Modernizing Food Security in Africa

Posted by on Nov 6, 2013

Modernizing Food Security in Africa

One of the glaring ironies of Africa remains food insecurity and hunger in the midst of plenty. The continent has plenty of arable land, much of it is not used for cultivation and whatever is cultivated it is done so, by and large, without modern technology for production and with little, if any, consideration of optimal financial structuring for the farmers and for the society at large. Consequently, in effect when it comes to food security, much is left to chance and too many risks are unmitigated. Of course, commercial farmers on the continent do the best they can to insure against some of their risks. Te private sector insurance against agriculture is, however, known to be an incomplete market, it is as such inadequate and sub-optimal for meaningful risk mitigation in the sector.

 

Food security has a substantial ‘public good’ dimension. When droughts, floods, and disease wipe out production, the farmers do suffer, but so does the society at large. Food shortages and sharp price increases are hard to manage for most in the society. Significantly, in the process, the poor suffer the most- many of them go hungry. Widespread malnutrition and even death do obtain. More often than not, socio-political instability also follows.

 

Given the continent’s rapid growth over the past decade, and in view of the expected rise in living standards, it is a fact that food consumption is set to rise considerably and consistently. Meanwhile, worldwide food production has not kept pace with the acceleration in demand arising from the rapid increase in the standard of living of the population in the emerging economies. In South East Asia alone, an estimated one billion people have joined the rank of middle class with vastly different levels of food consumption. Africa’s own middle class is rising too. It is not surprising that access to land and investment in agriculture activities are in vogue again. On the continent there is a growing scramble by foreign investment houses for arable land. This has raised some socio-political concerns too. Given the history of colonialism and land dispossession, this is understandable.

 

Mitigating the various risks in food security in Africa requires a number of interventions, amongst them three are the most critical. First and foremost is the clarification of land use regime. Whether in the form of private ownership or via long-term lease arrangements, the commercial use of land requires socio-political and legal clarity.  Second is the application of modern production techniques and the promotion of sustainable institutional structures for ongoing research and development in the complex field of food and agriculture technologies. The third, and a vital, element is the use of appropriate public-private partnership to put in place an effective,efficient and sustainable crop insurance system.

 

Worldwide, crop insurance has, conventionally, been perceived as a private sector activity and as such left to the insurance market to provide solutions. And, the insurance industry has provided some solutions too. However, the existing solutions are, by and large, inadequate and do not take care of the public good dimensions of food security and agriculture production.

 

From a national and social interest perspective, crop insurance should be designed as a package of private and public risk mitigation solution. Internationally, there is a growing awareness that the existing private insurance market solutions are not effective. At the same time, governments’ support of the agriculture sector is often in the form of drought relief or some or other disaster relief interventions. These governmental schemes are typically neither timeous nor efficient. As such the combination of both private sector insurance and public sector relief does not provide a socially optimal and technically effective food security platform.

 

With proper risk identification techniques and appropriate risk mitigation technologies, it is possible to structure a pooled private and public partnership (PPP) fund for insuring crop security. Private sector insurance and reinsurance technologies could optimize the outcome. For Africa this is a vital and immediate task. Of course, such a fund cannot be implemented at the continental level. Rather, at the country level, each country could put in place its own PPP national crop insurance scheme. Over time, such national schemes could gain the experience, institutional records and sustainability. Their organic and business driven consolidation would then obtain over time.