Reforming Agricultural Markets in Africa (review)

If you were allowed to recommend one and only one book about agricultural markets in sub-Saharan Africa, this volume would be an excellent choice. This reviewer, after spending decades trying to educate policymakers about the facts and experiences of market liberalization and reform, can think of many on the continent who would benefit from this short, readable, but fact-filled book.

There are several distinct strong points of the approach taken by this group of experienced authors. First is the explicit treatment of the historical context within which agricultural market reform has taken place, from colonial times to the present. This capsule history is essential, not only for understanding the reasons that the current situation is as it is, but also for understanding African policymakers' frame of reference. They inevitably view any new proposal through the lens of experience, which must be understood before any convincing case can be made.

Second is the excellent survey and use of many case studies from Africa as a factual underpinning for analyses and recommendations. A case can always be made for exceptional circumstances in any particular country, but the marshalling of dozens of examples makes it difficult to maintain that particular cases are entirely new or different. At the same time, the presentation of these cases is not so exhaustive as to numb readers or bury them under an avalanche of facts. For readers interested in more detail in any particular case, the excellent bibliography provides ample guidance.

Third is the topical focus of the three central chapters. Rather than attempting to cover each and every possible agricultural market on the continent, the authors have chosen to give in-depth treatment to three of the most important and often contentious areas. On the input side, the first chapter is devoted to fertilizer, which is not only the most important in terms of value, but also often the most subject to government intervention and misunderstanding. Given the predominance of heavy intervention in this sector, and the incomplete nature of reforms to date, this is an area that remains of extreme current importance. This is particularly true in light of the often infertile soils used in African agriculture and the lack of adequate use of this input compared to virtually any other region of the world. Any reader of this chapter will be convinced of the need for viable credit markets and enforceable contracts as prerequisites for growth in fertilizer use (or indeed almost any other input). In addition, the dismal history of fertilizer subsidies should give pause to anyone thinking about going down that path.

On the output side, a chapter is devoted to food markets, where the central dilemma is their dual role as a signal for market allocation of resources and as a determinant of poverty and income distribution. This makes reform not only a question of economic importance, but also one of political and humanitarian importance. Twenty years of liberalization have shown that private markets can function more efficiently than government monopolies, but that they have not, by themselves, provided a way out of poverty. Investment in physical infrastructure cannot be overemphasized, while institutional development for smallholders is a key element for future work. A second chapter is devoted to export crops, which are important as cash providers for farmers, revenue sources for governments, and major contributors to the balance of payments. A key finding is that market incentives can work, but are not sufficient to provide desired outcomes. This is particularly true in light of the fact that the potential gains from export market liberalization have been limited by the collapse of world commodity market prices.

The final chapter presents a summary of conclusions and recommendations which should be required reading for every practitioner of market reform, intervention, or promotion in Africa today. The authors are clearly economists, but just as clearly are experienced in the realities of agriculture in Africa. While supportive...