Africa can create trillion-dollar food market by 2030 if…
Africa’s farmers and agribusinesses could create a trillion-dollar food market by 2030, says a new World Bank report launched Monday, March 4, 2013 in Washington.
This can however only become possible if Africa’s farmers are able to expand their access to more capital, electricity, better technology and irrigated land to grow high-value nutritious foods, and if African governments can work more closely with agribusinesses to feed the region’s fast-growing urban population.
According to the “Growing Africa: Unlocking the Potential of Agribusiness” report, Africa’s food systems, currently valued at US$313 billion a year from agriculture, could triple if governments and business leaders radically rethink their policies and support to agriculture, farmers, and agribusinesses, which together account for nearly 50 percent of Africa s economic activity.
The report, which highlights the strong opportunities Africa has in agribusiness as well as the essential nature of value chains, states that Africa has become a major consumer and importer of rice, with Ghana and Senegal receiving special mention, while largely Africa imports half the rice its people eat and pay top dollar for it – $3.5 billion per year and more.
According to the World Bank report, Ghana produces fewer varieties of rice than Senegal, but at significantly higher cost, and levies 40 percent tariffs and other charges on imports, mentioning poor grain quality, cleanliness and packaging as major deterrents for consumers, thus constraining the sector’s performance.
It states further, that although Senegal is competitive among its neighbors, it is held back by the difficulty farmers have in accessing land, capital, finance for irrigation expansion and appropriate crop varieties.
Touching on maize production in Africa, the report says the crop is grown on 25 million hectares or 14 percent of cropped land, while in Zambia where people eat on average 133 kilograms of cereals a year, maize provides half the calories in their diets.
Affirming that Zambia is competitive when it comes to importing maize the report says the country fails on exports, as a result of high transport costs, higher labour costs and lower yields that combine to increase costs by one-third compared to Thailand, a major international producer of rain-fed maize.
The report argues that Zambia’s future competitiveness depends on raising yields, reducing costs, and removing disincentives for the private sector in markets and trade and further reviews value chains for cocoa in Ghana and dairy and green beans in Kenya.
Despite the combination of population growth, rising incomes, urbanisation and strong demand that are driving global food and agricultural prices higher and in spite of supply issues slowing yield growth of major food crops, slowdown in research spending, land degradation and water scarcity issues, and a changing climate, which mean that prices will remain high, the World Bank believes that in this new market climate, Africa has great potential for expanding its food and agricultural exports.
This is because “Africa holds almost 50 percent of the world’s uncultivated land, which is suited for growing food crops, comprising as many as 450 million hectares that are not forested, protected, or densely populated. Africa uses less than 2 percent of its renewable water sources, compared to a world average of five percent. Its harvests routinely yield far less than their potential and, for mainstay food crops such as maize, the yield gap is as wide as 60 to 80 percent.
Post-harvest losses run 15 to 20 percent for cereals and are higher for perishable products due to poor storage and other farm infrastructure,” the World Bank maintains.
The Bank is optimistic African countries can tap into booming markets in rice, maize, soybeans, sugar, palm oil, biofuel and feedstock and emerge as major exporters of these commodities on world markets, similar to the successes scored by Latin America and Southeast Asia.
For Sub-Saharan Africa, it maps out the most dynamic sectors as rice, feed grains, poultry, dairy, vegetable oils, horticulture and processed foods to supply domestic markets.
The report however cautions that even as land will be needed for some agribusiness investments, such acquisitions can threaten people’s livelihoods and create local opposition, unless land purchases or leases are conducted according to ethical and socially responsible standards, including recognising local users rights, thorough consultations with local communities, and fair market-rate compensation for land acquired.
Proffering solutions to Africa’s agriculture and agribusiness challenges, the World Bank suggests that these two should be at the top of the development and business agenda in Sub-Saharan Africa.
The report also calls for strong leadership and commitment for both public and private sectors and as comparators, the report cites case studies from Uruguay, Indonesia and Malaysia.
For success, it recommends that engaging with strategic good practice investors is critical, as is the strengthening of safeguards, land administration systems, and screening investments for sustainable growth.
The report notes that Africa can also draw on many local successes to guide governments and investors toward positive economic, social and environmental outcomes.
Commenting on the report, Makhtar Diop, World Bank Vice President for Africa Region, stated: “The time has come for making African agriculture and agribusiness a catalyst for ending poverty. We cannot overstate the importance of agriculture to Africa’s determination to maintain and boost its high growth rates, create more jobs, significantly reduce poverty, and grow enough cheap, nutritious food to feed its families, export its surplus crops, while safeguarding the continent’s environment.”
For his part, Jamal Saghir, World Bank Director for Sustainable Development in the Africa Region, said: “Improving Africa’s agriculture and agribusiness sectors means higher incomes and more jobs. It also allows Africa to compete globally. Today, Brazil, Indonesia and Thailand each export more food products than all of sub-Saharan Africa combined. This must change.”
Gaiv Tata, World Bank Director for Financial and Private Sector Development in Africa, however opined that “African farmers and businesses must be empowered through good policies, increased public and private investments and strong public-private partnerships,” saying, “A strong agribusiness sector is vital for Africa’s economic future.”
By Edmund Smith-Asante