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Smaller Might Be Better in African Agriculture 0

We recently carried out research in an African province with a population of over 4 million people and a yearly government income of over US$ 3 billion, and found little or no local industry for milk, feed, meat and other agricultural concerns. The entire region actually imports most of its agricultural and livestock products. Imagine what would happen if local industries were created instead.

Examples like this demonstrate that agriculture in Africa is a sitting gold mine. But also, as the world population increases, food demand is increasing at a rapid rate, and Africa is becoming recognized as the one place that has the capacity to feed the world. Already, fund managers and investors from various parts of the world are increasing their investment into agriculture on the continent, however, the surface has barely been scratched.

Most of the current focus in African agriculture has been on acquisition of large swathes of land for farming, production and export. This has generated its fair share of controversy with people complaining of various forms of abuse and exploitation. As a result, countries are beginning to place demands on investors and tighten conditions of land acquisition, which is are positive moves to make sure African communities benefit.

However, the greater opportunity may lie in developing and funding smaller scale operations, which come alongside African farmers to expand productivity. Investment needs to be made into development of technologies at this scale and helping farmers develop markets for their products. This approach will be less controversial as it tends to have tangible large scale benefit to communities at the grassroot level.

Pierre Mathijsen, President of EMRC, says African agriculture could be developed to such an extent that successful small-scale farmers emerged from all parts of the continent, returning Africa to its position thirty years ago as a net exporter of food. He pointed out that there is already sufficient funding available for African agricultural projects, but the challenge was developing a sufficient number of good, bankable projects.

The EMRC, partnering with the United Nations Development Programme (UNDP), Food and Agriculture Organization (FAO), and other role players are coming alongside to help Africans fill this gap. These development agencies are working on the premise that since agriculture already employs over 60% of Africa’s workforce, its growth would bring sustainable job and wealth creation to the continent. These they believe can be achieved through development of sustainable public/private partnerships.

At the recent AgriBusiness Forum in Cape Town, South Africa, Morgan Tsvangirai, Prime Minister of Zimbabwe, says African farmers can be moved from subsistence enterprises to exports, but it will take government, business, and financiers.

Focusing on small-scale farmers is really not a new strategy. Many firms from large to small understand the imperative and opportunity. An example of a large firm is Yara International, which has worked in Africa for over 30 years focused on supply inputs for farmers and capacity building for the value chain. And, Backpack Farming, a small, entrepreneurial enterprise, creates portable packs for cultivating small plots of land in East Africa.

For investors, there are three spheres from which they can benefit. First is the local demand for food. At this point, most African countries are importing their major food needs like fish, meat, milk, and corn. Locally created agricultural ventures will find opportunities here and in regional markets. And, as noted before, the growing global demand for food will be an opportunity to leverage African agricultural investments.

While there is a lot of opportunity, there are still a lot of challenges, e.g., infrastructure, for foreign and African investors and businesspeople alike. In reality, it will take ten years for many of today’s challenges to be addressed on a large-scale, but smaller, focused ventures with clusters of complementary businesses that catalyze the value chain can unleash the potential of this market much sooner.

By Nissi Ekpott – Afribiz/Africa The Good News

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Direttore Responsabile Giuseppe Frangi