Farming in Africa has always been a risky business, often at the mercy of bad weather, drought, low productivity, bad politics and non-remunerative fluctuating farm product prices. Consequently, Africa has long been confined to exporting primary commodities which faced volatile prices and unfavourable terms of trade. However, the recent surge in commodity prices could be changing the face of commodity trade and its fundamentals. The rise in prices of several commodities produced in Sub Saharan Africa is predicted to continue for the far future. For instance, food crop prices have increased globally by more than 85 percent since 2004 and they are predicted to remain above 2004 levels until 2015. This should be good and not bad news for African households and policy makers. It’s the right moment to prioritise modernisation of agriculture as a tool to fight poverty and achieve the millennium development goals by 2015 by taking advantage of the global price incentives to boost household incomes. The food price increases has been predicted as doom and gloom for the continent. However, this needs not to be the case, because there are benefits to reap in the medium and long term for African producers. 48 out of 53 African countries are dependent on commodity exports, including primary agricultural products, minerals and oil products to earn foreign exchange. The recent price boom has affected all these commodities. Africa is a natural basket of most these commodities and enjoys an absolute advantage on their supply.
Most specifically, the food related commodity price increases are attracting alot of global attention. The World Bank warns of more than 100m people, mainly in Sub Saharan Africa, that could be severely affected and plunged deeper into poverty. The Bank president has called for a “new deal for global food policy” to the tune of US$ 500m to support the World Food Programme. In Uganda, where most households are net food producers, the country could benefit greatly from the high food prices through regional food exports.
Oil prices are also booming, a major commodity now widely produced in Africa. Africa contributes 15 % percent of United States (US) energy requirements and is also major supplier to China. This ensures a wind fall of oil revenues to the continent especially to major African producers like Nigeria, Angola, and Equatorial Guinea, Sudan, Chad, Gabon, Cameroon, DRC, Gambia, Libya and soon Uganda. Investing these revenues wisely in education, health, and other sectors of the economy and upgrading of the continent’s physical infrastructure could turn the plight of the continent upwards forever.
A rise in global bio-fuels` production (fuel from crops like sugarcane, maize, soybeans and palm oil) especially in US, Europe and Brazil is another opportunity for Africa. With vast unutilised agricultural land, Africa can grow and cheaply supply bio-fuel crops compared to subsidized and expensive sources in US and Europe. The global drive against climate change and need for energy security will continue to make bio-fuel production a potential source of hope for poverty reduction in Africa if international and national policy makers seize this opportunity. A country like Uganda could be global supplier of grains both for food and bio-fuels under these price incentives.
China and India (the Asian Drivers) are rapidly industrialising and they need metals and ores for their hungry and thirsty construction and manufacturing sectors. The demand for metal ores in China will continue to push the prices for these commodities higher and higher.higher . The changing diets of middle income China and India will contrive to elevate food prices of protein related product likeproductslike milk, meat, pork and eggs in the long run. China’s GDP growth has averaged more than 9 percent since 1995 and makes up to 15.4 percent of the world economy. The country also consumes a third of the world’s iron ore, coal and steel, it is the world largest importer of copper and aluminium and the second largest importer of oil behind the US. Coupled with continued percapita income growth, change in diets, the “Asian drivers”, will lead to both a strong rise in demand for food and mineral commodities and sustain the high prices in long term. China and India also account for 40 percent of world commodity consumers and 20 percent of global purchasing power and their consumption power is predicted to more than double by 2020. All this presents enormous opportunities for Africa’s household commodity producers in form of increased farm incomes once strategically tapped. Its time to revive the Kilembe copper mines among others for Uganda.
The conclusion of the Doha Development Agenda in Geneva presents a tremendous opportunity. World Trade negotiators in Geneva are about to conclude a development trade round which was launched in 2001 in Doha Qatar, which could see shifts in agricultural subsidies in rich countries and reduction in import tariffs in the advanced economies. This could lead to a rise in prices for certain commodities, like cotton and sugar hence increasing income opportunities for commodity dependent developing countries like Uganda Benin, Mali and Burkina Faso for the case of cotton.
In final analysis there is plenty of opportunity for Sub Saharan Africa to turn around its “development puzzle” and get out of poverty by 2015. A country like Uganda can focus on becoming a food basket for the region; refocus its Poverty Eradication and Action Plan. Organise farm households into small plot intensive farming (SPIN-farming) to produce economically viable commodities. For instance, clusters like North Busiro Development Foundation of Prof. Gilbert Bukenya`s upland rice is a venture in the right direction. Also “Boona Bagagawale” and other poverty eradication programs should prioritise agriculture to produce strategic commodities that are going to be in high demand locally and globally, now and in the future rather than cash transfers to households or increasing food aid.
Most specifically, the food related commodity price increases are attracting alot of global attention. The World Bank warns of more than 100m people, mainly in Sub Saharan Africa, that could be severely affected and plunged deeper into poverty. The Bank president has called for a “new deal for global food policy” to the tune of US$ 500m to support the World Food Programme. In Uganda, where most households are net food producers, the country could benefit greatly from the high food prices through regional food exports.
Oil prices are also booming, a major commodity now widely produced in Africa. Africa contributes 15 % percent of United States (US) energy requirements and is also major supplier to China. This ensures a wind fall of oil revenues to the continent especially to major African producers like Nigeria, Angola, and Equatorial Guinea, Sudan, Chad, Gabon, Cameroon, DRC, Gambia, Libya and soon Uganda. Investing these revenues wisely in education, health, and other sectors of the economy and upgrading of the continent’s physical infrastructure could turn the plight of the continent upwards forever.
A rise in global bio-fuels` production (fuel from crops like sugarcane, maize, soybeans and palm oil) especially in US, Europe and Brazil is another opportunity for Africa. With vast unutilised agricultural land, Africa can grow and cheaply supply bio-fuel crops compared to subsidized and expensive sources in US and Europe. The global drive against climate change and need for energy security will continue to make bio-fuel production a potential source of hope for poverty reduction in Africa if international and national policy makers seize this opportunity. A country like Uganda could be global supplier of grains both for food and bio-fuels under these price incentives.
China and India (the Asian Drivers) are rapidly industrialising and they need metals and ores for their hungry and thirsty construction and manufacturing sectors. The demand for metal ores in China will continue to push the prices for these commodities higher and higher.higher . The changing diets of middle income China and India will contrive to elevate food prices of protein related product likeproductslike milk, meat, pork and eggs in the long run. China’s GDP growth has averaged more than 9 percent since 1995 and makes up to 15.4 percent of the world economy. The country also consumes a third of the world’s iron ore, coal and steel, it is the world largest importer of copper and aluminium and the second largest importer of oil behind the US. Coupled with continued percapita income growth, change in diets, the “Asian drivers”, will lead to both a strong rise in demand for food and mineral commodities and sustain the high prices in long term. China and India also account for 40 percent of world commodity consumers and 20 percent of global purchasing power and their consumption power is predicted to more than double by 2020. All this presents enormous opportunities for Africa’s household commodity producers in form of increased farm incomes once strategically tapped. Its time to revive the Kilembe copper mines among others for Uganda.
The conclusion of the Doha Development Agenda in Geneva presents a tremendous opportunity. World Trade negotiators in Geneva are about to conclude a development trade round which was launched in 2001 in Doha Qatar, which could see shifts in agricultural subsidies in rich countries and reduction in import tariffs in the advanced economies. This could lead to a rise in prices for certain commodities, like cotton and sugar hence increasing income opportunities for commodity dependent developing countries like Uganda Benin, Mali and Burkina Faso for the case of cotton.
In final analysis there is plenty of opportunity for Sub Saharan Africa to turn around its “development puzzle” and get out of poverty by 2015. A country like Uganda can focus on becoming a food basket for the region; refocus its Poverty Eradication and Action Plan. Organise farm households into small plot intensive farming (SPIN-farming) to produce economically viable commodities. For instance, clusters like North Busiro Development Foundation of Prof. Gilbert Bukenya`s upland rice is a venture in the right direction. Also “Boona Bagagawale” and other poverty eradication programs should prioritise agriculture to produce strategic commodities that are going to be in high demand locally and globally, now and in the future rather than cash transfers to households or increasing food aid.
