While a healthy pipeline of key grains is expected to keep agricultural prices stable going into 2017, one of the greatest global challenges remains the need for investment into sub-Saharan Africa to improve farm productivity, according to a new report from the World Bank.
Although agricultural output growth in the region has improved over the last two decades, it was largely the result of expanding the land under cultivation rather than increasing productivity gains, according to the Global Economic Prospects report.
“Unleashing productivity improvements will require significant public investments in rural public goods to strengthen markets, and to develop and disseminate improved technologies. While progress has been made in these areas, investment in agriculture R&D remains insufficient,” the authors wrote.
Because two-thirds of the poor in sub-Saharan Africa live in rural households, with agriculture as the dominant source of income and food security, increasing agricultural output and farm productivity is central to boosting incomes.
To achieve this, governments will need to improve the business environment for smallholder farmers by upgrading power and trade logistics infrastructure, strengthening the skills base, and expanding markets through deeper regional integration, according to the World Bank.
Infrastructure investments – to improve irrigation, road, and storage infrastructure, and to develop higher value chains and markets – are needed to support agricultural productivity growth and potential export diversification.
But international support is needed to finance these types of investments and “multilateral development banks can play an important role by expanding access to concessional financial flows.” Foreign investment could also help develop agribusinesses with capital and skills that can be “integrated into global value chains,” as Ethiopia, Kenya, and South Africa have already benefited from, according to the report.
Globally, stocks for the three key grains (maize, wheat, and rice) are at multi-year highs, while lower energy costs continued to have a dampening effect on prices in 2016, though “the expected recovery in energy prices in 2017 could halt these downward pressures.”
Global economic growth is forecast to accelerate moderately to 2.7 percent in 2017 after a post-crisis low last year, 1.8 percent in advanced economies and 4.2 percent in emerging market and developing economies.
“Fiscal stimulus in major economies – particularly in the United States – could generate faster domestic and global growth than projected,” the report states. “Nevertheless, the outlook is clouded by uncertainty about policy direction in major economies. A protracted period of uncertainty could prolong the slow growth in investment that is holding back low, middle and high income countries.”