other crops. There is nothing comparable to the stranglehold that wheat and rice have on diets in South Asia. Hence, the research needed to improve yields must be more extensive in its coverage of crops and microclimates. This crop diversity poses a challenge; at the same time, it mitigates risks and opens multiple pathways to increasing production and exports.

Higher yielding varieties of maize have been available for some time but their diffusion has fallen short of expectations. Hybrid seeds need to be purchased anew prior to each planting season because maize is an open pollinating species, and hybrids deliver the sought after yields only if they are adequately fertilized. Because agriculture is almost exclusively rain-fed and drought poses an omnipresent risk, borrowing to finance the cultivation of hybrids, even when subsidized credit is available, remains unattractive to many. Only 7 percent of the cultivated acreage in Africa is under hybrid varieties.<sup>16</sup> Superior strains of food crops are a necessary but by no means a sufficient condition for an eventual transition to modern agriculture. In the three countries, farmers use remarkably little mechanical equipment partly because labor is cheap, and partly also because capital costs and the expenses incurred on fuel discourage the use of machinery that would ease the workload and circumvent seasonal labor shortages. Furthermore, the incentive to upgrade agricultural practices is inhibited by difficulties encountered in processing, storing, transporting, and marketing surplus output.

Infrastructure constraints to modernization are several. First and foremost are the transport and energy infrastructures. All three East African countries are deficient in these. The lack of easily accessible all-weather feeder roads, maintained in good condition, greatly increases the ton/km cost of transporting agricultural produce and discourages yield-enhancing improvements and production for the market (e.g. the availability of fertilizer at affordable prices).<sup>17</sup> In fact, only a third of Uganda’s agricultural output reaches the market and many farmers have been discouraged from growing the high yielding NERICA rice for just this reason (GII 2017, p.153). Rural transport bottlenecks hamper the processing and marketing of food grains, dairy products and cash crops such as coffee and cut flowers. Gollin and Rogerson (2010)<sup>18</sup> blame the poor quality of Ugandan roads for much of the agricultural productivity deficit. A crippling shortage of electric power compounds the problem caused by transport constraints because –and this is looking ahead – an increasingly industrialized agriculture that harnesses digital technologies to raise yields and enlarge rural value adding activities, cannot gain traction without an adequate supply of power. As McKinsey Global (2015, Brighter Africa) note, there is potential

> 16 The uneven quality of fertilizer and hybrid seeds also discourages use. A study by Bold et al (2017) found that fertilizer purchased by African farmers had only 70 percent of the nutrient advertised and less than half of the hybrid maize seeds were authentic.

> 17 According to the AfDB, surface transportation costs in East Africa are the highest in the world and access to electrical power is the lowest. Also see WEF (2015). - <u>http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Economic_Brief_ _State_of_Infrastructure_in_East_Africa.pdf;</u>

> 18 <u>http://www.nber.org/papers/w15863</u>

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