An overview of economic issues in wheat research and development in Sub-Saharan Africa

From 1961 to 1987, wheat consumption in sub-Saharan Africa increased rapidly at 5.7 % per year, while production rose only 2.3 % per year from a very low base. About 90 % of increased consumption in the past two decades has been provided by imports, and sub-Saharan Africa is now only 25 % self-sufficient in wheat. Rising wheat consumption occurred at the same time that consumption of traditional staples was falling, indicating substantial substitution of wheat for these staples. To some extent, increased wheat consumption is an inevitable consequence of urbanization, but economic policies which reduce the cost of imports, lagging production of local staples, high consumer subsidies, and wheat food aid have also played a major role in increasing wheat consumption. This paper examines economic issues that should be addressed in deciding on the level of resources to invest in local wheat research and development. It is argued that local wheat production is difficult to justify on the grounds of food security; because of climatic and institutional factors, wheat production in sub-Saharan Africa is often more variable than world wheat prices, so attempts to insulate domestic wheat markets may increase rather than decrease instability of supplies and prices. Also, careful analysis is needed before local wheat production can be justified on the grounds of saving foreign exchange; imported machinery and inputs used in local wheat production often use up half or more of foreign exchange savings from reduced wheat imports. In deciding on the desirable level of investment in wheat research and development, local wheat production must be compared with available production alternatives. Domestic Resource Cost (DRC) analysis offers a useful framework for evaluating the economic arguments in favor of a domestic wheat industry. Recent DRC case studies have revealed that the factors which most influence the efficiency of local wheat production include: 1) competition from alternative crops, 2) cost of irrigation, 3) choice of technology, and 4) the physical location of consumption and production. The DRC framework of analysis can also show the feasible range of yields and irrigation costs for which local wheat production will be efficient. Several DRC case studies have already been carried out, but much more careful economic analysis is needed to develop a comprehensive, long-term strategy for wheat in sub-Saharan Africa