By Derek Byerlee. Presented at the ASTI-FARA conference Agricultural R&D: Investing in Africa's Future: Analyzing Trends, Challenges, and Opportunities - Accra, Ghana on December 5-7, 2011. http://www.asti.cgiar.org/2011conf

1. An Underutilized Opportunity to Boost Commercial
Agriculture
Derek Byerlee
ASTI/FARA Conference
Accra, Dec 6 th , 2011

2.  Africa has a great growth opportunity in commercial
agriculture
 Example of Ghanaian cocoa
 But R&D critical to ensure competitiveness
 Producer/industry funding of R&D by collective action
(e.g., a levy) can improve R&D by
1) boosting R&D funding,
2) improving the effectiveness of R&D
 Evidence that it works well in many settings and Africa
has tapped only a small part of its potential
 Case studies

3. Imports vs Exports Africa vs Competitors
25 Shares of World Agricultural Exports
9.00
20 8.00 Brazil
Imports 7.00 Thailand
$US2000 billionis
Exports SS Africa
15 6.00
5.00
10 4.00
3.00
5 2.00
1.00
0 0.00
2006
1985
1980
2006
1961
1973
2000
1988
1974
1972
1986
2000
2008
1982
2003
1964
1979
1988
2002
2004
1967
1970
1976
1991
1982
1990
1996
1984
1994
1997
1998
1970
1976
1992
1978
1994

4. Share of world exports Share of world imports
40% 20%
18%
% of golbal agricultural imports
16%
30%
14%
12%
20% 10%
1991-93 8% 1991-93
2006-08 6% 2006-08
10%
4%
2%
0% 0%

5. Ratio of cash crop yields Yield performance
Africa vs Asia/LA relates to R&D
1.5
 Cotton
 Variety releases fell 60%
1
1995-05 relative to
Ratio, 1991-93 previous decade
Ratio 2006-08
 Bt cotton delayed 6-8
0.5 yrs vs competitors
 Oil palm
 R&D shifted to SE Asia
0
where exports > than all
agric exports from SSA

6. Market prospects Comparative advantages
 Strong commodity  Land and water
market outlook resources
 Trillion dollar domestic  Could double land area
market by 2030  Locational advantage
 Regional trade opport.  Private investor interest
 New industries
 Biofuels
 Cassava for China?

7. Conceptual Practical
 Collective action to  Cost effective to collect
overcome scale and non-  Export products
excludability
 Some domestic
 Levy based on output
 Industry governance products
 Issues  Instability of funding
 Heterogeneity of industry  Organized
 Likely underfunding (use
matching grants)
producers/industry
 Free riders requires  Institutional designs
collective political action

8. Potential Actual
 Assume min size  Nine countries
industry of $100 M and  Coffee, cocoa, sugar, tea
1% levy and tobacco
 All exports levied plus  Total in 2008 of $PPP 90
half of commercial M
crops for domestic mkts  Ghana, SA, C’Iv, Kenya
 Potential llevy of $PPP  Range of institutional
500 M in 2008 designs
 Equivalent to one third  Mostly nonprofit crop
of total R&D in 2008 institute

10. Cenicafe (Coffee, 1938) Cenipalma (Oil palm, 1991)

11. Coffee Oil Palm
 Colombia 2nd place  Colombia 4th place
 Strong industry assoc  New industry and larger
with over 0.5 M members producers
(1.5 ha average)  High research intensity--
 Oldest institute from 1938 value based levy (1.5%)
 State of art and successful  Successful but faces
 But low share to R&D and challenges of
low research intensity of pest, science and costs
0.47%
 R&D only 14% of levy

12.  Kenya tea as African R&D budget Prod value
success story 300 120
 1st or 2nd
exporter, smallholder 250 100
based
R&D budget (M Shillings)
 Small institute of 13 FTEs
Tea value (B Shillings)
200 80
 Historically very effective
in serving smallholders 150 60
 Volume based levy
100 40
 Low research intensity of
0.1%
50 20
 + some company R&D
 Moving to value based levy 0 0
and improved industry
governance
Source: Nzuma, 2011

13.  The little engine that could--highly competitive
 0.4% value levy on nearly all products matched by
government (by law)
 Well funded and staffed relative to neighbors
 Real R&D spending doubled since established
 Strong industry governance
 Four board members—two gov, two industry
 Commodity and regional committees
 Evidence of impacts
 Overall B/C at least 16:1 but patchy

14.  Africa’s most successful agric exporter
 Federation of 14 producer associations established in
2003
 R&D contracted mostly to CNRA
 Only 18% to R&D, rest to extension etc
 Underfunding of R&D especially for major crops like
cocoa (research intensity 0.2%)
 Volume based levies set by industry
 Strong industry governance especially where POs are
strong

15.  Africa has huge potential in commercial agriculture
 Needs to invest more in R&D to regain competitiveness
 R&D on commercial crops underfunded although important
exceptions (e.g., cocoa Ghana)
 Collective action by industry can increase funding but not
necessarily so
 Matching funds would provide incentive to raise funds
 Strong industry governance improves effectiveness of
research and accountability to industry
 However, R&D often shortchanged in allocation
 Importance of building capacity of POs although well run
parastatals may be a second best (CRIG)
 FARA, MFIs and others should advocate & facilitate
industry R&D funding (including regional)

16. Country Product R&D expend. Industry Specific crop Public R&D
valueb R&D intensitya
intensityc
$PPP M $PPP M % %
Ghana Cocoa 33.25 757 4.4 0.9
Cote Multi 42.6 7,847 na 0.5?
d’Ivoire?
South Sugar 18.59 673 2.8 2.0
Africa
Kenya Tea 3.10 369 0.8 1.3
Kenya Coffee 5.78 45 12.8 1.3
Malawi/ Tea 2.42 65 3.7 0.7g
Zimb
Mauritius Sugar 9.89 149 6.6 3.9
Tanzania Coffee 3.43 46 7.4 0.5
Tanzania Tobacco 0.06 81 0.1 0.5
Tanzania Tea 4.10 37 11.1 0.5
Uganda Coffee 4.75 228 2.1 1.2
Source: ASTI files

17.  Funding only or Funding + R&D implementation?
 Single commodity vs multi-commodity?
 Levy funding vs block grants thru parastatal
organizations?
 National or regional?