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.

27 February 2011

The price of food is at the heart of this wave of revolutions

An article in today's Independent makes the link between high food prices and revolutions across North Africa and the Middle East. And it's not just countries north of the Sahara. Last week in Senegal, an army veteran died after setting fire to himself in front of the presidential palace, emulating Mohamed Bouazizi, the market trader whose self-immolation sparked the revolution in Tunisia.

Against this background the US Department of Agriculture is predicting that grains markets will remain tight this year and into 2012, with international prices likely to continue to push higher. Many countries in Sub-Saharan Africa have been protected from the global surge in food prices in recent months because of healthy domestic harvests. That situation could turn about rapidly if rains were to fail this year. There are already worrying signs in East Africa.

What's clear is that there needs to be massive investment to increase Africa's production of maize, rice, wheat and soyabeans, to meet the continent's own needs but also to supply global markets. Done properly and repsonsibly that investment can also generate jobs and income earning opportunities for hundreds of thousands of young people.

21 February 2011

Ag jobs, food production hikes can help stem protests, UN told

With world food prices soaring and unrest surging in the Middle East, boosting food production and finding agriculture-related jobs for disenchanted young people are now crucial, keynote speakers told the annual meeting of the U.N. fund for reducing rural poverty.
IFAD President Kanayo F. Nwanze said, "The first step is recognizing that farming of any scale is an economic activity, a business. And businesses need clear links along the value chain – from production to processing, marketing and consumption."

More from Reuters here

15 February 2011

Record maize prices - but few benefits for African farmers

By Chirs Isaac

The world is staring down the gun of a new food crisis. Global maize prices have doubled in the past six months, reaching record levels. The chart below from IndexMundi shows the extent of the increase, caused by poor harvests and low global stocks. Today the FOB Gulf price for maize (corn) hit $295 per tonne.

That must be good news for African maize farmers, right? Not in the short term. A number of countries in Southern Africa - Malawi, Tanzania, Zambia and Mozambique - have recorded bumper harvests this year following good rains. But surplus crops are flooding local markets, driving prices down, rather than taking advantage of export opportunities.

As this article reports the price of maize in Malawi is currently as low as $3 per 50kg bag - equivalent to just $60 per tonne. That is hardly sufficient for farmers to recover the costs of seeds and fertiliser let alone provide an income.

Why the disconnect? A combination of policy, logistical and infrastructure challenges keep African farmers locked out of international markets. It costs up to $150 per tonne to ship maize from Malawi to an international port, for example. There are also cleaning and storage costs to be taken into account.

The solution? Agricultural growth corridors in Tanzania (SAGCOT) and Mozambique (BAGC), both of which link back into Malawi and Zambia, are a way of leveraging socially-responsible private investment to drive investment along the agricultural value chain, building links from African farmers to regional and international markets.

With more investment, economies of scale along the value chain will start to kick in, driving a virtuous cycle of increased competitiveness, higher productivity and better incomes for African farmers.

11 February 2011

Concessional Funding Key to Unlock Africa’s Agriculture

At least three major demands: “catalytic funding”, some form of “patient capital” and the setting up of “agricultural growth corridors” – need to be met in order to boost the productivity of Africa’s farm sector, creating jobs, improving livelihoods and alleviating poverty.

This is one of the conclusions reached last week by experts meeting at the World Bank in Washington, DC, to discuss how best to assist African smallholder farmers to transition from subsistence to commercial farming.

An essential first step, the experts agreed, must consist of helping smallholder farmers gain access to credit, farm inputs and protection for their land rights. A similar step is needed for African commercial farmers, who need access to grants, subsidized or long-term funding.

“About 60 percent of the world’s uncultivated farmland is in Africa, yet the continent receives only five percent of global investments in agriculture, ” noted World Bank Managing Director Ngozi Okonjo-Iweala, pointing to the tremendous window of opportunity agriculture represents for Africa.

The representatives of African commercial farmers told the meeting that every dollar in “catalytic funding” (subsidized loans) devoted to Africa leverages up to $20 in private capital.

World Bank President Robert Zoellick, who hosted the talks, pledged Bank support in helping establish a “catalytic fund” and mobilize “patient capital” (resources from foundations and Trust Funds) to help nurse Africa’s “baby agricultural industry” to the maturity needed for it to satisfy demand from global retail giants like Walmart and Shoprite.

“Only one percent of commercial lending in Africa went to agriculture in 2010, not enough to ensure that the sector expands by at least 5 percent a year, ” commercial bank executives and some of the region’s biggest agri-business representatives acknowledged.

A mere third of the $3bn devoted to agriculture by private investors worldwide goes to Africa, where 60 percent of all arable land continues to lie fallow.

These problems are compounded by limited use of science – agronomic research, genetically modified seeds, fertilizers and other inputs. In addition, about 40 to 50 percent of Africa’s total farm yield is believed to be destroyed or lost between the harvest, warehousing, conservation, post-harvest marketing and transport to the final consumer.

More from the World Bank here.

7 February 2011

World food prices reach new historic peak

World food prices surged to a new historic peak in January, for the seventh consecutive month, according to the updated FAO Food Price Index, that regularly tracks monthly changes in global food prices.

The Index averaged 231 points in January and was up 3.4 percent from December 2010. This is the highest level (both in real and nominal terms) since FAO started measuring food prices in 1990. Prices of all monitored commodity groups registered strong gains in January, except for meat, which remained unchanged.

"High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food", said FAO economist and grains expert Abdolreza Abbassian.