Agricultural Supply Chains, Growth and Poverty in Sub-Saharan Africa: Market Structure, Farm Constraints and Grass-root Institutions

This research proposal relates to the "Agriculture and Growth" theme of the DFID-ESRC Growth Programme.
In Africa, rural poverty is a widespread phenomenon. The countries that historically managed to pull out of poverty are those that have been successful in diversifying their economies away from agriculture and other natural resource based activities. However, in Africa, the agriculture sector has so far failed to become an engine of growth and economic transformation for most countries in the continent. In Africa, international market conditions combine with domestic market configurations in shaping agriculture growth and poverty reduction. In Sub-Saharan Africa the levels of productivity in agriculture are of the order of one third of those enjoyed by small-holders in Asia. Part of the problem lies in the market structures and in the poor institutions, policies, and infrastructure serving the agriculture sector. Often, the commercialization of the agriculture output is produced along a value chain where intermediaries, exporters, and downstream producers interact with farmers. While in Africa the farming sector is composed mostly of atomistic smallholders, the lower-layers of the value chains are usually dominated by a small number of firms. Farmers may suffer from the non-competitive behavior of other agents along the chain, or be constrained from selling output in markets because transport and other services are not available or are too costly.
Our research will investigate if and how agricultural market structures and farm constraints affect the development of dynamic food and cash crop sectors and whether these sectors can contribute to a process of economic transformation and poverty reduction in Sub Saharan Africa. To do that we plan to study the interplay between agriculture supply chains, farm constraints and poverty in a number of crops and countries. We will do a mapping of the existing supply chains characterizing the existing market structures and domestic competition policies (privatization, regulation, entry, merger, etc). At the farm level we will study the constraints faced by small holders to increase productivity and break a vicious cycle where low productivity exacerbates vulnerability to poverty. In a series of case studies, we will explore how grass-root institutions may help overcome those constraints. We will study how the market configurations, farm constraints, and the action of grass-root institutions interact to create useful instruments of poverty eradication. We will also study the differential effect on female-headed households vis-à-vis male-headed households. As women and poor households often confront greater barriers to participation in agricultural value chains and in nonmarket institutions, it is important to highlight such differential constraints and their impacts in our analysis.
Our analysis builds around several case studies covering much of Sub-Saharan Africa and many of the major food and cash crops produced in the continent. Each case study has three building blocks, supply chains, farm constraints and grass-root institutions, and poverty impacts. In turn, the analysis in each building block is based on a sound theoretical framework and on a comprehensive quantitative assessment.

One of the key missions of the African Center for Economic Transformation is to enable increased ownership and accountability in the development process among African governments by improving the capacities of African governments to formulate and implement informed and sustainable economic policies. This project will generate a series of outcomes that will benefit policy makers currently seeking improved capabilities to deal with effective competition policy to promote increases in agriculture productivity, solve food security issues, promote agribusiness diversifying exports and increasing trade and competitiveness, and remove some of the constraints faced by poor farmers. This will be achieved through the following mechanisms:

i) Mapping current institutional and domestic markets configurations for food and cash crops in Sub Sahara Africa;

ii) Increased emphasis on more effective competition policies as an instrument to reduce major behind the border barriers to trade, exports, food security, and poverty alleviation;

iii) Development of new analytical tools to assess the poverty effects of value chains;

iv) Compilation of data and summary of methods to measure competition at different layers of a supply chain;

v) Assessment of the role of various rural development policies (e.g., provision of infrastructure) in more efficient value chains and price transmission;

vi) Greater awareness of the need for regulatory policies to support agricultural production and exports; and

Better understanding of the constrained faced in commercial agriculture by female-headed and poor households and how grass-root institutions could work to ease those constraints.
The African Center for Economic Transformation is particularly interested in the policy impact of this project and therefore will implement a knowledge dissemination strategy and a capacity building methodology to ensure the main stakeholders can benefit from this research.