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 Africa will be able to
feed less than half of its population by 2015. A major increase
in agricultural productivity is absolutely essential.
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 Africa's
Development (NEPAD) shifted its focus to implementation and fixed
targets in its work though an agricultural markets development
programme, food security and nutrition programme and agricultural
research and the dissemination of technology. To achieve the first
Millennium Development Goal, the Comprehensive Africa Agricultural
Development Programme has set a target of improving agricultural
productivity at an average growth rate of 6% per year, with particular
focus on small-scale farmers, especially women. Private-sector
participation is especially important to Pillar Two of the CAADP,
which targets improvement of rural infrastructure and trade-related
capacities for increased market access.
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
12. 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, Africa's food production could be tripled by 2015.
13. 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.
14. 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 nine 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 Malawi and in Ghana we have had to develop this
capacity from scratch as it currently doesn't exist in the agricultural
sector.
15. 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 Dar es Salaam port in Tanzania and Beira
port in Mozambique well ahead of when it normally would from a
business only perspective.
In Ghana we have initiated the Ghana Grain Partnership.
As opposed to Tanzania where the approach adopted by Yara was
to look at improving access to inputs, in Ghana a similar value
chain approach has been adopted but beginning from a market demand
side with the aim to strengthen key staple grain markets integral
to improved national food security. Currently there are more than
10 partner organisations involved along the value chain in this
partnership alliance.
16. In Malawi a similar value chain initiative,
involving a range of partners, has been initiated to improve farmer
outputs beyond maize, including rice, cotton and legumes.
17. 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.
18. 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 Alliance for a Green Revolution in Africa
(AGRA) in assisting African countries to access new sources of
financing for the green revolution. The Global Fund should be
based in Africa; support the accomplishment of the CAADP goals;
support rapid scale up of successful national and private sector
approaches in agriculture; and speed up the attainment of the
MDG goal on hunger and extreme poverty.
RECOMMENDATIONS
19. African farmers lack financing to buy
critical inputs such as fertilizers and high-yield seeds. The
donor countries would help Africa by focusing much more on helping
African farmers to gain access to the inputs they need for higher
productivity. An exemplary model is Malawi's voucher programme
for smallholder farmers, which gives impoverished farmers in Malawi
the access to a modest amount of fertilizer and improved seeds
per household, at an affordable price. DFID is one of Malawi's
biggest donors, and continues to support the voucher programme.
In Malawi the fact that DFID do not have an agricultural advisor
or growth and livelihoods advisor in country means that their
role, though beneficial, has less depth than otherwise would be
the case. This is particularly so in terms of ensuring that these
kinds of agricultural subsidy voucher schemes can be developed
into smart subsidies that promote private public sector growth
orientated partnerships along the agricultural value chain. It
would seem to us that at present there is unprecedented support
for a multi-sector approach to scaling up agricultural production
in Africa but this requires an investment from DFID on the ground
to promote and drive sustainable initiatives that can go to scale.
20. 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.
21. DFID, and the UK development community
as a whole, can make a potentially significant contribution to
African agriculture; indeed they already do in a number of ways.
Improving the way in which UK support for agriculture is delivered,
particularly through supporting collaborative frameworks with
the private sector, and by working with European and foreign agencies
to encourage others to do the same, is firmly in the UK interest
and should be an important part of DFID's overall programme in
Africa.
22. 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.
23. 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.
24. 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.
25. Smart partnership and scalability is
key. To date in Africa at least in agriculture there have been
very few examples of multi-sector partnership to effect change
on a wide scale. What is required is a collective partnership
approach that brings all the various initiatives by NGOs, donors
and Governments and business alike into a loose affiliated partnership
agreeing to work to a common goal, in this case, achieve food
security in the country. To bring this about, a key missing ingredient
is local institutions who have the inter sector knowledge and
skills to facilitate these kinds of multi-sector partnerships.
Together with NORAD we have initiated a partnership approach to
develop these multi-sector facilitative institutions working with
partners such as the African Institute of Corporate Citizenship
(AICC) in Malawi and the Agricultural Council of Tanzania to ensure
sustainability of any initiatives we may help to catalyse. We
would like to see these partnership development facilities at
a local level as a key part of DFID's activities in Africa. In
the past there has been support for this approach in another area,
as it related to HIV & AIDS, in the formation of HIV &
AIDS Business Coalitions which in many cases proved very effective.
26. A key to agricultural success in Africa
will also be in the efficient functioning of state owned agriculture
related enterprises working in coordination with ministries. In
this capacity the development planning capabilities of institutions
responsible for the ordering of key inputs is also critical. Improved
planning, ordering and tendering frameworks could have a strong
net impact on leveraging cost efficiencies in the procurement
of inputs when done at a national level. The support by DFID for
improved corporate governance training for state owned enterprises
aligned to the agriculture sector would also be a key to improved
efficiency of supply.
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