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Hungry over a Fertile Land: Africa and the Promise of Large-Scale Agribusiness
By admin May 23, 2016

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Africa Agribusiness

 

Throughout the world farmers face similar set of opportunities and challenges to sustain their business and livelihood. In Africa, however, these challenges tend to be of greater magnitudes.

 

In the continent agriculture employs 65 percent of labor force and contributes 32 percent to the GDP. There are approximately 80 million acres of arable lands under the production of maize which account for 20 percent of the world’s share. However, average maize yields are less than 2 tons per hectare. This is chronically inefficient when compared to the maize output in the US, which is 10 tons per hectare. Moreover 79 percent of the arable lands are either uncultivated or having low levels of productivity. Nearly 80 percent of African farmers cultivate less than two hectares, which makes Africa a continent of small-scale farmers. To understand agribusiness in Africa requires an understanding of small-scale farming opportunities and challenges.

 

African agribusiness – just like other parts of the world – is two-folds: inputs and outputs. ‘Inputs’ include seed, plant material, water, fertilizers, quality control, logistics and infrastructure and farming methods. ‘Outputs’ are comprised of customer insights and care, market analysis, distribution challenges and a deep knowledge about units of production (i.e. cost of goods, packaging, wastage, product replacement, etc.).

Small-scale farming in Africa demonstrates inefficiency, and as a result, an inability to compete in a global market. The scale of business in the continent has rendered financing either inaccessible or unaffordable. In small-scale farming, access to high-yielding seeds, effective fertilizers and sustainable sources of water is expensive. This higher price explains why fertilizer use in Sub-Saharan Africa is only one-tenth the world average.

 

In cases where migrants from urban areas send remittance back to their farms, we see better seeds, fertilizers or machinery, which shows that financial resources can improve the operations in rural areas. The under-investment, combined with the tenuous property rights and land tenures, has degraded farming from a potentially profitable business, to a purely subsistence activity in rural areas. Moreover, an overall lack of reliable infrastructure, such as paved roads, energy generators, warehouses and cold storages has isolated rural areas from reaching out to global markets. In a 2013 report on Agricultural Trade of Developing Countries by the Organization for Economic Cooperation and Development (OECD) it estimated that a 10 percent improvement in roads, energy, IT and storage could increase agricultural exports by 30 percent.

 

As for outputs, farmers need a better understanding about their market and potential customers. The general knowledge gap of customers’ needs, market trends, potential distribution channels and the basic economics of the produced crops have prevented farmers to grow and become competitive in global markets. The efficiency and knowledge gap in the continent can be remedied through investments and a large-scale approach towards farming in Africa.

 

Despite the overwhelming challenges within Africa, focusing on long-term investments between global players in agribusiness and African governments can recover the continents immense agricultural potentials. The continent possesses vast amount of arable lands, an eager labor force and a rising economy. All the necessary ingredients are in place to transform this potential to actual profitable business – making Africa the breadbasket of the 21st century.

For more information:

Five big challenges facing Africa’s food systems

Small Farmers Face Opportunities and Challenges

Estimating the Constraints to Agricultural Trade of Developing Countries

Agribusiness in Africa


Thanks for sharing !


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