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Agribusiness Ė the continental game-changer


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Gombe

Image: Local Cocoa Farmer

April/11/2013

 

A recent World Bank report predicted that Africa’s food systems could experience a tripling in the next 17 years with a valuation of $1 trillion per annum. In order to get there, it was proposed, there has to be a close working relationship between the public and private sector; and the food market would have to be more connected to labour, capital, technology (including power), and irrigated/arable/fertile lands. In many ways, this is old news and nothing we haven’t heard from Afro-optimists. But is this claim warranted? Does the continent really have the potential to move from an annual valuation of $313 billion to $1 trillion before 2030? Is agriculture really the continent’s economic equaliser in the global market? If so, what are the indicators of this potential? And what are the opportunities for growth/exploitation?

The Food and Agricultural Organisation (FAO) and the International Institute of Tropical Agriculture have described cassava as Africa’s wonder crop because of its abundance (Africa produces more of it than any other crop), its resilience (its ability to grow in poor soil conditions) and its longevity (it can be buried in the ground post-planting and harvested up to two years later). Moreover, cassava is easily affordable to the less-affluent classes in the society, thus being a cheap source of nutrition. All these translate into a food market with a potential for expansion at home and abroad, especially after value-chain addition.

However, cassava has its shortcomings, especially as a low-end source of nutrition/carbohydrates. It is not a secure source of much-needed nutrients such as carbohydrates and vitamins and, if containing cyanide, might compound nutritional problems among indigent families. Its low dry-matter also has implications for processing into flour. And after harvest, and without adequate storage facilities and efficient transportation channels, cassava does not last long before rotting. As I noted earlier in the year, a recent development has seen three new varieties of cassava, which are more nutritious, are better able to endure post-harvest, and are generally of a better yield for processing and other forms of value addition.

But cassava is not the only thing reportedly going for the continent. Uncultivated land remains the highest in Africa. Water, which is much coveted in the global East for the purposes of agriculture, has drawn many international investors to the continent. Other food markets like rice, maize, livestock, palm oil and soybeans are also growing, reflecting the growing demand for them as well as the potential the continent has to meet that demand. I used to think that Nigerians ate rice more often than any other people in the world, but when I went to the westernmost end of the West African coast, I was shocked to find people (running into the hundreds of thousands and millions) who perhaps ate rice more often than the average Nigerian – in the absence of any eba equivalents.

But the present low-yield means that even the miracle crops like rice and maize are being imported in large quantities by African countries because local farmers cannot compete with international sellers when it comes to yield/quality and pricing. Furthermore, post-harvest losses still account for about 20 percent of farm losses, leading to waste. And the yield of many crops including high-demand crops like maize is still about one-fourth of what it could be. So mass production without yield improvement, without the proliferation – even if gradual – of storage facilities and without value addition will only take us so far.

On a positive note, our research centres such as the IITA present a source of hope, even though Nigeria is alleged to be among the countries with the lowest budgets for agricultural research. A comparative analysis will be launched in a subsequent article to assay this claim and its implications for agricultural economic growth. But hopefully, under the auspices of the IITA and the National Root Crops Research Institute, there will be more investment in research backed up by a leadership that will enable the twin forces of innovation and science to propel the sector to great heights through the development of improved, high-yielding, disease-resistant varieties as well as tried-and-tested farming and marketing techniques.

The report warns that this growth might come at a price – the livelihoods and farmlands of the most vulnerable farmers might be bought off or otherwise acquired by large-scale commercial agribusinesses. As we have seen from the developments in Myanmar/Burma, sometimes property rights of communities and households can be sidestepped in favour of large-scale investment from international corporations in the name of economic growth. The case in Burma against this economic growth proposal is that growth for the country might not trickle down to its most impoverished citizens, thus robbing them twice over. So the question remains: when faced between protecting the rights of smallholder farmers and other citizens and maintaining a favourable atmosphere for investment and growth, which should a country prioritise? A prioritisation of the latter is what some have called land-grabbing and are already clamouring against, claiming that growth doesn’t matter much if millions of farmers and ordinary citizens do not benefit from it.

All in all, overcoming these challenges while playing on our current strengths promises to result in job creation, higher national economic growth rates, and larger markets/a greater competitive edge in the global market. The machinery for this should be strong policies that link market, research, technology, infrastructure and capital in the most beneficial arrangement and consequently boost agribusiness growth in the country. Since there are bound to be tradeoffs (for example, a $600-billion market in which 50 percent of smallholder farmers have seen their incomes double versus a $1 trillion sector from which only the richest agribusiness people have benefitted), the guiding principles must be agreed upon first and foremost. And it must be acknowledged that even with the most efficient regional trading agreement, coordinating the activities of an entire continent will be difficult, but when countries do what they can in their own little spheres of influence, the bigger picture will begin to look increasingly better.

In the grand scheme of things, therefore, this report is at once a wake-up call, a source of hope, and a reality check. Sector transformation is going to take a lot of work and commitment on the part of the public sector, opposition to strong vested interests in the private/corporate sector by firms who benefit from the status quo, and a lot of resilience and advocacy (and even disappointment) at the grassroots. But even in a business climate like ours, there is still a potential – especially for nascent agribusinesses with an eye for innovation – to thrive. And with a vast shore of unrealised potential carved out in front of us, what other choice do we have than to keep struggling to change our game?

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