DFID Annual Report 2008 - International Development Committee Contents


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.





 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 19 February 2009