A study carried out to measure productivity trends and the effects of research and development (R&D) in African agriculture shows that, over the period 1970â€“2004, African agricultural productivity grew at an annual rate of 1.8%. Agricultural R&D, improved weather, and policy reforms were found to be the principal drivers of the productivity gains realized after the mid-1980s.
The study by Arega Alene, IITAâ€™s agricultural economist, published in Agricultural Economics, showed that investments in agricultural R&D had an annual rate of return of 33%, proof that agricultural R&D in Africa is a socially profitable investment.
The study found that a strong growth of agricultural R&D investment of about 2%/year in the 1970s led to faster productivity growth after the mid-1980s, but stagnation of R&D investments in the 1980s and early 1990s led to slower growth in productivity in the 2000s.
Agriculture is key
Growth in agricultural productivity has been cited as the key to economic growth, and many researchers have in fact looked at the trends and sources of growth in agricultural productivity in developing countries. The extent of recovery of African agricultural productivity since the mid-1980s, however, varies widely, depending on the methods used to measure and explain it.
The study looked at total factor productivity (TFP) growth in African agriculture using available data on all African countries for the period 1970â€“2004. Data on agricultural production and conventional agricultural inputs for 52 African countries for the period 1970â€“2004 were obtained from the FAOSTAT database (FAO 2007). Meanwhile, data on agricultural research investments for 15 African countries for 1971â€“2001 were obtained from the Agricultural Science and Technology Indicators database of the International Food Policy Research Institute (IFPRI). These countries were BÃ©nin, Botswana, Burkina Faso, CÃ´te dâ€™Ivoire, Ethiopia, Ghana, Kenya, Madagascar, Malawi, Mali, Niger, Nigeria, Senegal, South Africa, and Zambia.
Using conventional indices of productivity growth, the study estimated that the annual aggregate productivity growth in African agriculture was only 0.3% over the period 1970â€“2004. The poor aggregate performance was due to a decline in agricultural productivity in over one-third of the sub-Saharan African countries. With an annual growth rate of only 0.1%, the conventional approach implied that the performance of agriculture in the region was poor and that agricultural productivity stagnated.
In sharp contrast, the improved measures of productivity showed that African agricultural productivity grew at a much higher annual rate of 1.8% over the period 1970â€“2004. In sub-Saharan Africa, agricultural productivity grew at an annual rate of 1.6% over the same period. As expected, North African countries experienced a higher annual productivity growth rate of 3.6%. Although 20 countries experienced annual productivity growth rates of over 2%, only seven countries (Burundi, Comoros, Democratic Republic of Congo, CÃ´te dâ€™Ivoire, Lesotho, Mozambique, and Sao Tome and Principe) experienced negative productivity growth rates, due largely to declining technical efficiency.
Technology drives agricultural productivity
Productivity decline during the 1970s was attributed to technological regress (âˆ’1.1%/year). However, technical progress (1.5%/year) was pinpointed to be the principal source of recovery of productivity during the 1980s.
The new measures demonstrated positive annual productivity growth in all three periods: 1970s (1.4%), 1980s (1.7%), and during 1991â€“2004 (2.1%). Unlike the conventional estimates, the improved measures demonstrated sustained increases in productivity growth over the years, with an impressive annual growth rate of over 2% achieved during and after the 1990s.
The results further showed that rainfall is positively and significantly related to agricultural productivity. This confirms that the weather is a critical constraint to agricultural production in Africa.
Despite the fluctuations in productivity induced by weather fluctuations, both trade and agricultural productivity exhibited an increasing trend after the mid-1980s.
The results showed a positive and significant association between trade policy reforms and productivity in African agriculture, suggesting that policy reforms indeed contributed to the recovery of agricultural productivity after the mid-1980s.
In particular, agricultural productivity grew at an impressive annual rate of over 2% after the early 1990s. This is consistent with recent data on economic recovery in Africa, as shown by stronger growth rates in agricultural gross domestic product (GDP) following improved macroeconomic conditions and commodity prices after the mid-1980s. The results demonstrated that technical progress, rather than efficiency change, was the principal source of productivity growth in African agriculture.
Alene said that a 10% increase in R&D investments would raise agricultural productivity by 2%/year. With an annual rate of return of 33%, R&D has proved to be a socially profitable investment in African agriculture. The analysis points to the need for increased investments in agricultural research to sustain productivity growth in African agriculture.
Alene, Arega D. 2010. Productivity growth and the effects of R&D in African agriculture. Agricultural Economics 41: 223â€“238.