Towards a Strategy for Improving Agricultural Inputs Markets in Africa



FSII Policy Synthesis No. 43

U.S. Agency for
International
Development


improving agricultural input markets in Africa. 2.
To help inform this discussion, the objective of
this policy synthesis is to review key
conclusions from Food Security Project
research, and outline findings about major
challenges ahead. More detailed results of
these research efforts are summarized in a
number of policy syntheses and research
papers available from MSU and USAID (see
list of downloadable Policy Syntheses by
subtopic in Table 1).

KEY CONCLUSIONS: Agricultural
intensification (i.e., raising yields on fixed
supplies of arable land) based on privately and
socially profitable technology (organic and 3.
inorganic fertilizers, soil/water conservation
technologies, improved seeds, pesticides, and
animal traction) is essential if rural incomes are
to rise and Africa is to feed its rapidly growing
population without destroying the natural
environment.

1. In many Sub-Saharan African (SSA)
countries, some smallholder and
commercial farmers are successfully using
improved technologies, often introduced
by government- or NGO-sponsored       4.

projects or private sector (including joint
venture or cooperative) outgrower
schemes. Input-responsive technology,
high-quality extension services, financially
sound savings and credit systems, and
well-functioning input and output markets
are vital to
sustaining farmer adoption of
intensive practices and
expanding the 5.
adoption of technologies by farmers
outside the small group of relatively well-
off early adopters.

Input and output markets serve farmers
best when there is some degree of
vertical coordination among input
distribution, output marketing, and credit
functions, which lowers costs and
improves loan repayment rates. To date,
the most successful and long-lived
examples of vertical coordination have
been in subsectors producing industrial or
export crops (cotton, for example). In
such cases, increased access to improved
inputs and more reliable output markets
stimulate productivity in food crops as
well as in cash crops.

A key feature of these sustainable cash
cropping schemes has been their ability to
provide incentives that make it profitable
over the long run for farmers to sell their
output through the scheme. This in turn
makes it profitable for the scheme to
extend credit, inputs, and other services
that support smallholder productivity
growth (including for food crops), to the
mutual benefit of both the scheme and
participating farmers.

By contrast, where the institutional
arrangements do not provide farmers with
sufficient incentive to market their output
through the scheme, the system often
breaks down and the contribution of cash
cropping to food crop productivity is not
realized.

Through most of the 1980s, input
delivery and output marketing activities in
SSA were provided directly by
government parastatals or semi-public


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