The inability of African farmers to achieve a supply response to take advantage of the high commodity prices from the food crisis reflects a mix of underlying challenges: binding capital constraints, deep poverty, lack of access to new technologies, and poor infrastructure that continue to limit the production response capacity of farmers. At the heart of this is the lack of provision of support to smallholder farmers. While farmers in the rich countries continue to receive subsidies poor farmers in Africa continue to languish with lack of comprehensive support packages that would help unlock them from productivity and poverty traps.
The global landscape on agricultural policy perpetuates income inequality. Farmers in developed nations (where agriculture is a miniscule share of their GDP) receive the highest levels of support, but poor African countries (where agriculture accounts for high shares of GDP) receive no support. For example, the share of agriculture in the GDP is extremely low in many of the OECD countries, ranging from 1% for the United States, the UK, and Germany, to 2% in Japan, Italy, and France. However, farmers in these countries receive the highest level of subsidies, in some cases as high as 62% of gross farm receipts. Estimates of agricultural subsidies as shares of agricultural GDP are high: United States (25%); UK (22%); Italy (20%); Germany (30%); and France (29%).
The inequalities become even starker when one examines the extent of agricultural subsidies per hectare of cultivated land. Developed economies have the highest levels of subsidies per hectare: Japan ($905); UK ($360); Italy ($567); Germany ($583); and France ($501). The picture is different in SSA: Ghana ($4); Kenya ($6); Tanzania ($4). Malawi, where most of the recent debate on subsidies in Africa focuses, provides only $43 per hectare (Fig. 1). The continued high support for rich farmers in the developed economies, while denying poor farmers in Africa much-needed support, perpetuates poverty in Africa.