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Lifting barriers could unlock Africa food trade-World Bank

posted 28 Oct 2012, 08:42 by Mpelembe   [ updated 28 Oct 2012, 08:43 ]

A new World Bank report says Africa has the ability to motivate its farmers to grow more food by promoting inter-regional trade. This could also contribute to food security, and beat recurrent shortages. Every year Africa imports grain worth 20 billion US dollars.

 LOMETOGO  (REUTERS) -  Africa could avoid food shortages if it reduces the tangled web of rules, fees and high costs strangling regional food trade and by putting large swathes of uncultivated land to productive use, a World Bank report said on Wednesday (October 24)

Just 5 percent of Africa's cereal imports are now provided by African farmers, according to the report released on the eve of an African Union summit on agriculture and trade inEthiopia.

The report says trade barriers, blunt regional dynamism and reduced restrictions could boost trade and earn Africa an extra 20 billion US dollars annually.

The bank estimated that 19 million people are in danger of hunger and malnutrition inWest Africa's Sahel region. Yet, removing cross-border restrictions could help avoid food crises if farmers were allowed to trade more easily with each other and get food to communities facing shortages.

Africa's population is currently estimated to be at one billion, the World Bank expects demand for food to double in the next eight years, as migration from rural to urban centres intensifies, reducing the number of people left to grow food.

"Every year, the continent spends some 20 billion US dollars to bring in the kind of cereals, wheat, rice and other staples that the people need to feed themselves within the continent, and the projection is that it is going to double by 2020, the demand is going to double by 2020," said Marcelo Giugale, the World Bank director of poverty reduction and economic management for Africa.

The World Bank report noted that yields for many crops in Africa are a fraction of what farmers are achieving elsewhere in the world.

More food trade in Africa could help raise yields, spread new technology and create jobs, it added.

Although Africa holds 60 percent of the world's arable land, it only generates 10 percent of global agricultural output.

Food trade barriers also increase the cost to the consumer and the farmer, the World Bank said. For example, farmers on holdings in Africa who sell surplus harvest typically receive less than 20 percent of the consumer price of their produce, with the rest being eaten up by various transaction costs and post harvest losses.

The new report suggests that since majority of Africa's farmers are women, their contribution would be significant in ensuring food security, if they received support in terms of credit lines and farm inputs.

This could in turn create more jobs in services such as distribution, while reducing poverty and cutting back on expensive food imports.

"A very small part of the land that can be cultivated in Africa is cultivated for food. So there is enormous potential to increase output. To do that, African farmers need incentives to do that. Often the nearest market, the nearest large market for farmers is across a border, and constraints on trade, rules and regulations, are very much hampering farmers in getting their food across borders and limiting the incentives they have to invest in seed, to invest in fertilizers and to increase their output and productivity," saidPaul BrentonWorld Bank's lead economist for Africa.

The Bank said rules and regulations are preventing African farmers from using higher yielding seeds and better fertilizers. In some countries it can take two to three years for new seed varieties to be released, even if they are being used elsewhere in Africa.

The World Bank said high transport costs were an impediment to more food trade across Africa, especially for small farmers. While poor roads and lack of infrastructure are a problem in Africa, transport cartels are also common with little incentive for investment in modern trucks.

Countries in West Africa for example could halve their transport costs within 10 years if governments undertook policy reforms that spurred more competition, the World Banksaid.

Roadblocks and bribes at border posts also add to the cost of getting food to markets.

Soaring global food prices in 2008, which triggered social unrest in several African countries, highlighted the problem of decades of underinvestment in agriculture in Africa. It also stimulated interest among investors in Europe, the Middle East and Asia inAfrica's untapped farming potential. Fears of land grabbing also increased.

The World Bank report says the institution's agriculture support for Africa, totalled 1.07 billion US dollars, between June 2011 and June 2012.