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| For Africa's farmers it's government, not big business, that is key | |
| (about 4 hours later) | |
| Africa’s agriculture sector is on the up. After decades of stagnation, the continent’s farms have registered sustained growth in productivity every year since 2005. That’s good news for the 520 million Africans dependent on farming for their livelihoods, and the millions more who rely on them for their food. | Africa’s agriculture sector is on the up. After decades of stagnation, the continent’s farms have registered sustained growth in productivity every year since 2005. That’s good news for the 520 million Africans dependent on farming for their livelihoods, and the millions more who rely on them for their food. |
| But African farmers still produce far less food per hectare than the world average. Yields for cereal farmers in South Africa, home to one of the continent’s most productive agriculture sectors, are less than half those of their UK counterparts. In central African states such as Niger and Eritrea, they are less than a 10th. | But African farmers still produce far less food per hectare than the world average. Yields for cereal farmers in South Africa, home to one of the continent’s most productive agriculture sectors, are less than half those of their UK counterparts. In central African states such as Niger and Eritrea, they are less than a 10th. |
| One of the key differences between the UK and Africa is the role of the private sector. In the UK, as in much of the developed world, corporations control a large chunk of the food chain. Not so in Africa. So should big business have a greater role in the continent’s agriculture sector? And, if so, what? | One of the key differences between the UK and Africa is the role of the private sector. In the UK, as in much of the developed world, corporations control a large chunk of the food chain. Not so in Africa. So should big business have a greater role in the continent’s agriculture sector? And, if so, what? |
| Panellists at a Guardian public debate, supported by the global beverage firm Diageo, had differing views but agreed that government, not corporate, leadership was the critical factor in developing agriculture. | Panellists at a Guardian public debate, supported by the global beverage firm Diageo, had differing views but agreed that government, not corporate, leadership was the critical factor in developing agriculture. |
| What is ‘inclusive business’? | What is ‘inclusive business’? |
| At the beginning of the debate Diageo’s John O’Keeffe introduced the idea of inclusive business, the latest buzzword in business and development circles. Behind the jargon, he explained, is a basic proposition: multinationals have lots of spending power, while Africa has lots of poor farmers hoping to increase productivity; when those farmers are integrated into the so-called “value chains” of big business and helped to improve their yields, they can see their livelihoods improve while corporations get the raw materials they need. | At the beginning of the debate Diageo’s John O’Keeffe introduced the idea of inclusive business, the latest buzzword in business and development circles. Behind the jargon, he explained, is a basic proposition: multinationals have lots of spending power, while Africa has lots of poor farmers hoping to increase productivity; when those farmers are integrated into the so-called “value chains” of big business and helped to improve their yields, they can see their livelihoods improve while corporations get the raw materials they need. |
| In Kenya, the multinational brewer now sources sorghum (an alternative to millet in beer) from 30,000 contracted farmers. That’s 30,000 farmers with a stable income who didn’t have one previously, O’Keeffe noted. Plus, Kenyan consumers can now enjoy an affordable, locally produced pint of beer, while the government can benefit from new tax revenues. | In Kenya, the multinational brewer now sources sorghum (an alternative to millet in beer) from 30,000 contracted farmers. That’s 30,000 farmers with a stable income who didn’t have one previously, O’Keeffe noted. Plus, Kenyan consumers can now enjoy an affordable, locally produced pint of beer, while the government can benefit from new tax revenues. |
| Multinationals bring commercial pressures | Multinationals bring commercial pressures |
| Catherine Krobo-Edusei agreed, although with some qualifications. Her charity, Eden Tree, works with local vegetable producers in Ghana to help them grow and market their goods. The firm has one major corporate client that supplies food to the international airline industry. Get rid of multinationals and half of her business would disappear overnight, she said. | Catherine Krobo-Edusei agreed, although with some qualifications. Her charity, Eden Tree, works with local vegetable producers in Ghana to help them grow and market their goods. The firm has one major corporate client that supplies food to the international airline industry. Get rid of multinationals and half of her business would disappear overnight, she said. |
| Even so, she has no illusions about the trade-offs of supplying large, powerful corporations. On the one hand, multinational buyers can offer new market opportunities and technical know-how, which African farmers need. On the other hand, they bring with them a raft of new (and not always) welcome commercial pressures. | Even so, she has no illusions about the trade-offs of supplying large, powerful corporations. On the one hand, multinational buyers can offer new market opportunities and technical know-how, which African farmers need. On the other hand, they bring with them a raft of new (and not always) welcome commercial pressures. |
| “When you are working with a multinational, you are forced to keep reducing your margins. You then panic, because if you refuse you are then losing a chunk of your business … But there’s nothing you can do about it unless they decide to change,” she said. | “When you are working with a multinational, you are forced to keep reducing your margins. You then panic, because if you refuse you are then losing a chunk of your business … But there’s nothing you can do about it unless they decide to change,” she said. |
| When you are working with a multinational, you are forced to keep reducing your margins | When you are working with a multinational, you are forced to keep reducing your margins |
| Na Ncube, struck a more sceptical note. Speaking from her vantage point as the director of a charity working with small-scale farmers in Zimbabwe (where big agricultural businesses are few and far between), she said that the role of big business was “peripheral” at best. | Na Ncube, struck a more sceptical note. Speaking from her vantage point as the director of a charity working with small-scale farmers in Zimbabwe (where big agricultural businesses are few and far between), she said that the role of big business was “peripheral” at best. |
| Central to her vision is farming for Africans by Africans. That’s the surest way to guarantee food security and food diversity, as well as to retain domestic control over the region’s food systems and its agricultural land, she said. Farmers that join the commodity chains of big business, in contrast, risk losing their independence. “You become a manager within a chain; someone is telling you what to grow and when to grow it,” Ncube said. | Central to her vision is farming for Africans by Africans. That’s the surest way to guarantee food security and food diversity, as well as to retain domestic control over the region’s food systems and its agricultural land, she said. Farmers that join the commodity chains of big business, in contrast, risk losing their independence. “You become a manager within a chain; someone is telling you what to grow and when to grow it,” Ncube said. |
| Bill Vorley, principal researcher at the International Institute for Environment and Development, also expressed hesitation at what he saw as an over-reliance on big business. For reasons of enlightened self-interest, individual corporations might well end up creating “islands of excellence”. | Bill Vorley, principal researcher at the International Institute for Environment and Development, also expressed hesitation at what he saw as an over-reliance on big business. For reasons of enlightened self-interest, individual corporations might well end up creating “islands of excellence”. |
| These are one-off cases that work for one specific crop, yet expanding this model for all agricultural sectors across all of Africa is a different proposition entirely, said Vorley. So Kenya’s sorghum farms may be booming, but Diageo’s value chain does nothing for the country’s rice growers or livestock producers. | These are one-off cases that work for one specific crop, yet expanding this model for all agricultural sectors across all of Africa is a different proposition entirely, said Vorley. So Kenya’s sorghum farms may be booming, but Diageo’s value chain does nothing for the country’s rice growers or livestock producers. |
| For Vorley, talk of involving big business in African agriculture detracts from companies’ core practices – treating suppliers fairly, for instance, or paying taxes. It also detracts from where the “real heavy-lifting” of farming in Africa is currently being done: the non-corporate sector, where smallholder producers proliferate. | For Vorley, talk of involving big business in African agriculture detracts from companies’ core practices – treating suppliers fairly, for instance, or paying taxes. It also detracts from where the “real heavy-lifting” of farming in Africa is currently being done: the non-corporate sector, where smallholder producers proliferate. |
| There’s a danger, he added, of putting “too many of our expectations on big business rather than on SMEs [small and medium-sized enterprises] and the informal sector, which is doing so much of the trade between small farmers and consumers.” | There’s a danger, he added, of putting “too many of our expectations on big business rather than on SMEs [small and medium-sized enterprises] and the informal sector, which is doing so much of the trade between small farmers and consumers.” |
| Should African farmers be more commercial? | Should African farmers be more commercial? |
| Asked from the floor if the ambition of smallholder farmers shouldn’t be to become more “commercial”, Ncube conceded that African agriculture needed to massively ramp up its productivity. Yet she said this could be achieved through improving existing agricultural practices, which were more ecological and oriented more towards local consumption, rather than resorting to the methods of multinational agribusiness. | Asked from the floor if the ambition of smallholder farmers shouldn’t be to become more “commercial”, Ncube conceded that African agriculture needed to massively ramp up its productivity. Yet she said this could be achieved through improving existing agricultural practices, which were more ecological and oriented more towards local consumption, rather than resorting to the methods of multinational agribusiness. |
| For Ncube, African governments – not big business – were the lynchpin to driving change in the sector. Legislators should earmark 10% of state budgets for agriculture, she argued. Krobo-Edusei identified access to finance as a breakthrough issue too, suggesting that legislators mandate domestic banks to make preferential loans to poor farmers. | For Ncube, African governments – not big business – were the lynchpin to driving change in the sector. Legislators should earmark 10% of state budgets for agriculture, she argued. Krobo-Edusei identified access to finance as a breakthrough issue too, suggesting that legislators mandate domestic banks to make preferential loans to poor farmers. |
| Businesses of all sizes – big and small – have a role to play, he said, as do governments and civil society | Businesses of all sizes – big and small – have a role to play, he said, as do governments and civil society |
| Several attendees also expressed concerns about big business, especially around the checks and balances needed to ensure that Africans profited from corporate investment and not just foreign shareholders. O’Keeffe responded by clarifying his belief that multinationals were neither the cause nor the panacea for “all the ills” in African agriculture. Businesses of all sizes – big and small – have a role to play, he said, as do governments and civil society. | Several attendees also expressed concerns about big business, especially around the checks and balances needed to ensure that Africans profited from corporate investment and not just foreign shareholders. O’Keeffe responded by clarifying his belief that multinationals were neither the cause nor the panacea for “all the ills” in African agriculture. Businesses of all sizes – big and small – have a role to play, he said, as do governments and civil society. |
| So what specific role did O’Keeffe have in mind for large businesses? One suggestion centred on the responsible use of corporations’ massive buying power. Consider Africa’s large-scale food processing capacity, which is chronically ill-equipped at present. With the right kind of procurement guarantees, big companies could club together and persuade investors to put up the cash to make the critical improvements necessary. | So what specific role did O’Keeffe have in mind for large businesses? One suggestion centred on the responsible use of corporations’ massive buying power. Consider Africa’s large-scale food processing capacity, which is chronically ill-equipped at present. With the right kind of procurement guarantees, big companies could club together and persuade investors to put up the cash to make the critical improvements necessary. |
| Standard-setting is another area where all the panellists saw a role for business. O’Keeffe gave the example of recent efforts by Diageo to assess human rights abuses in its supply chain. “Just by asking the questions and forcing our suppliers to adhere to guidelines does raise the bar,” he said. | Standard-setting is another area where all the panellists saw a role for business. O’Keeffe gave the example of recent efforts by Diageo to assess human rights abuses in its supply chain. “Just by asking the questions and forcing our suppliers to adhere to guidelines does raise the bar,” he said. |
| Krobo-Edusei agreed, noting that few regulatory authorities either enforce quality standards or promote sustainable agronomic practices. “With multinationals, they require these standards. So if you’re going to deal with a multinational as an SME, then you have to up your game,” she said. | Krobo-Edusei agreed, noting that few regulatory authorities either enforce quality standards or promote sustainable agronomic practices. “With multinationals, they require these standards. So if you’re going to deal with a multinational as an SME, then you have to up your game,” she said. |
| On the panel: the role of multinationals in African agriculture | On the panel: the role of multinationals in African agriculture |
| Eliza Anyangwe (Chair) International development journalist | Eliza Anyangwe (Chair) International development journalist |
| John O’keeffe President, Diageo Africa | John O’keeffe President, Diageo Africa |
| Na Ncube Director, Global Native | Na Ncube Director, Global Native |
| Catherine Krobo-Edusei Founder and managing director, Eden Tree | Catherine Krobo-Edusei Founder and managing director, Eden Tree |
| Bill Vorley Principal researcher, International Institute for Environment and Development | Bill Vorley Principal researcher, International Institute for Environment and Development |