural policy as a constraint in Botswana
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
    Conclusions
        Page 34
        Page 35
        Page 36
    Reference
        Page 37
        Page 38
Full Text













'. .* -in Drought 'Stricken Africa:
S -::... ...* .. ,The Botswana Case :'...
















Sauce Isaacson















paper sub tt ed as .parta-'. requirement for a: Cet ict n
ic ,S ri ulture on the Center for Tropical ": .
lona. "L Progra.ms : institute .of. Food and Ag icutu'al
S"ie''. e.s, Unirsity of Florida.'.. June' 19,. 1986.
: ', . :' : ": " " :". "" :. "" , ". i.:" .:


















"Government Policy as a Constraint to Agricultural Development
in Drought Stricken Africa:
The Botswana Case"
















By

Bruce Isaacson


A paper submitted as partial requirement for a Certificate in
Tropical Agriculture from the Center for Tropical Agriculture,
International Programs, Institute of Food and Agricultural
Sciences, University of Florida. June 19, 1986.









INTRODUCTION


"Farmers the world over talk primarily about two topics,

the weather and prices" (Timmer, Falcon, and Pearson, 1983,

p.85). This paper joins in the conversation. The physical

area of concern is drought stricken Africa. Weather

induced variations in staple crop production have been

profound. Acting as a major shock to a number of African

country's food supply, drought induced food shortages seem

to be becoming increasingly prevalent. While the

occurrence of droughts has a long historical base, the

ability of growing populations to cope, appears to be

declining. In recent years land has been given little

chance to regenerate, turning desertification into a

threatening reality.

Effort among scientists to increase the resistance of

agricultural production against the impact of drought has

been substantial. Techniques aimed at improving

climatically marginal food production have included new and

more efficient irrigation methods, genetic improvement

towards drought tolerance, improved agronomic techniques,

and the development of information systems including

computer based climatic and agronomic systems (Slater,

1981, p.99). More recently social scientists have looked

at the problem from a different viewpoint. Traditional

methods of living and coping with recurring drought are









being studied and analyzed in the context of today's

constraints.

Indirect government policies and strategies provide

another, perhaps under-utilized, potential technique to

minimize the impact of future droughts. Policies could be

used to stabilize and increase food production on a

national level through the establishment of grain reserves

and bilateral trade. This paper focuses on pricing

policy--another method which has often been used by

governments to influence both the composition and level of

agricultural output. Through direct pricing policy the

prices of agricultural commodities or inputs may be set.

Relative agricultural prices may also be influenced

indirectly by appropriate policy on export taxes and

exchange rates, or through subsidized credit and/or

fertilizer. However government policy is often shaped and

determined with interests other than the agricultural

producer in mind. A common goal is the provision of cheap

food for the urban and non-agricultural sectors.

The premise of this study is that there are

'distortions' in the economies of drought stricken African

nations which have seriously retarded the development of

arable agriculture. It is possible that this situation can

be improved through manipulation of pricing mechanisms. In

their 1982 paper "Research on Agriculture in Sub-Saharan

Africa: A Critical Survey", Carl Eicher and Doyle Baker









summize that pricing policy may be at the root of the food

and agriculture crises in Africa today. The negative

impacts accruing from distorted prices are well documented

(p.58). While getting the prices right will surely not

assure an end to the economic and food crises of Africa, it

is a step in the right direction.



SCOPE



Analysis of economic distortions, agricultural

production constraints, and government policies can not be

easily generalized across countries. The particular case

of Botswana will be considered in this paper to explore the

major economic characteristics and policy issues of a

drought-prone nation located in semi-arid tropical Africa.

However many of the problems and the particular economic

and agricultural conditions are common to other African

countries which face harsh and regularly occurring

droughts. It is hoped that the issues and policy

directions discussed in this paper will have a broader

application.



OBJECTIVES



This study explores the nature and intentions of current

African agricultural policy. Characteristics of the supply









and demand of staple foods in Africa are discussed. This

is followed by a summary of the current policy debate in

Africa. The analysis is then narrowed to drought prone

areas in general, using the specific case of Botswana.

Specific implications of current policies are discussed,

along with the need to reorient pricing policies. Finally

the role of such policy is considered in the context of

African agriculture and what is needed for such policy

reforms to have the desired outcome.



DROUGHT IN AFRICA



At the 1978 Symposium on Drought in Botswana, Steven

Sandford defines drought as a "...rainfall induced shortage

of some economic good...brought about by inadequate or

badly timed rainfall". He continues "...future incidence.-

..of drought depends not only on rainfall but also on

trends or fluctuations in requirements (demand) and on the

factors other than weather which influence supply" (p.34).

Using this definition the impact of drought becomes a

function of the supply and demand of the economic good in

question--in this case staple food crops. Alternatively

the U.S. Weather Bureau has defined drought as a "period of

dry weather sufficient in length and severity to cause at

least partial crop failure", while the British definition

describes absolute drought as a "period of at least fifteen








consecutive days without 0.01 inches of rain on any one

day", (Cooke, 1978, p.7). The common factor in any

definition is the availability, or perhaps more

appropriately the lack of availability, of water. Cooke

concludes that a suitable definition of drought for

Botswana, which works well for other semi-tropical African

countries is "a lack of rainfall severe enough, of long

enough duration, and of wide enough extent through-out a

country to deleteriously affect plant growth, and water

supplies for stock use,'for domestic use, and for urban,

industrial and mining purposes" (1978, pp.7-8).

In this context it becomes clear that drought in Africa

is a widespread and frequent occurrence. While the

patterns of climate will not likely change much by the turn

of the century, the physical environment in semi-arid

regions will probably change dramatically. With growing

population pressures and the spread of western technology,

fragile semi-arid lands have been highly stressed with

little chance for regeneration. The result is a declining

productivity and subsequent declines in food supplies and

in rural incomes. Large groups of rural people are

becoming increasingly unable to grow their own food, and

unable to purchase it. Governments have attempted to

sidestep wide-spread famines by importing and/or accepting

food aid from the international community. The need for

these frequent short-term relief efforts underlines the








need for a long-term strategy to effectively cope with

these harsh environments.



POLICY ISSUES IN AFRICA



Analysis of food production and consumption in Africa

must focus on several key factors. These factors tend to

characterize important policy issues unique to Africa. One

major issue which must be addressed by policy makers is the

high rate of population growth which continues throughout

most of Africa. Coupled with rising per capital incomes,

particularly in urban areas, the result has been a steady

increase in the demand for basic foods throughout the

continent. Agricultural production on the other hand has

failed to keep pace with this growing demand. Evidence

suggests that production levels may actually be declining

both in absolute terms and in average yields. The result

of this rising demand and decreasing supply of domestically

produced foodgrains are deficits of unprecedented levels.

Food imports to Africa have grown by about 7% per year

(Delgado and Mellor, 1984). This has not been enough to

meet the growing requirements. The inevitable results may

be measured in terms of malnutrition, hunger, and death.

The problem is even more acute in the drought-prone

countries and regions of Africa. As population levels

rise, the low productivity of these fragile lands drops









further as more demands are placed on these already

overburden areas. With limited off-farm employment and

low incomes the ability of rural families to feed

themselves in the face of drought is greatly

hindered. Drought as a major shock to a nation's food

supply has resulted in food shortages reaching crises

proportions.

However climate alone can not be blamed for the dramatic

disequilibrium between supply and demand. A number of

changes in African agriculture will surely be required to

cope with these problems. While this study focuses on

pricing policies as a means of increasing incentives to

production, in most instances the impact of such policies

will be greatly constrained unless accompanied by a reform

in the overall agricultural structure as well as other

agricultural policies such as exchange rates and trade

policies.



TRENDS IN AFRICAN AGRICULTURAL POLICY



Over the past few decades, the emergence of independent

African nations has been closely followed by the growing

gap between food demand and supply. Robert Bates in his

study Markets and States in Tropical Africa (1981) contends

that agricultural policies have largely been shaped

according to the short-term political implications of such









policy on the careers of the decision-makers. Political

instability, civil strife, and the toppling of a number of

African governments have forced important economic

decisions through-out Africa to become politically

motivated. It is not clear whether inappropriate

agricultural policy is more a cause or a result of such

strife. As Bates (1981) describes it, the resources at the

disposal of governments are generally reallocated from the

politically unimportant rural, agricultural sector to the

politically important urban, industrial sector. Bold steps

must be taken by governments to reorient policy for the

long-term benefit of the country as a whole. Realistically

it is likely that such changes can only occur at the

expense, (at least in the short-term), of the politically

powerful and organized minority groups. Kevin Cleaver

(1985) of the World Bank suggests that this factor will

greatly slow the rate of policy reform in most of Africa.

He believes that only as the agricultural sector is

developed, larger and more organized producers will be

able to exert the political pressure required for reform.

As economic conditions and incomes and have deteriorated

in much of rural Africa, incentives for urban migration

have been high. This is further encouraged by the growth

in urban services relative to those in rural areas.

Greater rural employment opportunities and higher relative

incomes are widely viewed as major elements required to









reverse the dilemma of African agriculture. Those in the

rural sector have recognized these needs and have acted

rationally by pursuing the potential for greater returns to

their labor in urban areas. Delgado and Mellor (1984)

report an average urbanization rate of 6.5% per year for

Sub-Saharan Africa. As more people move out of subsistence

agriculture, into the more politically visible and

concentrated urban sector, dependence upon the cash economy

and formal sector for purchases of food in the marketplace

has resulted in political pressure for cheap food

policies--at the expense of those who have remained in the

rural areas. In this manner current agricultural policy,

which has traditionally responded to these urban pressures,

may be viewed as a result of the deteriorating conditions

in the agricultural and rural sectors.

This becomes a viscous circle as low producer prices

provide little incentive to improve productivity. Relative

declines in total food production and low average yields

continue as current policies lure labor away from

agriculture. Despite well documented levels of un- and

under-employment in rural Africa, many experts contend that

labor shortages are already the limiting factor in

agricultural production (Eicher and Baker, 1982). While

labor bottlenecks certainly occur in peak production

periods, the under-utilization of rural labor throughout

most of the year suggests other factors may play a large









role in limiting production gains. These may include the

utilization of inappropriate methods and technologies, and

the overall unsupportive structure of the agricultural

sector. Current policies are causing substantial

distortions in rural economies. The rural population has

been and remains aware of this, and have acted accordingly

by moving their activities towards the more favored sectors

of the economy. The resulting decline in food production

and supply may in this fashion be viewed as a result of

government policy. If this is the case, the argument for

reorienting agricultural policy is strong.



THE CURRENT POLICY DEBATE



Kevin Cleaver, in his 1985 World Bank report on The

Impact of Price and Exchange Rate Policies on Agriculture

in Sub-Saharan Africa describes a general policy package

which he has "distilled from the literature" (p25). The

highlights of this package are summarized below as it

epitomizes current thought on policy reform in Africa.

Cleaver implies that African countries would be best

served in a free market setting with minimum government

participation. In the absence of either a public or

private marketing monopoly or oligopoly, producer prices of

staple foods should be left more or less free. In less

competitive situations prices should closely reflect long-









term world price levels. Prices should be set a level

which stimulates production, savings, and investment in

agriculture. Participation of private traders should be

encouraged. Prices of export crops should be stabilized to

reflect long-term averages of world prices.

Cleaver (1985) suggests generating more revenue from

income taxes over import and, particularly, export duties.

Exchange rates should be carefully managed to maintain

purchasing power parity between local currency and that of

the major trading partner. A floating exchange rate may be

more appropriate for some countries. Input subsidies

should be used only to introduce new inputs. Food

subsidies to consumers should be replaced with limited

direct aid to the truly destitute in urban areas.

Christopher Delgado and John Mellor, Coordinator of

African Research and Director, respectively, of the

International Food Policy Research Institute (IFPRI)

suggest an alternative emphasis for African policy. They

agree that price incentives must exist but argue that

unless accompanied by structural changes they would expect

a highly inelastic supply response of aggregate crop

production. Indeed they document their hypothesis by

citing the work of Marion Bond (1983). Using empirical

evidence from nine African countries Bond estimates the

average long-run aggregate supply elasticity of basic foods

in Africa at 0.16. Delgado and Mellor (1984) discount









these results as being either statistically insignificant,

misspecified, or inappropriate to today's typical African

country. They argue that the price elasticity is even

lower than Bond's estimates. They contend that a major

reason for this unresponsiveness is the inadequacies of

rural infrastructures and current systems of agricultural

input distribution.

Other studies on agricultural supply response to changes

in prices in Africa have been scant. Askari and Cummings

(1977), in their review of past analyses which venture

estimates of price elasticities of supply, report few such

African studies. Virtually all of these have been for

export crops which have in general received more attention

in the past than subsistence crops. Aggregate estimates

reported by Askari and Cummings (1977), and by Peterson,

(1981) have been considerably higher than Bond's estimate

(1983), as they indicate the long-term price elasticity for

aggregate crop production may be in the vicinity of 1.5.

If this is the case an overall rise in the price level of

food crops may indeed provide sustained growth in

agriculture. Isaacson (1986) disaggregates staple food

crops and suggests different crops will respond differently

to changes in price. He estimates short-run price

elasticities of individual food crops as high as 5.25 for

some crops in drought-prone regions. If such short-run

response is possible this could provide the needed impetus









to get agriculture moving. Continued long-term growth will

no doubt depend on the support small farmers receive which

would allow them to increase production. This requires

that structural changes in agriculture precede, or proceed

with, reform of agricultural policy.



PROFILE OF A DROUGHT-PRONE AGRICULTURAL SECTOR: BOTSWANA



To continue with a specific analysis of agriculture

policy in a drought-prone country requires an understanding

of the major environmental and economic characteristics. A

brief overview of these features for Botswana are included

below. A more in depth analysis may be found in Isaacson's

study Agricultural Responsiveness in Drought-Prone Africa:

The Botswana Case (1986).

Located on the southern tropic (Figure 1) Botswana is a

land-locked semi-arid country about the size of France.

Inadequate and irregular rainfall and a high evapo-

transpiration rate limit the area under production to an

estimated one percent of total land area. With a

population of just over one million, about 80% are involved

in agriculture.

The map in Figure 2 shows current land use patterns. In

the north is the Okavango Delta covering up to 16,000

square kilometers. The eastern strip receives an average

of 500 mm of rain per year and is the country's major










FIG 1








FIG 2









agricultural region. Eighty percent of the population and

most of the country's services and infrastructures are

located in this area. The southern and western part of the

country make up 84% of the total land area. Here the sands

of the Kalahari, often extending up to 120 meters in depth,

are a major constraint to development.

Politically, Botswana became independent in 1966.

British colonial interests were minimal. Trade and

missionary routes from South Africa to Rhodesia established

an early tradition towards a market economy. At the time

of independence Botswana was grouped into the United

Nation's classification of 'least developed countries' with

a per capital income of US$80. The economy was rural based

with the only industry of any substance being the abattoir

in the southern city of Lobatse.

Today the situation has changed dramatically as Botswana

is now the world's leader in diamond production. Figure 3

shows how the economy has gone from being 41% dependent on

agriculture in 1968 to 5.8% in 1984. Mining's direct share

of gross domestic product on the other hand has increased

from a mere two percent in 1968 to over 34% in 1984. Much

of the growth in other sectors has been a direct spin-off

of mining activity. In addition to diamonds, other

minerals currently mined include coal, nickel and copper.

Reserves of these and other valuable minerals are believed

to be substantial in the vast Kalahari. Constraints to









FIG 3









exploration and production include the over-burden of sand,

the lack of roads and railroads, power, and water. World

prices will ultimately determine the degree to which

Botswana's mineral potential is tapped.

Livestock production, which is considered more drought

tolerant than arable agriculture, has evolved as the major

agricultural activity. While the relative importance of

livestock in the nation's economy has dropped dramatically,

in an absolute sense it remains very important. Most of

today's rural population is in some way involved in the

livestock sector. However government policy on land

tenure, marketing structures, and services have favored a

few large cattle ranchers who have contributed sub-

stantially to this sector.

Despite the rapid rise in GDP, as shown in Figure 4, the

government of Botswana has declared that in rural areas

income distribution is among the most uneven in the world

(Botswana, 1976). They report that about 45% of the rural

population, or almost one-third of the country's total

population have incomes which lie far below the established

rural poverty line. Unemployment in these areas is

estimated as high as 45% (Muellor, 1985), with virtually no

income earning opportunities available outside of

agriculture. The tradition of labor migrations to the

mines, factories, and farms of South Africa began early in

Botswana and continues today. Most rural households are








fig 4









heavily dependent on remittances from earnings of wage

laborers of at least some family members. Opportunities in

South Africa have been declining which has caused pressure

in Botswana's cities as migrant laborers look elsewhere for

employment.

Agricultural production systems are of two basic types

in Botswana. In 1982 traditional farms numbered 80,000,

commercial farms 360. Most traditional farms produce both

crops and livestock. The major crops include sorghum,

maize, millet, and beans and pulses. In 1980 small farms

produced more than 38,000 metric tons of these crops, over

94% of the national yield for that year. Of this quantity

nearly 90% was sorghum and maize alone.

Mahoney (1977) provides a description of a typical

agricultural production system in Botswana. The average

farm size is less than two hectares. Generally the people

live in small villages. The fields they cultivate are

called the 'lands' and are usually a number of kilometers

from the village. Depending on the distance and on labor

abundance, certain family members may spend the entire

cropping season on the lands, to return to the village only

after harvest. Other family members will herd the cattle

to various watering sources according to the time of year.

In particularly dry years cattle may be herded great

distances in search of water supplies. The movement of

cattle is a key element in the production system.









Households are commonly comprised of three generations.

Agricultural tasks are divided strictly according to gender

and age. Within a community there is a strong

inter-household exchange. If a household is short a

particular input, they can usually rely on other households

to help out. The migration of men out of rural areas has

placed a particular burden on the role of women in

agricultural production.

The agricultural cycle, (Figure 5), usually begins in

July with land clearing and fencing prepared by men. Help

with this may be hired from the local labor supply or be

mutually exchanged. The first rains hopefully fall

sometime in November. From October to December are the

critical stages of plowing and planting, generally done by

men. Bottlenecks may occur at this time as most households

lack some or all of the equipment or labor necessary for

timely plowing. By May the crops are ripening and the work

of women increases as they weed, scare birds, build

threshing floors and storage areas. The women may move

from farm to farm to help each other or make other

arrangements for additional help. The growing season ends

in July with the women harvesting the crop.

Crop production is characterized by great variation in

area planted, area harvested, and total output. Yields are

very low with large fluctuations according to the amount of

rainfall. The histogram in Figure 6 shows the great










FIG 5












FIG 6









variation over time for sorghum and maize production. This

is highly correlated with seasonal rainfall levels.

Returns to arable agriculture are less than one-half of

those from livestock production. These low returns,

despite high unemployment, have provided substantial

disincentives to production. Instead they have encouraged

the pattern of out-migration from rural areas. This has

resulted in a great under-utilization of productive

resources in rural areas.

The 1981/82 crop season serves well to illustrate the

dilemma of farmers in Botswana. The national aggregate

foodgrain yield was estimated at approximately 15,000

metric tons, only 30% of the 1981 harvest. A survey of

1,355 farmers in 1982 showed that only 85% planted crops in

1981. Of these almost half had no harvest at all. Of the

available land in the Central, Francistown, and Northern

regions, only 50% was planted and 6.1% was harvested. The

following 1981/82 crop season looked about the same as the

previous year. By 1983/84 the drought worsened and total

production of major foodgrains dropped below 7000 metric

tons, less than 5% of the annual domestic demand which is

estimated at approximately 150,000 metric tons per year.

Harvested area in 1984 was less than 30% of planted area,

with average yield per hectare down nearly 50% from the

previous drought year to an average of 118 kg. The figures

in Table 1 illustrate the severe impacts of drought








tanle 1









on the nation's food supply. It is seen that within the

current structure of agricultural production and policies,

domestic producers contribute very little to the nation's

total food supply. Even in years of relatively high

rainfall, such as 1980/81, only about one-third of total

demand is met by domestic production.



AGRICULTURAL POLICY AS A CONSTRAINT IN BOTSWANA



In 1972 the Botswana Agricultural Marketing Board (BAMB)

was established as a parastatal body to provide a

guaranteed market for surplus crop production throughout

the country. Although considerable production is marketed

outside this formal marketing structure, particularly in

periods of low rainfall when total output is low, the price

structure, even in these informal markets is increasingly

influenced by the prices set by BAMB (Jones, 1981). Prior

to the 1979/80 growing season BAMB producer pricing policy

was to automatically set prices a few percentage points

above the South African marketing board's prices. Because

of the fear of widespread smuggling of foodgrains from

South Africa, and Botswana's legal commitment to the South

African Customs Union Agreement, BAMB, even today, is not

able to act totally independent of the South African

market. The unofficial policy of BAMB up until this period

had been to set producer prices at a minimum level which









would still allow producers to compete with South African

imports without incurring losses (U.S. Agency for

International Development, 1981, Annex I-F).

Since 1979/80 official policy has been to base

non-foodgrain prices on realized prices, and to base

foodgrain prices on the landed costs of imports from South

Africa. In 1979 the BAMB increased producer prices by

about 20 percent over the South African release prices.

This however served only to maintain the margin of natural

protection due to transportation costs from South Africa to

Botswana. Prior to the 1980 planting season the BAMB began

a new policy of announcing producer prices prior to the

planting season. This would allow producers to make

optimal production decisions with a minimum of price

uncertainty (Purcell, 1982). Despite these new changes in

pricing policies, a U.S. Agency for International

Development report on Botswana's pricing policy for

agriculture concluded that "although BAMB is providing a

useful service as a purchaser of surplus foodgrain

production in certain easily accessible parts of the

country, its producer price is not high enough to induce

significant increases in production" (1981, Annex I-F,

p. 1).

The Government of Botswana has stated its intentions to

develop arable agriculture to work towards the attainment

of three objectives: increased employment in the rural









areas, increased cereal production, and a decrease in the

growing gap between urban and rural incomes. In his

report on arable agriculture in Botswana, David Jones

(1981) of the Ford Foundation, reports that households seem

to prefer non-employment to arable agriculture. Many

households prefer to depend on remittances and transfers

from the non-agricultural sectors than sell unutilized

labor time to the arable agriculture sector. Jones

confirms Mueller's estimate (1985) that potential unemploy-

ment may be as high as 45 percent in Botswana. Despite

this staggering figure, producers commonly complain of a

shortage of labor for crop production. One is forced to

the logical conclusion that returns to arable farming are

indeed very low. The rate of pay which farmers are able or

willing to pay the unutilized labor falls below the level

at which the unemployed will work.

As seen in Table 1 domestic production of foodgrains

seldom exceeds 100,000 tonnes annually, while requirements

are estimated in the vicinity of 200,000 tonnes (Holm,

1985). We know that excess labor exists, excess land

exists, and excess demand exists. With this substantial

excess supply of resources, and the potential for

productive employment, one must question why returns to

arable agriculture are so poor. Jones documents the low

rates of return (1981, pp. 31-33) and suggests several

answers to these questions, apart from low productivity.









Despite unemployed resources and the high domestic

demand for food crops, we see large quantities of staple

foods being imported from South Africa instead of being

produced locally. This is a direct result of the Pula

being overvalued from the perspective of crop producers.

Normally we would expect pressure on the balance of

payments, and a drop in the wage rate, resulting from

widespread unemployment, to lead to a devaluation of the

local currency. However this has not been the case in

Botswana. We have seen the healthy state of Botswana's

economy. The recent years of a strong world market for

diamonds, and the artificially high price for frozen beef

received from the EEC has maintained Botswana's positive

balance of payments as seen in Table 2. The Bank of

Botswana has regularly revalued the Pula with the intended

goal "to spread the benefits of Botswana's prosperity by

making imports cheaper" (Jones, 1981, p. 33)

While little is known about the exact nature of wage

labor in traditional agriculture, it is clear that rural

wage rates are well below those in the formal wage labor

sector. Just as the exchange rate has not been forced down

to make crop production more competitive, neither has the

wage rate in the face of widespread unemployment.

Botswana's largest economically productive activity,

mining, is very capital intense requiring a small, highly

skilled labor force. Wages have remained high to attract









table 2









better labor and to avoid any work stoppages stemming from

labor unrest. Similarly the livestock industry has modern,

capital intense processing facilities requiring a small,

highly trained labor force. While other industries and

services in Botswana are minimal, Jones reports that it "is

a fair approximation to say that there is no commercial

modern-sector enterprise in Botswana which is not able to

support high real wage costs" (1981, p.35). The largest

wage employer is the government which has felt little

pressure to keep wages low. Rising government revenues

have steadily translated into higher wages for employees.

Migrant workers to South Africa have also enjoyed

relatively high wages for many years. While the use of ex-

patriate labor has allowed South Africa to maintain a low

domestic wage rate with minimal threats from labor

organizations, this has begun to change. Since the early

1970's South African industries have increased their

capital-labor ratio thus requiring fewer, higher skilled

workers. Both external and internal pressures have further

encouraged South Africa to increase employment for their

own black population. Opportunities for migrant workers

are rapidly declining throughout Botswana.

Those not involved in the formal wage earning sector

still lack the incentive to increase arable agriculture.

This is largely due to the complex nature of remittances

and transfers which has evolved over time. At the local









level the extended network of kinship and the broad concept

of sharing have long been society's major defense against

recurring drought (Behnke and Kervin, 1983). Inter-

household transfers within rural areas remains great even

today. Most all families have at least one wage earning

member, either in South Africa or at home in the formal

sector. Remittances account for a substantial cash flow

into the rural areas. Finally, food transfers,

particularly in years of drought, are substantial, adding

to the cushion in rural Botswana. Feeding programs, such

as that sponsored by the World Food Programme, have

provided daily food for up to one-third of the country's

population in times of drought. In non-drought years food

is provided routinely several times a week to school

children, pregnant and lactating women, and to

T.B. patients. Such transfers have prompted African

experts such as John Holm to herald Botswana as "An African

Success" in coping with drought (1985).

The result of the above mechanisms has been to limit

widespread poverty in rural Botswana. Jones (1981) reports

of studies that show that virtually all rural households

depend on some level of transfers. For those households

with incomes in the lowest 10 percent, transfers usually

account for the largest single source of disposable income,

an average of 20 percent. Households in the 15-50th

percentiles receive an average of 14 percent of their









incomes from remittances, while the 60th-95th percentiles

receive approximately four percent of their total

disposable income in this manner. This system has allowed

a large number of rural residents to reject agriculture as

a source of income with low and risky returns.

Rural people are likely reaching a higher level of

individual utility from not working than if they accepted

the hard work of arable agriculture under current pricing

policies. However in the interest of national welfare, the

loss of potential National Product must also be

considered. A different set of prices would not only

increase national production but could leave this rural

population with a sense that they are indeed better off.

Such government intervention could also stem the

urban-rural flow and the ensuing problems of urbanization

which Botswana is increasingly facing. Botswana's level of

dependency for its basic needs is frequently termed

'dangerous'. Furthermore, those factors allowing

Botswana's economy to operate as it now does all have

uncertain futures. A sudden drop in diamond prices would

have immediate and severe repercussions on the nation's

economy. The EEC supported livestock industry could tumble

at any time with another outbreak of hoof-and-mouth disease

or with continued internal pressure within the Community.

Opportunities for migrant workers, long an important source

of rural incomes is already declining.









The above arguments clearly state the need, for the sake

of national interests, for more resources to flow into

arable agriculture. Jones (1981) argues this need even at

the expense, in terms of welfare loss, of other sectors.

However he contends that countervailing losses of income or

welfare elsewhere in the economy are not a requisite to

increasing incomes from arable agriculture. He sites an

example of the actual costs of such a revision in pricing

policy. With the current low level of production, a 15

percent subsidy in a good year, such as 1978 when 30,000

tonnes of foodgrains were marketed, would bear a cost of

about P540,000. If in five years marketed production quad-

rupled to 120,000 tonnes, optimistic to say the least, the

subsidy would rise to P2.16 million, (at current prices).

Jones concludes that the P2.7 million cost over the five

year period is "a laughably small bill for obtaining extra

rural incomes of at least P13.6 million (first round only),

plus a sound start for rural economic transformation"

(1981, p.41).



CONCLUSIONS



Those countries located in the semi-arid tropical zones

of Africa must accept the reality of their environments

along with the social pressures of development. They must

accept the occurrence of drought as a part of their system










and develop their agriculture accordingly. At hand is the

issue of basic foods for survival. The stakes are indeed

very high.

Appropriate directions in government policy may be

viewed as a prerequisite to sustained growth in

agricultural productivity. Incentives, via higher prices

for example, must be developed in a manner that will

persist in the long-run. Once these incentives are in

place the structure of the agricultural sector must support

the new growth by providing the small farmers with inputs,

technology, and the necessary technical assistance.

Policy must reflect trends in agriculture through-out

the international community. Government intervention in

the marketplace, through parastatal organizations, must not

lag in efficiency. Economic distortions in rural areas,

whether through inappropriate prices, distorted exchange

rates, or misplaced subsidies, must be eliminated. This is

likely to occur only at the short-run expense of a minority

of the population specifically the urban, wage labor

sector. In the long-run, proper allocation of resources

for a nation as a whole is essential to reverse the crises

of African agriculture. While each country will require a

different combination of policy and infrastructural

development, they must all cope with their harsh

environments in the context of today's constraints. One

step in this direction will surely include improving the









36
terms of trade, via higher agricultural prices and

subsequent higher incomes, for the large rural population

of semi-arid Africa.











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