This is Africa | 18 December 2012
When This is Africa travelled to Brussels to meet Andris Piebalgs to discuss agricultural development, the streets were blocked by striking Belgian farmers. The country's agriculturalists may be facing their own constraints, but the thoughts of the European Union's commissioner for development are further afield.
The Latvian-born politician has put agriculture at the core of the EU's development policy, and his vision is clear: the invigoration of the sector in African, Caribbean and Pacific countries must be led by the smallholder.
"We should not be arrogant against the smallholder - 80 percent of Africa's agricultural production today is actually created by these smallholder farmers, so it gives employment and these are the traditional structures," Mr Piebalgs says from his European Commission office.
"We should not say that the EU agricultural pattern will be replicated in Africa or the Caribbean and Pacific. We should not think that it will be just a couple of farmers, hundreds of hectares of land and huge productivity. It should be looked on with respect that they will use a model which suits their needs, and that they will not necessarily repeat our pattern."
For this reason, the Commission prioritises smallholder development and food security. "Agriculture gives roughly 70 percent of employment and 30 percent of the GDP of a lot of these countries," Mr Piebalgs explains. "By 2050, even with urbanisation, 40 percent of Africans will still live in rural areas. That means 900m people who need jobs and a means to live. So there is a challenge and at the same time an opportunity in this sector for creating jobs, prosperity and welfare."
The EU and ACP agriculture
The EU cannot single-handedly support whole value chains, and the approach going forward will be to target constraints on a case-by-case basis, Mr Piebalgs says: "We will be looking in a lot more detail at the bottlenecks in each country. Is the problem access to finance? If so, let's deal with this. Is it access to energy? Let's deal with this. Is it roads? It will be a tailor-made approach. It will not cover each and every area, but what it must do is strengthen countries' resilience towards food price shocks and changing climate patterns."
Apart from prioritising water supply across the continent, the EU's work varies by country. In Rwanda, for instance, it is investing in land productivity through capital-intensive terracing. It also supports coffee production. In Ethiopia, it focuses on rural roads and access to markets, while supporting that market via the Ethiopia Commodity Exchange, which was established in 2008.
Regions that are particularly vulnerable to climatic shocks will be at the top of the EU's priority list. "We are very concerned at this stage with desertification, for example in the Sahel, where we focus on increasing investment in agriculture and productivity," Mr Piebalgs explains.
In areas requiring regular emergency humanitarian food aid - foremost the Sahel and Horn of Africa regions - the Commission integrates emergency response with longer-term market-building by delivering cash and purchasing food as close as possible to the crisis area, rather than importing it.
"We are trying not to decouple those areas of emergency response and longer-term development, and in this way we support agricultural producers as well as delivering emergency aid," Mr Piebalgs says. "I think that makes us unique in humanitarian aid."
The game changers
Despite being the biggest donor in the agriculture space, the EU's funding for agriculture and food security is relatively low at Ä800m ($1.03bn) and Mr Piebalgs acknowledges that "the needs are much higher". However, the commissioner is optimistic about changes, including the increasing penetration of ICTs, which are modernising the food sector.
"There are a lot of things that have changed and that is why we do not exclude the smallholder opportunity in the world and particularly in the ACP," he argues. "Mobile phones have changed things completely because farmers are more aware of information; there is much more predictability with prices."
The commissioner also pins his hopes on the G8's New Alliance for Food Security and Nutrition. This global initiative aims to increase private investment in African agriculture and enhance the sector's productivity, with the hope of lifting 50 million sub-Saharan Africans out of poverty in the next 10 years. Since its launch in May, more than 60 private companies, many of them African, have pledged over $3.5bn worth of investment in the continent's agricultural sector.
"The New Alliance is what will accelerate the change, because it is about government policy reforms: we deliver financing, and the private sector delivers the necessary investment, but it's about government delivering reforms, not just promising to," Mr Piebalgs argues.
ACP policy reform
Those reforms are desperately required, he says, "because private capital can be unlocked only if the country is stable in its policy reforms".
Chief among the continent's policy constraints has been the problem of land ownership; an area the commissioner urges African countries to focus on. "Eighty percent of smallholders are women, but they own only 2 percent of land in Africa," Mr Piebalgs says.
"It is clear from global experience that farmers should have an interest in the land they work on. It increases productivity if land belongs to the farmer, or if it could be passed to his or her family. Only then does the farmer really feel responsible for it, and study the market situation, and look to cultivate it better. If it is not the farmer's, it will never move forward."
Clarity around land ownership would also diminish concerns about land grabbing; another area of concern for the commissioner. "Large scale agriculture investment requires a lot of transparency and legal certainty, and that is what is lacking most of the time," he says. "We have seen that large-scale investment coming - I'm not saying that it is wrong, but it should be very clearly covered by countries' legislation. Contracts should not be one-off cases, because then the comprehensive approach to agricultural development could be jeopardised."
Economic Partnership Agreements
On the European side, there have also been hopes that trade policy could impact on the development of ACP agriculture.
The Economic Partnership Agreements, trade agreements between the EU and ACP countries which were first tabled in 2000, were supposed to render existing preferential trade agreements WTO-compliant, and promote trade between and within the two groups. However, negotiations between the EU and regional groupings have, for the large part, stalled.
Mr Piebalgs notes that ACP countries still have duty-free quota-free access to European markets under an 'everything but arms' system, but argues that this mainly benefits large exporters: "Basically this opening is for big farmers. For smaller farmers it does not change too much."
The problem lies in intra-African trade, he argues: "Intra-African trade is really the biggest challenge in the trade space. That is not going well, partially because of lack of infrastructure, but partially also because of tariff barriers. What we wanted to do with the EPAs was not only help the region with access to EU markets, but also strengthen the regional economic dimension. Without that only the big producers will be able to export, and if you are a small producer the best you will expect is to sell in a local market."
The CAP study
The commissioner argues that the EU's Common Agricultural Policy, the subsidy programme for European farmers, could also be used by ACP countries as a study for domestic policy.
"CAP provides a lot of good elements that people across the world could study, because we learnt from the mistakes of the past and today it provides farmers some guarantee to continue their business," he argues. "It is my opinion that it can be used to suggest what steps to take for agricultural production, and what shouldn't be taken. It is crucial to learn from the EU experience on how to balance traditional life, food security, income and also some predictability in the whole process."
But CAP spending - although falling - still accounts for around 30 percent of the EU's budget, and the scheme formed a point of dispute in the EU's recent budget negotiations. The farmer protests in Brussels also point to dissatisfaction with Europe's milk quota system.
"CAP is still up and down," the commissioner concedes, "but I think it is a more sophisticated policy than exists anywhere else in the world. And it is implemented by 27 different countries so it is productive for others to study."
The scheme has been controversial, facing decades of criticism for distorting markets and destroying the competitiveness of farmers in developing countries. However, the European Union has now removed 95 percent of export subsidies, retaining the last 5 percent until global export subsidies are cut, it says.
"The EU policy has made a lot of important changes but I think we still face opposition because we have still not totally abolished export subsidy schemes. As long as those subsidies exist the perception will be that CAP does not allow the farmers in developing countries to evolve," Mr Piebalgs argues. "That is not true, but it would help that export subsidies were abolished globally, because I think they jeopardise the market and that has an impact, no matter how small."
The issue of agricultural subsidies has been a central point of contention in troubled global trade negotiations, known as the Doha Round, which were first tabled in 2001.
Development budget cuts?
These are testing times for Europe, and the commission's development budget faces potential cuts over the next seven years. Some 80 percent of the EU's ODA comes from national budgets, and Mr Piebalgs is reassured by individual nations' willingness to maintain their pledge to commit 0.7 percent of GNI per capita to development aid.
"I would be more than happy if they would allocate more money for development on the European level and at this stage negotiations are still ongoing," he says. "But when there is overall streamlining of the budget then you have some collateral damage."
The commissioner argues that aid levels should be preserved, and the Ä800m currently spent on agriculture and food sustainability will not take a hit, he stresses. "Food security and agriculture will get more funds whatever happens, because it is very clear as a priority. We will spend less money on a sector like roads because it is very capital-intensive, and at this stage I see more value added emerging in agriculture. Agriculture is much more beneficial for a country's economy, and countries themselves say the same."
Andris Piebalgs, Commissioner for Development at the European Union
When This is Africa travelled to Brussels to meet Andris Piebalgs to discuss agricultural development, the streets were blocked by striking Belgian farmers. The country's agriculturalists may be facing their own constraints, but the thoughts of the European Union's commissioner for development are further afield.
The Latvian-born politician has put agriculture at the core of the EU's development policy, and his vision is clear: the invigoration of the sector in African, Caribbean and Pacific countries must be led by the smallholder.
"We should not be arrogant against the smallholder - 80 percent of Africa's agricultural production today is actually created by these smallholder farmers, so it gives employment and these are the traditional structures," Mr Piebalgs says from his European Commission office.
"We should not say that the EU agricultural pattern will be replicated in Africa or the Caribbean and Pacific. We should not think that it will be just a couple of farmers, hundreds of hectares of land and huge productivity. It should be looked on with respect that they will use a model which suits their needs, and that they will not necessarily repeat our pattern."
For this reason, the Commission prioritises smallholder development and food security. "Agriculture gives roughly 70 percent of employment and 30 percent of the GDP of a lot of these countries," Mr Piebalgs explains. "By 2050, even with urbanisation, 40 percent of Africans will still live in rural areas. That means 900m people who need jobs and a means to live. So there is a challenge and at the same time an opportunity in this sector for creating jobs, prosperity and welfare."
The EU and ACP agriculture
The EU cannot single-handedly support whole value chains, and the approach going forward will be to target constraints on a case-by-case basis, Mr Piebalgs says: "We will be looking in a lot more detail at the bottlenecks in each country. Is the problem access to finance? If so, let's deal with this. Is it access to energy? Let's deal with this. Is it roads? It will be a tailor-made approach. It will not cover each and every area, but what it must do is strengthen countries' resilience towards food price shocks and changing climate patterns."
Apart from prioritising water supply across the continent, the EU's work varies by country. In Rwanda, for instance, it is investing in land productivity through capital-intensive terracing. It also supports coffee production. In Ethiopia, it focuses on rural roads and access to markets, while supporting that market via the Ethiopia Commodity Exchange, which was established in 2008.
Regions that are particularly vulnerable to climatic shocks will be at the top of the EU's priority list. "We are very concerned at this stage with desertification, for example in the Sahel, where we focus on increasing investment in agriculture and productivity," Mr Piebalgs explains.
In areas requiring regular emergency humanitarian food aid - foremost the Sahel and Horn of Africa regions - the Commission integrates emergency response with longer-term market-building by delivering cash and purchasing food as close as possible to the crisis area, rather than importing it.
"We are trying not to decouple those areas of emergency response and longer-term development, and in this way we support agricultural producers as well as delivering emergency aid," Mr Piebalgs says. "I think that makes us unique in humanitarian aid."
The game changers
Despite being the biggest donor in the agriculture space, the EU's funding for agriculture and food security is relatively low at Ä800m ($1.03bn) and Mr Piebalgs acknowledges that "the needs are much higher". However, the commissioner is optimistic about changes, including the increasing penetration of ICTs, which are modernising the food sector.
"There are a lot of things that have changed and that is why we do not exclude the smallholder opportunity in the world and particularly in the ACP," he argues. "Mobile phones have changed things completely because farmers are more aware of information; there is much more predictability with prices."
The commissioner also pins his hopes on the G8's New Alliance for Food Security and Nutrition. This global initiative aims to increase private investment in African agriculture and enhance the sector's productivity, with the hope of lifting 50 million sub-Saharan Africans out of poverty in the next 10 years. Since its launch in May, more than 60 private companies, many of them African, have pledged over $3.5bn worth of investment in the continent's agricultural sector.
"The New Alliance is what will accelerate the change, because it is about government policy reforms: we deliver financing, and the private sector delivers the necessary investment, but it's about government delivering reforms, not just promising to," Mr Piebalgs argues.
ACP policy reform
Those reforms are desperately required, he says, "because private capital can be unlocked only if the country is stable in its policy reforms".
Chief among the continent's policy constraints has been the problem of land ownership; an area the commissioner urges African countries to focus on. "Eighty percent of smallholders are women, but they own only 2 percent of land in Africa," Mr Piebalgs says.
"It is clear from global experience that farmers should have an interest in the land they work on. It increases productivity if land belongs to the farmer, or if it could be passed to his or her family. Only then does the farmer really feel responsible for it, and study the market situation, and look to cultivate it better. If it is not the farmer's, it will never move forward."
Clarity around land ownership would also diminish concerns about land grabbing; another area of concern for the commissioner. "Large scale agriculture investment requires a lot of transparency and legal certainty, and that is what is lacking most of the time," he says. "We have seen that large-scale investment coming - I'm not saying that it is wrong, but it should be very clearly covered by countries' legislation. Contracts should not be one-off cases, because then the comprehensive approach to agricultural development could be jeopardised."
Economic Partnership Agreements
On the European side, there have also been hopes that trade policy could impact on the development of ACP agriculture.
The Economic Partnership Agreements, trade agreements between the EU and ACP countries which were first tabled in 2000, were supposed to render existing preferential trade agreements WTO-compliant, and promote trade between and within the two groups. However, negotiations between the EU and regional groupings have, for the large part, stalled.
Mr Piebalgs notes that ACP countries still have duty-free quota-free access to European markets under an 'everything but arms' system, but argues that this mainly benefits large exporters: "Basically this opening is for big farmers. For smaller farmers it does not change too much."
The problem lies in intra-African trade, he argues: "Intra-African trade is really the biggest challenge in the trade space. That is not going well, partially because of lack of infrastructure, but partially also because of tariff barriers. What we wanted to do with the EPAs was not only help the region with access to EU markets, but also strengthen the regional economic dimension. Without that only the big producers will be able to export, and if you are a small producer the best you will expect is to sell in a local market."
The CAP study
The commissioner argues that the EU's Common Agricultural Policy, the subsidy programme for European farmers, could also be used by ACP countries as a study for domestic policy.
"CAP provides a lot of good elements that people across the world could study, because we learnt from the mistakes of the past and today it provides farmers some guarantee to continue their business," he argues. "It is my opinion that it can be used to suggest what steps to take for agricultural production, and what shouldn't be taken. It is crucial to learn from the EU experience on how to balance traditional life, food security, income and also some predictability in the whole process."
But CAP spending - although falling - still accounts for around 30 percent of the EU's budget, and the scheme formed a point of dispute in the EU's recent budget negotiations. The farmer protests in Brussels also point to dissatisfaction with Europe's milk quota system.
"CAP is still up and down," the commissioner concedes, "but I think it is a more sophisticated policy than exists anywhere else in the world. And it is implemented by 27 different countries so it is productive for others to study."
The scheme has been controversial, facing decades of criticism for distorting markets and destroying the competitiveness of farmers in developing countries. However, the European Union has now removed 95 percent of export subsidies, retaining the last 5 percent until global export subsidies are cut, it says.
"The EU policy has made a lot of important changes but I think we still face opposition because we have still not totally abolished export subsidy schemes. As long as those subsidies exist the perception will be that CAP does not allow the farmers in developing countries to evolve," Mr Piebalgs argues. "That is not true, but it would help that export subsidies were abolished globally, because I think they jeopardise the market and that has an impact, no matter how small."
The issue of agricultural subsidies has been a central point of contention in troubled global trade negotiations, known as the Doha Round, which were first tabled in 2001.
Development budget cuts?
These are testing times for Europe, and the commission's development budget faces potential cuts over the next seven years. Some 80 percent of the EU's ODA comes from national budgets, and Mr Piebalgs is reassured by individual nations' willingness to maintain their pledge to commit 0.7 percent of GNI per capita to development aid.
"I would be more than happy if they would allocate more money for development on the European level and at this stage negotiations are still ongoing," he says. "But when there is overall streamlining of the budget then you have some collateral damage."
The commissioner argues that aid levels should be preserved, and the Ä800m currently spent on agriculture and food sustainability will not take a hit, he stresses. "Food security and agriculture will get more funds whatever happens, because it is very clear as a priority. We will spend less money on a sector like roads because it is very capital-intensive, and at this stage I see more value added emerging in agriculture. Agriculture is much more beneficial for a country's economy, and countries themselves say the same."
