I love academic papers that use evidence to try and shift stubborn policy perspectives, especially when those policy perspectives seem to be holding back development and hunger reduction. So, it is no surprise that I like the recent paper by Liverpool-Tasie et al. (2020) on persistent myths that are held about African food supply chains.
At the Food System Summit in September, big decisions will be taken, and this report can help to ensure the right ones are made for Africa.
First, the paper reminds us what food supply chains are: vertical - from farm input suppliers to farmers all the way to traders, processing, retail and consumers, but also lateral supply chains - logistics, labour and materials. Then we are reminded about the importance of food supply chains in Africa: 90% by weight of the food consumed in sub-Saharan Africa (SSA) is from domestic food supply chains. And SMEs deliver 85% of the food supply chains, i.e. 77% of all food consumed in sub-Saharan Africa. Moreover, purchases of food are 80% of total consumption in sub-Saharan Africa. This latter percentage is very similar to GAIN’s own analyses of World Bank Living Measurement Survey data which I have presented in dozens of venues over the past 4 years.
So, what is the problem with food supply chains? The authors contend that policymakers - domestic and international - are clinging to the past. Their vision of SSA food supply chains are 30 years out of date. There are 5 key myths which the paper outlines.
Myth 1: Imports are central to national food security. They are not, argues the paper. The paper shows that of the 850 million tons of food consumed in SSA in 2017, African farms produced 765 million tons and 612 million tons of those (i.e. 80%) are purchased. Everything matters, so it is important to keep trade barriers open during crises as this is a critical countervailing force for maintaining food flows, indeed trade closures can be catastrophic and lead to price spikes that do a lot of damage to livelihoods and hunger. In addition, access to export markets is very important for growth among the larger farmers and traders. But to overly focus on imports undermines the importance, success and further potential of domestic production.
Myth 2: Rural areas dominate the national food economy and rural households purchase little food. The numbers are clear. 67% of rural food consumption is through food purchases. In addition, the urban share of SSA’s population is 43% and this translates into more than 50% of all food consumption because of rural-urban income differences.
Myth 3: Small farmers are still traditional and poorly integrated with markets. The myth goes that smallholders do not represent much of a market for input dealers and do not generate much surplus for output markets. We have already seen that food purchases are very important, with African farmers selling huge amounts to output markets. Moreover the majority of African farmers purchase inorganic fertiliser and animal producers purchase large amounts of feed.
Myth 4: SMEs in food supply chains are stuck in a missing middle. The paper says that this myth has 2 variants:
- lateral supply chain services such as trucking and warehousing are lacking because of a lack of SMEs proving these services and
- SMEs are underfunded and need financial assistance to thrive. The data the paper cites on this myth is perhaps the weakest.
It is only from Nigeria and it shows that SMEs have proliferated in vertical and lateral supply chains. GAIN’s experience and analysis (using WB SME database data) is that growth per SME (not necessarily proliferation) is constrained by a lack of finance for SMEs and a lack of investor readiness of SMEs. Our experience and evidence suggests that the SME sector is vibrant, but overly constrained by a lack of finance/readiness. In the words of the report think of if as hidden, not missing.
Myth 5: Wholesale and retail markets and logistics services are not critical to food security. The paper attributes the lack of policy attention to domestic distribution in large part to the abolition of the frequently inefficient parastatals in the 1980s and 1990s but with nothing better taking their place. This infrastructure is obviously key for moving food around and making it available safely in wet markets.
So, what are the consequences of the persistence of these myths? Basically, a misdirection of policy and consequently not targeting scarce resources optimally.
First, lateral supply chains are missed by policy. For example, during the COVID-19 lockdowns, services such as banking, storage facilities used by food retailers/wholesalers, supply chains for packaging, fuel, fertilizer, and veterinary medicines were classified as non-essential in Nigeria. And this was the case for many African countries, the authors argue. This classification does not help to keep food flowing into markets.
Second, retail wet markets and wholesale markets were locked down as part of the COVID-19 response, often in a very uncoordinated way.
Third, while port handling and storage were exempted from lockdowns, transport by bus and truck was banned between states.
Fourth, the movement of inputs and people across state boundaries was prohibited.
Fifth, policy enforcement focused on urban areas, less on rural areas, which tended to impair urban to rural flows of labour, inputs as well as the influence of urban demand on rural production.
Finally, the authors argue there was a big focus on safety nets, implying that the market was not resilient enough to respond to the income shocks. I do not agree with this one because income was clearly shocked as people lost their jobs, but I take the point that a stronger investment in market infrastructure would have made safety nets less important. I also feel that a greater percentage of the safety nets could have been designed to build and reinforce market assets.
The paper concludes that African policy responses after the onset of COVID-19 lockdowns should have done more to
- focus on keeping the "bones and arteries" of the food system open - letting food move: "helping traders and truckers (among the most important actors in the African food supply chains, equal in importance to farmers) keep moving and selling is the basic requirement." and
- support SMEs through cheap loans and targeted subsidies leveraged to upgrade facilities: "if SMEs experience severe problems of cash flow or access to transport then people do not eat".
This is precisely the conclusion that GAIN and partners came to when we designed our keep Food markets Working Programme in March-April of 2020: support SMEs, keep wet markets open and support the nutrition of workers in the vertical and lateral food supply chains. To date, GAIN has disbursed USD1 million in small grants to African food supply chain SMEs.
As we move towards the Food System Summit these are valuable lessons to remember: policy matters and evidence matters for food system design. This is why I very much hope to see more countries coming forward with their own food system action plans and food system data dashboards. Myths are difficult to shake off, but they have real consequences.
Let’s shed them in 2021.