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Memorandum submitted by Yara International
SUMMARY
1. Yara International is pleased to submit this memorandum to the House of Commons International Development Committee to aid its inquiry into the Department for International Development (DFID) Annual Report 2008.
2. Yara is a Norwegian chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. Yara is the only global fertilizer company with a long-term presence in Africa. We, at Yara, strongly believe that addressing the challenge of African agriculture in the context of global food security is essential to the continent's overall economic development. It is alarming that while modern agriculture is constantly becoming more effective 854 million people still suffer from hunger and malnutrition.
3. Through Yara's support for an African Green Revolution we have been helping farmers in their fight against poverty. We have also pioneered innovations in public-private partnerships in a number of African countries where agriculture still forms the backbone of their respective economies.
4. We share with the Committee the concern that funding agricultural development has not been sufficiently prioritised and that donors have shifted their focus to other sectors. We believe that improving the profitability of agriculture is central to reducing rural poverty levels, which is necessary to meet the United Nation's Millennium Development Goal of tackling overall poverty. DFID needs to recognise this objective in its funding allocations, in the priorities it sets in its Country Assistance Programmes and in the agreements in reaches with recipients of budget support for priorities in allocating those funds.
5. At a Business Call to Action meeting recently hosted by Prime Minister Gordon Brown, UNDP and DFID, businesses were invited to demonstrate their commitment to growth and development through increasing investment, creating jobs and increasing skills. We believe that no one sector alone can help bring about change. What is required is a collective partnership approach that brings together NGOs, donors and businesses alike to agree to work together along different agricultural value chains towards a common goal of improving agricultural growth and competitiveness in Africa. DFID's approach to improving investment climates alongside supporting the development of markets such as agriculture is most welcome. Initiatives such as the recently launched African Enterprise Challenge Fund are a positive contribution to improved inter sectoral collaboration but need to be entrenched with mainstream support from DFID programmes for agricultural growth and development.
AFRICAN AGRICULTURE AND POVERTY
6. We hope that this inquiry signals the prioritising of sustainable agriculture and its immense potential to bring real benefits to poor farmers in developing countries and lasting growth, and to enhance DFID's capacity to address the current food crisis in its aid strategy going forward.
7. Africa is the only
region in the world where poverty is on the increase. Agriculture is at the
core of African society. It employs the majority of its people and for many
countries provides the major share of export earnings. At the current pace, it
is estimated that
8. With the current food crisis threatening political stability there is need for concrete and coherent action. For the first time in 25 years, the World Bank's World Development Report 2008 prioritised agriculture and development and stressed the importance of increased investment in agriculture in developing countries to trigger growth and help meet the Millennium Development Goals on poverty and hunger by 2015.
9. The Comprehensive Africa Agriculture Development
Programme (CAADP) under the New Partnership for
10. At the UN FAO Summit on food security on 3 June, UN Secretary-General Ban Ki-moon argued that boosting food production and revitalizing agriculture was essential to respond to the food crisis and ensure food security. Agriculture is referred to throughout the Declaration of the High-Level Conference on World Food Security. Published on 5 June 2008, the expansion of and investment in agriculture and agribusiness is seen as crucial to resolve the global food crisis.
11. For the first time in its 33-year history, the ACP-EU Council of Ministers has come out with a joint political resolution on a number of issues including food prices. The ACP countries acknowledged that only sustainable and well-financed regional and national agriculture policies will lead to stable medium and long term solutions.
AFRICAN GREEN REVOLUTION
13. A long-term
concerted effort to transform smallholder agriculture, to increase productivity
and sustainability, and to end poverty and hunger requires a sustainable and
uniquely African green revolution. With better access to fertiliser, improved
seed and water, coupled with more hardy plant varieties and agronomic
expertise,
14. We recognise that the green revolution is not a novel concept. The idea has been around for decades; it has been attempted, but not fully implemented - and it has not always succeeded. However, in recent years it has resurfaced, not least due to repeated calls from the former Secretary-General of the United Nations, Kofi Annan.
15. In this context
Yara has initiated the Tanzanian Agricultural Partnership, together with
partners including NORAD, Norfund, Prorustica, Agricultural Council of Tanzania
and the Tanzanian National Microfinance Bank & others, looking at the role
inputs plays across various interconnected agricultural value chains from
farmer field school promotion, to agro dealer development, to finding solutions
to the massive void in rural agricultural credit and the scope for initiatives
such as warehouse receipting, to efficiencies at the port, to the role of
government policy interventions in the process. What has become clear to us
through undertaking this partnership is the need to engage the whole value
chain uniformly rather than deal independently with a collection of individual
links in the chain. A key component of the success of the Tanzanian pilot was
the support of quick release funding from NORAD that helped to fast track the
adopted approach in a series of districts. Subsequently this led to the
beginning of a national roll out of this value chain approach in less than 9
months. Equally important was their support in developing the capacity of a
local broker and facilitator organisation, in this case the Agricultural
Council of Tanzania, to build their capacity to promote and develop such a
multi-sector value chain partnership. In each country that we have initiated
such a partnership the need for a local and neutral partnership facilitative
platform has been key. In
16. A key feature of
the Tanzanian Agricultural Partnership was the commissioning of an independent
report on the efficiency of port facilities when it comes to delivery of inputs
into the country. The report found major inefficiencies which bring significant
costs to importing fertiliser into the country. This led Yara to develop a
strategy that would begin to harmonise transport linkages, including ports, in
the delivery of fertiliser. Yara, as part of its commitment to the green
revolution in Africa, have agreed to look at the feasibility of developing port
facilities at both
In
17. In
18. Currently discussions are underway to form of a private sector-driven, Sub-Sahara Africa based non-profit consortium African Grains Partnership. The Partnership will be enterprise, productivity and incomes focused, and will intensify farmer production, enhance farmer profitability and incomes, and promote new African agri-business through the entire grain and staples value chains.
13. African
ministers of agriculture and finance, gathered at the Oslo Green Revolution
conference on 31 August 2007, recommended the establishment of a financing
framework: Global Fund for the Africa Green Revolution. The proposed Global
Fund for the Africa Green Revolution will provide access to large-scale
financing for the green revolution to African governments, civil society and the
private sector, via grants instead of via loans. The Global Fund for the Africa
Green Revolution seeks to complement and work closely with the
RECOMMENDATIONS
14. African farmers lack financing to buy critical inputs such as
fertilizers and high-yield seeds. The donor countries would help
15. Contrary to views held by certain NGOs, what African farmers need is not to reduce fertiliser use from nine kilograms a year to none; they need to increase it from nine to 50 to meet the commitment made by agricultural scientists in Africa through the New Economic Partnership for African Development (NEPAD). As fertiliser usage increases across the continent there is however a critical need for a joined up approach to educating farmers as to appropriate use of inputs and to develop the capacity of local agro dealer networks and extension service delivery officers to ensure fertilisers are applied appropriately and in moderation in a way that is suited to the needs of local environments.
16. DFID, and the
17. The approach the donor community adopts has to be holistic. Businesses, governments, donors and NGOs need to address value chains in their entirety. Even if we only serve a specific component of that chain we have to understand that we are interdependent on the whole and to facilitate linkages at all levels of the value chain in a way that promotes sustained growth and development.
18. Support to agriculture should not be seen in isolation. Good agricultural outcomes can be achieved by investment in related sectors such as infrastructure and we would agree with DFID that the building of roads and port facilities enables farmers to market their crops. We see it as critical need that private sector initiatives, such as Yara's suggested investments into improved efficiencies in Beira and Dar es Salaam ports, are supported through coordinated inter sectoral action. This is critical in order to develop efficient and competitive agricultural development corridors linking improved logistic constraints and cost efficiencies to inland agricultural hinterlands in the host country and land locked neighbouring countries. Unless infrastructure is improved, there is little hope for real progress in reversing the alarming food insecurity trends or in making agriculture an engine of economic growth.
19. Just as there was a revolution in microfinance there needs to be a similar rethink as to the critical role of rural agricultural credit. The answer requires not so much a new invention, but an alignment of government / donor guarantees, commercial bank loans, microcredit players with micro crop insurance and even the use of cell phones and smart cards to come up with a mechanism that works as we have been able to begin to demonstrate with some of our partners such as NORAD and Norfund in Tanzania. A key strength of donors is that they have the ability to work with governments simultaneously in a range of countries to fast track successful pilot initiatives to a point where private sector involvement is a natural consequence of their involvement.
20. Smart partnership
and scalability is key. To date in
21. A key to
agricultural success in |