Mozambique is a development paradox.
Rural poverty is increasing despite high growth rates and billions of dollars
in aid. Now the country has been targeted by two contrasting models of
agricultural development. The Barack Obama model was backed by the G8 in Washington
in May, while the Kofi Annan model was proposed by the Africa Progress Panel (APP).
Which works better for the poor?
The APP, which is chaired by Annan and counts
a former IMF head and a former US Treasury secretary among its members, is
heavyweight and conservative. It says one of the biggest dangers in Africa is
the growing inequality between rich and poor, which is creating a threat
of social instability. In sub-Saharan Africa, the APP argues, "the pattern
of trickle-down growth is leaving too many people in poverty". The panel
warns that Mozambique is one of Africa's more unequal countries, pointing out
that – despite having huge agricultural potential – the republic is a net importer
of staple foods.
The APP report calls for "fundamental
change" in both donor and African government policies. "Raising the
productivity of smallholder farmers is critical," it says.
"Smallholder agriculture must be placed at the centre of a green revolution
in Africa." This will require more government action and more support for
small farmers. Let's call this the Annan model.
The second agricultural model for Mozambique
was agreed in Washington in May, when G8 leaders adopted a new alliance
for food security and nutrition proposed by President Obama and USAid.
The idea is to use giant agribusiness to end hunger in Mozambique and five
other countries. The first project in Mozambique will be to support
Cargill, the giant grain trader and largest private company in the world, to take
40,000 hectares of farmland. US officials say this will include some
smallholder contract farming, which means Cargill will not make enough
profit from the investment, so the giant transnational grain trader must be
subsidised from G8 aid. Let's call this the Obama model.
The two models are incompatible. The APP
report points specifically to the very large land concessions in Mozambique,
and warns that "for Africans, the benefits of large-scale land
acquisitions are questionable".
The UN Development Programme (UNDP) recently
issued its Africa human development report 2012, which points to "the
recent international scramble for land in sub-Saharan Africa" and urges
caution on big foreign investors. "Much agricultural technology for
producing crops is scale-invariant (it is as efficient on small farms as on
large), so large farms should not be expected to be inherently more
efficient," says the report, which also warns that "private investors
naturally prioritise their own objectives, not the wellbeing of the poor and
vulnerable."
Mozambique's experience with large investors
has not been all bad. Indeed, a single US multinational has probably done more
to reduce poverty in Mozambique than any donor action – without subsidy and
without grabbing any land. Universal Leaf Tobacco has agreements with 150,000
peasant families, and their earnings from tobacco have lifted thousands of
families out of poverty. How ironic that the antidote to poverty should be a
poison, tobacco.
But Universal's success stems from a
different model to Obama's – outgrower or contract farming. The company
provides seeds, fertiliser and other inputs as well as extension services, and
guarantees to buy the crop. In return, farmers must sell their tobacco to
Universal. This package works because of two factors. First, risk is shared, so
if a drought or cyclone destroys the crop, farmers do not have to pay Universal
for the seeds and fertilisers they received. Second, the market is guaranteed;
farmers who grow tobacco can be sure they will sell it.
Elsewhere, Mozambique has the lowest
agricultural technology levels in southern Africa, because the present
free-market policies oblige peasants to shoulder the risks associated with
weather, pests and a lack of market. Mozambican farmers are very poor – the
average rural cash income is $31 a person annually. That is less than the price
of a bag of fertiliser.
Very few peasant farmers are willing to risk
their whole year's income on fertiliser, or better seed, or a different crop.
The problem for Mozambican peasants is that foreign companies will only share
the risk with tobacco and cotton, and are not interested in other crops. And
under the present free-market system pushed so hard by the international
community, the state is not allowed to share the risk for maize and other
domestic food crops.
Nearly all Mozambican farmers still use only
a hoe, and do not have a tractor or oxen to plough, so they can only farm 1.5
hectares. As international investors are now noticing, that leaves vast tracts
of underused land. The difference between the Annan and Obama models lies in
the use of that land. Under the Obama model, giant northern agribusinesses like
Cargill would – with G8 help – take the underused land and end poverty through
what the APP calls "the pattern of trickle-down growth". The Annan
model would upgrade millions of peasant farms to up to 5 hectares each, using
most of the available land, but providing initial support with mechanical
ploughing, inputs and assured markets.
The question is, will the Annan or Obama
model lead to the biggest reduction of poverty and the best use of Mozambique's
land?
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