São Tomé and Príncipe's economy - the agriculture sector

The Agriculture Sector in São Tomé and Príncipe

The agriculture sector in São Tomé and Príncipe is a critical component of the economy, contributing approximately 11.8% to GDP based on World Bank data from 2017. Historically, the sector has been dominated by plantation agriculture, with cocoa being the primary crop and export commodity. Given the country's small size, with a land area of just over 1,000 square kilometers and a population of about 225,000, agriculture plays a vital role in providing employment and supporting food security, while also contributing to export earnings.

Historical Context

São Tomé and Príncipe's agricultural history is rooted in its colonial past under Portuguese rule, beginning in the 15th century. The islands were initially used for sugar production with slave labor, transitioning to cocoa and coffee plantations in the 19th century, which became the economic backbone. After independence in 1975, the government nationalized many of the large estates, leading to a period of economic disruption. Subsequent structural adjustments, supported by the International Monetary Fund (IMF) and World Bank, aimed to revitalize the sector, with a focus on privatizing estates and improving productivity.

Contribution to GDP

Research suggests that in 2017, the agriculture, forestry, and fishing sector contributed 11.8% to GDP, based on World Bank data. This figure has remained relatively stable in recent years, reflecting the sector's consistent role in the economy. The sector's contribution is significant, especially given the country's reliance on agriculture for employment, with about 39.6% of the labor force engaged in agricultural activities, according to the CIA World Factbook for 2017.

Main Crops and Their Significance

The agriculture sector is characterized by a mix of cash crops for export and food crops for domestic consumption:

• Cocoa: Traditionally, cocoa has been the primary export crop, accounting for about 95% of exports in the past, particularly during the colonial period and immediately after independence. Recent data from the Observatory of Economic Complexity (OEC) for 2022 shows cocoa beans exports at $8.73 million, which is approximately 8.5% of total exports ($102 million), indicating a decline in dominance. Production levels are around 3,000 to 4,000 tons per year, making São Tomé and Príncipe a small but significant player in the global cocoa market, with a focus on high-quality, organic cocoa.
• Other Export Crops: These include copra (dried coconut meat), palm kernels, and coffee. While specific export values are not detailed in recent data, historical reports suggest these crops contribute to diversifying the export base, with copra and palm kernels used for oil production, and coffee, though less prominent, still exported in small quantities.
• Food Crops: The sector also produces a variety of fruits and vegetables for domestic consumption, such as bananas, cassava, yams, and sweet potatoes, supporting local food security. These crops are primarily grown by smallholder farmers and are essential for the daily diet of the population.

Structure of the Sector

The agricultural sector in São Tomé and Príncipe is structured around both large-scale commercial farming and smallholder agriculture:

• Ownership: During the colonial period, the economy was based on large Portuguese-owned cocoa and coffee estates. After independence, these were nationalized, and later, many were privatized, with some now owned by local entrepreneurs or foreign investors. Smallholder farms, often family-run, produce food crops for local consumption, with land tenure systems varying between leased and owned plots.
• Labor Force: Approximately 39.6% of the labor force is engaged in agriculture, highlighting its importance as a source of employment. This includes workers on plantations, smallholder farmers, and those involved in forestry and fishing, which are often integrated with agricultural activities.

Recent Trends and Performance

• GDP Contribution Trends: The sector's contribution to GDP has been stable at around 10-12% in recent years, based on World Bank data, reflecting its consistent role despite economic diversification into services and potential oil exploration.
• Production Levels: Cocoa production has been around 3,000 to 4,000 tons per year, according to the International Cocoa Organization, which is relatively small compared to major producers like Ivory Coast or Ghana but significant for the country's economy. Efforts to improve productivity include introducing high-yield varieties and organic farming practices.
• Export Trends: While cocoa remains a key export, its share of total exports has decreased from historical levels of 95% to around 8.5% in 2022, as per OEC data. This decline is partly due to the emergence of other exports, such as crude petroleum ($30.8M in 2022), which may be related to the Joint Development Zone (JDZ) with Nigeria, though no commercial oil production has started as of 2021, suggesting possible data misclassification.

Challenges

The agriculture sector faces several structural challenges:

• Small Land Area: With a total land area of just over 1,000 square kilometers, there is limited space for agricultural expansion, constraining the sector's growth potential.
• Climate Change: As a small island nation, São Tomé and Príncipe is highly vulnerable to climate-related events such as floods, rising sea levels, and changing rainfall patterns, which can impact crop yields and agricultural productivity. Reports from the World Bank highlight the country's susceptibility to these risks, particularly affecting coastal plantations.
• Limited Market Access: The small domestic market limits demand for agricultural products, and challenges in accessing international markets, such as high transportation costs and trade barriers, hinder export growth. The country's remoteness in the Gulf of Guinea exacerbates these issues.
• Competition for Resources: With the growing focus on tourism and potential oil exploration, there is competition for land and labor, which can divert resources away from agriculture.

Opportunities

Despite these challenges, there are significant opportunities for growth:

• Expanded Production: There is potential to increase production through improved agricultural practices, such as adopting modern farming techniques, enhancing irrigation systems, and introducing high-yield crop varieties. Government initiatives and donor support, such as World Bank projects, aim to boost productivity.
• Diversification: Introducing new crops and enhancing the value chain of existing crops, such as processing cocoa into chocolate for export, can reduce dependency on a single commodity and improve resilience to market fluctuations.
• Better Market Access: Efforts to improve transportation infrastructure, supported by the World Bank's Country Partnership Framework for FY2024-2029, could enhance market access, both domestically and internationally, facilitating export growth.
• Sustainability and Organic Farming: Given the country's pristine rainforests and unique biodiversity, there is potential to focus on organic and sustainable agriculture, particularly for cocoa, which can command premium prices in international markets.

Future Prospects

The agriculture sector is expected to continue playing a vital role in São Tomé and Príncipe's economy, particularly in providing employment and contributing to GDP. With strategic investments and policies aimed at addressing challenges and leveraging opportunities, the sector can drive future economic growth. The government's focus on diversifying the economy, supported by international donors, includes projects to enhance agricultural productivity and sustainability, with expanded production seen as a key driver for future prosperity.