a May, 2007 Poverty, Food Security and Agricultural Trends in Southern Africa Pius Chilonda, Charles Machethe and Isaac Minde ReSAKSS Working Paper No.1 i Regional Strategic Analysis and Knowledge Support System for Southern Africa (ReSAKSS-SA) ReSAKSS Working Paper No. 1 May, 2007 Poverty, Food Security and Agricultural Trends in Southern Africa Pius Chilonda, Charles Machethe and Isaac Minde ii About ReSAKSS The Regional Strategic Analysis and Knowledge Support System (ReSAKSS) is an Africa-wide network that provides analysis, data, and tools to promote evidence-based decision making, improve awareness of the role of agriculture for development in Africa, fill knowledge gaps, promote dialogue and facilitate the benchmarking and review processes associated with the AU/NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP) and other regional agricultural development initiatives in Africa. About the Working Paper series The goal of the ReSAKSS Working Paper series is to provide timely access to preliminary research and data analysis results that relate directly to strengthening ongoing discussions and critical commentaries on the future direction of African agriculture and rural development. The series undergoes a standard peer review process involving at least one reviewer from within the ReSAKSS network of partners and at least one external reviewer. It is expected that most of the working papers will eventually be published in some other form and that their content may be revised further. For more information, contact: Subregional Coordinator Regional Strategic Analysis and Knowledge Support System, Southern Africa (ReSAKSS-SA) Private Bag X813 Silverton 0127 Pretoria, South Africa Telephone: +27 (0)12 845 9100 Facsimile: +27 (0)12 845 9110 E-mail: resakss-sa@cgiar.org Website: www.sa.resakss.org iii The authors Pius Chilonda is the Regional SAKSS Coordinator for southern Africa, based in Pretoria, South Africa. Charles Machethe is the Professor of Agricultural Economics at the University of Pretoria, South Africa and Isaac Minde is a Principal Scientist (Economics), International Crop Research Institute for semi-Arid Tropics (ICRISAT), Bulawayo, Zimbabwe. Acknowledgements The authors gratefully acknowledge the valuable comments and suggestions made by Dr. Joachim Otte, Professor Thom Jayne and Ms. Phumzile Mdladla on earlier drafts of this document. Chilonda, P.; Machethe, C. and I. Minde. 2007. Poverty, food security and agricultural trends in Southern Africa. ReSAKSS Working Paper 1. International Crops Research Institute for the Semiarid Tropics (ICRISAT), International Food policy Research Institute (IFPRI) and International Water Management Institute (IWMI). /Southern Africa/agricultural trends/ poverty/food security/trends/investments/public agricultural spending/ Except where otherwise noted, this work is licensed under a Creative Commons Attribution 3.0 License. iv v CONTENTS TABLE OF CONTENTS ................................................................................................................. v LIST OF TABLES ........................................................................................................................... vi LIST OF FIGURES ........................................................................................................................ vi LIST OF BOX ................................................................................................................................ vii LIST OF APPENDIX TABLES ..................................................................................................... vii ABBREVIATIONS AND ACRONYMS ...................................................................................... viii ABSTRACT ..................................................................................................................................... ix OVERVIEW ..................................................................................................................................... 1 THE ECONOMIC CONTEXT ....................................................................................................... 3 HUMAN DEMOGRAPHICS AND POVERTY ............................................................................ 5 POPULATION: RURAL AND URBAN POVERTY .............................................................. 5 INEQUALITY: THE GINI COEFFICIENT ............................................................................ 7 HEALTH AND EDUCATION LEVELS: LIFE EXPECTANCY, LITERACY RATES, INFANT MORTALITY AND CHILD MALNUTRITION .................. 8 AGRICULTURE’S ROLE IN THE SADC REGION .................................................................. 9 SHARE OF AGRICULTURE IN OVERALL GDP ................................................................ 9 CONTRIBUTION OF AGRICULTURE TO EMPLOYMENT ............................................ 10 CONTRIBUTION OF AGRICULTURE TO FOOD SECURITY ......................................... 11 TRENDS IN AGRICULTURAL OUTPUT AND PRODUCTIVITY ........................................ 13 CROP PRODUCTION ........................................................................................................... 16 LIVESTOCK PRODUCTION ............................................................................................... 23 TRENDS IN FERTILISER USE ................................................................................................... 25 TRENDS IN AREA UNDER IRRIGATION ................................................................................ 26 TRENDS IN AGRICULTURAL TRADE ..................................................................................... 27 PUBLIC EXPENDITURES AND INVESTMENT IN AGRICULTURE .................................. 30 CONCLUSION ............................................................................................................................... 35 REFERENCES ............................................................................................................................... 39 DATABASES ................................................................................................................................... 41 APPENDIX TABLES ..................................................................................................................... 42 vi List of Tables Table 1: Poverty rates in southern Africa ....................................................................................... 7 Table 2: Contribution of specific crop and livestock commodities to total agricultural revenue in SADC countries* ....................................................................... 14 Table 3: Trend in land use in SADC region (2003) ...................................................................... 16 Table 4: SADC: Percentage land utilisation by crop .................................................................... 17 Table 5: National shares in total crop production in the SADC region (2004) ............................. 19 Table 6: National shares of livestock resources in the SADC region (2004) ................................ 23 Table 7: Trends in fertiliser consumption by country in the SADC Region (2002) ..................... 26 Table 8: Trends in area under irrigation in the SADC region ....................................................... 27 List of Figures Figure 1: Agricultural growth rates in the SADC region ................................................................. 2 Figure 2: Trends in annual GDP and GDP per capita growth rates in the SADC region ................ 4 Figure 3: GDP per capita in SADC countries (constant US$, year 2000) ....................................... 4 Figure 4: Trends in rural and urban populations in the SADC region ............................................. 5 Figure 5: Progress towards achieving the millennium development goal on poverty ..................... 6 Figure 6: Gini coefficients versus GDP per capita in selected southern Africa countries ............... 8 Figure 7: Trends in share of agriculture in total GDP in the SADC region ..................................... 9 Figure 8: Trends in the proportion of agriculture in total gross domestic product in the SADC region ......................................................................................................... 10 Figure 9: Economically active population in the SADC region – agricultural versus non agricultural .................................................................................................... 11 Figure 10: Calories and protein consumption per capita per day in the SADC region ............................................................................................ 12 Figure 11: Under nourishment in the SADC region expressed as a percentage of total population ...................................................................................... 13 Figure 12: Production indices (PIN) - trends in net production and net per capita PIN base .......... 15 Figure 13: Trends in agricultural value addition per worker ............................................................ 16 Figure 14: Trends in area harvested of major crop categories in the SADC region ......................... 18 vii Figure 15: Area harvested of major food crops in the SADC region ............................................... 18 Figure 16: Area harvested of major cash crops in the SADC region ................................................ 19 Figure 17: Trends in production of major crop categories in the SADC region ............................... 20 Figure 18: Trends in total cereal and root/ tuber and per capita production in SADC ..................... 21 Figure 19 Trends in yields of major crops in the SADC region ....................................................... 22 Figure 20: Trends in off take of livestock products in the SADC region ......................................... 24 Figure 21 Trends in carcase weights in the SADC region ................................................................ 24 Figure 22: Trends in milk yields in the SADC region ...................................................................... 25 Figure 23: Trends in net trade in maize, wheat and rice in the SADC region .................................. 29 Figure 24: Trends in net trade in meat and milk in the SADC region .............................................. 29 Figure 25: Trends in food aid in the SADC region ........................................................................... 30 List of Box Box 1: Promoting quality public investments in Zambia’s agricultural sector ........................... 31 List of Appendix Tables Table A1: Trends in Gross Domestic Product in the SADC region ................................................. 42 Table A2: Trends in GDP per capita income (constant 2000 US$) in the SADC region ................ 43 Table A3: Percentage growth in Agricultural GDP by country in SADC ....................................... 44 Table A4: Trends in relative sectoral contribution to GDP in SADC region (%) ............................ 45 Table A5: Trends in human population in the SADC region ........................................................... 46 Table A6: Rural population as proportion (%) of the total population ............................................ 47 Table A7: Agriculture value added per worker (constant 2000 US$) .............................................. 48 Table A8: Role of agriculture in sustaining livelihoods and employment in the SADC region (2004) ................................................................................................. 49 Table A9: National trends in HIV/AIDS and malnutrition .............................................................. 50 Table A10: National trends in life expectancy, infant mortality and adult literacy .......................... 51 Table A11: Crops yields in the SADC region ................................................................................... 52 Table A12: Yield of livestock products in the SADC region ............................................................ 53 viii Abbreviations and Acronyms AfDB African Development Bank CAADP Comprehensive Africa Agriculture Development Programme COMESA Common Market for Eastern and Southern Africa FAO Food and Agriculture Organization of the United Nations FND Fifth National Development Plan (Zambia) FRA Food Reserve Agency (Zambia) FSP Fertiliser Support Programme (Zambia) FTA Free Trade Area GDP gross domestic product HIV/AIDS Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome IFAD International Fund for Agricultural Development MACO Ministry of Agriculture and Cooperatives (Zambia) MDGs Millennium Development Goals MTEF Medium Term Expenditure Framework NCZ Nitrogen Chemicals of Zambia NEPAD New Partnership for Africa’s Development PE personnel emoluments PIN agricultural production indices PRP poverty reduction programme RDC recurrent departmental charge RISDP Regional Indicative Strategic Development Plan SADC Southern African Development Community SSA sub-Saharan Africa SSFMI small-scale farmer-managed irrigation UNCTAD United Nations Convention on Trade and Development ix Abstract This paper presents trends in indicators of poverty, food security and agricultural growth in the Southern African Development Community (SADC) region. It does so to clarify the challenges and opportunities for achieving the targeted 6% agricultural growth rate and the first millennium development goal. Using data from commonly available datasets such as FAOSTAT and World Development Indicators the paper also gives baseline statistics for poverty, food security and agricultural growth in the region. There is evidence to show that broad-based agricultural development is an effective means of reducing poverty and accelerating economic growth. Dealing with poverty and hunger in much of the developing world means optimising the opportunities that agriculture holds for the majority of the poor. Agriculture has the potential to contribute to equitable economic growth in SADC – a region in which most inhabitants rely on agriculture directly or indirectly as their main source of livelihood. It remains the primary source of subsistence, employment and income for 61%, or 142 million, of the region’s total population of 232 million. Agriculture accounts for close to 8% of the region’s gross domestic product (GDP). Despite the importance of the sector in SADC’s economy, agricultural growth rates have been both low and highly variable across the region averaging only 2.6% per annum in the last decade. Average growth rates in the sector have been similar to demographic growth rates of 2.4% over the same period. Of the numerous explanations for the sector’s poor performance the most significant are insufficient investment in agriculture, poor access to agricultural inputs (especially fertilisers and improved seed) and to markets, and low levels of technology development and dissemination. These factors have resulted in limited growth in the average yields of key crops and in low labour productivity. Other factors include adverse climatic conditions and HIV/AIDS, both of which threaten the livelihood of farming households. This situation calls for strengthening and transforming agriculture in the region so that it stimulates much needed economic growth and contributes measurably to poverty reduction. Increasing food production will help ensure that food prices remain low creating a conducive environment for the development of a broader commercial economy. In addition, there are bright prospects for expanded commercial production of a wide range of high value agricultural products. Moves towards regional integration present further opportunities for SADC countries. They can take advantage of regional growth dynamics to improve agricultural performance thereby generating mutual benefits across countries. Therefore, the agricultural sector in the region faces three strategic challenges. The need to achieve an average annual agricultural growth rate of at least 6%, targeted by ● CAADP as necessary for attaining overall economic growth, poverty reduction and food security (AU/NEPAD, 2003). x The need to enhance agriculture’s contribution to the achievement of the first millennium ● development goal of halving poverty and hunger by 2015. The need to identify optimal policy and investment alternatives that will yield the highest ● payoffs, given that countries in the region have committed themselves to increase national budgetary allocation to the agricultural sector to 10%. SADC Heads of State have recognised the importance of agriculture by endorsing the CAADP (AU/ NEPAD, 2003). Furthermore, the SADC Regional Indicative Strategic Development Plan (RISDP) speaks to the need for accelerated agricultural growth in order for the sector to contribute to broader economic growth and poverty reduction in the region. The economy of the region has been growing rather steadily but agricultural productivity has remained relatively flat, indicating the sector’s dismal contribution to regional economic growth relative to other sectors (Figure 2). At 7.3%, the agricultural sector is the smallest contributor to regional GDP behind services about 51%; the industrial sector at about 28.6% and manufacturing at about 13.5% in 2005. The greater GDP shares of the services and industrial sectors indicate the growing importance of these sectors as sources of growth, while the low contribution of agriculture to GDP, the sector which supports the majority of the population, indicates that the potential of this sector to contribute to economic growth and poverty reduction has not yet been realised. It is noteworthy, however, that although agriculture’s contribution to GDP in the region is very low, especially when compared to other developing countries, it rises to 23% if the middle income countries (Botswana, Namibia and South Africa) are excluded. Agriculture is less important for the region’s middle-income countries as a group – contributing only 3% of total GDP in those countries. In the low-income countries it accounts for 33% of total GDP. This proportion is above the average share for all low-income countries in sub-Saharan Africa outside the southern African region. The low-income countries in which agriculture has the highest share of GDP are the Democratic Republic of Congo (46%), Malawi (35%) and Tanzania (45%). Net agricultural production more than doubled during 1960-2005, increasing from about US$10,000 million to more than US$20,000 million. However, net per capita agricultural production decreased by about 40% during this period. This suggests that agricultural production has not kept pace with population growth in the region. The decline in per capita agricultural production is attributable to among other factors the rapidly growing population in the face of low agricultural productivity. The agricultural sector in SADC is dominated by crop production, which account for 65% of total agricultural revenue. However, crop production’s share of value in the sector has been declining over the years as livestock production has increased its share. The largest contributors to agricultural revenue are maize, fruits, beef, roots, tubers and milk. The increasing importance of livestock as a source of agricultural revenue implies that agricultural growth in the region will largely depend on the synergy between the crop and livestock sub-sectors combined with enhancing their respective productivity. xi The value added per worker in agriculture is a proxy for labour productivity and is estimated at US$851 per annum for the SADC region. This is 30 times lower than the value added per worker in developed countries estimated at US$25,372 per annum. While the agricultural output per worker has been increasing in the developed countries, in the southern African region it has only increased marginally off a low base. The need to increase agricultural productivity is greatest in the low- income countries in the region. Their agricultural value added per agricultural worker is only US$230, compared to US$1,681 among the middle-income countries in the region. The challenges in stimulating agricultural growth lie in stabilising the highly variable agriculture growth rates and subsequently reaching and sustaining the 6% growth rates targeted under the CAADP. The current average agricultural growth rate in the SADC region is only 2.6% and the region needs to more than double this rate if the sector is to contribute significantly to economic growth and poverty reduction. Among other things, this calls for increased public and private investment in the agriculture sector. Such investment needs to be directed into priority areas if agricultural growth is to be accelerated. This is particularly important given that countries in the region have committed themselves to increase budgetary allocation to at least 10% of their national budgets by 2008 under the Maputo Declaration. It is worth noting that even with a modest increase in investment in smallholder-led and diversified agricultural development per capita incomes will rise markedly. This will contribute to alleviating poverty and to achieving major advances towards food security. Increased investments in agriculture can also provide an engine for broad based and equitable growth with positive spill over effects on the poorest and most vulnerable. However, it is essential to direct these investments into priority areas, especially into growth enhancing investments, if agricultural growth is to be accelerated as countries increase their budget allocations to the agriculture sector. xii 1 Poverty, food security and agricultural trends in Southern Africa Pius Chilonda, Charles Machethe and Isaac Minde Overview The evidence is quite clear that broad-based agricultural development provides an effective means for reducing poverty and accelerating economic growth (FAO/World Bank, 2001). Small farmers produce much of the developing world’s agricultural output and yet are generally much poorer than the rest of the population in these countries. For the foreseeable future, therefore, dealing with poverty and hunger in much of the developing world means confronting the problems that small farmers and their families face in their daily struggle for survival. To be effective investment priorities and policies must take into account the immense diversity of investment opportunities and problems facing farmers. Agriculture remains the key driving force for economic development in the Southern African Development Community (SADC) region – a region in which most inhabitants rely on agriculture directly or indirectly as their main source of livelihood. Agriculture in the SADC region is the primary source of subsistence, employment and incomes for 61% (or 142 million) of the region’s total population of 232 million. It accounts for close to 8% of the region’s gross domestic product (GDP). However, despite the importance of agriculture in SADC’s economy, agriculture growth rates have been low and highly variable across the region, averaging only 2.6% per annum in the last decade (Figure 1). The average growth rates in the sector have been almost the same as population growth rates of 2.4% over the same period (World Bank, 2006). This explains why the region has been experiencing low per capita growth in agricultural production. Numerous explanations have been provided for the poor performance of the agricultural sector in the region, but the factors considered to have contributed most to the low growth rates include insufficient investment in agriculture, inadequate development of markets for agricultural commodities, credit and inputs (especially fertilisers and improved seed) and low levels of technology development and dissemination. These have resulted in limited growth in the average yields of key crops and low labour productivity. Other factors that have contributed to the low growth rates include adverse climatic conditions and HIV/AIDS, both of which threaten the livelihood of farming households. This situation calls for strengthening and transforming agriculture in the region so that it stimulates much needed economic growth. Increasing food crop production will help ensure that food prices remain low, creating a conducive environment for the development of a broader commercial economy. In addition, there are bright prospects for expanded commercial production of a wide range of high value agricultural products. The move towards regional integration further presents opportunities for SADC countries to take advantage of regional growth dynamics thereby generating mutual benefits across countries. SADC Heads of State have recognised the importance of agriculture, by endorsing the Comprehensive Africa Agriculture Development Programme (CAADP) (AU/NEPAD, 2003). The CAADP’s objective is to improve the ‘productivity of agriculture to attain an average annual growth rate of 6% especially focusing on small-scale farmers’ (AU/NEPAD, 2003). In a related and complementary development, countries in the region have committed themselves to increasing 2 investments in the agricultural sector to at least 10% of their national budgets by the year 2008. SADC countries have in addition, committed themselves to achieving the first millennium development goal (MDG1) of halving the proportion of people living below US$1 a day and the proportion of people who suffer from hunger by 2015 (SADC, 2006). Figure 1 Agricultural growth rates in the SADC region 15 10 5 0 -5 -10 -15 19 80 19 85 19 90 19 95 20 00 20 05 20 10 20 15 A nn ua l g ro w th ra t e (% ) Historical Targeted Source: World Bank (2006) For CAADP and SADC to be able to attain the set growth targets it is imperative that there is adequate knowledge and understanding of where the region is at the moment, where it is coming from and where it is headed in future with respect to key agricultural indicators. This paper attempts to comprehensively review the status and trends of key indicators in the agricultural economy at national and regional levels. An understanding of how the agricultural economy has performed overtime is a useful tool in planning, setting realistic targets and making major investment decisions in the sector. Agricultural trends analysis is critical for a multi-institutional and multidisciplinary range of stakeholders including policy makers, politicians, researchers, civil society, donors, economic analysts and decision makers in the regional economic and political integration bodies. Understanding agricultural trends will provide a reference point and basis for informed debates and dialogue about the performance of agriculture in the region. Quite often, discussions about policy on agricultural technology around the region, for example, suffer from inadequate knowledge and information about what is happening in the region and the consequences of alternative policy decisions. In addition, understanding the key trends will provide insights and explanations to questions such as ‘why are poverty levels so high in the SADC countries’. For example, continued low investment in the agricultural sector, which is the source of livelihood for over 60% of the region’s population, implies that achieving substantial growth in this sector will continue to be elusive. In general, agricultural trends analysis provides a rough indication of what growth pattern or improvement could be expected from total investment in a particular sub-sector. 3 This paper therefore, presents trends in indicators of poverty, food security and agricultural growth in the SADC region to clarify the challenges and opportunities for achieving the targeted 6% agricultural growth rate (Figure 1) and the first millennium development goal. Using data from commonly available datasets such as FAOSTAT (FAO, 2006a) and World Development Indicators (World Bank, 2006), the paper also provides baseline statistics for poverty, food security and agricultural growth trends in the region. The economic context Currently Africa, as a whole, is far from achieving the two targets constituting the first MDG: halving both the proportion of people living below $1 a day and the proportion of people who suffer from hunger by 2015. To meet the first MDG target Africa must achieve an annual economic growth rate of 7% (AfDB, 2003). As a whole Africa is currently growing at about 3% and if this trend continues projections indicate that 42.3% of the population will remain in poverty by 2015, as opposed to the targeted 23.7% (World Bank, 2006). Considering that agriculture is the primary source of livelihood for approximately 65% of Africans, contributes between 30 and 40% of Africa’s GDP and accounts for almost 60% of Africa’s export income, reducing these high levels of poverty and hunger in Africa will require greater agricultural and rural development (IFAD, 2003). In 2005, the combined GDP of the SADC region stood at more than US$232 billion dollars while the average per capita GDP was approximately US$965. According to the World Bank classification, low-income countries have GDP per capita of less than US$875, whereas middle-income countries have a GDP per capita income higher than US$875, but less than US$3,465 per annum (World Bank, 2006). Using per capita income as a proxy for the level of development, the 14 SADC countries can be grouped as follows: low-income countries Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mozambique, Tanzania, Zambia and Zimbabwe; and middle-income countries Angola, Namibia, Swaziland, Botswana, Mauritius, and South Africa. The economies of countries in the region vary in terms of their size and structure, but the combined GDP for the region has been growing, largely driven by the dominance of the South African economy. South Africa’s share in regional GDP is about 69%. The low-income countries contribute only 17.4% to the region’s GDP. The six middle-income countries, as a group, account for 82.6% of the regional GDP. Figure 2 presents trends in GDP and per capita income for the region, while Figure 3 presents the per capita incomes. Both the region’s GDP and per capita incomes have shown upward trends in the early 1990s indicating a positive outlook for the overall economy of the region. In the last decade, some countries in the SADC, notably Angola, Mozambique and Tanzania have achieved high annual GDP growth rates, whereas the Democratic Republic of Congo and Zimbabwe have achieved zero and negative growth rates respectively. The average per capita income of $965 in 2005 for the region remains above the average per capita income of US$316 for sub-Saharan Africa. This is because of the higher per capita income in middle-income countries in the region of US$2,851. However, average per capita income (US$234) for the low-income countries in the region is less than that for the rest of sub-Saharan Africa as a whole. This low per capita income is largely due to very low per capita incomes in the Democratic Republic of Congo. 4 Figure 2: Trends in annual GDP and GDP per capita growth rates in the SADC region -8 -6 -4 -2 0 2 4 6 8 10 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 An nu al g ro w th ra te (% ) GDP Per Capita GDP Source: World Bank (2006) Figure 3: GDP per capita in SADC countries (constant US$, year 2000) in 2005 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 C on go , D R M al aw i M ad ag as ca r M oz am bi qu e Ta nz an ia Za m bi a Zi m ba bw e Le so th o An go la Sw az ila nd N am ib ia So ut h Af ric a Bo ts w an a M au rit iu s Lo w in co m e M id dl e in co m e SA D C SS A Country G D P Pe r C ap ita (U S$ ) Source: World Bank (2006) 5 Figure 4: Trends in rural and urban populations in the SADC region Human demographics and poverty Population: Rural and urban poverty The SADC region has a total population of 232 million. The region’s population is growing at a rate of 2.4% per annum. About 61% of the population lives in rural areas and is engaged in agriculture, directly or indirectly, as the main source of livelihood. On one hand, the middle-income countries account for 82.6% of the region’s total GDP, while they account for only 28.1% of the population. On the other hand, the low-income countries account for 71.9% of the region’s population and only 15.1% of the total economic output of the region. Like much of sub-Saharan Africa, the region is rapidly urbanising. The largest proportion of the population, about 67%, in the low-income countries is still rural based whereas, 54% of the population in the middle-income countries resides in the urban areas (FAO, 2006a). Among the low-income countries Lesotho, Madagascar and Malawi have the highest proportion of their populations based in rural areas. Projections indicate that the population in these countries will still be predominantly rural in the next decade. However, projections by FAO (2006a) indicate that by the year 2025 about 50% of the population in the majority of the SADC countries will be residing in urban areas (Figure 4). Year Rural population Urban population 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 N um be r ( '0 00 ) Source: FAO (2006a) If business continues as usual, the region, like the rest of sub-Saharan Africa, is unlikely to meet the twin MDG1 targets of halving the proportion of people living below US$1 a day and halving the proportion of people who suffer from hunger by 2015. The region as a whole has made limited progress in reducing poverty when compared to other developing regions of the world (Figure 5) and poverty remains pervasive with amongst the highest incidences in the world (World Bank, 2006). About 40% (or 86 million) of the region’s population of about 232 million live in extreme poverty mostly in the rural areas. There is a wide variation in progress towards poverty reduction among the 14 SADC countries (Table 1). 6 While poverty levels have reduced marginally in some countries, they have increased in the last decade in countries such as the Democratic Republic of Congo, Zambia and Zimbabwe. In virtually all the countries in southern Africa poverty rates in rural areas are higher than both the urban and national poverty rates. Countries with poverty rates higher than 50% include Malawi, Madagascar, Mozambique, Tanzania, Zambia and Zimbabwe. Agriculture, therefore, remains essential to lift the majority of both the rural poor (who are mainly farmers, labour sellers, traders and so on) and urban dwellers in southern Africa out of poverty. Figure 5: Progress towards achieving the millennium development goal on poverty Pr op or tio n be lo w U S$ 1/ da y (% ) 50 45 40 35 30 25 20 15 10 5 0 1990 2002 2015 South Asia SADC All Developing Source: SADC (2006) 7 Table 1: Poverty rates in southern Africa Countries National Poverty Rate (%) Dollar a Day Poverty Rate (%) 1990-96 2000-2006 Angola … … 68* Botswana … 37.4 (2001) 23.5 … DRC … 83.6 (2001) … … Lesotho 49 (1993) 68 (1999) 36.4 39.05 Madagascar 73.3 (1997) 71.3 (1999) 42.56 61.03 Malawi 54 (1990) 65.3 (1998) 56.64 49.73 Mauritius … … 9.7** Mozambique 69 (1996/97)*** 54.1 (2002/3)*** 37.9 33.71 Namibia 38 (1999)**** 28 (2006)**** 35 32.83 South Africa 23.7 (1993) 57 (2001)***** 7.85 10.71 Swaziland 40 (1995) … 11.87 8.46 Tanzania 41.6 (1993) 35.7 (2000/01) 51.1 57.8 Zambia 69.2(1996) 72.9 (1998) 56.63 75.8 Zimbabwe 25.8 (1990/91) 34.9 (1995/96) 56.1 58.26 Sources: World Bank (2000-07) *CHR Michelsen Institute Report (2006) **United Nation Report- Mauritius, (2005) ***Republique of Mozambique (2004) ****National Planning Commission, Namibia (2007) *****Human Science Research Council of South Africa (2004) Inequality: The Gini coefficient The overall level of inequality in a country, region, or population group and, more generally, the distribution of consumption and income are also important dimensions of welfare for the people concerned (Coudouel, Hentschel and Wodon, 2002). Most poverty measures are based on the average level of income or consumption in a country and focus on the situation of those individuals or households receiving the lowest levels (Coudouel et al., 2002). Inequality is a broader concept than poverty that looks at the distribution of income over the entire population, not only below a certain poverty line. The Gini coefficient is one of the most commonly used measures of inequality with higher values indicating greater inequality in the distribution of income. The Gini coefficient measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution indicated by 0.0. Gini coefficients for selected SADC countries are presented in Figure 6. Namibia and South Africa have Gini coefficients higher than 0.5, indicating a relatively high-income inequality against a backdrop of relatively high per capita GDP. Among the low-income countries, Lesotho has the highest income inequality. 8 Figure 6: Gini coefficients versus GDP per capita in selected southern Africa countries 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Gini Coefficient G D P p er c ap ita (U S $) South Africa Namibi Lesotho Malawi Madagascar Zambia Mozambique Tanzania Zimbabwe Source: World Bank (2006) Health and education levels: life expectancy, literacy rates, infant mortality and child malnutrition The poverty rate is a monetary indicator of poverty and does not take into account non-monetary dimensions of poverty and human well-being, addressed by indicators such as life expectancy, the infant mortality rate and the literacy rate. The average life expectancy in the region has declined from about 50 years during the period 1970- 1990 to 44 years in 2004. This is below the average for the developing world but equal to the average for sub-Saharan Africa. This decline is largely attributable to the disproportionately high prevalence of HIV/AIDS and malaria, and the low calorific intake in the region. Southern Africa region is the most affected by HIV/AIDS in sub-Saharan Africa (UNAIDS, 2006; Shapouri and Rosen, 2001). An analysis of national trends in life expectancy for SADC countries shows that, with the exception of Mauritius, all the other countries have experienced a downward trend in life expectancy since 1990. With regard to education, the average literacy rate in the region rose from 60% in 1990 to approximately 70% in 2004. This is higher than the average literacy rate for all developing countries. The upward trend in the literacy rate suggests increased commitment in the SADC countries to investing in human capital. Two of the most commonly used indicators of the health dimension of human well-being are the infant mortality rate and the prevalence of malnutrition. The infant mortality rate in the region has been declining since the 1970s reaching about 147 deaths per 1000 births in 2004. Although the infant mortality rate for the SADC region is lower than that for sub-Saharan Africa as a whole, it is higher than the rate for the developing world as a whole. The downward trend in the infant mortality rate in the region may be attributed to the progressive expansion of basic health and sanitation facilities. 9 The prevalence of child malnutrition in the region decreased by 7% in the period 1992-2000. In 2000, the proportion of underweight children was approximately 20%, which is lower than the proportion for the developing world as a whole (Cohen, 2006). The decline in child malnutrition experienced in the region since the 1990s may be attributed to improved basic health and sanitation facilities coupled with improved education among females. Agriculture’s role in the SADC region Share of agriculture in overall GDP The agricultural sector is the main source of livelihood for the majority of the population in the region, although it only contributes 7.3% to the region’s GDP in 2005. As indicated in Figure 1, the annual agricultural growth rate for the region as a whole has averaged only 2.6% in the last decade, which is much lower than the target 6% average annual growth rate stipulated by the CAADP. Growth in the agricultural sector would need to increase substantially to keep pace with population growth rate and contribute to economic growth and poverty reduction. Figure 7 presents trends in total and agricultural GDP in the region. The economy of the region has been growing rather steadily. However, the agricultural GDP has remained relatively flat, indicating that the agricultural sector has contributed little to regional economic growth relative to other sectors. The agricultural sector is the smallest contributor to the regional GDP, while the services sector is the largest contributor at 51%. The industrial sector is the second largest contributor at 28.6% and the largest contributor to the national GDP in Angola, Botswana, Lesotho and Swaziland. The manufacturing sector contributed 13.5% to the regional GDP in 2005. The growing GDP shares of the industry and services sectors in the region indicate the increasing importance of these sectors as sources of growth, while the potential for the agricultural sector to contribute to economic growth, and subsequently to poverty reduction, is yet to be realised. 0 50 100 150 200 250 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 Year U S$ B ill io n Agricultural GDP Total GDP Source: World Bank (2006) Figure 7: Trends in share of agriculture in total GDP in the SADC region 10 The contribution of agriculture to GDP in the region is among the lowest when compared to other developing countries (Figure 8). However, it should be noted that the agricultural sector’s contribution to regional GDP of only 8% rises to 23% if Botswana, Namibia and South Africa are excluded. The theoretical and empirical literature suggests that the role of agriculture in an economy is closely related to a country’s stage of development (Rostow, 1960). Because of this, agriculture is less important for the region’s middle-income countries as a group. The agricultural sector for the middle- income countries in the region accounts for only 3% of total GDP. It is relatively more important in the low-income countries where it accounts for 33 % of total GDP. This proportion is above the average share for all low-income countries in sub-Saharan Africa excluding southern Africa. The low-income countries with the highest agricultural GDP share are the Democratic Republic of Congo (46%), Malawi (35%) and Tanzania (45%). Figure 8: Trends in the proportion of agriculture in total gross domestic product in the SADC region 0 5 10 15 20 25 30 35 40 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 Pe rc en ta ge SADC exc. South Africa SADC Sub-Saharan Africa Developing Countries Source: World Bank (2006) Contribution of agriculture to employment Agriculture remains important for employment creation in the region despite a decrease in the share of the sector in employment generation over the last three decades (Figure 9). According to FAO (2006a), 57% of the population of the region (or 132 million people) are classified as agricultural, meaning that they are actively involved in agriculture and depend on it for their livelihoods. In the low-income countries the agricultural population averages 69%, while it is much less in the middle- income countries where it averages 27%. Agriculture is still the main source of employment for low-income countries such as Malawi, Madagascar, Mozambique, Tanzania, Zambia and Zimbabwe whereas the importance of the sector as a source of employment in the more developed countries of Angola, Botswana, Namibia, South Africa and Swaziland has declined significantly over the years. The agricultural sector in these more developed countries is relatively small either due to their more advanced and diversified economies or because their economies depend on mineral resources (Pratt and Diao, 2006). 11 Figure 9: Economically active population in the SADC region – agricultural versus non agricultural Contribution of agriculture to food security Despite the relative importance of agriculture in the region, its performance in terms of food production and contribution to food security has not been impressive. Food insecurity is a major problem in most SADC countries. In addition to the level of food production, a country’s food security also depends on several other factors such as availability, access, utilisation and stability of food supplies. Figure 10 presents the distribution of per capita consumption of calories and proteins in the region, giving a picture of the region’s food security situation. Typically, the low-income countries have lower per capita consumption levels of calories and proteins than the middle-income countries. Although per capita caloric intake in the region has been increasing since 1990, the average per capita caloric intake for the region was estimated at 2270 kcal/person/day in 2003, below the minimum requirement for caloric intake of 2350 kcal/person/day set by FAO (2006b). Notably, the Democratic Republic of Congo and Zambia have the lowest per capita consumption of calories, while the Democratic Republic of Congo, Mozambique and Zimbabwe have the lowest consumption of proteins. Source: World Bank (2006) 0 20,000 40,000 60,000 80,000 100,000 120,000 19 61 19 65 19 69 19 73 19 77 19 81 19 85 19 89 19 93 19 97 20 01 Nu m be r ( '0 00 ) Non agricultural economically active Agricultural economically active 12 Figure 10: Calories and protein consumption per capita per day in the SADC region Figure 11 presents information on the prevalence of under nourishment in the SADC region. Under nourishment in a country is a result of several factors among them the level of food production and utilisation, the level of education, cleanliness, health and sanitation. The proportion of undernourished people in the region varies widely from country to country, ranging from as low as 6 % in Mauritius to as high as 72 % in the Democratic Republic of Congo. The average proportion of undernourished people in SADC is about 35 %, which is just three percentage points above the proportion for sub- Saharan Africa as a whole. The proportion of undernourished people in the region has remained almost constant since the 1990s suggesting no improvement in the overall food security situation of the region. In five SADC member countries (namely Botswana, the Democratic Republic of Congo, Madagascar, Swaziland and Tanzania), the proportion of undernourished people increased between 1990 and 2004. The Democratic Republic of Congo recorded the largest increase of 40%, probably attributable mainly to the unstable political situation in the country during the period. Countries that have reduced the proportion of undernourished people include Angola, Lesotho, Malawi, Mozambique, Namibia and Zambia. The largest decrease in the proportion of undernourished people occurred in Mozambique (21%), which may be largely attributed to a stable political climate. Source: FAO (2006b) Calories/capita/day Protein/capita/day Calories/day 2,530.00 more 2,150.00 2,530.00 2,010.00 2,150.00 1,930.00 2,010.00 less 1,930.00 not available grams/day 71.0 more 55.0 71.0 48.0 55.0 44.0 48.0 less 44.0 not available 13 Figure 11: Under nourishment in the SADC region expressed as a percentage of total population 0 10 20 30 40 50 60 70 80 An go la Bo ts w an a C on go ,D R Le so th o M ad ag as ca r M al aw i M au rit iu s M oz am bi qu e N am ib ia So ut h Af ric a Sw az ila nd Ta nz an ia Za m bi a Zi m ba bw e Pe rc en ta ge u nd er no ur is he d (% ) Trends in agricultural output and productivity Agricultural products are usually measured by weight or volume. An immediate question that arises is how to best combine different agricultural products since summing up weights or volumes is not very meaningful. Because of this, aggregate output in agriculture is measured in monetary units – as the sum of the value of all production in the agriculture minus the value of intermediate inputs originating within the sector. Aggregate output takes into consideration both cash and non-cash transactions – and is often referred to as ‘final output’. This differs from agricultural GDP because it also includes the non-agricultural inputs (Rao, 1993). Thus aggregate output (final output), refers to the amount of agricultural output available for the rest of the economy – whereas agricultural GDP measures the ‘net contribution’ of agriculture to the GDP of a country (Zapeda, 2001) Productivity measures are subdivided into partial or total measures. Partial measures are the amount of output per unit of a particular input. Commonly used partial measures are yield (output per unit of land), and labour productivity (output per economically active person or output per agricultural person-hour). Yield is commonly used to assess the success of new production practices or technology. Labour productivity is often used as a means of comparing the productivity of sectors within or across economies. Labour productivity can also be used as an indicator of rural welfare or living standards since it reflects the ability to acquire income through the sale of agricultural goods or agricultural production (Block, 1994). The agricultural sector in SADC is dominated by crops, which account for 65% of total agricultural revenue. However, the dominance of crops in terms of agricultural revenue has been declining over the Source: FAO (2006a) 14 years (Table 2). Livestock production has thus gained prominence in terms of generating agricultural revenue in the region. The largest contributors to agricultural revenue are maize, fruits, beef, roots, tubers, milk and poultry. The increasing importance of livestock as a source of agricultural revenue in the region implies that agricultural growth in the region will largely depend on complementarities between the crop and livestock sub-sectors and enhancing their respective productivity. Table 2: Contribution of specific crop and livestock commodities to total agricultural revenue in SADC countries* Commodity Average revenue (%) 1977-1981 1998-2002 Maize 15.3 10.8 Wheat 3.0 2.7 Other cereals 1.6 1.3 Roots and tubers 5.9 11.6 Pulses 1.4 1.4 Fruits 9.5 10.8 Vegetables 5.6 6.5 Oilseeds 4.5 3.5 Cotton 1.5 1.5 Tobacco, coffee, tea, spices 4.5 5.6 Sugarcane 5.2 4.8 Forage and others 9.4 4.5 Total (crops) 67.3 65.1 Beef and buffalo meat 12.5 10.0 Milk, total 8.5 6.8 Eggs, primary 2.3 3.5 Poultry meat 3.9 9.7 Pork 2.0 2.2 Lamb and goat meat 3.6 2.7 Total (livestock) 32.7 34.9 Total 100 100 * Excludes Angola, Democratic Republic of Congo and Tanzania Source: Pratt and Diao (2006) 15 Agricultural production indices (PIN) can be used to provide information on the overall performance of the agricultural sector. Figure 12 presents the challenge facing the agricultural sector in the SADC region in the context of the need to increase agricultural productivity in order to achieve the CAADP agricultural growth objective of 6% per annum. Net value of production has more than doubled in the period 1960-2005, increasing from about US$10,000 million to more than US$20,000 million. However, net per capita production has decreased by about 40% during this period indicating that agricultural production has not kept pace with population growth in the region. The decline in per capita agricultural production may be attributed to a combination of factors including adverse climatic conditions (droughts), continuing low levels of fertiliser use and the relatively small area under irrigation, especially among smallholder farmers. Figure 12: Production indices (PIN) - trends in net production and net per capita PIN base 0 5,000 10,000 15,000 20,000 25,000 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 M ill io n US $ 0 20 40 60 80 100 120 140 160 In de x Net Production 1999-2001 (Million I$) Net per capita PIN base 1999-2001 The value added per worker in agriculture, which is a proxy for labour productivity, in the SADC region, is estimated at US$851 per annum. This is 30 times lower than the value added per worker in developed countries estimated at US$25,372 per annum. The agricultural output per worker has been increasing steadily in the developed countries, while, even starting from a low base, agricultural output per worker in the region has only marginally increased. The need to increase agricultural productivity is greatest in the low-income countries where agricultural value added per agricultural worker is only US$230, compared to US$1,681 in the middle-income countries in the region. Source: FAO (2006a) 16 Figure 13: Trends in agricultural value addition per worker 0 5,000 10,000 15,000 20,000 25,000 30,000 19 90 19 92 19 94 19 96 19 98 20 00 20 02 U S$ /A gr . w or ke r/a nn um SSA OECD SADC 0 500 1,000 1,500 2,000 19 90 19 92 19 94 19 96 19 98 20 00 20 02U S$ /A gr . w or ke r/a nn um SADC low income SADC middle income SADC SSA Source: World Bank (2006) Crop production Trends in land use statistics in the region are presented in Tables 3. Agricultural production accounts for 44.8% of the land area, of which 87.7% is used for forage and the rest for crop production. Therefore in terms of land resources, the region has the potential to increase agricultural production. Table 3: Trend in land use in SADC region (2003) Land type Million hectares *Percentage (%) Annual growth rate (1990-2003) (%) Land Area 906 - 0 Agricultural area (1) 406 44.8 0.15 Arable and Permanent Crops (2) 50 12.3 0.90 Permanent Pasture (2) 356 87.7 0.04 *(1) and (2) as a percentage of land area and agricultural area respectively Source: FAO (2006a) Table 4 presents the relative share of main crops grown in the region, while Figures 14, 15 and 16 present trends in the area harvested for major crop categories, food crops and cash crops in the SADC region. Cereals dominate crop production although cash crops are also increasing in importance. Maize is the single most important crop in terms of land utilisation and occupies about 37% of total cropland (Table 4) and accounts for 71% of the harvested areas for cereals. Although the total area harvested for maize production has increased, the proportion relative to other crops has remained stable in the last decade. Figure 13a: SADC versus developed countries Figure 13b: Low income versus middle income countries 17 Table 4: SADC: Percentage land utilisation by crop Crop 1990 2000 2004 Coffee 1.8 1.1 0.8 Fruit Primary 4.6 4.1 4.3 Maize 37.2 38.3 37.1 Millet 2.6 3.3 3.4 Oil crops 14.2 13.0 14.2 Pulses 7.0 7.3 7.7 Rice, Paddy 3.1 3.6 3.0 Roots and Tubers 15.6 16.8 17.0 Sorghum 4.5 4.9 5.2 Spices 0.0 0.0 0.0 Sugar Cane 1.6 1.8 1.8 Tea 0.2 0.2 0.2 Tobacco Leaves 0.7 0.9 0.8 Vegetables Primary 1.7 1.7 1.6 Wheat 5.3 3.1 2.9 Total 100.0 100.0 100.0 Source: FAO (2006a) Areas harvested for cereals, oil crops, pulses, and roots and tubers have remained basically the same, with only marginal increases in the last decades. The area harvested and total production of other important food crops such as wheat, millet, sorghum has remained stagnant since the 1970s. Similarly, the area harvested and total production of major cash crops in the region including cotton, tobacco, tea and coffee have either declined or remained virtually stagnant since the 1970s. 18 Figure 14 Trends in area harvested of major crop categories in the SADC region 0 5000 10000 15000 20000 25000 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 Ar ea h ar ve st ed (' 00 0 he ct ar es ) Cereals,Total Oilcrops Primary Pulses,Total Roots and Tubers,Total Figure 15: Area harvested of major food crops in the SADC region Source: FAO (2006a) 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 A re a ha rv es te d ('0 00 h ec ta re s) Cassava Maize Millet Rice Sorghum Wheat Source: FAO (2006a) 19 Figure 16: Area harvested of major cash crops in the SADC region 0 200 400 600 800 1,000 1,200 1,400 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 Ar ea h ar ve st ed (' 00 0 he ct ar es ) Coffee, Green Seed Cotton Tea Tobacco Leaves Source: FAO (2006a) Table 5 presents crop production statistics by major crop categories for the SADC region in 2004. South Africa dominates the region in maize production accounting for 41.7% of the total maize produced, followed by Madagascar and Tanzania, which account for 16.9% and 11.4% respectively. South Africa and the Democratic Republic of Congo are the major producers of oil crops accounting for over 50% of regional production. With respect to pulses, Tanzania produces 31.4% of the regional total, while the Democratic Republic of Congo produces 31.7% of the roots and tubers in the region. Crop production is less important in countries such as Botswana, Namibia and Mauritius. Table 5: National shares in total crop production in the SADC region (2004) Country Cereals Oil crops Pulses Roots & tubers ‘000 Mt % ‘000 Mt % ‘000 Mt % ‘000 Mt % Angola 725 2.4 90 7.1 76 5.0 7,507 15.3 Botswana 45 0.2 3 0.3 18 1.2 93 0.2 Congo, DR 1,570 5.3 341 27.0 185 12.3 15,488 31.7 Lesotho 248 0.8 0 0.0 11 0.8 90 0.2 Madagascar 3,391 11.4 29 2.3 102 6.8 3,214 6.6 Malawi 1,843 6.2 56 4.4 254 16.9 4,344 8.9 Mauritius 0 0.0 1 0.0 0 0.0 13 0.0 Mozambique 2,007 6.8 97 7.7 205 13.6 6,565 13.4 Namibia 107 0.4 1 0.0 9 0.6 295 0.6 South Africa 12,352 41.7 369 29.2 97 6.5 1,873 3.8 Swaziland 69 0.2 2 0.1 3 0.2 54 0.1 Tanzania 5,020 16.9 156 12.4 473 31.4 8,131 16.6 Zambia 1,427 4.8 26 2.0 17 1.1 1,021 2.1 Zimbabwe 837 2.8 92 7.3 55 3.7 228 0.5 SADC 29,640 100.0 1,262 100.0 1,505 100.0 48,916 100.0 Source: FAO (2006a) 20 Trends in production of major crop categories are presented in Figure 17, indicating that root and tubers have shown the largest and sustained increase in the last decades. This is primarily due to the expansion of cassava production in the region. Maize production trends are highly variable, largely influenced by climatic conditions, which depress production, especially drought. The growth in the production of pulses, and roots and tubers has remained more or less constant. Figure 17: Trends in production of major crop categories in the SADC region Cereals,Total Oilcrops Primary Pulses,Total Roots and Tubers,Total 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 '0 00 m et ric to nn es As cereals and roots and tubers are the most important food crops in SADC, per capita cereal and roots and tuber production in relation to population growth can provide an indication of how well the region is doing in meeting food needs. Over the last decades, cereal and tuber production have been on increase but per capita production have been on decline1 which implies widening gap between production and demand for the commodities (Figure 18). Source: FAO (2006a) 1This situation is further complicated by a 6-7 year period (from 2001) of erratic rainfall and production patterns 21 Figure 18: Trends in total cereal and root/ tuber and per capita production in SADC Source: FAO (2006a) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 19 61 19 66 19 71 19 76 19 81 19 86 19 91 19 96 20 01 '0 00 m et ric to nn es 0 50 100 150 200 250 300 Roots and Tubers kg/capita 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 19 61 19 66 19 71 19 76 19 81 19 86 19 91 19 96 20 01 '0 00 m et ric to nn es 0 50 100 150 200 250 Cereals,Total kg/capita Figure 19 shows trends in yields for major crops in the SADC region. When compared to developing and developed countries, the region has made limited progress in improving yields per hectare for virtually all the major crops. Yields per hectare in the developing and developed countries have not only remained high, but have been increasing during the last decade. Yield trends in the SADC countries have followed the patterns of the rest of sub-Saharan Africa, which have lagged behind those in other parts of the world. Maize yields in developing countries as a whole, for example, have more than doubled since the 1960s to reach more than 8,000 kg/ha, whereas yields in the SADC region and in sub-Saharan Africa are still below 2,000kg/ha. Similarly, there is a big yield gap between the developed countries and the region for cotton, millet and groundnuts. These yield gaps are substantial and affect mainly smallholder farmers. Hence they have implications for improving food security and incomes in the region. The wide yield gap is an indication of the existing potential and opportunity for making substantial improvements. Addressing the yield gap could go a long way towards reducing food insecurity in the region. Cereals, total Roots and tubers, total 22 Fi gu re 1 9 Tr en ds in y ie ld s o f m aj or c ro ps in th e SA D C r eg io n C ot to n 0 50 0 10 00 15 00 20 00 25 00 30 00 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 Yield (kg/hactare) De ve lo pe d co un tri es De ve lo pi ng c ou nt rie s SA DC SS A G ro un dn ut s 0 50 0 10 00 15 00 20 00 25 00 30 00 35 00 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 Yield (kg/yield) De ve lo pe d co un tri es De ve lo pi ng c ou nt rie s SA DC SS A M ai ze 0 1, 00 0 2, 00 0 3, 00 0 4, 00 0 5, 00 0 6, 00 0 7, 00 0 8, 00 0 9, 00 0 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 Yield (Kg/hactare) De ve lo pe d co un tri es De ve lo pi ng c ou nt rie s SA DC SS A M ill et 0 20 0 40 0 60 0 80 0 1, 00 0 1, 20 0 1, 40 0 1, 60 0 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 Yield (Kg/hactare) De ve lo pe d co un tri es De ve lo pi ng c ou nt rie s SA DC SS A So ur ce : F A O (2 00 6a ) 23 Livestock Production In the SADC region, traditional and commercial livestock production are gaining importance as a source of livelihoods and revenue. Table 6 presents the distribution of major livestock species by country. The region has a total of 63.9 million cattle, 355 million poultry, 73 million small ruminants and 6.6 million pigs. Madagascar, South African and Tanzania each have over 10 million head of cattle. Together they account for 66.3% of the region’s cattle population. South Africa also accounts for 41.1%, 43.3% and 24.9% of the poultry, sheep and goats, and pig populations respectively. In most countries in the region livestock is kept in traditional mixed use or pastoral systems, providing animal traction for crop production and a source of income for the purchase of inputs into crop production. Although countries such as Botswana and Namibia have relatively small livestock populations, they are major exporters of livestock to international markets along with South Africa. Table 6: National shares of livestock resources in the SADC region (2004) Country Cattle Pigs Poultry Sheep & goats Nr (‘000) % Nr (‘000) % Nr (‘000) % Nr (‘000) % Angola 4,150 6.5 780 11.8 6,800 1.9 2,390 3.3 Botswana 3,100 4.8 8 0.1 4,000 1.1 2,150 2.9 Congo, Dem Republic of 758 1.2 957 14.4 19,710 5.6 4,915 6.7 Lesotho 540 0.8 65 1.0 1,800 0.5 1,500 2.0 Madagascar 10,500 16.4 1,600 24.1 32,800 9.2 1,850 2.5 Malawi 765 1.2 456 6.9 15,200 4.3 2,015 2.7 Mauritius 28 0.0 13 0.2 9,845 2.8 105 0.1 Mozambique 1,320 2.1 180 2.7 28,670 8.1 517 0.7 Namibia 2,900 4.5 28 0.4 3,500 1.0 4,750 6.5 South Africa 13,512 21.1 1,651 24.9 145,990 41.1 31,732 43.3 Swaziland 580 0.9 30 0.5 3,200 0.9 301 0.4 Tanzania, United Republic of 17,800 27.8 455 6.9 31,320 8.8 16,071 21.9 Zambia 2,600 4.1 340 5.1 30,000 8.5 1,420 1.9 Zimbabwe 5,400 8.4 62 0.9 22,097 6.2 3,580 4.9 SADC 63,953 100.0 6,625 100.0 354,932 100.0 73,295 100.0 Source: FAO (2006a) Trends in the off-take of livestock products show that overall production has increased only marginally in the last decade (Figure 20). Although beef production dominates in the region, it has only doubled in the last four decades and off-take has remained constant over the last decade. Poultry production is the fastest growing sub-sector, with poultry meat production expanding by 50% in the last decade. Given these trends in production, livestock production has not kept pace with demographic growth and consequently the region has among the lowest consumption rates for livestock products in the world (FAO, 2006a). These trends are mirrored by low productivity of both meat and milk as illustrated in Figures 21 and 22, which present trends in carcass weight for beef and milk yields. Both 24 carcass weight and milk yield are much lower in the region when compared to developed countries indicating a big yield gap. In fact the yield for meat and milk has only marginally improved when compared to developed countries. Figure 20: Trends in off take of livestock products in the SADC region Source: FAO (2006a) Figure 21 Trends in carcase weights in the SADC region Source: FAO (2006a) Developed countries Developing countries SADC SSA 0 50 100 150 200 250 300 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 C ar ca ss w ei gh ts (K g/ an im al ) Beef Eggs Milk Mutton & goat meat Poultry meat 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 '0 00 m et ric to nn es 25 Figure 22: Trends in milk yields in the SADC region Developed countries Developing countries SADC SSA 0 1,000 2,000 3,000 4,000 5,000 6,000 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 M ilk y ie ld (k g/ co w ) Source: FAO (2006a) Trends in fertiliser use The role of fertiliser in increasing agricultural production and productivity has been clearly demonstrated in many developing countries particularly in Asia during the green revolution. African governments have realised that without increasing fertiliser use little can be achieved by way of raising agricultural production and meeting the Millennium Development Goals. Hence, African countries, under the 2006 Abuja Declaration on Fertilisers, have committed themselves to significantly increase fertiliser use from 8 kg per hectare to 50 kg per hectare by 2015. The SADC region has one of the lowest fertiliser application levels in the world. The limited use of fertiliser is an important explanation for the low levels of agricultural production and productivity in the region. Fertiliser use by country is presented in Table 7. South Africa accounts for 65% of total fertiliser use in the region, followed by Malawi (13.5%), Zimbabwe (7.7%) and Zambia (4.5%). Until 2002, Zimbabwe was the second largest consumer of fertiliser in the region after South Africa. 26 Table 7: Trends in fertiliser use by country in the SADC Region Country 1992 2002 Growth rate (%) Metric tonnes Proportion (%) Metric tonnes Proportion (%) 1992-2003 Angola 9,100 0.8 0 0.0 - Botswana 900 0.1 4,600 0.3 17.7 Congo, DR 2,300 0.2 10,513 0.7 16.4 Lesotho 5,700 0.5 11,300 0.8 7.1 Madagascar 7,697 0.7 9,125 0.6 1.7 Malawi 73,800 6.6 193,008 13.5 10.1 Mauritius 26,638 2.4 25,000 1.7 -0.6 Mozambique 4,900 0.4 24,900 1.7 17.7 Namibia 0 0.0 300 0.0 - South Africa 732,800 65.3 965,100 67.3 2.8 Swaziland 12,400 1.1 7,000 0.5 -5.6 Tanzania 47,923 4.3 7,148 0.5 -17.3 Zambia 84,500 7.5 65,168 4.5 -2.6 Zimbabwe 113,600 10.1 110,000 7.7 -0.3 SADC 1,122,258 100.0 1,433,162 100.0 2.5 Source: FAO (2006a) The expansion of fertiliser application in the region presents a mixed picture, having declined in Tanzania, Zambia and Swaziland. Overall fertiliser use is increasing at 2.5% per annum. Trends in area under irrigation In sub-Saharan Africa, public sector irrigation schemes have been generally expensive to construct and maintain and their performance has been disappointing. Not only have production increases been lower than anticipated, but the systems have often been unsustainable due to low output prices, and high operational and maintenance costs (Malcolm, et al, 2001). The option for the future is to design a series of smaller, more manageable schemes – or to find private companies willing to operate the large schemes on a commercial basis. Small-scale farmer-managed irrigation (SSFMI) has been more successful and holds more promise (Malcolm et al, 2001). Projections indicate a slow expansion of irrigation during the next 30 years – thus unlike other regions where irrigated areas will generate a major part of the increases in food production, irrigation in Africa may play a very modest role during the next three decades (FAO, 2003) Limited progress has been made in southern Africa in increasing the area under irrigation. The percentage of cultivated land under irrigation has risen slowly from 5.1% in 1980 to 5.9% in 2003 (FAO, 2006b,). Globally, Africa, with 5.4% of its cultivated land under irrigation in 2003, was the second lowest after Oceania (FAO, 2006b). Within the region, irrigation coverage is lowest for 27 Botswana, the Democratic Republic of Congo and Lesotho. Swaziland led with 39% of its arable land under irrigation in 2002, followed by Madagascar at 37%. On average, the region had 8.98% of its cultivated area under irrigation by 2002. Total irrigation coverage is highly skewed with South Africa having 1,498 million ha under irrigation followed by Madagascar with over a million hectares under irrigation, and Botswana and Lesotho each with 1,000 ha under irrigation. Expansion of irrigation coverage will reduce vulnerability to unpredictable rainfall patterns, which undermine overall agricultural performance. Table 8: Trends in area under irrigation in the SADC region Country Irrigated land (1000 Ha) Percentage share of cropland (%) 1979-1981 1989-1991 1999-2001 2002 1979-1981 1989-1991 1999-2001 2002 Angola 75 75 75 75 3 3 3 3 Botswana 2 2 1 1 0.50 0.48 0.27 0.27 Congo, Dem R 6 10 11 11 0.1o 0.15 0.16 0.16 Lesotho 1 1 1 1 0.34 0.32 0.3 0.3 Madagascar 646 1000 1090 1090 25 37 37 37 Malawi 18 20 30 30 1 1 1 1 Mauritius 16 17 21 22 16 17 21 22 Mozambique 65 103 107 107 2 3 3 3 Namibia 4 4 7 7 1 1 1 1 South Africa 1,119 1290 1450 1498 9 10 10 10 Swaziland 58 65 70 70 34 35 39 39 Tanzania 117 144 162 170 4 4 4 4 Zambia 19 30 46 46 0.37 1 1 1 Zimbabwe 80 100 117 117 3 3 4 4 SADC 2,226 2,861 3,188 5,247 7.09 8.28 8.9 8.98 Source: FAO Statistical Year Book (2004) Trends in agricultural trade For centuries, countries have relied on trade in agricultural and food commodities to supplement and complement their domestic production. The uneven distribution of land resources and the influence of climatic zones on the ability to raise plants and animals has led to trade between and within countries and continents. Historical patterns of settlement and colonisation contributed to the definition of trade patterns and the emergence of an infrastructure to support such trade. More recently, trans-national companies with global production and distribution systems have taken over from post-colonial trade structures as a paradigm for the organisation of agricultural trade. Changes in consumer taste have encouraged the emergence of global markets and added to the significance of trade. Few countries 28 could survive the elimination of agricultural trade without a considerable drop in national income and none could do so without considerable reduction in consumer choice and well-being (Bruinsma, 2003). The SADC protocol on trade, as amended, envisages the establishment of a free trade area (FTA) in the region by 2008 and its objectives are to further liberalise intra-regional trade in goods and services, ensure efficient production, contribute towards the improvement of the climate for domestic, cross border and foreign investment; and enhance economic development, diversification and industrialisation in the region. The specific strategies adopted to achieve these objectives are the gradual elimination of tariffs; adoption of common rules of origin; harmonisation of customs rules and procedures; attainment of internationally acceptable standards, quality, accreditation and metrology; harmonisation of sanitary and phyto-sanitary measures; elimination of non-tariff barriers; and liberalisation of trade in services (SADC, 2006). Improving intra-trade in agricultural products will contribute significantly to the development of SADC. Any strategy aimed at increasing economic growth through trade in the SADC region should encompass the promotion of intra-regional trade. Prospects for intra-regional trade in the region are promising, especially since the signing of a Free Trade Protocol by SADC member countries in 2000. Intra-SADC trade has tripled between 1990 and 2002 and stood at 8.8% of total exports in 2002 (UNCTAD, 2002). Intra-SADC trade is expected to increase even further with the establishment of a Free Trade Area in the SADC region by 2008. The Free Trade Protocol is expected to increase trade significantly in the region, especially between South Africa and countries such as Malawi, Mozambique, Tanzania and Zambia (COMESA, 2003). South African supermarkets are already sourcing fruits and vegetables from African countries rather than importing them from overseas (Resnick, 2004). Agricultural exports and imports in SADC are largely dependent on climatic conditions, because of the heavy dependence of agricultural production on rainfall. The region tends to import more agricultural products when drought conditions are experienced and exports more products when favourable climatic conditions prevail. This is clearly illustrated by the trends in net trade for maize, rice and wheat (Figure 23). The SADC region is a net importer of cereals. Maize is the only major cereal that has generated a trade surplus in some years. South Africa and Zambia dominate maize exports accounting for 86% of exports in 2004. South Africa and Zimbabwe are the main importers of maize accounting for 55% of all maize imports into the region in 2004. Overall, SADC is a net importer of food. Figure 25 shows the trends in food aid (cereals), which move with the negative trade balance, being high during periods of poor rainfall. The value of tobacco and coffee exports has been decreasing since the late 1990s while tea and cotton exports have stagnated for most of the period. Imports of cotton and tobacco have fluctuated since the late 1980s, showing a rising trend particularly from around 2000. Tea and coffee exports have remained almost constant since the late 1980s. The region has managed to maintain a positive trade balance in the above cash crops. 29 Figure 23: Trends in net trade in maize, wheat and rice in the SADC region Maize Wheat Rice 400 200 0 -200 -400 -600 -800 -1000 1990 1992 1994 1996 1998 2000 2002 2004 M ill io n U S$ Figure 24: Trends in net trade in meat and milk in the SADC region Source: FAO (2006a) -250 -200 -150 -100 -50 0 50 100 150 200 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 M ill io n US $ Milk Beef Source: FAO (2006a) 30 Figure 25: Trends in food (cereals) aid in the SADC region 0 500 1,000 1,500 2,000 2,500 3,000 3,500 19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 '0 00 m et ric to nn es Source: FAO (2006a) Public expenditures and investment in agriculture Public expenditures in agriculture include short-term outlays as well as long-term investments. Investment in agriculture includes government expenditure directed to agricultural infrastructure, research and development, and education and training. Data showing the proportions of all central government expenditures on agriculture are incomplete in most African countries (FAO/World Bank, 2001). Human capital development is a key component of public agricultural investment. The composition and the total amount of public expenditure on agriculture are both of concern (Zepeda, 2001). Investment is the change in fixed inputs used in a production process. In the narrowest definition, it is the change in the physical capital stock, namely physical inputs that have a useful life of one year or longer such as land, equipment, machinery, storage facilities and livestock. Economists recognise that, though difficult to measure, a comprehensive agricultural investment measure should include improvements in land, development of natural resources and development of human and social capital in addition to physical capital formation. Human capital is the stock of knowledge, expertise or management ability. Since it is directly influenced by education, training and extension institutions variables such as educational level or extension contacts are often used as proxy measures. In addition, public and private expenditure on R&D is often used as a proxy for the level of human capital. Social capital is the stock of personal relationships and knowledge of institutions that an individual or household has. This affects the individual’s access to risk minimising inputs like credit, insurance and land title. In other words, social capital measures the ability to use social networks and institutions. Status, gender and group affiliations are often used as proxies for social capital in economic studies. However, education and transportation, as well as the range of social institutions available, can also influence social capital. 31 The relationship between government spending on one hand and agricultural growth and poverty reduction on the other has been examined in previous studies (Elias, 1985; Fan and Pardey, 1998; Fan, Hazell and Thorat, 2000; Fan, Zhang and Zhang, 2000). The findings generally indicate that government spending contributes to agricultural growth and poverty reduction. A common measure of government expenditure on agriculture relative to the size of the sector is to express public and private agricultural spending as a proportion of agricultural GDP. Fan and Rao (2006) observe that developing countries as a whole allocate less than 10% of their GDP to agriculture which is much less than in developed countries, which allocate more than 20 percent. Government spending on agriculture as a percentage of GDP for African countries was lower than the average for all developing countries and remained constant at 7.8% for the period 1980 to 1998. During this period, agricultural expenditure relative to GDP decreased in about two-thirds of African countries. Under the Maputo Declaration, SADC member countries have committed themselves to increasing agricultural budgets to at least 10% of their national budgets by the year 2008. This is in recognition of the fact that increased investment in the agricultural sector is necessary for the sector to contribute substantially to economic growth and to meeting the first millennium development goal. However, questions remain about what constitutes agricultural investments, how to allocate agricultural budgets among different sub-sectors in agriculture and how to ensure the efficient use of increased agricultural budgets. The case study of Zambia provides an example of how some of these questions may be addressed (Box 1). Box 1: Promoting quality public investments in Zambia’s agricultural sector The Ministry of Agriculture and Cooperatives (MACO) has an enormous task of expenditure management to increase productivity and reduce poverty in the long run. Budgetary allocations to agriculture state government’s intentions. The Government of Zambia finances agriculture through budget expenditures and fiscal advantages granted through the taxation system. This section only covers spending that is reflected in annual budgets. It includes the considerable budgetary support provided by donors but does not include the programmes and projects they implement outside the public budget. Trends in allocating public spending for agriculture Figure I shows trends in the share of the national budget allocated to the agriculture sector. The allocations cover all expenditure by the Ministry of Agriculture and agricultural sector programmes implemented through other ministries. Between 1981 and 1994, the share of public resources allocated to agriculture was above 14%. The highest share of 30% was in 1992. This coincided with the period when there was considerable state involvement in agricultural marketing. This period saw an expansion of state crop buying operations in smallholder areas; direct state control over grain supplies and pricing; heavy subsidisation of fertiliser to encourage its use by small farmers; and efforts to stabilise and subsidise urban consumer prices. Given the prominent role agriculture plays in poverty reduction, concern about declining public spending on agriculture is justified. Going by what has been planned under the Medium Term Expenditure Framework (MTEF), the allocation to 32 Figure I. Trends in the share of the national budget allocated to the agricultural sector, 1981 – 2006, Zambia Year 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 Pe rc en t o f t ot al b ud ge t agriculture in 2008 – the target for attaining the 10% budgetary allocation of the national budgets to agriculture set in the Maputo Declaration – will decline to 4% of total budget. Composition of the agriculture sector budget Figure II shows the six major public agricultural sector budget items. These include personnel emoluments, recurrent departmental charges (operational expenditure), poverty reduction programmes, capital expenditure, agricultural development programmes, agricultural infrastructure spending allocated through other ministries and other public payments to the sector. Personnel emoluments (PE) cover salaries, wages and pension contributions to all filled positions. Recurrent departmental charges (RDCs) are expenditures which support the operations of MACO staff covering fuel, spare parts, stationery, field allowances and supplies. Poverty Reduction Programmes (PRPs) support farmers in crop and livestock production and marketing. Capital expenditure supports civil works and purchase of movable and immovable assets. Agricultural development programmes are investments in the sector through loans and grants. Finally, agricultural infrastructure and agricultural social relief services are channelled through other ministries. Over the past six years, poverty reduction programmes had the largest share of 48% followed by agricultural development programmes at 18%. Personnel emoluments, agricultural infrastructure and social relief, recurrent departmental charges and capital expenditure follow in that order. 33 Figure II. Average share allocated to agriculture budget items in real prices, 2001 – 2006, Zambia Poverty Reduction Programmes/HI PC 48% Capital Expenditure 4% Agricultural development Programs 18% Recurrent Departmental Charges 7% Agricultural spending allocated through other ministries 9% Personnel Emoluments 12% Grants and Other Payments 2% Variation in amount requested, approved and released In each budget cycle, MACO has an opportunity to present a budget that reflects needs. In most instances MACO has not received all the resources requested in the years analysed with approved resources ranging from 30 – 91% of those requested. The average over the period was 72%. This cannot entirely be explained by the adoption of the cash budget system alone. Prior to the implementation of the cash budget system in 1994, resources approved for allocation were less than the amounts requested. The size of the budget approved for the sector is important but this does not correspond with the resources that will be released as the budget gets implemented. This is very crucial because non or partial release of funds means that several programmes will not be carried out. Budget allocation and agricultural policy objectives The budget is a tool or instrument available for use by government to achieve agricultural policy objectives. The Fifth National Development Plan (FNDP) has identified public agricultural investment priorities such as irrigation; agricultural infrastructure and land development; livestock development and animal health; and agricultural (crops, livestock and fisheries) research and extension as growth enhancing investments. These investments are considered the prime movers of agricultural growth and international competitiveness. The question is whether budget or funding priorities match FNDP priorities? Expenditures under the Poverty Reduction Programmes (PRPs) and agricultural funding directed through other ministries have been re-classified into three categories, namely: input subsidies, output subsidies and growth enhancing programmes. Input subsidies comprise programmes such as the fertiliser support programme, the food security packs, drought emergency recovery, out- grower schemes and support to Nitrogen Chemicals of Zambia (NCZ). Output subsidies are those 34 expenditures allocated to the Food Reserve Agency to purchase maize locally or externally. Finally, growth enhancing programmes include land development, livestock restocking and disease control, the rural investment fund, the rehabilitation and construction of earth dams and fisheries development. Figure III shows the funding trends across the three main categories. The results indicate that input and output subsidies have dominated poverty reduction and agricultural development programmes. This poses questions about the sustainability of such expenditure patterns and whether they contribute to long term agricultural growth, given that limited resources are directed towards growth enhancing measures. Figure III: Trends in the share of agricultural resources allocated to subsidies and growth enhancing programs, 2001 – 2006, Zambia 0 50 100 150 200 250 300 350 400 2001 2002 2003 2004 2005 2006 Salient features 1. Budget allocations to agriculture provide a statement of government’s intent. Since 2000, allocations for agriculture have ranged between 4.5% and 9% of total government spending. Over the past three years, they have hovered in the range of 5% to 6%. If Zambia is to meet the 10% target set in the Maputo Declaration, these levels will need to increase significantly over the coming years. 2. Analysis of actual budget disbursement reveals that allocations offer only a rough guide to actual government spending priorities. Since 2000, actual spending on agriculture has ranged from 55% to 119% of total authorisations, while spending above and below authorisations varies significantly by line item. While spending on the fertiliser support programme (FSP) tends to overshoot authorised levels, recurrent departmental charges (RDC) tend to fall consistently below authorised levels. These disparities suggest that the budget authorisation process is only a small part of the decision-making machinery affecting resource flows. Improved transparency and accountability in government budgeting require increased focus on decisions affecting the release of authorised funds. 35 3. The quality of public spending matters as much as the quantity. In some instances, government spending operates at cross-purposes to stated agricultural policy. Despite a stated policy of promoting crop diversification, budget allocations indicate an overwhelming focus on maize. Likewise, the subsidies currently administered by the Food Reserve Agency (FRA) sometimes conflict with government goals of stimulating private trade. In spite of a stated policy emphasis on irrigation development actual investment allocations remain small. In general, government investment in public goods has diminished as a share of budget outlays in favour of an increasing preference for subsidy payments to private individuals, particularly through fertiliser and maize price supports. While assessment of returns to alternative public expenditures is beyond the scope of this paper, rough indications are that declines in public research funding may compromise the technology development pipeline in key food security crops. The agricultural sector plays a crucial role in Zambia’s overall economy. As such, agricultural growth and increased competitiveness will remain the main avenues for poverty reduction and increased rural incomes. There is no doubt that public agricultural investments are associated with growth in per capita agricultural GDP. Therefore, expenditure management is one instrument government can use to achieve the required growth in this important sector. Given the fluctuations between approved and actual expenditures, policy analysis should dwell more on the latter. Source: Adapted from Govereh, Shawa and Malawo (2006) Conclusion Agriculture has potential to contribute to equitable growth for the SADC region despite its poor performance Despite its relatively low contribution to GDP (8%), agriculture has the potential to become an engine for broad based and equitable economic growth in the SADC region. This is because agriculture’s considerable potential to contribute to the growth of the region and to poverty alleviation has not yet been exploited. This is especially so in the lesser developed countries of the region where agriculture’s contribution to GDP is more than 30%. For agriculture to play a more meaningful role in contributing to economic growth and poverty alleviation, the sector’s performance needs to improve considerably. Agriculture’s performance in terms of productivity, achieving food security and generating income has not been impressive in the SADC region. For example, yield per hectare for major crops such as maize remains lower than the average in developing countries (2,000kg/ha for SADC versus 8,000kg/ ha for developing countries as a whole). Livestock production has increased only marginally in the last decade. The food security situation in the region remains undesirable with about 35% of the region’s population undernourished. The average proportion of undernourished people in the region has remained almost constant since the 1990s, but some individual countries (such as the Democratic Republic of Congo) have experienced increases of up to 40% in the proportion of undernourished people. 36 Although net agricultural production has more than doubled in the last four decades, net per capita production has decreased by 40% over the same period. Agricultural growth rates have averaged about 2.6%, which is almost the same as the 2.4% growth rate in population. This suggests that the region’s agricultural sector has not performed well in terms of producing sufficient food for the region’s population. The growth rate of 2.6% in SADC’s agricultural sector is far lower than the 6% growth rate proposed in NEPAD’s CAADP. Raising the agricultural growth rate to 6% will require substantial increases in productivity and will involve exploiting opportunities for crop diversification to include higher- valued crops. To achieve higher levels of agricultural productivity will require attention to both input and output market development as input intensification and market development are highly synergistic. Therefore, a holistic and comprehensive programme to achieve rapid productivity growth in the region requires progress in both input and output market development. However, while overall agricultural growth will undoubtedly be an effective engine for both economic development and poverty reduction in the region, the form and pathway that this growth takes will have a strong bearing on its effectiveness in reducing rural poverty. The challenge for countries in the region is to identify specific agricultural and rural development needs, and to focus investment in areas that will achieve optimal impact on food security and poverty reduction. Reducing poverty in the SADC region requires higher agricultural performance Poverty is pervasive in the SADC region with 40% (86 million people) of the region’s population living on less than a dollar a day. Most SADC countries are unlikely to achieve the target of 6% growth in the agricultural sector and the millennium development goal of reducing poverty and food insecurity by half by 2015 unless there is a dramatic increase in the agricultural sector’s performance in the next few years. Most of the poverty in the region is rural, therefore agriculture needs to play a major role in reducing the proportion of poor people. The majority of the poor in the SADC region are in the low-income countries of the DRC, Lesotho, Madagascar, Malawi, Mozambique, Tanzania, Zambia and Zimbabwe. These countries account for more than 70% of the total population but only about 15% of the total GDP of the region. Experience from other regions suggests that agriculture can be an effective vehicle for reducing poverty (Norton, 2004). The high levels of poverty in the region suggest that agriculture has not yet reached its full potential in terms of contributing to poverty reduction in the region. For agriculture to make a significant contribution to poverty reduction, productivity in the sector will have to increase substantially. This calls for the identification of factors currently preventing the agricultural sector from realising its potential productivity and taking steps to remove the constraints. Such constraints are likely to include both output and input markets. Increasing investment in productivity-enhancing inputs is crucial for improving agriculture’s performance Improving the performance of the agricultural sector in SADC will not be possible without a significant increase in investment in productivity-enhancing inputs such as infrastructure (including 37 irrigation and storage), human capital (extension, education and health) and improved technology (seed, fertiliser and so on). The level of use of most of these inputs is among the lowest in the world. For example, the average amount of fertiliser used in the region is currently 16 kg per ha, lagging behind Latin America, South and Southeast Asia which have averages of 86, 104 and 142 kg per ha respectively. Although fertiliser consumption has increased overall in the region by about 2.5% over the last decade, it has decreased in some of the SADC countries. The proportion of cultivated land under irrigation in SADC has increased by 5.1% to 5.9 % in the period 1980-2003 but the proportion remains the second lowest in the world. Experience from other developing regions of the world (such as Asia) suggests that significant progress in growing the agricultural sector is only possible with an expansion in the area under irrigation. Although the SADC region is not well endowed with water resources, the area under irrigation can be expanded and this requires additional investments in irrigation infrastructure. Issues for further investigation This review has covered a wide range of issues related to agriculture and poverty in the SADC region. However, due to lack of information and time limitations, it was not possible to address all the important issues including the following: Livestock production: The review has established that production in the livestock sector has not kept pace with population growth. Nevertheless, this sub-sector is gaining importance in the region. This is particularly true for the poultry sub-sector. An important question to be addressed is, ‘What measures need to be taken to raise the growth of the livestock sector to the level required to, at least, meet the consumption needs of SADC’s population?’ Fertilizer use: The review established that total fertiliser use in the SADC region has increased marginally in the last decade but some countries experienced a decline in fertiliser use. Why has fertiliser use decreased in these countries? What are the explanations for the marginal increase in the consumption of fertiliser in the SADC region? What measures should be (or are being) taken by governments to promote fertiliser use among smallholder farmers in the region? What contribution does fertiliser make to profitability in the production of major food crops and where would we expect to find high uptake of fertiliser? How do complementary inputs such as improved seed and irrigation water affect profitability related to fertiliser use in the region? Another key question is how government policies and programmes should be re-designed to achieve substantial increases in fertiliser use in the region. It is critical to identify cost-effective strategies for promoting fertiliser use in the region and to seek a regionally coordinated framework for implementing these strategies. Since the productivity boost from fertiliser use is often enhanced by irrigation, it will be critical to identify cost-effective investments in irrigation that will expand 38 the benefits from (and incentives for) adopting fertiliser by sm