Market Access and Capacity Strengthening for Nigerian Farmers

Small hold farmers in Nigeria will benefit from a US$74.7 million loan from IFAD.

IFAD has partnered with the Federal Republic of Nigeria to establish a Value Chain Development Programme. The loan agreement, signed into place by Ngozi Okonjo-Iweala, Coordinating Minister of the Economy and Minister of Finance, Nigeria, and Kanayo F. Nwanze, President, IFAD, will improve food security and farmer incomes by supporting small hold farmers who produce cassava and rice in the states of Anambra, Benue, Ebonyi, Niger, Ogun, and Taraba; it is estimated that over 200,000 poor rural households will benefit directly.

Building rural infrastructure and strengthening the capacity of farmer organizations will be the main pathways of development for the IFAD programme as they aid the Federal Republic of Nigeria in its efforts to reduce rice imports, boost cassava production, and bring the rural population above the poverty line.

More information on the Nigeria Value Chain Development Programme can be found on the IFAD website.

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Improving Market Access and Commercialization: Assessment of Scenarios with Policy Analysis Matrix

On July 25th at 9:00 am (EST), Shahidur Rashid, senior research fellow, Markets Trade and Institutions Division, IFPRI, delivered a livestreamed seminar on “Market Access and Commercialization.”

A copy of the PowerPoint presentation has been made available on this site and you can view find the abstract below.

The development and application of a Policy Analysis Matrix (PAM) was proposed under the IFAD-IFPRI research partnership in order to better understand the policy constraints in Northern Mozambique, where IFAD is supporting the Government in the implementation of a project called Rural Markets Promotion Programme (PROMER). Three key tasks of the study were to: (i) assess the comparative advantage of the agricultural sector in Northern Mozambique,  (ii) identify the interventions and policy changes that could influence the region’s comparative advantage and associated poverty reduction implications, and (iii) validate the PAM simulations with actual field data in collaboration with national partners as part of capacity building efforts. The International Food Policy Research Institute (IFPRI) and the University of Illinois have collaborated to construct the PAM and carry out some policy simulations, using secondary data.

In general, the results indicate that there are potential interventions in both the maize and cotton sub-sectors that can promote commercialization, alleviate poverty, and accelerate economic growth. The analysis confirms that Northern Mozambique’s exports of maize and cotton are consistent with the region’s comparative advantage and are not a product of policy distortions. However, the returns to farming are small—roughly US$100 per year for the typical farmer in Nampula—implying that there are potentials for improving households’ welfare through policies and investments to reduce transaction costs and enhance productivity. For selected crops, several policy scenarios are considered in order to draw implications about market access, poverty reduction, and overall growth in Northern Mozambique. This presentation will discuss the preliminary results and potential future work under the IFAD-IFPRI research partnership 

A.     The Activity Rationale

The development and application of a Policy Analysis Matrix (PAM) was proposed under the IFAD-IFPRI partnership in order to: (i) assess the comparative advantage of the agricultural sector in Northern Mozambique, (ii) identify the interventions and policy changes that could influence the region’s comparative advantage and associated poverty reduction implications, and (iii) validate the PAM simulations with actual field data in collaboration with national partners as part of capacity building efforts.  IFPRI researchers collaborated with a professor of applied economics from the University of Illinois to construct the PAM and carry out some policy simulations using secondary data on maize and cotton farmers. However, the research team could not accomplish one of the central tasks of the proposed study—validating the PAM with field data and training local partners—during the first phase due to the capacity constraints of the IFAD-IFPRI partners in the country. Clearly, this can be addressed in the second phase, but it is to be noted that the results of this presentation need to be interpreted with caution.

B.     Study Area and Data Sources

The geographic focus of the PAM analysis was the Rural Markets Promotion Programme (PROMER) area. Data for this analysis come from the Trabalho de Inquérito Agrícola (TIA, 2008), a national rural household survey which has been implemented by Mozambique’s Ministry of Agriculture in conjunction with USAID and the Michigan State University.  Data for Niassa and Nampula Provinces were extracted from TIA (2008) and compared with research from the Competitive Commercial Agriculture in Africa (CCAA) studies of the World Bank (Arlindo and Keyser, 2007) and other studies.  Post-farm budgets were developed based on data compiled from Arlindo and Keyser (2007), Corzine (2008), Olanda Bata et al (2005), Meews (2004), and Souza Cruz (2006).  Data from TIA (2008) were contextualized and validated against various reports listed in the draft report.

C.      The Results

The caveat for the lack of validation notwithstanding, the results indicate that there are potential interventions in both the maize and cotton sub-sectors that can promote commercialization, alleviate poverty, and accelerate economic growth. The analysis confirms that Northern Mozambique’s exports of maize and cotton are consistent with the region’s comparative advantage and are not a product of policy distortions.  Five key results are noted:

  1. The returns of MZM3100 per hectare of maize imply less than US$100 per year for the typical farmer in Nampula.  This means that investments in reducing transaction costs and enhancing productivity—something PROMER is focusing on—can improve households’ welfare.
  2. The costs of currency misalignment and trade policies are important for the PROMER region for two reasons: (i) an estimated 15% overvaluation of currency in 2008 contributed to divergences between the private and social values of tradable inputs, maize, and cotton, and (ii) trade and agricultural policies in Malawi may make the market outlet for the PROMER region unreliable.  Indeed, there is evidence to suggest that the prices in Blantyre were below those in Nampula due to Malawi’s cereal trade policies.
  3. Technology and reduced transactions costs need to go hand in hand in Northern Mozambique. This will help increase the returns to Emergent Commercial Farmers (ECF) compared to the traditional technology package.  The combination of higher yields from the ECF package and improved output prices will lead to a dramatic increase in revenues and profits.   These results support an intervention strategy that combines infrastructure investment with efforts to promote technology development and market coordination.
  4. Simulations in the PAM model can indicate the increase in profitability that would come from investments to lower the cost of accessing inputs and marketing outputs. Spatially disaggregated PAMs can then be used to indicate where input costs bind farmers the most and where change could have the largest impact. The models can also indicate where the reduced cost of marketing outputs offers the greatest impact on farmers’ returns and poverty.
  5. Integrating the PROMER region with Maputo: Given recent maize prices well over $300/MT, there appears to be the potential to market maize from Nampula into Maputo if appropriate infrastructural improvements and production technologies are adopted.

D.     The Way Forward

Because the data used in this PAM exercise were not validated in the field, these results are indicative and preliminary.  The exercise suggests the potential for an analytical approach—such as developing a spatially disaggregated PAM analysis within a value chain approach—that can triangulate the logic of the integrated market development approach of the PROMER programs, as well as transfer the methods and techniques to monitor and track the outcomes of policies/interventions. However, for the meaningful application of a PAM, the exercise needs to be validated with primary data on a regular basis, which in turn requires training relevant officials within GoM and its partners.  Without buy-ins to such a plan, conducting this type of study will have little value.

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Adaptation Options for sub-Saharan Africa in the Face of Climate Change

Authors Alvaro Calzadilla, Tingju Zhu, Katrin Rehdanz, Richard S.J. Tol, and Claudia Ringler tackle the obstacles and opportunities for climate change adaptation in their paper Economy wide impacts of climate change on agriculture – case study for adaptation strategies in sub-Saharan Africa.

Utilizing a combination of a partial equilibrium model (IMPACT) and a general equilibrium model (GTAP-W) to assess both changes in agricultural productivity and production, the researchers were able to understand the broad effects climate change has on water and food supplies, general human welfare, and its ultimate effect on global, national, and local economies.

After rigorous investigation of several scenarios through these applied models, and extensive research of simulations run by authors in the field of climate change, Calzadilla et al. determined that agricultural productivity investments provided the greatest potential for sub-Saharan Africa to increase rural incomes while also adapting to climate change.  Expansion of irrigation, while important, will take many more years to reach a similar number of people in the region given the low levels of initial investment in that sector.

For detailed charts on the results from their simulations and to read more about their proposed paths toward successful adaptation and agricultural growth in sub-Saharan Africa, click here.

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The Economics of Rural Infrastructure

In many countries of sub-Saharan Africa, there are large tracts of arable land with significant agricultural potential. Unfortunately, much of this land is located in remote areas that lack access to major markets, so this enormous agronomic potential remains untapped.

In Road connectivity, population, and crop production in Sub-Saharan Africa IFPRI researchers Paul Dorosh, Emily Schmidt, and Liangzhi You and World Bank researcher Hyoung Gun Wang investigate the potential for improved infrastructure in rural sub-Saharan Africa to remove this market constraint and lead to increased crop production.

Photo by IFPRI

Using geographic information system (GIS) data sets to determine the links between “population, agricultural production, and travel time to large cities (100,000 people or more)” Dorosh et al. found that less than 10 percent of agricultural production takes place in areas from which travel time to large markets exceeds 4 hours. Moreover, only 5% of the potential land in remote areas was being used for agricultural production as compared to 45% near large cities/markets. These findings suggest that “improving access to road infrastructure and large markets could facilitate a substantial increase in agricultural production.” Furthermore, this increase in agriculture could “have a significant impact on rural and national incomes.”

Seems like a simple equation, doesn’t it? Improved access to markets offers the potential to increase agricultural output and generate incomes that benefit the farmer and the nation as a whole. But simple solutions are rarely reliable when addressing complicated issues.

Yes, roads can mean market access. Yes, they could open channels for extension services to provide advanced training and inroads for new technologies. Yes, roads connect households to larger cities and the potential for new livelihoods. But who is going to pay for this rural infrastructure?

Ultimately roads cost money, and unfortunately, as the researchers found, “while reductions in travel time … could lead to large increases in output, the costs of the investments in rural roads are [so great] that gains in agriculture production alone are likely not sufficient to justify the major expenditures that would be required.”

So while research shows a correlation between production and proximity to markets, high transportation costs remain a major obstacle in granting market access to remote areas. Dorosh et. al also stipulate that improved roads “will not reduce transport and marketing costs in the short run,” and caution that other factors  including the structure of agricultural and transport service markets, investments in agricultural seed systems and extension, and availability of credit should also be taken into account.

In the end, while building rural infrastructure would increase market access for remote farmers and open up opportunities for new investments, it is not the proverbial silver bullet.

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Operationalizing Targets of the Government of Vietnam’s Policy Agenda for Agricultural Mitigation: Roadmap, Implementation, Institutions and Costs

Vietnam’s greenhouse gas (GHG) emissions are relatively low in the global context, but they are growing rapidly and will likely triple by 2030 unless significant mitigation options are undertaken.  With over 60 percent of the population in Vietnam active in the agricultural sector, there is significant mitigation potential through improved agricultural practices.   Emissions reductions could be a source of millions of dollars a year of income for farmers in the country, which could be used to adapt to the adverse consequences of climate change.

The workshop “Operationalizing Targets of the Government of Vietnam’s Policy Agenda for Agricultural Mitigation: Roadmap, Implementation, Institutions and Costs,” held today and organized by International Food Policy Research Institute (IFPRI)-International Fund for Agricultural Development Partnership Program, will address challenges in agricultural mitigation, potential mitigation options, government policy, and the way forward for implementing potential mitigation options in the country.

“There is significant potential for climate mitigation in Vietnam, but careful assessment regarding yield, production, and environmental aspects is needed,” said Claudia Ringler, IFPRI senior research fellow.

A recent study by IFPRI, the Centre for Agrarian Systems Research and Development, the Institute for Agricultural Environment and DNDC Application, Research and Training, assessed emissions from the production of key food crops in Vietnam and evaluated the potential of alternative mitigation options in agriculture.  The mitigation potential in Vietnam is largest with rice and in the rural areas that are home to most of the poor people in the country.  The study analyzed alternative management practices for paddy rice— the main staple crop harvested annually on approximately 7 million hectares—which was shown to be the key to pro-poor agricultural mitigation. Alternative wet and drying and dry seeding appear to achieve largest mitigation and economic benefits for rice and increased nutrient use efficiency is critical for increased profitability and mitigation of other food crops.

As Vietnam is a country based heavily in agriculture and with many of the poorest people living in rural areas, linking poor farmers to voluntary carbon markets could provide significant economic benefits from implementing activities that reduce GHG emissions.

“One of the challenges of carbon market entry for developing countries are the small size of farms and the lack of institutions that can organize these farmers and include them in carbon markets,” said Dao The Anh, Director of CASRAD. “In Vietnam, farm sizes are small, but rural organizations are very strong and can facilitate organizing farmers and developing projects.”

The Vietnam government has affirmed its commitment to reducing agricultural emissions while enhancing economic growth and reducing poverty by signing Decision 3119/QD-BNN-KHCH in December of 2011.  This confirms the country’s commitment to increase agricultural production by 20% and reduce emissions and poverty by 20% by 2020.

“IFAD is committed to supporting poverty reduction in Vietnam, which will require an increased focus on building capacity in the provinces and districts to help farmers adapt to and mitigate adverse impacts from climate change,” confirms Atsuko Toda, IFAD country manager, Vietnam.

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New Project Note: Crop Mitigation Potential for Key Food Crops in Vietnam

Vietnam remains a country heavily grounded in agriculture. In 2010, approximately 63% of the working population was active in agriculture. By 2020, the share is expected to still be 59%. The rural areas also harbor the majority of Vietnam’s poor people. At the same time, Vietnam has enjoyed very rapid growth across all major sectors, with overall GDP growth of 6-8% over the last decade. As a result, greenhouse gas (GHG) emissions per capita have increased exponentially. While Vietnam is responsible for a very small share of global greenhouse gas emissions, the country accounts for a significant share of GHG mitigation potential through improved agricultural practices as well as improvements in other sectors. Emissions reductions in agriculture could be a source of millions of dollars a year of income for farmers in the country, which could be used by farmers to adapt to the adverse consequences of climate change.

Read the latest IFAD-IFPRI Partnership Program climate change mitigation project note, National-level Crop Mitigation Potential for key Food Crops in Vietnam, here.

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Protecting Smallholder Farmers

Sustainable smallholder agriculture will be the focus of IFAD’s major annual event, the 2012 Governing Council (Feb. 22-23). The highlight of Sustainable smallholder agriculture: Feeding the world, protecting the planet will be a discussion on Feb. 23 with Bill Gates, co-chair of the Bill & Melinda Gates Foundation.  It will be webcast live at 10 a.m. CET.

The the Chief Executive Officer of the Food, Agriculture and Natural Resources Policy Analysis Network,  Dr. Lindiwe Majele Sibanda, will also speak at the event. She’ll discuss the fate of agriculture in the  context of the upcoming Rio+20 negotiations.

Two high-level panels will delve into issues affecting smallholder agriculture.  On Feb. 22, BBC’s Nik Gowing will moderate a panel about issues facing smallholder farmers in the face of climate change, volatile markets, and strained natural resources. The session, which will be webcast live at 9:45 a.m. CET, will examine the best means to ensure food security for smallholder farmers while protecting the environment. Speakers include Pamela K. Anderson, the Director General of the International Potato Center.

A second panel, on Feb. 23, will look at the concrete actions that policymakers must make to ensure that smallholder farmers grow food in a sustainable way. Panelists include the H.E. Akinwunmi Ayo Adesina, Nigerian minister of agriculture. It will be webcast live at 11 a.m. CET.

In addition to live webcasts, you can follow and interact with the event through the following social media channels.

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Controversies Over Climate-Smart Agriculture

Climate-smart agriculture is receiving more attention than ever now that agriculture is on the table at global climate talks (see previous blog post).

But critics from all over the climate change arena question climate-smart agriculture’s ability to be the three-point solution for food security, adaptation and mitigation its proponents claim it can be.

Bruce Campbell (Program Director, CCAFS) will explore some of the controversies surrounding climate-smart agriculture, adaptation and mitigation during the event “Which Way to Climate-Smart Agriculture?” on February 21 from 12:30pm – 1:30pm at IFPRI’s Washington, D.C. office.

To join us remotely simply click this link and join via Go-To-Meeting.

If you have a microphone, please be sure to mute it unless you are speaking.

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To Focus on Adaptation or Not to Focus on Adaptation?

That question could define the next decade of development in Mozambique.

Photo by Andrea Romero (IFPRI)

In their paper Everyday Realities of Climate Change Adaptation in Mozambique, Luis Artur and Dorothea Holhorst paint a disheartening picture of the current issues facing the vulnerable people of Mozambique.  A “lack of coherent strategy and leadership” due to the conflicting interests of development agencies and climate change programs has greatly diminished the government’s ability to respond effectively when natural disasters strike.

Artur and Holhorst believe adaptation measures could make great strides in protecting vulnerable Mozambicans but see actors at every level preventing progress. “Rather than displaying a unified concern to prepare the country for increasing disasters, national level actors . . . politicize adaptation and make it subject to bureaucratic competition,” explains Holhorst. Throughout the paper, readers see how this division among leaders fractures the entire relief system, resulting in uninformed interventions that mishandle already fragile floodplain communities.

But while the paper successfully draws attention to the inadequacy of current adaptation interventions and the damage done by disjointed leadership, it ultimately fails to recognize the importance of development initiatives for a fledgling country post civil war. On the surface, climate change adaptation solutions are exciting and almost irresistible, but focus on adaptation can take away from important development initiatives during a nation’s delicate developmental stages.

“Mozambique won’t see, or at least be able to detect, climate-change induced natural disasters for many years,” says Gerald Nelson (Senior Research Fellow, Environment and Production Technology, IFPRI). “Right now [Mozambique] needs to focus on recovering from the aftermath of the civil war. Spending time on climate change adaptation really just distracts from doing sustainable development.”

This begs the question: How developed does a nation need to be before it can focus on adaptation?

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Impact Evaluation Takes Center Stage for IFAD

This week IFAD has been seriously evaluating the organization’s ability to assess impact and maximize the effectiveness of development programs.

Click here to read more.

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