Famine in the Sahel: Possible Regional Solution

Mayor Bloomberg said it best, “I never like people who complain without doing something about it.” http://www.nytimes.com/2012/02/04/nyregion/mayor-bloombergs-pledge-to-planned-parenthood-captures-interest.html?_r=1&src=tp That said I am going to complain a bit and endeavor to do something about it, although since I am not as endowed as Mayor Bloomberg I cannot immediately put my ideas into action.

The drought and impending famine in the Sahel is upon us. Last year it was the Horn of Africa, 2012 it's West Africa. Well I happen to be from West Africa and am living in West Africa now. I am appalled that with all the fertile land in the region we cannot produce enough food to feed the region and indeed other parts of the continent. I am particularly disgusted that Nigeria is not pulling its weight and hope to change that someday.

In 2002, during my third year in college, I won a Center for Global Health Fellowship that allowed me to work on a Behavioral HIV/AIDS project over the summer in Nigeria. While discussing my future plans in a family meeting, I made an announcement that after graduating I would go into farming. Some members of my family laughed and scoffed at the idea that I would be able to make a living farming. Majority of my siblings had grown up farming and being the last of 12 siblings, born in the city, I was spared that experience I thought growing up. So I didn’t think it was unusual that I got comments about my inexperience in the field. My father though, took it seriously and could not sleep for two days. On the third day he pulled me aside and asked me why I said I wanted to be a farmer. After all I was supposed to be the Doctor of the family and until then was on my way to a career in medicine. I responded to my father by describing the results I was uncovering in my research where sick people were having to make decisions between food and drugs with food winning out 9 out of 10 times. I felt if I went into Agriculture I would be able to do more for people than if I became a Doctor. My father nodded in his wisdom and asked me to reconsider medicine, which I did, but I ended up pursuing a Public Health degree instead of clinical medicine. But since then, my father has kept this discussion in mind and has purchased hectares and hectares of farmland in the eventuality that one day I would actually focus on farming.

That same summer of 2002, while I was working on my HIV/AIDS project and making pronouncements about my future plans, President Olusegun Obasanjo launched the Presidential Initiative on Cassava, which aimed to make cassava farming and processing a US $5 Billion industry in Nigeria. Supply of cassava definitely increased in the subsequent years and by 2006 it seemed like there was a glut of cassava in the market. In the fall of 2006, I saw a real opportunity to try to link up farmers to international markets but unfortunately did not have the connections then to make it a reality. Anecdotal evidence from talking to a few farmers seemed to suggest that farmers became fed up with the government of Nigeria's inability to follow through on the implementation of the Presidential Initiative on Cassava. Another great idea hampered by a failure to implement.

So what does this have to do with drought and famine in the Sahel? Well everything!!!

One of several solutions especially if you think in the long term like I tend to think is to have stocks of foodstuff available regionally. Some governments are doing it but I think the private sector can do it better and more efficiently.

Today’s emergency appeals are necessary but I would hope that if we could get our act together regionally, the call for appeals would reduce in frequency as well as size. The current emergency appeal the UN is seeking to address the famine in the Sahel in 2012 is approximately US$1 Billion with only about 1/4 raised as of March 13th, 2012. How much will need to be raised in the next three to five years if crops fail again? Don't get me wrong, this money is needed NOW, but I would prefer to explore the long-term solutions, and I hope Donors be they bi-lateral, multi-lateral, foundations, or individuals would explore supporting more long-term efforts. For those of you who want to support the ongoing efforts please visit the following websites and consider supporting UNICEF or if you prefer to support NGO's Oxfam or Save the Children and a host of other organizations responding to the immediate crisis.
http://www.unicefusa.org/work/emergencies/sahel/sahel-now.html
http://www.oxfam.org/en/emergencies/sahel-food-crisis
http://www.savethechildren.ca/page.aspx?pid=563

Now for those of you interested in more long-term solutions, please keep reading. I will give you a simple explanation of what I am hoping to do in the near future.

So my idea is not revolutionary at all, in fact it's a combination of several economic and financial concepts many of which you actually practice such as consumption smoothing - Consumption smoothing is exactly what you think it is, ensuring that you have a stable consumption regardless of the uncertainties you face but I digress. Please read up @ http://en.wikipedia.org/wiki/Consumption_smoothing - forward contract, and insurance.

The basic premise is this, I plan to negotiate a price for delivery of a specified amount and quality of a crop up front with a farmer or group of farmers (cooperatives) a season or two or three before the crop is planted or harvested (forward contract). Depending on the other partners I work with, a farmer or group of farmers could get a percentage of the agreed upon price say 20-30% upfront either in the form of cash or inputs and then get the remaining 70-80% upon delivery of the agreed upon quantity and quality. (Farmers would also benefit from technical assistance.) Upon taking delivery of the agreed upon quantity and quality of crop I would make the payment to the farmer/group of farmers and everybody would be happy right? Well I hope so. As an added measure of protection for the farmers and myself I would take out insurance to cover the full quantity agreed in the forward contracts in case one or several farmers fail to deliver for drought related or other reasons, thus ensuring that farmers still get compensated at the end of the season. (Generally farmers cannot afford insurance on an individual basis and by grouping them together we all benefit from economies of scale)

This is the main thrust but could vary to ensure that farmers or co-ops get monthly payments, of course based on inspections of farms and ensuring that certain milestones have been achieved thus enabling farmers to smoothen their consumption throughout the year. All this would be spelt out in the details of the forward contract.

On my end I'd have to build up my logistics infrastructure mainly transport and storage, and sort out how I'd offload any product I buy from farmers. Again depending on my partners and investors, I could foresee an arrangement where I held onto a certain amount of foodstuff to support a regional emergency response if needed. Regardless, I would plan to hold on to a portion of a product TBD.

So in summary, I am hoping to use the power of forward contracts to ensure that I can obtain a predetermined amount of crops upfront; use the incentive of a partial payment upfront and/or monthly payments to farmers to get them to sign a forward contract with my firm; and use economies of scale to provide crop insurance for the farmers, to create a market driven solution to improve the utilization of arable land in Nigeria, create jobs and produce ENOUGH crops to provide for at a minimum the immediate demand and be able to store the excess crops in case of emergencies.

Now time to cost the business plan and begin fundraising!!!