Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

6 December 2010

Smallhodler farmer entrepreneurs will transform Africa's agricultural productivity

Two new publications make the case for promoting entrepreneurship in the African agriculture sector - as an exit strategy for aid.

The first, a report by the Harvard academic Calestous Juma with the backing of several African presidents, argues that Africa faces three major opportunities that can transform its agriculture into a force for economic growth: advances in science and technology; the creation of regional markets; and the emergence of a new crop of entrepreneurial leaders dedicated to the continent's economic improvement.

The need to promote a class of entrepreneurial farmers by linking them to commercial farm hubs is powerfully made by Harvey Leard in a report from the Brenthouse Foundation. Leard points out that the small-scale farming sector in Africa remains marginalised. Donor and non-governmental organisation (NGO) assistance along with government subsidies appear to alleviate the symptoms at times but never the root cause.

Leard endorses the view that smallholder farmers need to be linked to modern supply chains. Doing so will provide farmers with access to knowledge, technology and markets, allowing them to earn higher incomes. Making this happen is not easy but successful examples of commercial farm hubs and outgrower schemes exist in crops such as sugar, rice and vegetables.

As argued by AgDevCo, new types of smart aid (e.g. patient capital) can be used to catalyse more private investment in enterprises incorporating smallholder farmers. Conditions attached to that aid can ensure investment is socially and environmentally responsible, with equitable benefit sharing arrangements with smallholder farmers.

Neither Juma or Leard is arguing for an end to "traditional" support to the agriculture sector, such as publicly-funded research and development or voucher schemes for seeds and fertiliser. But they do point towards an increased role for private enterprise as a means of creating a new generation of entrepreneurial smallholder farmers.

The challenge for donor community is to find ways of deploying aid to attract  investment which provides opportunties for smallholder farmer entrepreneurs to thrive.  If that can be done African agriculture can be a force for economic growth and development and, over 10 or 20 years, the exit strategy for aid.

1 December 2010

African Agriculture Fund reaches first closing at $135 million

The African Agriculture Fund (AAF), a private equity fund designed to respond to the food crisis that severely impacted the continent in 2008 in the wake of escalating food prices, reached its first closing at US$135 million in November 2010.

AAF investment primarily lies in food production, processing and distribution in cereals, livestock farming, dairy, fruit and vegetables, crop protection, logistics, fertilisers, seeds, edible oils, smallholder and agri services.

To achieve optimal diversification within the sector, AAF will invest across the value chain, from primary production to processing and tertiary services. The fund will make investments of up to US$20 million per portfolio company, targeting entities with robust management and growth prospects.

AAF aims to support private sector companies that implement strategies to enhance and diversify food production and distribution in Africa by providing equity funding, as well as strengthening the management and modernisation of the agricultural sector on the continent.

To enhance its impact on development, AAF has deployed two powerful instruments: a dedicated SME sub-fund of a target size of $60 million (initially US$30 million) and a technical assistance facility (TAF) of €10 million, to support outgrower schemes in large companies and business development services in SMEs.

Full article from News Day

21 November 2010

Why is aid not delivering poverty reduction in Mozambique?

According to a recent report by the Government of Mozambique, there have been improvements in access to education and health services over the past decade, but poverty has not fallen. In fact, in the central region, an area with huge natural potential for agriculture, it has increased markedly. Across the country child malnutrition remains at the same level as in 2002, despite billions of aid over the period. What is going on?

The report puts the blame squarely on the lack of support for the agriculture sector. Aid dollars of some $1.6 billion per year - equivalent to 50% of government revenues - have been focused on health and education, while largely ignoring the need to boost agricultural productivity. Farming yields are some of the lowest in Africa, Mozmabique has to import large volumes of staple crops and the poor are exposed to rising international food prices.

"Achieving greater success in stimulating the agricultural sector, particularly but not exclusively the family sector, is the central policy recommendation derived from this assessment", the report concludes.

18 November 2010

FAO warns against looming food crisis

Hinting a possible food crisis next year, UN Food and Agriculture Organization (FAO) said only a substantial increase in global wheat and maize output could help prevent it.

In its latest Food Outlook report, the FAO said if wheat and maize production do not rise substantially in 2011, global food security could be uncertain for the next two years. International food import bills could exceed $1 trillion in 2010, it added.

The FAO predicts that food import bills for the world's poorest countries will rise 11 percent in 2010, while bills for low-income food-deficit countries will go up by 20 percent.

"With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared," the FAO report said.

Wheat and maize prices have shot past their 2009 highs, with FAO adding that international food import bills could surpass one trillion US dollars in 2010. Food imports last topped the trillion dollar mark during the 2007/08 food price crisis.

The organization anticipates that world cereals stocks will shrink by seven percent, with barley declining 35 percent, maize by 12 percent and wheat by 10 percent.

Six percent more maize will have to be produced in 2011 than in 2010, while wheat stocks need to rise by more than 3.5 percent to ensure the world has enough reserves to tide it over 2011, said the FAO Food Outlook, released on 17 November.

Global wheat and barley stocks declined in 2010 as severe drought and fires slashed production in Russia and Ukraine two of the world's largest producers.

The news drove up wheat prices by 45 percent and even 80 percent in the second half of 2010, with an export ban imposed by Russia adding impetus. Canada, another major wheat producer, was also hit by bad weather.

World wheat inventories are forecast to fall to 181 million tones, 10 percent below the 2010 level but still 25 percent above the critically low level of 2008, the Outlook said.

Maize stocks are already low as production slipped in the United States, the world's largest producer, while demand continued to grow.

15 November 2010

The UK can help Africa double its agricultural production

A submission to the UK's All Party Parliamentary Group on Agriculture and Food for Development, by Keith Palmer, Chairman of AgDevCo

Rapid growth of sustainable agriculture is essential if the poverty reduction target in the MDGs is to be met and if the global food security problems are to be solved. The appropriate response to the challenge of climate change is to develop greater resilience in agricultural systems. In Africa the two most important priorities to increase resilience are investment in irrigation and weather insurance.

Given the high quality of the natural resource base in many parts of Africa, achieving the vision of a doubling of agricultural production in 10 years is entirely feasible. Moreover it can be achieved in ways that are socially and environmentally sustainable, respond to the challenges of climate change and bring about major improvements in the livelihoods of smallholder farmers.

There are three separate but linked issues. How to bring about rapid growth of agricultural production? How to ensure that smallholder farmers are major beneficiaries of rapid growth? And how to ensure that growth of agriculture is socially and environmentally sustainable?

Doubling of agricultural production in 10 years will require heavy investment by the private sector. Currently there are major barriers to entry deterring investment by the private sector. Donors should deploy patient capital to overcome the barriers to entry and kick-start growth of sustainable commercial agriculture in Africa.

The most cost-effective way of improving the livelihoods of smallholder farmers is to develop a series of commercial farm hub/smallholder farmer support programmes. The investors in the commercial farm hubs agree to provide access for smallholder farmers to infrastructure, inputs, credit, extension services and markets at an affordable cost. The evidence shows that this approach can more than triple the incomes of smallholder farmers in a few years and markedly improve their resilience to harvest failure.

The way to ensure social and environmental sustainability and that investors in commercial farm hubs comply with agreements to implement smallholder farmer support programmes is to make failure to comply a condition of default in patient capital funding agreements.

DFID should refocus its policies and strategy for pro-poor agricultural development and stress: the importance of productivity improvement and competitiveness of African agriculture as the keys to sustainable growth and poverty reduction; the importance of directly supporting domestic farm enterprises and entrepreneurs in Africa to overcome barriers to entry and achieve international competitiveness; and the importance of conditioning support for domestic farm enterprises and entrepreneurs on their agreeing to commit to implement smallholder farmer support programmes.

DFID should build on its experience and leadership in creating novel financing and development vehicles in partnership with others to: design, fund and implement a patient capital fund aimed at stimulating new private investment in early-stage commercial agriculture hubs with smallholder farmer support programmes; provide development funding to not-for-profit development companies to accelerate the creation of investment ready opportunities; and consider how the role of CDC should be redefined to ensure that it plays a greater role supporting early-stage agriculture in Africa.

There have been numerous recent announcements about new funding for agriculture and food security (eg GAFSP, Feed the Future, CAADP) but insufficient creative thinking about how to ensure that the resources are deployed effectively. There is a real opportunity now for the UK to "punch above its weight" by leading the design and implementation of novel financing and delivery mechanisms which can make a major contribution to addressing the poverty reduction agenda, the global food security problem and the challenges of climate change.

12 November 2010

Afreximbank to boost assets, eyes African agriculture

* Africa's arable land a lure to investors
* Private sector needs bigger role in boosting trade
* Africa needs to diversify exports beyond raw goods

CAIRO, Nov 10 (Reuters) - Egypt-based African Export Import Bank (Afreximbank) aims to boost its assets by 10 percent in 2010 to $1.6 billion with increased lending to African firms involved in agriculture, the bank's president said.

Jean-Louis Ekra told Reuters agriculture in Africa was being given a boost because of global concerns about food security that was pushing investment into the sector, and cited opportunities in countries such as Malawi.

He also said business risks in Africa were often overstated by investors, and said he expected sturdy growth given the continent's 1 billion people, foreign exchange reserves in excess of $450 billion and agricultural potential.

"Historical data will show that less than 1 percent of the money that they (banks) lent in Africa was lost," he said.

"More than 60 percent of the arable land of the world is here on our continent. The biggest challenge of the future ... is food, access to water. This continent has it. What is left for us is to turn this potential into reality," he said.

"We've been doing more for certain countries like Malawi and doing more in certain items like fertilizers ... because the food crisis has made many more countries more interested in developing the agricultural sector," Ekra said in an interview.

Other sectors being eyed by the bank, which finances and promotes trade within and beyond Africa, include oil and telecoms, he said.

Trade finance experts have said the difficulty some poor African nations have in obtaining funding for their exports threatens their economic development.

"We still are not fully out of the so called financial crisis. It's very difficult for companies and for even banks to have access to the amount of funding that they want," he said, adding that his bank was seeking to help fill the gap.

Africa's trade in 2009 was around $900 billion, divided almost equally between imports and exports, Ekra said, adding that growth in trade was stalled by the private sector's lag in pushing for greater involvement in trade agreements.

"The private sector should as a bloc say 'look, we are not prepared to accept that (governments) go and sign an agreement that is not beneficial for us,'" he said, adding African trade delegations were often dominated by politicians not executives.

Reflecting growing appetite for African investments, he pointed to Afreximbank's $300 million five-year bond launched in Nov 2009 at a 9.125 percent yield, which was over five times oversubscribed.
Afreximbank, established in 1993, has authorized capital of $750 million. The bank's non-performing loan ratio averaged about 1 percent between 2004 and 2009, a statement from the bank said.
Its shareholders include African governments and private investors, and non-African financial institutions and its Egyptian clients include El Sewedy Cables, the largest Arab cable maker by market value, which supplies cables to various African countries.

Ekra said the biggest challenge facing African trade was the need to diversify exports beyond raw commodities such as cocoa to offset demand and price fluctuations on the global market. (Writing by Shaimaa Fayed; Editing by Ron Askew)

9 November 2010

Agriculture, farmland attracting "impact investors"

Investors eyeing agriculture in Africa, Latin America and other global markets are increasingly merging their pursuit of profits with a philanthropic zeal that promoters say will pay benefits over the long term.
So-called "impact investing" is catching on with a range of private equity groups, financial services firms, venture capital funds and other moneyed players.

"There are a cadre of investors who are working under the hypothesis that one can invest for the long-term in a manner that is both economically sustainable and socially palatable," said Ademola Adesina, a former investment banker for JPMorgan who oversees business development and corporate strategy for AQUIFER, an investment company.

"Long-term sustainability, particularly in agriculture, requires a deep collaboration and symbiosis between investor activities and the communities in which they operate," Adesina said.

Full article from Reuters

3 November 2010

Time for Europe to make good on African agriculture aid pledges

A British report says Europe needs to do more to invest in African agriculture. It says a gap exists between bold rhetoric that pledges billions to aid African agriculture and a reality in which money has not materialized.

The panel of experts from Africa and Europe said European donors need to pay more attention to immediate threats of food insecurity in Africa and also to support African-led initiatives to improve agricultural productivity on the continent.

Alliance for a Green Revolution in Africa President Namanga Ngongi was on the panel of experts and says agriculture in Africa is improving. "I have seen for myself. You go into the field seeing farms where people were producing one ton per hectare before, they are now producing three, four, five tons per hectare - in some cases 6-metric tons per hectare. So now they have these possible surpluses that need to be market," Ngongi said.

He says regional bodies in Africa are increasingly making agriculture a major focus, introducing new crop breeding programs and providing start up capital for new enterprises.

And he says governments are spending more of their national budget on agricultural development.

Those efforts, he says, are paying off. For example, Nigeria has surpassed Brazil as the world's largest producer of cassava, which is a major source of calories in Africa.

Panel chairman Gordon Conway says the improvements within the agricultural sector in Africa are making it a better environment for European investment. "There is a great opportunity for the private sector to work in Africa to help increase production, both of staple crops and of crops for export. So I think it is looking optimistic," he said.

In 2009 wealthy governments in Europe and the United States pledged $22.5 billion to improve food security worldwide. Agricultural development in Africa was set to be a focus. But the panel says it is important that cash is channeled in the right way.

Child malnutrition, it says, has to be a major focus. It also says global and national food reserves need to be created to counter major volatility in global markets for staple crops.

Conway says food security in Africa is crucial for global security. "Global security is important for all of us," he says, "Every single family in Europe depends on global security. And that global security consists of a number of components, one of which is food security, another one is protection from climate change. If you do not have those two you will get political, economic instability and unrest and that is a real threat to Europe."
The report was produced by the Montpellier Panel, which was made up of 10 experts from across the agriculture, development, trade, and policy sectors.

Africa's farming sector is ripe with business opportunities

"Young people who will be future policymakers and leaders should see agriculture as a business opportunity and not simply a means of survival" - by Namanga Ngongi, president of Agra.

It is widely accepted that agricultural growth and increases in farm productivity are prerequisites to broad-based sustained economic growth and development. Yet, when it comes to Africa, this connection is just beginning to be made by the development community as well as many African governments. Smallholder agriculture and the back breaking work of millions of African farmers have been taken for granted – viewed as an accepted way of life that they embrace. Support comes mostly in the form of charity, not investment.

In Africa, you are born a farmer; you don't become one. At least, that's been the perception. But young people who will be the future policymakers and business leaders of tomorrow need to view agriculture as more than something that is done solely out of necessity and associated with the stigma of poverty and lack of education. We must make them see that Africa's farming sector is ripe with business opportunities.

Read the full article at The Guardian

28 October 2010

Private Sector Interest Grows in African Farming

Mounting concern over security of food supplies is spurring a wave of private-sector investment in Africa that many hope will put it at the center of a green revolution. Already investors are waking up to Africa's potential. Forty-five private equity firms plan to invest $2 billion in the region's agriculture in the next three to five years, according to figures from Informa Agra, and consultancy McKinsey estimates the continent's agricultural output could treble from $280 billion a year today to $880 billion by 2030.

"People are realizing the potential of agriculture," says Lucy Muchoki, head of African business coalition PanAAC, which encourages investment in the continent's agricultural sector.
To meet growing global food demand the United Nation's Food and Agriculture Organization estimates an extra six million hectares need to be brought under cultivation every year for the next 30 years. With sub-Saharan Africa estimated to hold up to 60% of the world's remaining uncultivated land suitable for farming, the region's agriculture is starting to look an interesting investment.

Read the full Wall Street Journal article

27 October 2010

Africa can achieve food and nutrition security through agricultural development

As fears increase about the impact of another global food crisis on poverty in Africa, a ten-member panel of development experts from Europe and Africa have launched a new report. The report, Africa and Europe: Partnerships for Agricultural Development, The Montpellier Panel, provides an overview of the state of European investment in African agriculture, highlights African priorities in agriculture and nutrition, and makes recommendations for ensuring global food price stability and strengthening partnerships between Europe and Africa.

The report comes at a time when Brazil, China and India are scaling up their investments and partnerships in various sectors across Africa, and Africa is taking the lead in boosting its own agricultural development. Europe risks being left behind as a key partner to tap the huge potential of the farm sector in Africa. GDP is now rising in 27 of Africa's 30 largest economies-both in countries with significant resource exports and in those without. That growth is coming from a variety of sources, not just oil and other natural resources, but also agriculture, finance, retail, and telecommunications.
The report portrays an Africa vulnerable to spikes in food prices, yet also lays the groundwork for unprecedented progress in food production. Meanwhile, Europe has made big promises for a massive increase in agriculture aid, but has yet to bridge the gap between rhetoric and action. The current murky state of European assistance obscures its record as historically Africa's most reliable partner.
  • Average wheat and coarse grain prices are projected to be 15-40% higher over the net decade in real terms relative to 1997-2006 (OECD, FAO)  
  • By 2030, the population of Sub-Saharan Africa is still projected to be about 52% rural based. In Sub-Saharan Africa, the agricultural sector accounts for over 80% of the labour force and 50% of the GDP  
  • If Africa could raise yields on key crops it could increase the value of its agricultural production by $235 billion over the next two decades.  
  • Coupled to this, if Africa could shift a proportion of cultivation to higher value crops such as fruit and vegetables, the continent would benefit from a further $140 billion annually by 2030

23 October 2010

"We cannot solve the problem of poverty without sustainable increases in agricultural productivity"

An internal review of World Bank projects shows that its activities in Africa have not performed very well in terms of boosting agricultural productivity or improving rural livelihoods. The Independent Evaluation Group (IEG) assessment presents a sobering picture of how little the World Bank Group has done over the past decade or so in that task and the need to do more and do it better.

Enhanced agricultural growth and productivity are essential if we are to meet the worldwide demand for food and reduce poverty, particularly in the poorest developing countries. The World Bank Group has a unique opportunity to match the increases in financing for agriculture with a sharper focus on improving agricultural growth and productivity in agriculture-based economies, notably in Sub-Saharan Africa.
Read the full Independent Evaluation Group (IEG) report

14 October 2010

Investing in start-up agriculture in Mozambique

AgDevCo today agreed to provide a first round of loans to several start-up agriculture businesses in the Beira corridor region of Mozambique. The aim is to help create profitable companies which can provide jobs, link smallholder farmers to markets and address food security issues. The beneficiaries are involved in farming and marketing of a range of grains, livestock and tropical fruits – maize, wheat, cowpeas, soya, sesame, potatoes, goats, bananas and mangoes. All of the projects include active participation by smallholder farmers.

The loans ranging from $50,000 to $200,000 are provided as part of the Beira Agricultural Growth Corridor (BAGC) initiative. BAGC is a partnership between the Government of Mozambique, international donor agencies and private companies, launched in early 2010. The aim of the BAGC is to promote a competitive agriculture sector in central Mozambique, creating over 350,000 jobs and providing opportunities for large numbers of smallholder farmers to boost their farming incomes.

Pascoal Alves, a farmer in the Dombe region who grows mangoes and sesame, said:
“Support from AgDevCo will help kick-start a profitable mango industry in the Dombe region, creating jobs and income earning opportunities for large numbers of people. What’s more, we are supporting smallholder farmers to grow sesame and food crops among the mango trees, helping boost incomes and address hunger”

Roberto Albino, director of the Mozambique government's Centre for Agricultural Promotion (Cepagri), said:
“The first round of investments under the Beira Agricultural Growth Corridor initiative will kick-start a revival of the agriculture sector in the central provinces of Manica, Sofala and Tete. We call on development partners to help scale-up the programme so that it can provide income generation opportunities for hundreds of thousands of farmers and their families”

Chris Isaac, Director of AgDevCo, said:
“Mozambique has huge untapped agricultural potential. The BAGC initiative can help tackle rural poverty and increase food production through a public-private partnership. The government and donor partners should increase support for rural farming infrastructure, especially electricity connections and irrigation. Local and international investors can provide the capital to scale-up successful business”.

Despite huge potential, there is today virtually no competitive agriculture in the Beira corridor region of Mozambique. Of the 10 million hectares of arable land, less than 20,000 hectares (0.2%) is farmed commercially under irrigation, mostly sugarcane. 800,000 smallholder farmers operate at the subsistence level with almost no access to modern farming inputs, finance or markets.

The BAGC Investment Blueprint demonstrates how to transform opportunities for smallholder farmers by linking them to markets and giving them access to improved inputs, infrastructure and know-how. It calls for almost US$2 billion of investment by the public and private sectors over a twenty year period.

Investing to Achieve Food security

Investing in irrigation and other measures to improve land quality will accelerate productivity growth. Rich countries should help to finance such investments.

The spectre of a global food crisis has reared its head again. Soaring corn prices, which on Monday recorded their biggest one-day rise since 1973, have triggered fears of a return to the turmoil of 2007-2008. Far-reaching measures are needed to prevent a recurrence.

Full article from Financial Times (registration needed)

1 October 2010

Is Zambia Africa's next breadbasket?

Mail & Guardian - Jody Clark

The evening sun is setting on Francis Grogan's Zambian farm and the combine harvesters are finishing their work for the day. Francolins scuttle in their wake and herons pick at the ground where wheat has been growing.
But instead of letting the farmland lie fallow until next season, Grogan will soon be planting again.
"The land is so good here that there's no need for it," says the Irishman and managing director of Zambeef, one of sub-Saharan Africa's largest food producers.
"The sun shines all day and there is plenty of water for irrigation, which means we can double-crop. Once the wheat is harvested, we'll plant the maize and sorghum."

Long regarded as the poorer cousin of its Zimbabwean neighbour, Zambia is fast gaining attention as a desirable destination for agricultural investors.
International investors from Britain to South Africa have begun putting money into infrastructure development and transport, and about 200 exiled Zimbabwean farmers have taken leases from the Zambian government to develop farmland in the country.
Meanwhile, companies such as Zambeef have risen on the back of a growing Zambian middle class, whose incomes and expectations are rising.
From humble beginnings in 1991 in Lusaka, where the business started as an abattoir and two butcher shops, Zambeef is now a $200-million-a-year company. It is the largest meat producer in Zambia, slaughtering more than 60 000 head of cattle and 3,5-million chickens a year.
"We have a lot more water than Brazil, there is plenty of rainfall and solid support from the government. This is an excellent country to invest in," Grogan said.
The question now on many people's lips is: Could Zambia become the next breadbasket of Africa? It certainly has the potential.

Of a total land area of 752 000km2, 420 000km2 is classed as having medium to high agricultural potential. But, only 15% of arable land is cultivated, according to the World Bank.

Despite this, last season's maize harvest satisfied domestic consumption more than twice over, according to the International Trade Centre in Geneva.

Of a total harvest of 2,7-million tonnes, only one million tonnes of maize was absorbed by the home market. The surplus will be exported, and the country is looking for buyers.

Although economic growth has averaged 5% over the past decade thanks to a roaring demand for the country's copper, the agricultural industry has floundered. Agricultural growth has averaged less than 1% annually.

Only 1% of small farmers have access to electricity and just 28% have access to a public water supply, making irrigation all but a dream for many.

Despite the country's potential, between 80% and 90% of its farmers still work on small-scale or subsistence operations.

Access to finance and capital is also a problem. The Zambian National Farmers' Union has said that "Zambia's market for agricultural finance is fundamentally dysfunctional".

Credit is scarce and expensive for the majority of farmers and heavily skewed towards the larger corporate sector.

In addition, the union says, loan terms are often too short to accommodate the long-term nature of agriculture, and the processing of loan applications by banks frequently takes too long.

These problems make an already risky sector even more hazardous, with non-performing loans in the 0agricultural sector now exceeding 37%, against 13% across all other sectors of the economy.

Large sums of money are needed to kick-start agricultural businesses. According to Grogan, it costs $10 000 a hectare to turn bush into farmland, but even for large-scale businesses such as Zambeef, bank lending rates are about 20%.

For that reason the company has turned to international organisations, such as the European Investment Bank, which offers loans for farming operations at about 5% interest. This is not an option for most farmers in Zambia.

Despite this, the tremendous possibilities have continued to attract investors, with a delegation of Indian commercial farmers expected in December.  That could benefit both them and Zambia.

The United Nations Food and Agriculture Organisation says that if Zambia could equal agricultural activity in Kenya, a country where two-thirds of the land is semi-arid, output would amount to $1,5-billion a year --10% of Zambia's GDP.

The sector's current contribution is about 1%.

"The Zambian government is very supportive -- and they aren't looking for backhanders," said Grogan. "Of course there's a lot of red tape and bureaucracy, but that's the same everywhere in the world.

"We came up from very humble beginnings, delivering beef to the shops in the morning in Land Rovers. Now we have a turnover of £200-million a year and we're listed on the local exchange."

22 September 2010

The rhetoric on increased investment in African agriculture must become reality

In a continent where farming is the main industry, rural prosperity would be a development catalyst - so getting the promised aid is vital, writes Dr Christie Peacock, CEO of FARM-Africa, in the Guardian.

Do not forget that most poverty in the world is rural. Three out of four people in developing countries live in rural areas. Evidence shows that investing in farming consistently has a two to three times greater impact in reducing poverty than investing in other sectors. Yet farming remains chronically under-resourced.
In Africa, the vast majority of people rely on farming for their living. To have real and sustained impact on eradicating extreme hunger and poverty, the first of the millennium development goals, new resources must be targeted at smallholder farmers. I urge African governments and donors to honour their commitments, made at Maputo and L'Aquila respectively, to increase investment in agriculture. Please turn rhetoric into reality.

Africa's rural communities are the bedrock of the continent. But they need support to create a prosperous rural Africa which, in turn, can provide a springboard for development across the continent.

15 September 2010

Sub-Saharan Africa has world’s highest number of hungry people

At least one out of three people in sub-Saharan Africa will continue to be undernourished in 2010, making the region home to the world’s highest proportion of hungry people, a United Nations report released yesterday said.
The Food and Agriculture Organization of the UN (FAO) and the United Nations World Food Programme (WFP) said the region’s hunger level has fallen by 12 million this year, but is scarcely enough to keep it clear from having about a third of its population without food.

The region contributes 30 per cent (239 million) of hungry people to global figures released Tuesday, while Asia and the Pacific remains the world’s hungriest region, with a combined figure of 578 million.

The new figures are contained in the annual flagship report, “The State of Food Insecurity in the World” (SOFI) to be jointly published by FAO and WFP in October, 2010. It was released yesterday, ahead of the September 20-22 meeting in New York called to speed up the achievement of the United Nations Millennium Development Goals (MDGs), the first of which is: ending poverty and hunger.

Full article

28 August 2010

Agricultural alchemy? How to attract more private investment for agriculture and turn it into aid

An article by Chris Isaac, Director of AgDevCo

With a global population expected to reach 9 billion by 2050, the FAO estimates that $83 billion of investment in agriculture is required every year in developing countries to assure global food security. Where is the money going to come from? Not from official development assistance (i.e. aid) which according to the OECD provided less than $2 billion to support agricultural production in 2008/09. In fact aid to agriculture has been declining for more than 20 years. So the hope must be that private investors will rush in to fill the gap. But is that going to happen in Africa where investment is most needed? If it does, will the benefits be widely shared with local communities?

Based on AgDevCo’s experience of developing agriculture projects across Africa, the answers to these questions are that investment in agriculture is unlikely to happen at anywhere near the scale required; and the benefits will reach local communities only if aid is used strategically to make that happen.

Why? Firstly, agriculture in Africa is essentially an infant industry and the business case for early-stage investment is often weak. A lack of infrastructure, uncertainty over land tenure, missing support services, and low levels of managerial skills make early stage investment costly and risky. Secondly, investors are often reluctant to incur the additional upfront costs of building links to smallholder farmers – for example by sharing irrigation infrastructure and developing outgrower schemes – even though experience shows these arrangements can be profitable in the long-term.

To assure global food security and reduce poverty, a way needs to be found to stimulate more investment in African agriculture in a manner that benefits local communities, by creating jobs in rural areas and allowing a new class of skilled farmers to emerge. In other words there needs to be a way of attracting more private investment and turning it into something resembling aid – a sort of agricultural alchemy.

There is a way. “Patient capital” is low-cost, long-term finance invested alongside African entrepreneurs and agribusinesses. It is used to part-finance the costs of agricultural infrastructure such as feeder roads, rural electrification and bulk water supply. It stimulates increased investment by overcoming barriers to entry which otherwise would have deterred investors. It comes with conditions attached which require the recipient to build strong and direct links to smallholder farmers and local communities.

The concept of patient capital is not new. It has been used in isolated cases over the past 40 years. There are commercial agriculture projects in Africa – for example in sugar, rice and cotton – which receive ad hoc grant funds from donor agencies and governments to build stronger links with smallholder farmers. AgDevCo has recently launched a fund in Mozambique to support early-stage farming businesses. But the amount of patient capital available is nowhere near high enough to induce the step change required to respond to the food crisis and reduce poverty in the poorest countries.

If the international community is serious about addressing global food security and reducing rural poverty in the world’s poorest countries, it needs to encourage the private sector to do more and to do it better in agriculture. It should commit to making patient capital available at a scale that will catalyse significantly increased investment into socially-responsible agriculture projects. Patient capital can help turn billions of private dollars into aid, providing jobs and income generation opportunities for large numbers of people in rural areas.

AgDevCo is actively involved in promoting agircultural growth corridors in Mozambique and Tanzania. Chris Isaac, Director of AgDevCo, will be speaking about patient capital at the African Green Revolution Forum in Accra, Ghana, on 2-4 September, 2010.

Funds raising capital for African agriculture

Funds that have recently raised or are raising capital for agriculture investment in Africa, or which have agriculture and agribusiness as focus sectors include:
-- SilverStreet Capital, the investment management firm that focuses on Africa and the agricultural sector, is raising capital for the Silverlands Fund, a private equity fund that will invest in African agricultural businesses across the value chain around a core of farmland businesses in Southern and Central Africa. The fund will be Luxembourg domiciled and have a life of 10 years, with an option to extend for a further two years. Targeted fund size is $350 million and target return is 20-25 percent per annum. Silver Street was set up in 2007 by Gary Vaughan-Smith, former head of alternative investments at ABN AMRO.

-- Phatisa Group, the South African private equity and corporate finance advisory firm, is managing the African Agriculture Fund (AAF), which held its first close in mid-July at 200 million euros and is targeting a final close of 500 million euros. Founder sponsors were IFAD, the African Development Bank (AfDB), Agence Française de Développement (the French development agency), AGRA and the West African Development Bank. AAF will back private-sector companies that implement strategies to increase and diversify food production and distribution in Africa. It will invest in agro-industrial companies, and agricultural co-operatives that support small-scale farmers and respect the environment.

-- South Africa's Sanlam Private Equity and SP Aktif raised $100 million for Agri-Vie Fund and are already planning a second $300 million fund, to be launched in a couple of years to feed investor demand. The first fund invests in agricultural projects in South Africa, Botswana, Kenya, Tanzania, Uganda, Ghana and Nigeria. Backed by Development Bank of Southern Africa, Industrial Development Corp (the South African DFI using money from the EU-funded Risk Capital Facility that is co-managed with the EIB), and the WK Kellogg Foundation, the fund will invest in entrepreneurs in the agribusiness value chain, rather than directly in the farming industry. Agri-vie plans to invest up to $25 million in five projects in 2010. The fund invests equity and quasi-equity with a preferred position of 25-75 percent. It can arrange debt funding and is open to syndication and co-investment.

-- Global Environment Fund (GEF), the U.S.-based private equity firm, raised an initial $84 million for the GEF Africa Sustainable Forestry Fund (GASFF) and is targeting $150 million. The fund is focused on sustainable forestry in sub-Saharan Africa and is the first of its kind. It is a 12-year closed-end private equity fund dedicated to investments in forestlands or forestry-related companies and projects in Eastern and Southern Africa, together with two countries in West Africa. The first close saw commitments principally from development finance institutions; CDC was a cornerstone investor, with $50 million; the IFC committed $20 million. Private investors are expected to invest alongside the DFIs to get the fund to its target size. GASFF will target commercial returns and is expected to invest in and develop between five and 10 forestry businesses across sub-Saharan Africa. The forestry businesses will grow process and market timber products to meet growing global demand from industries including construction, energy, furniture and biofuel. The fund will start to make investments immediately, with an investment size typically between $15 million and $30 million. Focus countries will include Mozambique, Tanzania, Swaziland, South Africa, Uganda, Ghana, Malawi and Zambia.

-- African Agricultural Capital (AAC) started raising capital earlier this year for the AAC Fund, an East African agricultural investment fund. The Uganda-based venture capital firm, set up by the Rockefeller Foundation, the Gatsby Charitable Foundation and Belgian investment company Volksvermogen sent out its private placement memorandum earlier this year. The $25 million Mauritius-domiciled closed-end fund is focused on providing capital to small growing businesses (SGBs) operating in the agriculture value chain in East Africa. The fund will invest between $200,000 and $2 million in each business, using a range of equity and quasi-equity instruments. AAC says its success criteria are to earn a minimum gross return of 12 percent per annum on funds invested, and to mobilise increased investment capital of at least an additional $5 million into the East African agricultural sector through partnerships with other investors.

-- Private equity funds Sierra Leone Investment Fund and ManoCap Soros Fund are raising capital to invest in small companies in Sierra Leone, primarily in agribusiness and related services. Both have signed contracts with MIGA.

-- Beltone Private Equity, a unit of the MENA-focused investment bank Beltone Financial, signed a partnership agreement with Kenana Sugar Company in Sudan with the aim of deploying up to $1 billion in large-scale agriculture projects across Egypt and Sudan. Beltone will provide investment management, corporate finance and strategic capabilities, while Kenana will add technical know-how and operational expertise.

-- Emerging Capital Partners, the Washington DC-based Africa-focused private equity firm, raised $613 million for ECP Africa Fund III at its final close in July. Over $450 million came from the AfDB, IFC, OPIC and CDC. The remainder came from new investors such as South Suez, the pan-African fund-of-funds manager. The fund's mission is to generate above-market returns by taking controlling stakes or influential minority positions in high-growth companies through equity and quasi-equity investments such as convertible debt. The fund will focus on companies pursuing regional strategies and will invest across various sectors, including agriculture, natural resources, telecoms, financial services, transportation, and utilities.

-- Advanced Finance and Investment Group, the private equity group based in Senegal, held the first closes of the Atlantic Coast Regional Fund (ACRF) at $84 million last year and is building towards its $150 million target. ACRF is focusing on mid-size, strong growth companies with a regional scope. Core investment countries will be Nigeria, Senegal, Côte d'Ivoire, Ghana, Cameroon, Gabon, DRC and Angola, but the scope of the fund's investments will cover the Economic Community of West African States (ECOWAS), the Economic Community of Central African States (ECCAS), as well as Morocco, Mauritania, Uganda and Rwanda. Main investors in the fund are AfDB, CDC, EIB, FinnFund, and IFC as well as international investors such as Africa Re. The fund will make investments ranging between $3 million and $15 million. The sector focus will be agribusiness, transportation and logistics, financial services, telecoms, mining and natural resources and manufacturing companies.

-- Nairobi-based venture capital firm Amani Capital hooked up with the Norwegian Investment Fund for Developing Countries (Norfund) to establish the Luxembourg-based Fanisi Venture Capital Fund. The fund will target high growth start-up and established small and medium enterprises (SMEs). Fanisi expects to close at $55 million and will invest in high-growth businesses in Kenya, Rwanda, Tanzania and Uganda. The fund will invest widely across a range of sectors, including agribusiness, ICT, retail, financial services, real estate, health and tourism. The fund's first close investors were Proparco (the DFI majority owned by the French government) and Finnfund, the Finnish government's development finance agency. Other investors were the IFC, the Soros Economic Development Fund and the Barry Segal Foundation.

-- Africinvest Capital Partners reached the fourth close of Africinvest II with commitments of 137 million euros, and is planning for a final close of 150 million euros. The Mauritius-based pan-African SME fund has the backing of a whole host of European DFIs as well as the IFC, AfDB and EIB.

25 August 2010

African agricultural finance under the spotlight

Africa is turning into a fashionable post-crisis investment destination as investors regain their confidence and start to focus on the continent’s lack of direct involvement with the global market’s volatility drivers and trouble hotspots.

At the same time, bilateral and multilateral development agencies are actively investing via an assortment of public and private-sector channels; the international capital markets pipeline is building – sovereign debt offerings on the docket for Nigeria, Senegal, Tanzania, and Zambia with Libya believed to be looking – while the slew of private equity and hedge funds being raised this year for Africa are seeing healthy interest from public-sector and private LPs.

Rising levels of international investment capital in African agriculture and agribusiness have taken the investment thesis directly into the intensely political arena of global food security and land rights. It will remain there as long as food security remains a top agenda item for the likes of China, India, Saudi Arabia, UAE, South Korea and many others.

The notion of foreign investment in agriculture as a key to Africa’s food security, particularly when it is aimed at supporting smallholder agriculture and sustainable farming, is a relatively straightforward one. The acquisition of huge tracts of African agricultural land by foreign governments (directly or through sovereign wealth funds), and by multinationals, investment banks, hedge funds, private equity firms and speculators creates a slightly more convoluted picture.

The debate about large-scale African land acquisition by purchasers from all over the developed and developing world is well documented, and the pros and cons continue to be the subject of fierce debate. It’s either a cynical land grab that amounts to a new wave of exploitational colonialism or it’s the best opportunity Africa has had in decades to generate investment inflows that will fund lasting economic benefits.

The facts might help: Africa has about 12% of the world’s arable land but 80% of it is uncultivated, only 7% is irrigated (compared to 40% in Asia) and production yields are low. For all of the protestations of exploitation, the opportunity to develop and commercialise Africa’s abundant agricultural land offers a range of hugely compelling economic opportunities for Africa as well as for international investors. The issue is ensuring deals are structured properly. At the same time as international buyers need to respect principles of responsible investing, governments need to be more accountable, transparent and strategic in how they structure deals.

Full Reuters article here

30 July 2010

AgDevCo announces launch of catalytic fund in the Beira Corridor

AgDevCo announces the launch of a catalytic fund focusing on agribusiness opportunities in the Beira Corridor of Mozambique. The fund is deigned to support commercially-viable agriculture projects which benefit smallholder farmers and local communities. Proposals are now invited from entrepreneurs. More information.

22 July 2010

Fund to invest in improved seed production

The West Africa Agricultural Investment Fund (WAAIF) and Injaro Investments Limited (Injaro) have announced the First Closing of the first ever West African fund focused on investing in indigenous seed production companies.

The initial investors in the fund are -The Alliance for a Green Revolution in Africa (AGRA) and the Lundin for Africa Society, a Vancouver-based foundation. The launch of this fund will provide capital that is desperately needed by West Africa's critical but nascent seed production industry. Link to full article

17 July 2010

Senior UN official urges Africa to focus on agriculture, jobs and social services

A combination of investment in agriculture, basic social services and job creation is the key to ensuring that Africa can meet the Millennium Development Goals (MDGs) – including slashing poverty, reducing illiteracy and boosting maternal and child health, all by 2015 – according to a senior United Nations official.
Helen Clark, Administrator of the UN Development Programme (UNDP), made the comments during her three-day visit to Ghana which wrapped up today.

Miss Clark, who met with Ghanaian officials, including President John Evans Atta Mills, and several Government ministers, praised the country’s advances towards the MDGs.

“Ghana has a great story to tell about how investing in agriculture drove down poverty, and there are many blessings to share,” she stated, pointing to a successful democratic transition, the establishment of solid institutions and legal reforms, among other things.
Link to full article

1 July 2010

Small farmers should get on the "land grab" bandwagon

If you are a small farmer in a developing country, and there is a big agricultural land investment deal going down in your neighbourhood, you could become part of it and make money in several ways, said a new UN-backed study. A growing number of "land grab" deals, especially in Africa, have hit the headlines of late.

The study - Making the most of agricultural investment: A survey of business models that provide opportunities for smallholders - examined agricultural investment models that have included small farmers and suggested changes to make sure the poor were not short-changed; more than 70 percent of people living in developing countries are small farmers.

To make these models work you need strong policies in place and vigilant governments to "police" the deals, said Sonja Vermeulen, deputy director of research at the Denmark-based Challenge Program on Climate Change, Agriculture and Food Security, one of the study's two authors.

Link to Reuters article

16 June 2010

Food prices to rise by up to 40% over next decade, UN report warns

Food prices are set to rise as much as 40% over the coming decade amid growing demand from emerging markets and for biofuel production, according to a United Nations report today which warns of rising hunger and food insecurity.

Farm commodity prices have fallen from their record peaks of two years ago but are set to pick up again and are unlikely to drop back to their average levels of the past decade, according to the annual joint report from Paris-based thinktank the OECD and the UN Food and Agriculture Organisation (FAO).

The forecasts are for wheat and coarse grain prices over the next 10 years to be between 15% and 40% higher in real terms, once adjusted for inflation, than their average levels during the 1997-2006 period, the decade before the price spike of 2007-08.

Link to Guardian article

15 June 2010

UK's Andrew Mitchell urged to support poor farmers

NGOs set to lobby the UK's international development secretary, Andrew Mitchell, over support for agriculture and poor farmers in developing countries.

Mitchell made a number of comments about agriculture during his time on the opposition bench. For example, he spoke about the importance of private sector led growth and wealth creation as a path to prosperity and investment in low cost rainwater collection and irrigation systems. If the minister needs reminding of any of his promises, Keith Palmer, executive chairman of AgDevCo, will be on hand to do so. When we met last week, Palmer handed me a list of Mitchell's top lines.

AgDevCo is a not-for-profit company that develops and arranges finances for sustainable agriculture and agri-business opportunities in Africa. With its focus on business development, it is perhaps less focused on the groups to which Peacock refers, but he is no less passionate about the importance of agriculture in changing the world – and he believes the key to achieving this is investment in irrigation.

"If you're really serious, you've got to sort out irrigation. It solves the problem of famine when rains go away. It's been a persistent problem in Africa for a long time. It's not just that we can massively improve yields and production, you can two-crop and in some parts of Africa you can triple crop. You improve nutrition and health. It's so obvious to me that it's depressing that there is almost no irrigation systems in Africa – except in south and north Africa," he told me last week.

The reason for this apparent lack of interest is, he says, is money. He estimates that the cost of installing irrigation infrastructure is, on average, US$7,000 per hectare. (Although organisations like International Development Enterprises (IDE), which champions small-scale irrigation schemes to farmers living on $1 a day, would no doubt argue you can do it for much less.)

"You've got to create irrigation agriculture businesses to pay for the cost of all that, but it's not a government priority."

At an event organised by AgDevCo last week, delegates called on governments and donors to support a major increase in resources for sustainable and pro-poor agricultural initiatives in Africa, and to channel a greater share of the budget towards NGOs.

"I hope that we can get this message across about agriculture production being the single best thing we can do to help the rural poor. Let's look at effective ways to do this. Let's put some commitment behind it. If you want quick wins you're not going to get it [with agriculture], but this is the way to go," Palmer says.

The UK government has already been vocal in its support for women in developing countries, focusing on a reduction in maternal mortality rates. But it has been tight-lipped so far on agriculture - a sector in which women make up around 70% of the workforce in many parts of Africa – except to include the Food and Agriculture Organisation (FAO) and the International Fund for Agriculture and Development (IFAD) in its review of spending on multilateral aid.

In January, a report published by the All Party Parliamentary Group on agriculture and food for development, Why no thought for food?, was heavily critical of the Department for International Development (DfID) for neglecting agriculture. It called on the UK government to commit at least 10% of its overseas aid budget to farming. At the time Mitchell called the report "hard-hitting" and said: "Improving food security for the world's poorest people is a matter of life or death, and should be an important part of our international development efforts."

Link to Guardian article

11 June 2010

Agriculture ignored: the failure of aid to reduce rural poverty

A recent article by Cunguara and Hanlon (2010) shows that rural poverty in Mozambique has been increasing in recent years, depsite record levels of donor assistance. Education outcomes are improving (slowly) but "people are in the process of losing faith in education as a vehicle for upward social mobility" because there are no jobs. There needs to be much increased support to productive agriculture, the authors argue. Donors and governments have neglected the agriculture sector for decades. If they are serious about tackling rural poverty, that must change.
Link to full article

22 May 2010

With minimal spending on agriculture, East Africa countries getting poorer

East African countries are giving less than the recommended budgetary provisions for agriculture, pushing the region deeper into poverty, despite its dependence on the industry. Kenya, Uganda, Tanzania, Rwanda and Burundi are spending less than five per cent of their budgets on agriculture.

According to the 2009 report by the Comprehensive Africa Agriculture Development Programme (CAADP), that evaluates trends in agricultural development, performance and spending in Africa, agricultural production is on the decline and so is donor support, while aid for food emergencies is on the rise. East African

20 May 2010

AfDB commits USD 40 million in the African Agriculture Fund

The private sector window of the African Development Bank (AfDB) Group received, on 19 May 2010, board approval for a USD 40 million equity investment in the African Agriculture Fund (AAF), a private-equity fund designed to respond to the food crisis that severely impacted the continent in 2008 in the wake of escalating food prices and staple export bans. Link

6 May 2010

Tanzania Agricultural Growth Corridor

TANZANIA - Major agriculture projects to be executed in the southern highland regions, the country main food basket, are underway. President Jakaya Kikwete said in Dar es Salaam that the government and the private sector are on the drawing board for the ambitious projects. Mr Kikwete who was addressing local and foreign media attending the 20th edition of World Economic Forum (WEF) on Africa Conference which begun today, said the corridor which runs between Rukwa region through Mbeya, Iringa, Ruvuma and Morogoro has huge potential to feed the country if necessary investment was made. "This area has huge agriculture potential and we want to partner with the private sector to invest in this area heavily," said President Kikwete.

Link to AllAfrica.com

Plan to develop Southern Agriculture Corridor in Tanzania receives strong support at World Economic Forum

With the Agriculture Council of Tanzania and international partners, AgDevCo launched the Southern Agricultural Growth Corridor Concept Note at the World Economic Forum in Dar es Salaam. The Concept Note received strong endorsement from President Kikwete and multinational companies as well as donor organisations including the UN and IFAD.

4 May 2010

Africa Boom Lures Investors as Growth Set to Double

Investment in Africa from countries such as China and India has rekindled optimism in a continent that sits on the world’s biggest deposits of platinum, chrome and diamonds, attracting a record number of delegates to this year’s World Economic Forum on Africa.

Agricultural loans are another area of growth on the continent, where farming employs 65 percent of the labor force and accounts for 32 percent of gross domestic product, according to the World Bank. Agriculture is being spurred by foreign investment, such as Indian food processing company Karuturi Global Ltd.’s leasing of 300,000 hectares in Ethiopia to produce food for export.

Business Week link

23 April 2010

Millions Sought for Global Fund to Aid Farms

The Obama administration is proposing to add $408 million to a global fund to boost food production and encourage good farming practices in the developing world, the Treasury Department announced on Thursday.

The fund, created after the Group of 20 meeting in Pittsburgh last year, will begin with contributions from the governments of Canada ($230 million), Spain ($95 million) and South Korea ($50 million) and from the Bill and Melinda Gates Foundation ($30 million). It is meant to provide money to poorer countries, particularly in Africa, that invest in local farming programs and agricultural development to increase crop yields, administration officials said.

The funds are meant to be invested to improve land use planning, irrigation and farm machinery, to provide technical help to farmers and to build better roads linking farmers with their markets. The World Bank will administer the fund and help choose projects to finance, in conjunction with the African Development Bank and the International Fund for Agricultural Development.

Link to New York Times article

18 April 2010

Incorporating smallholder farmers in large-scale commercial agriculture

InfraCo’s Chiansi irrigation project in Zambia adopts a fundamentally new approach to boost food production and incomes of smallholder farmers. It involves the creation of a shared, commercially managed water infrastructure system for all landowners. The cost of the irrigation project is paid back from the value uplift generated by the separately managed commercial farm operation, taking place on land of which half is unused land contributed by smallholder farmers. Free irrigation is provided over the smallholder market garden plots. Full article here.

25 March 2010

S.Africa firms launch $408 mln farmland fund

Two South African asset management firms launched a 3 billion rand farmland investment fund on Wednesday that is expected to help boost agricultural development in Africa's biggest economy.

The Futuregrowth Agri-Fund, launched by Old Mutual South Africa unit Futuregrowth Asset Management and UFF Asset Management, plans to tap institutional investors for the cash, which will be invested in farms in South Africa. Reuters link.

18 March 2010

Global Food Security Depends on Modern Agriculture

Research presented by a diverse group of experts in agriculture, economics, conservation and food security detailed how technological advancements employed on farms and across the food chain have provided an abundant, safe, affordable food supply while fostering economic development. Presswire link

17 March 2010

Agricultural growth and poverty reduction in Africa: The case for patient

AgDevCo publishes a briefing report "Agricultural growth and poverty reduction in Africa: The case for patient capital". The report argues that patient capital is the most effective means of kick-starting sustainable commercial agriculture in Africa and will deliver major benefits for smallholder farmers. Link.

14 March 2010

African agriculture in 50 years

A powerful article by Professor Paul Collier and Stefan Dercon of Oxford University challenges the traditional approach by governments, donor agencies and charities which focuses exclusively on supporting increased production by smallholder farmers. To put Africa on a path to achieving a large and sustinable reduction in poverty, they argue, the agenda for agricultural growth should surely be to introduce commercial agriculture on a competitive basis. Link to full article here.

11 March 2010

UN: ‘Africa Spends $33bn on Food Imports Yearly

The Under-Secretary General and Executive Secretary of the United Nations Economic Commission for Africa (UNECA), Mr. Abdoulie Janneh yesterday said food imports from the developed world into the African continent annually gulps $33 billion. This, he said, is besides the $3bn which comes in the form of aid from international donor agencies. He said the continent has had to resort to food import to bridge the gap between domestic food supply and demand which is mainly fueled by urban demand for processed food.

“Overall, the performance of the food and agriculture system of the continent has been far below its potential and far short from expectation. Despite, proven comparative advantage, Africa relies heavily and increasingly on food imports, standing now at about $33billion,” Janneh said at the three Day High Level Conference on the Development of Africa Agrobusiness and Agro-industries Development Initiative in Nigeria. This Day article.

9 February 2010

AgDevCo makes the case for "patient capital"

Chris Isaac of AgDevCo speaking at the Africa Investment Forum in Accra makes the case for "patient capital" to finance agriculture-supporting infrastructure such as feeder roads, reservoirs and electricty reticulation to the farm gate. Download the presentation on the AgDevCo website here.

Adopting irrigation could help Africa offset 3 degree increase in global temperatures

Africa’s failure to embrace modern farming methods is a greater impediment to food production than global warming, according to the International Crops Research Institute for the Semi-Arid Tropics.

Adopting this approach would help the continent offset possible temperature increases of as much as 3 degrees Celsius (37 degrees Fahrenheit), it said, citing conclusions made by computer modeling. Link to Newsweek article.

3 February 2010

Citadel Capital to Invest in Tanzania Agriculture

A CAIRO-based private equity firm, Citadel Capital, has announced plans to invest between 200 and 400 million US Dollars in East Africa (Tanzania, Kenya and Uganda), this year, with agriculture, mining, petroleum, transport and logistics being the priority sectors. The company's senior consultant, Ms Sinit Zeru, told the 'Daily News' in an exclusive interview in Dar es Salaam today that the investment will mainly focus on the agriculture sector. allAfrica.com link.

29 January 2010

Calls for DfID to increase agriculture spending to 10%

Why no thought for food? Report criticises the Department for International Development for neglecting agriculture and recommends it doubles its current aid budget in this area.

The report, Why no thought for food?, published yesterday by the All Party Parliamentary Group (APPG) on Agriculture and Food for Development, criticises DfID for its years of neglect of agriculture and recommends it doubles its current aid commitments for food security and sustainable agriculture to 10%.

26 January 2010

Beira Agriculture Growth Corridor - Delivering the Potential

In a major new report Beira Agriculture Growth Corridor - Delivering the Potential, InfraCo shows how the Beira corridor region of south eastern Africa can become a world class agricultural producer, eliminating food imports.

The report launched on Wednesday 27 January at the World Economic Forum in Davos identifies 190,000 hectares in Mozambique as having the potential to generate revenues for farmers of more than US$1 billion per year. But lack of irrigation, grid-connected electricity and all-weather feeder roads make this impossible.

Patient capital is needed to unlock the potential. It is used to finance " agriculture-supporting " infrastructure, especially irrigation, and make it available to farmers at affordable cost. The result: vastly improved yields, lower costs and the ability for farmers to compete in domestic, regional and global markets. More informtion on BAGC website

Gulf firm seeks long-term lease on Tanzanian farmland

A UNITED Arab Emirates (UAE) company is seeking a 98-year lease on vast tracts of farmland in Tanzania to grow rice in order to secure food supplies for the Gulf countries.

Pharos Miro Agriculture Fund, which was launched in November last year, plans to lay hands on 50,000 hectares of prime land in Tanzania this year.

According to media reports from the Gulf, the private sector fund is to invest $350m in farmland across Africa and Europe. This Day article.

22 January 2010

Stretching from Mozambique into Zimbabwe, Zambia and Malawi, the Beira agricultural corridor should bring a breadbasket its route to market. Viable projects that bring together private and donor funds to catalyse infrastructure investment are vital to scale up Africa’s agricultural potential, says Sean de Cleene of Yara International.

"On the Beira corridor, we have been working with the government of Mozambique, InfraCo, Technoserve, Universidade Eduardo Mondlane, the Alliance for a Green Revolution in Africa, Transfarm, the World Bank and the African Development Bank, amongst others, to draw up an initial corridor investment blueprint. This spells out infrastructure and agriculture investment opportunities, with concrete proposals for how they could be financed". Africa Report article.

One quarter of US grain crops fed to cars - not people

One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies. Guardian article.

African fruit farmers get funding from big business

Coca Cola has entered a partnership with The Bill and Melinda Gates Foundation and TechnoServe, a non -profit organisation, to provide $11.5 million in aid to 50,000 farmers. The aim is to improve their productivity and double their incomes by 2014.

TechnoServe has partnered with Cargill, Kraft, Nestle and Unilever, and has helped expand businesses in over 30 countries. The implementation of this partnership will build on a track record of similar schemes underway across Africa including banana, cashews, cocoa and coffee. The Gates Foundation has committed more than $1.4 billion to agriculture projects in Sub-Saharan Africa and South Africa. International Supermarket news article.

17 January 2010

China gives Tanzania $180m in loans

China gave Tanzania $180 million in concessional loans on Friday as part of its pledge to provide $10 billion in low-cost lending to Africa over the next three years, Tanzanian Finance Minister Mustafa Mkulo said on Saturday.

Mkulo said the loans would fund various development projects in infrastructure and information, communication and technology. He said Tanzania was also in talks with Beijing for additional loans in agriculture, railway infrastructure, transportation and for the upgrade and rehabilitation of Dar es Salaam's underperforming port. Reuters link