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Market Opportunities for African Agriculture - International Food ...

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MARKET OPPORTUNITIES FOR AFRICAN AGRICULTURE:<br />

AN EXAMINATION OF DEMAND-SIDE CONSTRAINTS ON AGRICULTURAL<br />

GROWTH<br />

Xinshen Diao 1 , Paul Dorosh 2 , and Shaikh Mahfuzur Rahman 3<br />

with<br />

Siet Meijer 4 , Mark Rosegrant 5 , Yukitsugu Yanoma 6 , and Weibo Li 7<br />

1. INTRODUCTION 8<br />

Rapid growth in the agricultural sector is central to any strategy <strong>for</strong> reducing<br />

hunger and poverty in Sub-Saharan Africa (SSA). Increased output of food crops<br />

augments food supplies and may well reduce the real price of food. Moreover,<br />

agricultural growth (even outside of the food sector) boosts incomes, particularly of<br />

households in rural areas, both directly and through multiplier effects on other sectors,<br />

thereby increasing household access to food.<br />

Technology exists to increase agricultural productivity (though additional<br />

resources <strong>for</strong> research and extension may be required <strong>for</strong> adaptation to local agroecological<br />

and socio-economic conditions, and to promote rapid adoption of new<br />

technologies). However, lack of marketing opportunities <strong>for</strong> increased agricultural<br />

production could constrain agricultural growth and prevent the sector from serving as an<br />

engine of growth on a scale required to significantly reduce hunger and poverty in SSA.<br />

High market transaction costs, weak domestic consumer demand, and lack of export<br />

possibilities suggest that output increases could lead to a sharp decline in producer prices,<br />

inhibiting growth in both production and farmer incomes. Thus, there is need to analyze<br />

demand constraints on agricultural growth, including export demand, regional trade and<br />

1 Research Fellow, <strong>Market</strong>s, Trade and Institutions Division, IFPRI.<br />

2 Former Senior Research Fellow, IFPRI; currently Senior Economist, The World Bank<br />

3 Former Research Assistant, <strong>Market</strong>s, Trade and Institutions Division, IFPRI.<br />

4 Former Research Analyst, Environmental and Production Technology Division, IFPRI.<br />

5 Division Director, Environmental and Production Technology Division, IFPRI.<br />

6 Senior Research Assistant, <strong>Market</strong>s, Trade and Institutions Division, IFPRI.<br />

7 Former Senior Research Assistant, <strong>Market</strong>s, Trade and Institutions Division, IFPRI.<br />

8 This chapter was written by Xinshen Diao and Paul Dorosh.

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