Yes to Industrial Agriculture in Tanzania

Agrisol, an American agriculture company, is considering investing $100 million in purchasing and developing 325,000 acres of farmland in Tanzania.  This development has raised the ire of the Sierra Club, an environmental group that is concerned with the impact on the smallholder farmers that will be displaced by project and the inequity of repatriating money out of the country.  They are concerned that the move amounts to a land grab – developing land in Tanzania to the detriment of Tanzanians.   From the East African:

Opponents charge that the deal amounts to a “land grab” that would result in the displacement of 160,000 refugees from Burundi, some of whom have lived on the land for 40 years. “Very productive smallholders” would be replaced by “large mechanised farms” growing genetically modified maize to be used as biofuels in developed countries, says Anuradha Mittal, a researcher with the California-based Oakland Institute.

The company denies that it plans to grow crops for biofuel production. It adds, however, that “as crop production increases over time, excess crops that are not needed for valued-added food products could become available for other uses.

Agrisol says its $100 million investment over the next 10 years is intended to produce staple crops and livestock that “will help stabilise local food supplies, create jobs and economic opportunity for local populations, spur investment in local infrastructure improvements.”

I have somewhat strong feelings about agriculture developments like this one.  When I was working in Ghana, I was involved with the rice sector, and spent a lot of time trying to understand why West Africa imports more rice as a share of consumption than most regions in the world.  I asked my boss at the time – a veteran of African agriculture who cut his teeth in the soybean industry in Zambia – what Ghana needs to eliminate its dependence on rice imports from Thailand, Vietnam, the U.S., and other countries.  “Give me 125,000 hectares of irrigated land near Lake Volta,” he said, “trucks to transport the rice south to Accra, a warehouse in Tema for storage, and I will feed of all of Accra.”  In other words, economies of scale.

The Sierra Club might say that this is also tantamount to a land grab.  But, unfortunately, the reality of the rice sector in Ghana is that large-scale industrial farming is essential to substituting the rice imports from around the world.  The fact is that people in Ghana will eat rice.  It is not a staple like maize, cassava, or yams, but, as the country has increased in socioeconomic status, the demand for rice has increased.  In the early 80’s, the country produced 100% of its rice – about 80,000 tons per year.  After a structural adjustment program imposed by the IMF decimated the industry, local rice production atrophied, leaving the vacuum to be filled by the U.S. and, ultimately, Southeast Asia.  The rice that was imported – jasmine long-grain – quickly supplanted the local variety, and people developed a taste for rice from the outside.  Unfortunately, smallholder farmers were unable to bring jasmine long-grain to the seed – either due to regulatory issues or cost – and could not compete.

Today, most Ghanaians in Accra, the capital city, would take some rice imported from Thailand over local rice any day. One day I went to the field with Andrew, the rice guy on the team.  We went to see a subsidiary company of an American agribusiness that had set up an industrial rice mill outside of Accra.  They had 1,000 acres and a large industrial mill that produced nearly impeccable rice with little breakage, as compared to the small local mills.  While there, we heard about another Brazilian operation that planted 1,000 acres of jasmine long grain.  They were fairly industrialized, supported by the Brazilian government agriculture organization, and had remarkably high yields, compared with local smallholders.

The smallholder rice farmers, on the other hand, were farming by hand and had limited access to irrigation.  They could often only plant one season per year instead of two, due to the fact that they couldn’t access the abundant waters of the Volta River.  As a result, the local variety of rice grown was often milled in small mills with poor equipment that broke the rice into small pieces and commanded a much lower price at the market than the imported variety, or the Brazilian crop for that matter.

This, for better or for worse, is the reality. Brazil pioneered the revolution in agriculture that Africa would do well to replicate.  The Economist had an article two years ago about Brazil’s admirable approach to farming titled “How to Feed the World.”  Here it discusses the innovation:

Brazil has followed more or less the opposite of the agro-pessimists’ prescription. For them, sustainability is the greatest virtue and is best achieved by encouraging small farms and organic practices. They frown on monocultures and chemical fertilisers. They like agricultural research but loathe genetically modified (GM) plants. They think it is more important for food to be sold on local than on international markets. Brazil’s farms are sustainable, too, thanks to abundant land and water. But they are many times the size even of American ones. Farmers buy inputs and sell crops on a scale that makes sense only if there are world markets for them. And they depend critically on new technology.  As the briefing explains, Brazil’s progress has been underpinned by the state agricultural-research company and pushed forward by GM crops. Brazil represents a clear alternative to the growing belief that, in farming, small and organic are beautiful.

That alternative commands respect for three reasons. First, it is magnificently productive. It is not too much to talk about a miracle, and one that has been achieved without the huge state subsidies that prop up farmers in Europe and America. Second, the Brazilian way of farming is more likely to do good in the poorest countries of Africa and Asia. Brazil’s climate is tropical, like theirs. Its success was built partly on improving grasses from Africa and cattle from India. Of course there are myriad reasons why its way of farming will not translate easily, notably that its success was achieved at a time when the climate was relatively stable whereas now uncertainty looms. Still, the basic ingredients of Brazil’s success—agricultural research, capital-intensive large farms, openness to trade and to new farming techniques—should work elsewhere.

These last three ingredients are what the Agrisol investment could potentially bring to the agriculture sector in Tanzania.  As much as the Sierra Club would like to think that “very productive” smallholder farmers could bring about this kind of revolution, 160,000 smallholders cannot compete with one 160,000 acre farm (or a 325,000 acre one for that matter).

And the problem of food insecurity in sub-Saharan Africa will continue to be a problem without the innovations of industrial agriculture.  People will certainly be displaced.  But the Tanzanian economy, hopefully aided by woefully-lacking good governance, can capitalize on this investment to produce much of the food for the region.  In doing so, it, along with its people, will become richer in the process.

So when organizations like the Sierra Club oppose such investments, I understand where they are coming from, but my realipolitik radar starts to register abnormal activity.  To denounce the benefits of industrial agriculture, which clearly provide huge benefits in the form of cheaper food, more efficient supply chains, better seed varieties, higher yields, employment, and tax revenue, seems impractical.

In a perfect world, cooperatives of smallholders could function perfectly and produce the same yields as the Agrisols of the world.  Unfortunately, we live in a world where economies of scale simply offer better results.  So I support the company’s acquisition of 325,000 acres, for better or for worse.  But hopefully for better.

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"Josh Weinstein is a visionary. I read his blog every day." - Bono
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