A policy brief

Emerging evidences revealed that the agricultural sector offers huge potentials that African countries can exploit (based on comparative advantage) not only to fast track improved livelihoods and economic development but also enhance cooperation, collaboration and partnership. The agricultural landscape in the continent is inundated by small holders with limited means and associated high transaction costs- sector highly inefficient with uncompetitive products quality and prices. This scenario profoundly hampers the ability of Africa agriculture to furnish accelerated economic growth and rural in the continent.

As part of its mandate in conducting research aimed at achieving growth and transformation for shared prosperity and improved livelihood, through sustained agricultural growth, the AU-SAFGRAD office conducted the study on commodity value chain analysis. The study was aimed at identifying stakeholders along the strategic commodity supply chain, whose action affect the smooth functioning and impact on the transaction costs of commodities This initial study on challenges and opportunities for strategic agricultural commodities value chain development was conducted in the IGAD region of Africa.

The Intergovernmental Authority on Development (IGAD) region is a Regional Economic Community (REC) – one of the eight building blocks of the African Economic Community. A characteristic feature of the region is that most of it is classified as arid and semi-arid lands. The region is also endowed with vast, unexploited, fertile land and water bodies that can sustain intensive agriculture. Unfortunately, undeveloped commodity value chain coupled with a host of infrastructural and policy related constraints have been greatly limited progress in efficient cross border trade and investment in agriculture. Both cash and food crops are produced in the region. Common food crops include cereals, pulses, tubers and oilseeds, while cash crops are coffee, tea, tobacco and cotton. Livestock herding is dominant agricultural system in Djibouti and Somalia representing 50% and 76.9% of total agricultural production respectively. Sesame and sorghum were selected as case study commodities. The criteria used in their selection were their relative importance as household food security crop and export potentials in the semi-arid parts of the region.

Sudan and Ethiopia were found to be major producers and consumers of sorghum. Production of sorghum in the region is mainly in rain fed farms with little or no use of purchased inputs. The sorghum value chain includes, seed suppliers, farmers, collectors, wholesalers, exporters, millers and retailers. Also, Sudan, Ethiopia and Uganda are major producers of sesame in the region. Sesame production is largely on rain fed fields cultivated on small and, often dispersed farm lands. Marketing of sesame was found to be largely underdeveloped and inefficient. Major Sesame chain actors were farmers, assemblers, wholesalers, processors and retailers.

At the country level, the inefficiencies in the commodities value chain were mainly due to lack of standardization, poor quality of harvest, lack of market support services, bad roads infrastructure as well as the sharp practices of public agents. These resulted to high transaction costs in the downstream commodity sector. At the cross-border trade level, high inefficiency was occasioned by mainly non-tariff barriers occasioned by delays, excesses of border agents and high transport costs.

The study concludes that increased sorghum and sesame chain efficiency coupled with the conducive climatic condition, the massive pool of farm families involved in production and marketing as well as the market demand in the region present huge opportunities to fast track improved livelihoods, economic growth and partnership in the region. The creation of an enabling production and marketing environment at the national level, to leverage on public private partnership models, while also encouraging opportunities for increased value addition services by primary actors are needed to catalyze the benefits.

However, to achieve this landmark, some key challenges have to be overcome. There is the need to address information gaps at all levels in the value chain, encourage public private partnership through incentivized schemes and infrastructural development. To promote collaboration and cooperation in the region through trade in the agricultural commodities, the study recommends the inauguration of a high level technical advisory group to be facilitated by IGAD secretariat. The group will be responsible for charting the road map for the institutionalization and implementation of integrated commodities value chain considered key for ensuring food security and enhancing regional trade.

The Policy Brief in pdf