Insufficient Resources Allocated to Agriculture

Agricultural investment in the region in the past was driven by public investment with most of these investments in large projects. Countries in the region have made measurable progress in agricultural productivity and overall growth in the agricultural sector. However, agriculture still lags behind other regions in terms of productivity. Agricultural productivity in the countries except Libya has improved significantly, but remains well below the values of developed countries including the European Union. A sustainable improvement in agricultural productivity is possible and necessary given the untapped potential for sustainably improving agricultural production.

Data on capital stock show that in the countries of the region capital stock is mainly composed of land (51 %) and livestock (26.1 %) and less by the infrastructure, tools, machinery, and buildings (Table 9). The countries in the region have limited investment in agriculture, the mainstay of the evolution of agricultural productivity and performance. Investment in agriculture in the North Africa was down by 77 % during the period 1980–2007 and continues to represent a small portion of the value of the sector in GDP.

Ideally, most of the investment in agriculture should be from private sources and in most cases from farmers themselves. Data on private investment in agriculture is

Table 9 Capital formation in North Africa

Capital formation (million US$ constants 2005)

Livestock (as % capital formation)

Machinery and equipment (as % of capital formation)

Structures for livestock (as % of capital formation)

Land development (as % of capital formation)

Algeria

14,545.2

28.8

15.8

1.4

42.0

Libya

7,531.4

15.4

11.1

0.5

64.6

Morocco

26,006.2

22.9

3.7

1.2

63.2

Tunisia

10,303.7

19.2

10.5

0.9

40.5

Source: FAOSTAT

rather scarce and hard to value, though many countries have revised their investment policies to enable more private investment in agriculture.

Historically, public investment has been the most important source of resource for the agricultural sector; however, in the past 10 years, private agricultural investment in relative terms has become more important. The agricultural sector in the countries receives special support, and government expenditures remain an essential element for the economic and social development. The agricultural research and extension, infrastructure and utilities, response measures against transitory shocks, programs to facilitate the adjustment of certain sectors or regions and enable innovation at risk for an environment sustainability, and food security are some of the features that continue to be applied to the public sector, more and more frequently in a decentralized manner and in partnership with the private sector and civil society (FAO 2014).

The extent of support and the instruments differ from one country to another, ranging from financial assistance (income support for farmers) or price supports to agricultural loans or granting of an investment premium. The expenses also vary from 1 year to another. The forms of taxation adopted by governments also have an impact on the level of available resources, while constituting an effective instrument for redistribution.

The share of expenditure on agriculture should reflect, at a minimum, the share of agriculture in the overall economy. While data on public spending for agriculture are scarce and not comparable, available data show that in many countries allocation of public spending does not reflect the economic or social importance of the sector. By taking data on the share of agriculture in GDP and compare it with total expenditures, it is possible to establish an agricultural orientation index indicating the extent to which public spending on agriculture match (or not) the importance of agriculture in the overall economy. To calculate this index, the share of agricultural spending in relation to total public expenditure is divided by the share of agriculture in GDP. The higher the index, the higher the share of agricultural spending is close to the share of agriculture in GDP.

For example, in Tunisia public spending on agriculture decreased over time as a percentage of total expenditures. The orientation index decreased by 0.39 in 2001 to 0.31 in 2011 (Table 10).

Table 10 Agricultural orientation index (Tunisia)a

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Orientation indexa

0.39

0.34

0.40

0.43

0.40

0.41

0.38

0.33

0.35

0.32

0.31

Source: FAOSTAT

aAgricultural orientation index: Share of agriculture in total expenditures/share of agriculture in value-added

In most of the countries covered, historically public investment in agriculture was primarily oriented towards the mobilization of natural resources (water, soil, forests, fisheries to assist in preparing the conditions for sustained agricultural development (including through private operators) that would achieve the strategic objective of food security. Investment in research and development has been no more than 2–3 % of all agricultural investment (FAO 2014).

 
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