New Investment Models for Agric in Africa

Agricultural projects take more time to mature and investors are developing new models to encourage businesses to appreciate a longer bottom line.

 

Investing in agriculture takes patience – not something a lot of investors, eager for quick returns, have in ready abundance. However, a new investment model is gaining traction, using professional fund managers to invest donor funds as 'patient capital' in small and medium-sized enterprises (SMEs).

UK-based social venture capital firm AgDevCo has become one of the model's pioneers after investors chose it to manage a catalytic fund for the Beira Agricultural Growth Corridor in Mozambique.

AgDevCo has $28m under management; $23m of that consists of funds for investment in the Mozambique catalytic fund, from donors including the UK, Dutch and Norwegian governments. So far, it has made nine investments in SMEs plus three larger investments with its own capital. Unlike some venture capital investors, AgDevCo invests in both primary agricultural production and agribusinesses.

Chris Isaac, business development director of AgDevCo, says the lack of bankable projects is the main constraint facing private equity funds and commercial banks looking to invest in African agriculture. "Our role is to invest to create a pipeline of bankable agriculture businesses which can attract third-party investment," says Isaac.

AgDevCo deems an investment successful if it can exit by replacing its investment with private capital. Any profits from the Beira catalytic fund will be reinvested back into the country. For other investments, profits will be reinvested back into AgDevCo projects.

The average SME investment is $200,000-$500,000 and the management approach – which it sees as project incubation – is very hands on. Sometimes strategic partners are brought in from the outset, such as with banana company FrutiManica when AgDevCo's $150,000 was matched by a private investor.

Another investee company – extension and marketing company Empresa de Comercialização Agricola – will soon sell grain to the World Food Programme and is about to sign a contract with a large brewer.

AgDevCo is also investing in the livestock sector, as demand grows. Founded in 2009 by executive chairman and principal sponsor Keith Palmer, a former vice president at investment bank Rothschild, AgDevCo was modelled on InfraCo, an infrastructure fund also run by Palmer.

But there is a difference in the size and timeframe of the projects: whereas a typical InfraCo project could go through the project development cycle in two to four years, it could take six to seven years for an agriculture project.

No shortcuts

"Where one has seen investment fail in the agriculture sector in Mozambique, in the biofuels sector for example, is because that process of developing the project was not done properly and there were short cuts taken,"says Isaac.

AgDevCo has made "significant process" in Mozambique, says Patrick Guyver, managing director of Prorustica, which advised on the blueprint for agricultural corridors in Tanzania and Mozambique. He says the jury is still out on the catalytic fund model, which is not a "silver bullet" approach but shows potential as a means of supporting the development of smallholder farmers.

Outside of Mozambique, the company has investments in five large irrigation projects in Tanzania and Ghana, and is working on more in Zambia.

In Ghana, it is investing in three projects involving irrigation and food crops, each requiring $30m-$40m. AgDevCo expects to commit the first $2m-$3m, according to Isaac, and hopes the World Bank will step in as a source of patient capital. It is also waiting for the launch of a tender process to run a catalytic fund that will invest in the Southern Agricultural Growth Corridor of Tanzania.

Source: The Africa Report

Every drop of Water counts for Africa Farming

By: Elspeth Bartlet, Green Ink

The challenge of managing Africa's water more efficiently and allocating it more fairly was one of the topics for discussion at the recent Every Drop Counts conference. Green Ink's Elspeth Bartlet considers the implications for agriculture. 

Africa's demand for water is rising fast.

©FAO/Olivier Asselin

 Africa's demand for water is rising fast, as population increases, and urbanisation, economic growth and climate change combine to exert ever-increasing pressure on dwindling supplies. Water shortages already threaten food production in many African regions, while the lack of clean water and sanitation leads to 1.5 million deaths a year from diarrhoea and cholera. Yet Africa has substantial water resources: its shortages are often the result of poor water management, low investment, inefficient use and wastage. Agriculture is a primary water consumer and pivotal to the debate. How can the needs of agriculture be met as it intensifies to feed a growing population? What contributions can a more water-efficient agricultural sector make to African water security?

As demand for water grows, major water management decisions increasingly need to be made at the river-basin level, but this is not easy in a continent where 90 per cent of the available water is in river systems that straddle country boundaries. Agreement at the trans-national level is needed to avoid conflict over water and to balance the demands of agriculture with those of industry, energy and consumers. The most effective dialogues seem to be those that form part of a wider foundation for cooperation and integration. For example, Lake Victoria's water is relatively well managed, with the support of policies set by the East African Community (EAC).

Improving infrastructure

Africa's infrastructure for managing water lags way behind that of other regions. Irrigation is a prime example: only around 5 per cent of cultivated land in Africa is irrigated, compared to 40 per cent in Asia. A CGIAR Research Program on Water, Land and Ecosystems was launched in March, with a target to bring irrigation to millions of households in sub-Saharan Africa. "Irrigation offers huge scope for intensification of agricultural production in Africa," explains the program's director Simon Cook. "Shallow groundwater for irrigation is available over large areas of West Africa and surface water is available in parts of East Africa. But to be sustainable we have to ensure that development is balanced, that societal norms are protected, and that environmental needs are respected."

 Major water management decisions increasingly need to

 bemade at the river-basin level. © FAO/Giulio Napolitano

Large-scale public projects are far from the only way to improve water management. Much can be done at the farm or village level, arguably with better, and faster, results. The use of small-scale water collection and storage, known as water harvesting, gives farmers more control over their water supply. Modern technologies, such as the delfino plough, can be used to scale up traditional water harvesting approaches. "The dramatic gains that can be achieved with the delfino plough make it a deserving case for 'smart subsidy' by governments," says Ola Smith, formerly with the region's Desert Margins Program. 'Goutte-à-goutte' or drip-irrigation systems are highly water-efficient and have underpinned the development of vegetable gardens in Mali, Senegal and Burkino-Faso. Water run-off or evaporation can be reduced by optimising soil health and minimising soil disturbance with approaches such as conservation agriculture, used for example in Zimbabwe and Zambia.

Choice of crops and need for loans

Choosing the crop that delivers the best return on the water available is a key decision for farmers. Climate change is increasing the need for varieties that can make the most of low or unreliable supplies. Chickpea, pigeon pea, pearl millet, sorghum and groundnut are species that are already adapted to tolerate hot and dry conditions. However, plant physiologist Vincent Vadez of the International Crops Research Institute for the Semi Arid Tropics (ICRISAT) believes they can become even more water efficient. "We have been screening our collections against combined heat and water stress and found a wealth of genetic variation across the dryland crop species," he says. "We think there is a mechanism that contributes to the plant's water conservation, which is only switched on when needed. It can lead to large yield differences in different crops." Crop scientists are also working on the major cereal crops; for example, the International Maize and Wheat Improvement Center (CIMMYT) and partners are developing fast-growing, drought-tolerant varieties of maize, currently being trialled in East and Southern Africa by the Water-Efficient Maize for Africa project.

Attracting suitable investment is crucial to improving African water management. In Kenya, investment in water infrastructure has moved up the national policy agenda over the past four years. "The government in Kenya have realised the importance of making water a priority," says Charity Kaluki Ngilu, Minister of Water and Irrigation. "I've seen the budget go up nearly ten times. At the moment we have over US$500m for water." But governments and donors alone cannot provide all the investment needed to improve African water management. "Financial sustainability depends on appropriate combinations of all available sources of funding," says Monica Scatasta from the European Investment Bank. "Loans, possibly 'blended' with grants, spread the cost of investment over time. But their financial costs and the cost of operation, maintenance and infrastructure renewal can only be recovered from a combination of tariffs, budget transfers and grants. 

Water tariffs are sometimes controversial, but they play a role in ensuring the long-term sustainability of water and sanitation. However, proper consultation and regulation is important to ensure affordability through appropriate tariff structures or separate income support targeted to the poor."

At the Every Drop Counts conference, agriculture was identified as the sector where Africa can make its biggest water savings. Some of the measures discussed are difficult and controversial but, when every drop counts, Africa needs to consider all the tools at its disposal.

Small-Scale Farming - Way to Overcome Food Insecurity

By: Butjwana Seokoma

South Africa should invest in small-scale farming if it intends overcoming food insecurity, ending the culture of relying on social grants and also meeting the UN MDG 1 

 

I was born and raised in a rural area somewhere in the eastern side of Limpopo Lowveld. I never suffered from malnutrition or any other disease linked to food insecurity because my parents relied on small-scale farming to produce the food that we consumed as a family. Like many other families in my area, we have a piece of land where we plant crops depending on the season of the year. Many people in my community face a number of socio-economic hardships in their daily lives. To escape the reality of living under such hardships, they invest their time and energy into small-scale farming. It is for this reason that children from families that practice small-scale farming are not likely to suffer from diseases such as kwashiorkor, which is directly linked to food insecurity.

In order to overcome some of the socio-economic hardships already referred to, most unemployed adults in the area have no option but to rely on small-scale farming to sustain their families and generate income. The greatest benefit is the area has loam soil and one is not required to invest in buying fertilisers since it contains more nutrients and humus.

I am a bit worried that while the Department of Agriculture, Forestry and Fisheries focuses on providing fertilisers to small-scale farmers in my area, other departments have not contributed anything to the sector. Fertilisers are not important especially because activists in the area are of the view that they have the potential to kill the microorganisms which play a key role in decomposing the organic matter in the soil. If this claim is anything to go by, the use of fertilisers could impact negatively on small-scale farming in future.

A few months after hosting the 17th Conference of the Parties (COP17), we now live with the reality that climate change exists. All we need to do as a country is to empower small-scale farmers to make informed decisions, especially because they are affected by climate change.


Small-scale farmers operate within ever-changing and unpredictable weather patterns. It is time for the South African Weather Service (SAWS) to come to the party. We cannot continue to have the SAWS which does not even reach out to small-scale farmers when conveying weather-related information. I am one of the fortunate few South Africans who can access weather forecasts on the SAWS website, get weather information on radio or watch it on television. The sad thing is that many of our small-scale farmers do not have the luxury of accessing weather-related information.

I recently went to the SAWS website and found the following message - “Get weather insight for your farm in the palm of your hand by using our web product and SMS messages: R199 per month.” This message is aimed at commercial farmers – there is no doubt about it. Does this institution have a strategy in place to start updating small-scale farmers with useful information on weather, which will enable them to make more informed decisions when farming? Messages like this will not benefit majority of the small-scale farmers in the country, if one considers the country’s literacy.

Again, providing support to small-scale farmers will go a long in building healthy communities. Small-scale farming has many benefits. In South Africa for example, small-scale farming could enable many people, especially those living with HIV/AIDS to eat a healthy diet and also contribute to improving life expectancy. In addition, it could help majority of the 15 million social grants beneficiaries to also produce enough food. This will ease pressure on their social grants, which are often used for buying food and not other necessities in the household.

Even though small-scale farming does not contribute massively to overcoming food insecurity in many communities, it could enable communities to realise the United Nations Millennium Development Goal 1 of eradicating extreme poverty and hunger. Our government should put its money where its mouth is. We cannot continue encouraging people to venture into a sector which we are not supporting as a country. By failing to build the capacity of small-scale farmers to be able to produce food; we are creating a hungry nation, promoting the culture of relying on social grants for survival, not improving life expectancy, and taking the country many steps backwards when it comes to nutrition. We need to follow on the footsteps of our parents’ generation, who grew crops to feed their families for many years.

- Butjwana Seokoma is information coordinator at SANGONeT. He continues to believe in the power of subsistence farming and describes agriculture as his greatest passion

Developing innovation systems for African agriculture

This policy brief, published by the Comprehensive Africa Agriculture Development Programme (CAADP) at the Future Agricultures Consortium, examines how an African 'green revolution' could be underpinned by the development of innovation systems rather than technology transfer.

While science and technology (S&T) is widely seen as key to advancing the continent's agricultural productivity, policymakers and institutions have largely focused specifically on delivering technology to farmers, rather than wider S&T initiatives. But inclusive agricultural development has been difficult to achieve through market-led approaches. 

This brief draws from research to look at alternative innovation systems, how such systems can benefit the poor, and what changes are needed to realise sustainable agricultural development.

It highlights an alternative approach — Agricultural Innovation Systems (AIS) — which focuses on strengthening the capacity of smallholder farmers to innovate, and recognises the need for a continuous process of innovation. 

'Enabling Rural Innovation', an initiative that promotes agricultural market access for poor and marginalised groups, particularly women, is one example of how a participatory approach has been used to create an entrepreneurial culture in poor economies and improve farmers' decision-making capacity. The initiative has revealed barriers to market access for women and the poor, and the need for stronger input from research and policy.

A different approach ('Zooming-in,  Zooming-out'), which focuses on communicating fresh ideas and educational tools about agricultural innovation, rather than supplying ready-made technology, shows that experiential learning can work, says the brief,  but requires more support from research centres. 

The example of seed systems also shows that efforts to develop African agriculture rely on technology over innovation systems. Formal seed sources, such as gene banks and commercial companies, marginalise informal sources, like farmers saving and exchanging their own seed in local markets, for example. These informal sources are an opportunity to link formal system technology with local innovation systems. 

The brief concludes that alternatives to market-led technology transfer can be developed, creating opportunities for small farmers — including women — to participate in innovation, research and farmer organisations. But to be successful, alternative innovation pathways require policy changes to promote better collaboration between stakeholders and a strengthened role for the public sector. 

This policy brief was written by Kate Wellard Dyer for the Futures Agricultures Consortium.

FAO launches project to boost food security in Egypt

CAIRO -  The UN Food and Agriculture Organization (FAO) is leading a US$3 million project to boost food and nutrition security for women and youth in Egypt, through increased food production, nutrition education, and governmental capacity building.

Women harvesting onions in Ghana. © Afrikafarms

The four-year project, announced last month (18 June), is funded by the Italian government and will be implemented in collaboration with Egypt's Ministry of Agriculture.

Moujahed Achouri, the Egyptian FAO representative, told SciDev.Net: "The programme is part of the FAO's [regional] contribution to reducing and mitigating [...] concomitant financial and political shocks, which are heavily affecting food and nutrition security at household level". 

The project aims to improve the nutritional status of households, particularly of women and youth, in Egypt's poorest villages, by creating secure access to diversified foods from both animal and vegetable sources, and ensuring target groups have the knowledge and skills necessary to follow nutritionally adequate diets. 

The FAO in Egypt told SciDev.Net that before the revolution of 2011, "women and youth faced constraints in accessing the labour market — it is expected that this situation will worsen with the prevailing economic slow-down". 

According to the UN Development Programme's Human Development Report 2010, the percentage of unemployed women and youth was significantly higher than the national average, (24–24.5 per cent versus ten per cent). Egyptian health surveys show that malnutrition is the root cause of more than one third of illnesses affecting children under five. 

A new fund will promote training, not only on environmentally-friendly and bio-secure ways of producing food and rearing animals, but also on the skills and knowledge necessary to running small enterprises, says the FAO in Egypt. 

Training will be delivered through women's groups and will engage community members in in-depth analyses of their villages' nutritional statuses and in the preparation and implementation of nutrition education and communication plans. 

Akila Saleh, a coordinator at the Egyptian Ministry of Agriculture, told SciDev.Net that "There is a steering committee for the project made ​​up of [officials from] the ministries of education, health and agriculture".

An institutional mechanism will be established to coordinate implementation, monitor impact and ensure that good practices are integrated into national strategies.

"Target villages will be selected on the basis of their poverty ranking [...]," according to the FAO in Egypt. "Preference will be given to those located in governorates with high rates of poverty, low food security, and malnutrition".

Source: Science and Development Network

Rural Dwellers must adapt to Climate Change, says workshop

ABIDJAN -  Researchers in Côte d'Ivoire have called for villagers across the region to be made aware of the negative effects of climate change and encouraged to pursue adaptation measures. 

 

The calls came at a workshop held at the Regional Unit of Higher Education of Korhogo, in the north of the country earlier this year (18 May), at which researchers presented recent work on the impacts of climate change in the region. 

"Data from 1970–2000 show that rainfall during the period decreased by about 12 per cent in northern Côte d'Ivoire," Bama Koné, coordinator of the research, told SciDev.Net. He added that annual temperatures increased by almost one degree Celsius during the same timeframe.

Koné said that the rainy season has shortened, while the dry season has become longer. 

"Conditions in the region have become harsher and longer, vegetation has been damaged, many species are endangered, and many rivers and streams have dried up," he said. 

More than two thirds of farmers have experienced a decline in crop productivity — particularly of highly prized crops such as sorghum, yam and millet — while 60 per cent have had their farms flooded during the rainy season. 

Traditional practices have also been affected. For example, traditional doctors have been affected by the paucity of medicinal plants. 

According to the deputy mayor of Korhogo, Salimou Coulibaly, villagers sow crops such as cotton, maize and rice, according to the lunar month. When the rains do not come, they worship fetishes and pray in mosques, all the while ignoring the negative effects of climate change, Coulibaly said. 

Sidiki Cissé, director general of the National Agency for Rural Development (ANADER), is clearly concerned. "The despair of farmers is evident. Many farmers feel clueless about the [growing] uncertainty of the seasons." 

Marc Kouame, a farmer — from northern Cote D'Ivoire — who cultivates okra, peanuts and cassava, said: "Because of the changing seasons, last year I lost half my peanuts. I had not planted them at the right time". 

Coulibaly said that he hoped the results of the study would be disseminated to villagers to encourage them to change any negative habits and adapt to climate change. 

Changes in practice recommended by the researchers include the reduction and regulation of charcoal production, sensitising people about the need to protect forests, encouraging reforestation, and digging clean water wells, in conformity with draining and hygiene standards.

The East and Southern Africa Agribusiness Network

The East and Southern Africa Agribusiness Network (ESAANet) is a network that aims at facilitating increased regional Exchange of information, best practices and trade cooperation among Agribusiness-oriented organizations providing services to small holder farmers for increased productivity and market access.

 

Formed in 2007, as a follow-up to a 4-year Business Experience Exchange Program (BEEP), ESAANet is funded by the Royal Norwegian Society for Development (Norges Vel). The main aim of BEEP was to enhance the business performance of small holder farmers through exchange of experiences supported by formative process research. ESAANet’s objective is to foster increased regional integration and collaboration among Agribusiness-oriented Organizations in East and Southern Africa, for increased regional information sharing as well as trade in agricultural and forest products.

To view ESAANet current Partners please click here

Through ESAANet, partners are able to:

Share experiences on best practices and business concepts at national and regional level;
Replicate successful business models and avoid bad practices;
Increase access to regional market information; and
Create opportunities for regional trade cooperation for agribusinesses and
Rural Producer Organizations;

 Source: ESAANet

Benefits of Agribusiness in Africa

June 2011: The UN Industrial Development Organization (UNIDO) has published the sixth edition of its magazine, “Making It: Industry for Development.” The newest edition is sub-titled “Agribusiness: From farm to fork.”

The magazine features an article on “Agribusiness: Africa’s way out of poverty,” which argues that a shift to an agribusiness development growth trajectory is crucial for poverty reduction. Along the same line, the article “Agribusiness in Africa” outlines some of the issues and challenges facing agribusiness development, such as low productivity in the agriculture sector, lack of affordable finance and access to credit, and underinvestment in infrastructure.

This issue of the magazine also features an article that highlights the benefits of energy efficiency, including increased productivity and economic output, reduced demand, reduced energy bills and enhanced energy security. Other articles featured in the magazine address: the development challenges faced by small island developing States (SIDS); Cape Verde's graduation from Least Developed Country (LDC) status; carbon capture and storage (CCS); nuclear energy; the poverty footprint; and the importance to business strategy of corporate social responsibility, philanthropy and environmental compliance.

How Corporate Agribusiness supplies the lion's share of US Food Aid

For the first time it is possible to see which companies benefit from aid contracts and which countries are the main recipients

A woman collects WFP vegetable oil in Agok, southern Sudan.

As the food crisis in the Sahel countries of west Africa deepens and the anniversary of the famine in the Horn of Africa falls, the debate about how best to deliver food aid to the world's hungry has intensified.

The US is the world's largest donor of food aid but still delivers most of it "in kind" under programmes dating back to the 1950s that tie it to American companies and were originally designed to make use of American agricultural surplus.

The in-depth Guardian analysis of all the food aid contracts awarded by the US government's department of agriculture last year highlights some of the most controversial aspects of the programme. For the first time it is possible to see just which companies benefit from the contracts and which countries are the main recipients.
Development charities have been concerned for some time that corporate agribusiness supplies the lion's share of the contracted food aid and the Guardian investigation bears this out.

It is not surprising ADM, Cargill and Bunge dominate food aid, since they dominate global grain trade too. They are also powerful political players; in the first three months of 2012 alone, ADM and Cargill reported lobbying expenses of $360,000 and $340,000 respectively; Bunge reported spending $230,000 over the same period, lobbying Congress on a range of largely agricultural issues, including "support for US in-kind food aid programmes".

Patrick Woodall, research director at Food and Water Watch, pointed out the inherent contradiction in current policy. The companies that benefit from the US food aid business are the very companies that encourage poor countries to cultivate non-food crops for export rather than food to feed their people. "In terms of global food security, it seems like a double-edged sword," he said.

Nor is it surprising that food aid supports US geopolitical interests – although just how emerges in our analysis. The Guardian database shows Ethiopia, Sudan, Djibouti, Pakistan, Kenya and Afghanistan are among the top recipients of American food. These are all countries with people who go hungry but, were humanitarian need the only criterion for giving food aid, you might expect to see more countries from west Africa higher on the list, points out Rob Bailey, a fellow at Chatham House. Ethiopia, the recipient of the largest amounts by far, is highly vulnerable to regular droughts and food crises, and famine has been associated with regime change there, but it is since it became an ally in the global war on terror in the region that a more permanent food aid structure has been developed. The US has given more food and the World Food Programme has been able to work with the government to make regular food distributions as a result. A similar pattern can be seen in food aid to Afghanistan, Bailey said. High wheat prices have been a source of political instability in strategic ally Pakistan too, explaining its position as fourth largest destination country for US food aid.

Debate over these issues is growing as Congress approaches a 30 September deadline to pass a new farm bill. Negotiated every five years, it is one of the largest and most contentious pieces of US legislation, setting policy on a wide range of issues – including the bulk of international food aid.

In 2008 Congress authorised a $60m pilot to buy food aid closer to where it was needed as part of the current farm bill – a move that many other donor countries and NGOs believe would be a more effective use of money. The Senate version of the farm bill would extend the pilot. However, the House version doesn't even mention it. Now the two chambers of Congress have to reconcile their differences, and with big farm bill fights over farm subsidies and domestic food stamps, it's anyone's guess what happens next.

Trade groups are clear in their opposition to local and regional purchasing. In letters to Congress earlier this year 31 agribusiness and shipping groups wrote: "US food aid programmes not only further our humanitarian and security goals by allowing Americans to share their bounty with the needy, but these programmes also provide stable jobs for hundreds of thousands of Americans."

Source: the guardian

How a banana flour company is bringing relief to small-scale farmers

A Kenyan banana farmer transporting his produce.

Banana farmers in Kenya often find themselves incurring huge losses due to surplus fruit that basically ends up rotting away. Smallholder farmers in remote areas face challenges in reaching markets for their produce because of bad roads and a lack of information.

In a bid to reduce post-harvest losses, Eric Muthomi – a 26 year old entrepreneur – started Stawi Foods and Fruits, an award winning enterprise involved in the production of banana flour. The company works with a team of banana farmers in the agricultural town of Meru in central Kenya. The idea to process raw bananas into flour was conceived in 2010 following Muthomi’s consultations with Kenya’s ministry of agriculture.

“I was looking for ways of providing a market for small-scale farmers and increasing the shelf life of bananas, which would rot in farms, especially those belonging to farmers who could not reach the collection centres set up along the tarmac road on market days,” says Muthomi.

The company’s main product is banana flour made from processed green bananas. The banana flour is gluten free, nutritious and can be used to make baby food, porridge, mashed food, baked foods and soups.

Bananas are sourced from small-scale farmers in Meru and processed using both manual labour and processing equipment to make the flour. Muthomi works with a team of four full-time employees and 15 casual workers.

“We are working with a group of 100 farmers. As we scale we will need additional farmers to meet the demand for more raw materials. Farmers benefit by earning more income. They also have a ready market for their produce and do not have to incur additional costs of transportation to Nairobi,” says Muthomi.

Traditionally banana farmers in Meru had to drop off their produce at designated collection points for transport to Nairobi. Since farmers do not have direct access to consumers they sell to middlemen at throw-away prices. The perishable nature of bananas and logistical challenges give middlemen the bargaining power over farmers.

Stawi banana flour is distributed in major supermarkets like Nakumatt, Uchumi and Chandarana across the country.

Some of the challenges Muthomi has faced have been accessing start-up capital, lengthy licensing procedures, and complying with the many regulations that businesses dealing with food have to adhere to. The company also has to invest heavily in marketing and raise awareness about the benefits of banana flour given that most consumers are used to maize and wheat flour.

“Banana flour can play an important role in providing nutrition to consumers and solving the malnutrition problem in marginalised areas. Bananas are rich in nutrients, which are absent in conventional flours such as maize and wheat flour. This means that banana flour is a good source of nutrition to consumers ranging from infants to adults,” explains Muthomi.

Stawi Foods and Fruits has received three national awards for innovation, value addition, employment creation and environmental conservation.

Muthomi’s future plan is to begin exporting Stawi banana flour to the greater East African region.

“The food processing industry is critical in providing a market for farm produce, creating employment and curbing rural-urban migration. Value addition promotes the export of finished goods rather than raw materials and earns the country more foreign exchange,” says Muthomi.

Source: How We Made It in Africa

Marketing dilemma of the Ghanaian Farmer

By:  Felix Appiah-Ankam / CIGMAG – Assin, Central region
        feliangh@gmail.com / assincigmag@yahoo.com

"A soldier walks on his stomach", so the popular adage goes. Similarly, "a hungry man is an angry man". The computation of these two noble sayings goes to conclude that farming is the strength of almost every nation on the earth regardless of their status quo, of either being a developed, or, a developing nation. It is however harrowing to notice the lack of interest in farming by the Ghanaian youth with the covert disrespect for farmers by governments who have over the years paid only lip service to these farmers without helping them make any meaningful gains with the exception of a few who happen to produce cocoa especially.

The backbone of the African economy in general, and that of Ghana in particular, is agriculture. Agriculture accounts for about 30 per cent of the nation's GDP though a large chunk of it is from cocoa to the neglect of other crops especially the abundant citrus in the country which can equally fetch the nations millions of dollars if proper attention is accorded it.

The Ghanaian farmer will appreciate a subsidy on their farming equipment and the facilitation to the market for their produce than assisting in non-beneficial public holiday (National Farmers’ Day). In the absence of capital intensive or mechanised farming in Ghana, our old stumped subsistence farmers are able to produce almost enough to feed the nation. However, their aspiration to better their lives through farming always hits the rocks. In a year of abundant produce resulting from favourable weather conditions, the Ghanaian food stuff farmer runs a heavy financial loss let alone breaking even or making any profit. This is the sad predicament of farmers. We cannot find buyers who will even be ready to offer a purchasing price far below the production cost. The produce goes rotten without any form of compensation from any quarters to the farmers.

For citrus farmers in the Assin area of the Central Region overabundance is not a gift, but a burden. The Burkinabes, who were the only vibrant external market for their citrus have, for strange reasons, been stopped from coming to Ghana to purchase the oranges. Since then, the Ghanaian market is so saturated with oranges that nobody buys them any longer until lately (which is good news). The Ivorians and Malians have started coming to buy some of the oranges while local fruit juice manufacturing companies (who are struggling to operate at full capacity due to high cost of production) also purchase some. The sad news is farmers still gets about 30% of their citrus going waste because these marketing avenues are not enough to absorb all the oranges harvested every season. For nearly the GHC 9,000 annual expenditure on ones' farm paying the workers’ wages and buying insecticides and herbicides if in the end there is not a pesewa in return, the person is sure to go ballistic. This is why citrus farmers in particular and Ghanaian farmers in general are calling for pragmatic approach by various stakeholders in solving their myriad of problems, marketing being particular.

The citrus farmers have of recent years become victims of the policies of government which were meant for their good. A classic example is the Ghana School Feeding Programme (GSFP). The school feeding programme is an initiative of the Comprehensive African Agricultural Development Programme (CAADP) Pillar III and part of government’s efforts to attain the Millennium Development Goals (MDGs) One and Two, which seek to eliminate extreme hunger, poverty and achieve universal basic education. The programme commenced in 2006 with support from the Dutch Government to reduce poverty in deprived communities for Ghana. Though the main idea was to provide market for local farmers in the communities where the programme operates, this has not been the case for most commodity groups since most caterers buy their supplies from other parts of the country to prepare meals for the school children.
The issue is especially worrying in the Assin area where the caterers could have bought citrus from the farmers. These caterers either do not buy the oranges at all for the school children or rather buy from the market women, who do not necessarily buy from farmers in the Assin area, at a higher cost to the detriment for the local farmers. This defeats the very purpose of the GSFP.
A research conducted by Citrus Growers and Marketing Association of Ghana (CIGMAG – Assin Chapter) with funding from the Business Sector Advocacy Challenge (BUSAC) Fund indicated that most stakeholders in the GSFP in the Assin area approve of the provision of citrus compared to other fruits (such as banana and pineapple) for pupils because of its abundance in the area and its cheaper cost in relation to other fruits stated above. The only bottleneck as the captured by the research was funding. The programme handlers contend the current funding (Gh40p/head, tax inclusive) makes it virtually impossible to add citrus to the meal though I am tempted to disagree with them to some extent.

Let consider the current market price of GH¢5.00 for 100 oranges (which translates to Gh5p/orange). Can someone tell me it is impossible to include citrus in the meal of school children under the programme in the country? Absolutely not! I believe these farmers will be more than willing to cut down the price knowing very well that this is a viable market for their produce which goes to waste every season.

I strongly suggest that government takes a second look at the programme to remove all bottlenecks that militate against providing market for produce of local farmers especially citrus. Such bottlenecks include inadequate funding and lack of monitoring to ensure caterers buy from local farmer in the areas they operate. I believe the fortunes of farmer across the country would change if remedies are found for these bottlenecks.

As a long term approach I suggest whatever problem that culminated in the stopping of the Burkinabes from coming into Ghana to trade in oranges is re-examined. There could be an effective way of dealing with the problem other than a total ban where the farmers are made to suffer such financial losses without any sort of compensation from the government. We need all marketing avenues that would auger well for these farmers. It is sad to note that some farmers have either abandoned their farms or started chopping down their citrus crops to plant palm in their stead.

The citrus farmers need more factories built in the country to guarantee them an assurance that their efforts will not be in vain. The Ghanaian farmers need subsidies. They need compensation. They desire silos and other storage facilities built for the storage of their cereals, citrus and other agricultural produce. We need our scientists to come up with practical solutions to our food insecurity and to push mother Ghana forward.

African Agribusiness: 9 specific Investment opportunities

Many African brewers have started producing beer with sorghum instead of barley. This creates opportunities for sorghum producers.

There has been much talk about the potential for investment in Africa’s agribusiness and food industries. But what are the particular opportunities? In a recent report the United Nations Development Programme (UNDP) revealed nine specific investment options for business people and entrepreneurs.

1. Fruit juice concentrate processing facility in Nigeria

Around 90% of the fruit juice produced in Nigeria is based on concentrates imported from abroad. Nigeria’s fruit juice market is projected to be worth more than US$2 billion per annum. Interested investors could have discussions with established fruit juice producers such as Coca-Cola Nigeria and Chi-Nigeria to investigate their quality specifications, volumes and potential prices.

2. Cassava value chain investment

While cassava is one of Africa’s main staple foods, the opportunities for the crop in ethanol, bio-fuel, processed foods, industrial starch and pharmaceutical applications have not been exploited. There is a huge market for starch in Nigeria and other countries, with strong demand from textile and food processing companies. Currently Nigeria’s local textile industry and food companies import over 90% of their starch requirements.

“One weakness along the cassava value chain is the absence of in-country large-scale cassava processing facilities, which could turn cassava from subsistence use into industrial use,” notes the report.

3. Cultivation of soya bean and other oil seed plants

“Soya bean has become a strategic commodity for sub-Saharan African countries,” says the UNDP. The crop’s importance in the food, animal feed and edible oil industries have grown in recent years. Sub-Saharan Africa however contributes only 0.2% to global soya bean output.

Africa presently has a large demand for soya bean related products – including soya cake and soya oil. BIDCO, a company with a presence in a number of east African countries, could process an additional 30,000 tons of soya beans using its existing processing capacity.

According to the UNDP, the demand for crude palm oil is even higher than that of soya beans.

4. Sorghum production

Sorghum has evolved from a commodity for subsistence farmers into a popular household and industrial crop. East African Breweries, Nigeria Breweries and Ghana Breweries have started using sorghum for beverage production. The report notes there are currently opportunities for the private sector to invest in sorghum production expansion and mechanisation.

East African Breweries is currently seeking farmers to produce sorghum on contract to reduce its reliance on more costly barley. It is expected that by 2015, demand in Nigeria for domestic use and exports to neighbouring countries will reach over 980,000 tons.

5. Intensive production technologies for fresh vegetables

Aubergine and Onion garden, Accra.

© EnterpriseAfrik

The growth of modern supermarkets in Africa coupled with urbanisation and a rising middle class, has led to a high demand for quality vegetables that can be obtained using intensive production technologies.

Earlier this year How we made it in Africa reported that in some places in Africa, fast-food giant Kentucky Fried Chicken (KFC) doesn’t serve lettuce on its burgers. This is not to save on costs or due to a difference in local tastes, but rather because there are no local lettuce producers who can supply the quantities and quality required by KFC.

The use of intensive production technologies has transformed the horticultural industry in Kenya. West Africa holds considerable potential for the introduction and commercialisation of intensive vegetable production systems.

“The investment opportunity does not only reside in production but a strategic and integrated approach to market production equipment, transfer technologies and provide market linkages for producers,” says the report.

6. Production of milk powder in west Africa

West Africa Milk Company (WAMCO) currently imports 90% of its milk powder. Imports of milk powder into west Africa is estimated to be over US$2 billion per year.

Milk yields are low, quality is poor and supply is inconsistent. Processing facilities are required to process fresh milk into powder and provide the intermediate product (powder) imported by the multinationals for tin milk production.

7. Aquaculture

“Nigeria alone imports over US$900 million worth of fish annually. Ghana and Senegal spend over $100,000 annually on fish imports. Almost every country in west Africa is embarking on aquaculture and incentives packages have been designed to attract investment. Investors have immediate domestic and regional markets to supply,” says the report.

CHI Limited has started with a large aquaculture project in the Nigerian city of Ibadan although this project will account for less than 2% of the country’s total demand.

8. Equipment leasing

One of the greatest challenges facing African farmers is a lack of farming equipment.

A solution is a private sector led centralised equipment hiring model – especially for tractors. Although governments have been involved in such initiatives in the past, it has in many cases not proved very successful.

“Such operations led by the private sector are expected to ensure sustainability, efficiency and free government funds for infrastructure development. Private sector agribusiness men in Nigeria are keen on investing into such a model,” says the report.

9. Market centre infrastructure investment

Whereas the larger players have the necessary infrastructure and logistics for their operations, many smaller agribusiness and food companies don’t have access to quality warehouses, cold store facilities and loading machines. This has resulted in fire outbreaks, high post-harvest losses and food safety concerns.

This situation provides an opportunity for the private sector to get involved in the modernisation of local market centres.

Source: How We Made It in Africa

Saudi Investment in African Farmland

Saudi Arabia is investing in agricultural land in Africa as the state’s local crop production diminish.

Saudi Arabia has a major problem with water scarcity and only 1% of its land is suitable for agriculture.

“Saudi investors have reportedly planned or concluded investments covering 800,000 hectares of land in Africa (accounting for almost 70% of all large deals struck by Saudi firms globally),” says Standard Bank in a recent report.

But why Africa, and what are the opportunities and problems Saudi investment in Africa might catalyse?

The Saudi agriculture problem

Saudi Arabia is approaching a food production crisis that is a major problem for its growing population that is consuming more food. “Local poultry production in 2012 is likely to be almost 800,000 tonnes lower than consumption, while wheat production will be deficient by around 1,800,000 tonnes and maize by 1,880,000 tonnes,” notes Standard Bank’s report. Saudi Arabia’s water scarcity is also problematic, with water consumption having more than doubled since 2006.

This has led to the Saudi government deciding to phase out local wheat production. By 2016 it will no longer purchase locally-grown wheat. The country is already estimated to import around 2.5 million tonnes of wheat between 2012/2013, and this is expected to increase to 3.3 million tonnes annually in the coming years.

However, relying on food imports is not ideal, with the country becoming vulnerable to unstable global supply and costs.

The solution: invest in foreign agricultural production as a “means to ensure a long-term, reliable supply of stable commodities,” says the report. It is because of this that the “Saudi government established the King Abdullah Initiative for Saudi Agriculture Investment Abroad under which large Saudi agribusiness firms are provided with credit, as well as strategic and logistical support to invest abroad”.

The Africa solution

With 60% of the world’s uncultivated arable land being in Africa, it’s no wonder that Saudi Arabia has an eye on the continent, with almost 70% of all concluded and planned investments in offshore agriculture being in Africa.

“Factors considered in identifying suitable host countries for agricultural investments include the availability of resources and infrastructure, political and socio-economic stability, and favourable relations with the Saudi government,” notes the report. “Under this initiative, bilateral government-to-government deals can be struck which allow more fluid access for Saudi firms in target markets.”

An example of a Saudi investment in agricultural land in Africa is the Ethiopian government leasing 10,000 hectares to the Saudi Star Agricultural Development in 2008. The company has plans to acquire another 290,000 hectares of land.

“A guiding principle of the initiative is that the investor must have the right to export at least 50% of the farmed produce to Saudi Arabia,” says the report. “The primary products targeted are wheat, barley and maize.”

Weighing up the pros and cons for Africa

Africa needs investment for the improvement of infrastructure and to boost employment opportunities and skills development. Agricultural investment by Saudi firms could help with all these things and more.

However, Standard Bank points out that attention needs to be given to the possible negative ramifications. “Under-selling of agricultural assets (both land and, perhaps more critically, water) remains a profound threat. Meanwhile, as large tracts of land are sold or leased off to foreign investors, the social strains brought about by the relocation of local inhabitants has the potential to be deeply destabilising.”

An ideal investment in Africa’s agricultural land would include directing investment into agricultural infrastructure (such as storage and transport); providing employment and training for local communities; and ensuring that a generous portion of the crops go to local markets. The report also argues that “transparency in the manner in which land deals are struck, and adequate consultation with affected local communities, must be compulsory”.

Source: How We Made in Africa