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EUROPEAN COMMISSION
Andris Piebalgs
European Commissioner for Development
Making agricultural
business
development
in
Africa
a
good
Agribusiness Forum / Brussels
10 April 2013
SPEECH/13/298
Commissioner Cioloş,
AUC representatives
Distinguished Guests,
Ladies and Gentlemen,
Agriculture in Africa accounts for 65 percent of total employment and 32 percent of GDP.
Increasing investments in agriculture – starting with support to small farmer and other
domestic investors – stimulate increased production and can potentially create wealth
for smallholders and rural communities. As such, it is key to fighting food insecurity.
Moreover, it makes good business sense.
That’s why I am delighted that we’ve come together today to discuss agricultural
development in Africa and the role public efforts can play alongside those of small
farmers and businesses in realising the vast potential agriculture offers to pull countries
and millions of people out of poverty.
We believe agriculture-based inclusive growth is crucial to poverty alleviation and wealth
creation. Accordingly, smallholder-based agricultural development is a focal area in our
European Agenda for Change, which aims to increase the impact of EU development
policy.
Developing a viable and vibrant agriculture sector in Africa is a development challenge.
However, it is also a significant market opportunity for companies – especially small and
family farmers, who are the largest private investors in African agriculture. For African
agribusinesses to make the most of the opportunities in the agri-food sector there needs
to be a sustainable shift from subsistence agriculture to a productive agricultural
industry that allows farmers to take part in the market economy.
Such a shift will involve far-reaching structural changes to boost production, productivity
and, eventually, incomes for small farmers and other SMEs alike. But production
increases must be environmentally friendly and socially sustainable. This can be done by
increasing access to sustainable agricultural methods suitable for smallholders and by
encouraging more women to seek training and access to land and credit.
What is “sustainable agriculture”?
But what do we mean by “sustainable agriculture”? Well, beyond the purely
environmental, sustainable agriculture is also about economic viability and social
acceptability. Delivering public goods like environmental benefits is closely interlinked
with the capacity of agriculture to be economically sustainable, generate adequate family
income, and be socially sustainable.
Basically, sustainable agriculture is about improving the quality of life in rural areas. The
EU promotes sustainable agriculture at home and in developing countries, where it
involves adopting more productive methods that are ecologically efficient, using inputs
such as water, land, plant protection chemicals and fertilisers sparingly and effectively.
Governance
Our European Agenda for Change supports sustainable agriculture as an engine for
inclusive and sustainable development. It recognises that the preconditions for such
development, and for a thriving business sector, are the same: good governance, rule of
law and human rights. Businesses need a favourable business environment to generate
economic growth. This makes the business sector an important and natural advocate for
good governance, transparency and accountability. Indeed, as I have said before, the
private sector’s ability to trigger investments and to create wealth and jobs can be
crucial to development.
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Responsible investments
We as policy-makers can promote inclusive investment in more direct ways. But with
accountability comes responsibility. In October 2012 the Committee on World Food
Security launched a two-year consultation to develop principles for responsible
investment in agriculture that respects rights, livelihoods and resources.
The principles are designed to complement the recently endorsed “Voluntary guidelines
on the responsible governance of tenure of land, fisheries and forests in the context of
national food security”. They will address all types of investment in agricultural value
chains and food systems, and will include concerns of host countries and investors.
Smallholder-sensitive investments may include, for example, tax incentives for
investments that source produce from small-scale producers or involve them as
shareholders in the business venture.
The Comprehensive Africa Agriculture Development Programme, run by the New
Partnership for Africa’s Development and the African Union, also highlights the
importance of attracting responsible private investment into the sector and putting
quality control systems in place. The EU contributes financially to the CAADP and is
committed to playing an active part in the affairs of this Africa-led, Africa-owned
programme. To that end, it recently agreed to become chair of the donor group to the
CAADP for a year.
Examples of our approach in action
All in all, we believe that the prospects for real public-private cooperation to build
sustainable and resilient agriculture in Africa are good. In fact, our work with the private
sector in African agriculture is already showing promise. For instance, via the Farm
Income Diversification Programme, the EU is helping move Malawi away from imports
towards production and exports. By increasing productivity and producing greater value
from agriculture, the programme will help smallholder farmers see farming as a business
activity rather than solely as a means of subsistence.
Its first phase brought a 50 percent rise in average farm incomes, a steep increase in
milk production, and a sharp fall in post-harvest grain loss, thanks to over a thousand
new granaries. A remarkable start, by anyone’s calculations. The second phase, which
will run until 2015, will assist some 46 thousand smallholders in diversifying their income
through various means, from training and knowledge-sharing to better primary crop
storage and more agro-processing.
African farmers’ organisations also play a crucial part in tackling the challenge of
reducing rural poverty and enhancing food security. They put their producers’ concerns,
interests and solutions to other economic actors, to governments and development
partners. Recognising this, the EU has provided 26.9 million euro to Farmers Africa to
help farmers’ organisations across the continent to evolve into stable, performing,
accountable organisations able to effectively represent and advise their members.
Many African agricultural value chain entrepreneurs are caught in the so-called “missing
middle”, between rural microfinance and large commercial finance providers.
Smallholders and small businesses need financial resources to make the sector
sustainable and inclusive.
To address these issues the African Agriculture Fund came into being as a private equity
fund in 2008. The EU has put 10 million euro into the fund’s Technical Assistance Facility
to enable small businesses, small-scale farmers, farmers’ organisations and cooperatives
to benefit, directly or indirectly, from AAF investment windows.
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We are also promoting transformational development partnerships with the private
sector, such as the Southern Agricultural Growth Corridor of Tanzania, or SAGCOT.
This year EU donors will provide more than EUR 50 million to this inclusive, multistakeholder partnership. SAGCOT has already done much for agricultural production,
infrastructure and technologies, job creation and rural incomes in the region. To exploit
that potential further, the Commission is looking to enhance cooperation on SAGCOT
with the government and other public and private development partners.
Ladies and Gentlemen,
These examples are just some of the many traditional and new actions we are pursuing
as part of our commitment to help working small farmers, SMEs and other businesses.
At a global level, the EU will remain proactive in international fora and contribute to
improve the "investment climate" in agriculture while safeguarding the interest of the
poorest.
The G8 "New Alliance", to which we actively participated, shows the interests from all
stakeholders to move in this direction and to bring genuine benefits in job creation, food
security, nutrition and other areas too. This is not about paying lip service to agricultural
entrepreneurship. Our ultimate aim must be to enable everyone in society – producers,
workers and consumers – to enjoy the fruits of sustained and sustainable growth. It is
an aim we can achieve far more easily if public and private actors work together.
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