Trade Barriers in Africa cause Food Crises

A new World Bank report says that Africa’s farmers can potentially grow enough food to feed the continent and avert future food crises if countries remove cross-border restrictions on the food trade within the region.

According to the Bank, the continent would also generate an extra US$20 billion in yearly earnings if African leaders can agree to dismantle trade barriers that blunt more regional dynamism.

The report was released on the eve of an African Union (AU) ministerial summit in Addis Ababa on agriculture and trade.

With as many as 19 million people living with the threat of hunger and malnutrition in West Africa’s Sahel region, the Bank report urges African leaders to improve trade so that food can move more freely between countries and from fertile areas to those where communities are suffering food shortages.

The World Bank expects demand for food in Africa to double by the year 2020 as people increasingly leave the countryside and move to the continent’s cities.

According to the new report?Africa Can Help Feed Africa: Removing barriers to regional trade in food staples ? rapid urbanization will challenge the ability of farmers to ship their cereals and other foods to consumers when the nearest trade market is just across a national border.

Countries south of the Sahara, for example, could significantly boost their food trade over the next several years to manage the deadly impact of worsening drought, rising food prices, rapid population growth, and volatile weather patterns.

With many African farmers effectively cut off from the high-yield seeds, and the affordable fertilizers and pesticides needed to expand their crop production, the continent has turned to foreign imports to meet its growing needs in staple foods.

“Africa has the ability to grow and deliver good quality food to put on the dinner tables of the continent’s families,” said Makhtar Diop, World Bank Vice President for Africa.

“However, this potential is not being realized because farmers face more trade barriers in getting their food to market than anywhere else in the world. Too often borders get in the way of getting food to homes and communities which are struggling with too little to eat.”

The new report suggests that if the continent’s leaders can embrace more dynamic inter-regional trade, Africa’s farmers, the majority of whom are women, could potentially meet the continent’s rising demand and benefit from a major growth opportunity. It would also create more jobs in services such as distribution, while reducing poverty and cutting back on expensive food imports. Africa’s production of staple foods is worth at least US$50 billion a year.

Moreover, the new report notes that only five percent of all cereals imported by African countries come from other African countries while huge tracts of fertile land, around 400 million hectares, remain uncultivated and yields remain a fraction of those obtained by farmers elsewhere in the world.

Poor roads and high transport costs blunt progress

Transport cartels are still common across Africa, and the incentives to invest in modern trucks and logistics are weak. The World Bank report suggests that countries in West Africa in particular could halve their transport costs within 10 years if they adopted policy reforms that spurred more competition within the region.

Unpredictable trade policies a liability

Other obstacles to greater African trade in food staples include export and import bans, variable import tariffs and quotas, restrictive rules of origin, and price controls.

Often devised with little public scrutiny, these policies are then poorly communicated to traders and officials. This process in turn promotes confusion at border crossings, limits greater regional trade, creates uncertain market conditions, and contributes to food price volatility.

Establishing a competitive market will enhance food distribution networks

A competitive food market will help poor people most, the report notes. For example, poor people in the slums of Nairobi pay more for their maize, rice, and other staple food than wealthy people pay for the same products in local supermarkets. The report underlines the importance of food distribution networks which in many countries fail to benefit poor farmers and poor consumers.

“The key challenge for the continent is how to create a competitive environment in which governments embrace credible and stable policies that encourage private investors and businesses to boost food production across the region, so that farmers get the capital, the seeds, and the machinery they need to become more efficient, and families get enough good food at the right price.” said Paul Brenton, World Bank’s Lead Economist for Africa and principal author of the report.

World Bank Group support for trade and agriculture in sub-Saharan Africa

The World Bank is recognized as a key source of knowledge on trade policy issues, analysis and investments for trade-related infrastructure at the country level.

The institution’s agriculture support for Africa has grown significantly over the past decade. Concessional lending totaled US$1.07 billion in fiscal year 12 (July 11-June 12): a fourfold increase from FY03.

The share of trade-related lending in total Bank lending has also grown from an average of two percent in FY03 to five percent in FY12. New trade-related commitments in FY13 are expected to increase to US$3 billion, 70 percent of which will go to Africa.

Since 2008, World Bank Group lending for agriculture and related sectors in sub-Saharan Africa total approximately US$5.4 billion.

Can smallholder farmers transform Africa’s agricultural output?

Mohit Arora believes that small-scale farmers can play a central role in boosting African agricultural output.

Much has recently been written about Africa’s agricultural potential. It is estimated that over 60% of the world’s available and unexploited cropland is in sub-Saharan Africa. 

The continent’s agricultural sector, however, faces various challenges – from insufficient irrigation systems and use of fertilisers, to poor storage and transport facilities leading to post-harvest losses.

The vast majority of African farmers are smallholders. However, recent years have seen increased investment in large-scale commercial projects. But should African agricultural development be driven by commercial farmers or smallholders?

Mohit Arora, head of agriculture at Standard Bank Africa, believes that with the right support, smallholder farmers could transform Africa’s agricultural output if they are integrated into a free market and financial system supported by appropriate legal systems that address land rights and contractual rights.

In an interview with How we made it in Africa, Arora used the example of India, where the government prioritised smallholder farming. The government provided a market mechanism where smallholders were treated fairly. “That meant that any trade between a farmer and any other counterparty had to be verified by the government.” A minimum price for certain key commodities were also guaranteed. In addition, Indian banks were incentivised to lend to the agricultural sector. These measures transformed India from a country unable to feed itself, to an agricultural powerhouse that not only has been feeding well over billion people for a few decades but will export US$10bn of food this year.

According to Arora, besides government intervention, smallholders can also be supported through microfinance.

In addition, Africa’s smallholder farmers should be assisted through extension services and improved technology. “Attention to extension services is not quite up to the level that it should be. Meaningful contributions from the government is to get extension services going, basic extension services – help the farmers get their financial planning right, what commodities are they going to plant … African agriculture doesn’t really need high-tech technology – it needs basic technology at this stage,” explains Arora.

“If you look at the south of Brazil, tobacco farmers don’t have more than 10 or 20 hectares… and Brazil is a tobacco powerhouse. In India, 80% to 90% of the farmers are smallholder – and India is one of the world’s top producers in many commodities… An interesting one in India is milk. The majority of the farmers do not have even more than a few cows, [yet] India produces the world’s largest amount of milk,” he says.

Many opportunities, but challenges remain
“Africa is turning out to be a gold mine of opportunities,” says Arora. “All the categories of the value chain are growing.”

However, Standard Bank faces various challenges in servicing the continent’s agriculture sector. One of the key challenges include financial and market risk management by the bank’s agriculture clients.

“As banks get involved, they expect the financial management to be of a certain level to be able to get comfortable and lend. A lot of lending is happening, but banks can do much more if clients organise themselves in a manner that is more conducive to financing by major banks. We often aim to not just lend but advise the client on enhancing their financial and risk management practices so that they effectively access wider financial markets as they grow.” says Arora.

Grooming talent, particularly by providing staff with continent-wide exposure, is also not easy as moving people across Africa can be a challenge. “As Africa is moving towards trade integration it needs to look at easing the flow of people to support trade (in line with people policies within trading blocks of the EU, Latin America and the Middle East).  We can actually do a lot more if we can rapidly develop talent … It is not easy to move people across countries. Even within the trading blocs, it is not that easy to move,” notes Arora.

Africa has got its work cut out when it comes to agriculture, but Arora believes that governments are generally steering the sector in the right direction.

He reckons more needs to be done to build awareness about the positive things happening on the continent. “A lot of brilliant things exist in Africa, but it doesn’t market itself that well… In countries like Ghana, Zambia, they are doing some really brilliant stuff in agriculture. Awareness particularly in the Western markets is building, but it is not quite at the level that it should be.”

Source: How We Made It in Africa

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.

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.

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.

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

World Bank approves $120m for agric production in Ghana, Senegal

The World Bank has approved One hundred and twenty million dollars for agricultural production in Ghana and Senegal.

The funds will promote the use of agric technologies to cope with the increasing demand for food in West Africa.

In a statement issued in Accra, World Baank Director for Sustainable Development, Jamal Saghir, said the programme will increase economic growth, improve food security and reduce poverty.

The statement said while West Africa’s population is set to grow from 300 million in 2011 to about 500 million in 2030, the region was facing the challenge of meeting its food demands.

It said the recent food, fuel and financial crisis had demonstrated the need for West Africa to utilize the region’s agricultural potential.