In
Africa, various risks such as climate change threaten the livelihoods of
millions of rural producers. This presents major impediments to increasing
productivity and investment in the agriculture sector and the entire agri-value
chain.
Yet
the origin of the risk management is recorded in African history. More than ten
centuries BCE, Egypt, according to the Bible, was aware of the need to create
public stocks to face starvation. This is even how Joseph, a Jewish slave
turned administrator assured his power from Pharaoh and secured the domination
of Egypt on the neighbouring peoples. In Sub-Saharan Africa, according some
traditions, the village chiefs in the twentieth century were responsible for
maintaining two years of consumption before successive droughts which
undermined this principle of insurance.
The
most exposed rural populations include pastoralists, smallholder farmers and
female farm owners. People are more exposed to production hazards in arid and
semi-arid areas. When there is a crisis, they are often forced to decapitalise
their assets to weather the storm, after which they find themselves even more
vulnerable to other shocks. Increasing occurrences of abnormal or unusual
weather conditions attributed to the effects of climate change, along with
market instability, exacerbate risks for populations.
Usually,
risks in agriculture are categorized in climate shocks such as drought and
floods which are increasing in frequency and intensity under climate change
trends, and related pest outbreak and crop disease on one hand, all these
factors affecting production; price volatility, market and institution failure
on the other hand knowing that such risks have escalated since the 2007-2008
food crises.
Compared
to any other industry, market prices in agriculture are too volatile to be
predictable and ensure visibility on income expectations. This
leads to under-investment from part of the farmers. Financial institutions may
find extending credit to farmers, grain and livestock traders and millers or
processers a risky venture if prices are volatile, and may therefore increase
substantially the cost of borrowing. Spiking and excessive volatile food prices
also create speculation and stock retention, leading to artificial scarcity in
urban areas or total market disruption in rural areas. Nevertheless there are
different options which can be combined in managing price risks, among which
warehouse receipt systems, commodity exchanges, contract farming, grain stock
management and price and tariff policies to name a few.
All
types of risks have discouraged agricultural investment and technology adoption
for decades, and they legitimately become a major concern. Thus, over the
recent years, the importance of adopting a risk management approach for
building resilience is rapidly rising to the top of the international
development agenda.
Guided
by the Sustaining CAADP Results Framework 2014-2024 for the agricultural
transformation for the next decade, the AU declared 2014 as the Year of
Agriculture and Food Security. Five priority sub-themes were identified from
which “Building resilience of Africa’s agriculture through integrated risk
management” to place the foundation for building strong and resilient agri-food
system..
Mainstreaming
risk management tools and policy instruments in the implementation of CAADP is
a long term strategy departing from short term humanitarian interventions which
are usually undertaken to address agriculture and food crises. It intends to
build resilience all along the agriculture value chain. FAO’s definition of
resilience includes 3 components: 1) in the short term and at individual level,
it questions the capacity to bounce back after a shock; 2) in the medium and
long term and at individual and systemic level, it relates to the capacity to
adapt to a changing environment; 3) at the policy level, it addresses the
transformative capacity of an enabling institutional environment.
Cognizant
of the importance of coordinated actions towards building resilience at
household, community, national and regional level, various platforms have
recently been initiated by Regional Economic Communities (RECs) and donor
partners, among which the IGAD Regional Disaster Resilience and Sustainability
Platform, the Global Alliance for Resilience for Sahel and West Africa (AGIR),
the SADC Vulnerability Assessment and Analysis Programme, and the Africa
Adaptation Knowledge Network, can be highlighted. Even though these
initiatives are providing valuable platforms to bring together partners and
stakeholders including AU Member States, the AUC, NPCA, RECs and Development
Partners in building resilience, it is of paramount importance that a voluntary
common framework be agreed upon so that building resilience and capacity to
reduce vulnerability to better withstand crises and shocks can be more
effective.
The
New Partnership for Africa’s Development, NEPAD Agency has developed an
initiative for supporting regional economic communities and countries in
managing risk in Agriculture. This initiative is aimed at mainstreaming risk
management strategies into CAADP implementation. It consists of a holistic
approach considering increased resilience of rural producers and processors as
the appropriate avenue for addressing risk factors and allowing them to
increase their level of productive investment in a continuous and sustainable
manner.
Once fully developed at the regional and national level, the initiative
will provide to rural producers and processors, the appropriate tools for
preventing, mitigating, and transferring risk. It will therefore allow building
assets, strengthening livelihoods hence contributing to agriculture
transformation.
The
expected significant outcomes of the Joint Conference of Ministers of
Agriculture, Rural Development, Fisheries and Aquaculture about risk management
and resilience building is a renewed commitment on two specific points:
That
countries and Regions formulate and implement policies and regulations to
enhance risk management tools effectiveness focusing on creating a more
predictable market environment and insurance mechanisms that may be adopted in
particular by smallholder farmers and address climate change and gender
challenges; and
That
NEPAD ensures deeper policy coherence by mainstreaming climate change
adaptation and risk management strategies into National and Regional
Agriculture and Food Security Investment Plans and promotes a Continental
Framework on Integrated Risk Management in Agriculture.
*Contributed by Abiola Ajayi, communication officer with
NEPAD
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