A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Focus on issues

Africa’s dormant resources potential

Simon Freemantle, Senior Analyst,
Standard Bank

With over a quarter of a billion people suffering from hunger worldwide, sub-Saharan Africa is one of the regions most affected by food insecurity. This situation is particularly worrying in that the continent's population growth will remain at a high level in the coming years, and thus aggravate this already problematic situation. However, Africa’s potential for growth is enormous: it has indeed the majority of potentially arable land in the world and the prospects for increasing yields on land already under cultivation are important. As shown by Simon Freemantle, in a report published by Standard Bank last October1, these are real opportunities for development but as a priority, Africa will need to establish a system for land ownership and management that is more transparent and favorable to small producers. Beyond these recommendations, it is necessary to implement international regulatory policies that enable the development of agricultural production in Africa.

momagri Editorial Board

Malthusian concerns around the earth’s ability to nourish a population of 7 billion (bn) people, expected to rise to 9 bn by 2050, are increasingly abundant. In order to feed the world’s population in 2050, food production will have to increase by 70%, necessitating a total average annual net investment in developing world agriculture of USD83 bn. Two recent and alarming global food price hikes have added texture to pervasive fears.

Much of the new demand for food continues to originate from the developing world’s rising, and increasingly affluent, population. Per capita food consumption in Brazil, for instance, has risen from USD650 in 2005, to USD1,025 in 2010, and is ex-pected to reach USD1,800 in 2015.

For many emerging markets, rising demand is being met with diminishing local resources. In China, home to 20% of the world’s population and less than 8% of its arable land, total cropland is expected to decline from 135 mn hectares (ha) today, to 129 mn ha in 2020. Almost half of China’s cities face water shortages. Other areas in the emerging world are even more pressed. In 2011, Bahrain, Qatar and Saudi Arabia were ranked as three of the four most water stressed nations in the world. Already, Gulf States import around 60% of their food, and natural water reserves are able to support only 30 more years of agricultural production.

Given these threats, attention is increasingly turning to Africa. It is estimated that over 60% of the world’s available and unexploited cropland is in Sub-Saharan Africa (SSA). Of Sudan’s 105 mn ha of cultivable land, only 16% (or 16.6 mn ha) had been cultivated by 2009. A similar ratio is evident in the Democratic Republic of Congo (DRC), where less than 10% of the country’s 80 mn ha of cultivable land has been cultivated. The Congo River Basin alone holds 23% of Africa’s irrigation potential, with the Nile River Basin holding a further 19%.

Interest in Africa’s farmland is taking a variety of forms:

First, donor institutions have re-prioritised development assistance for African agriculture as a means to elevate socio-economic prosperity. Where in 2003/4 all Organisation for Economic Co-operation and Development (OECD) Development Assistance Countries (DAC) committed a total of USD5 bn in aid to agriculture worldwide, by 2007/8 this had increased to over USD7.3 bn. The US alone increased aid to agriculture from USD379 mn to USD1.4 bn in the same time period. Meanwhile, programmes such as NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP), and the Alliance for a Green Revolution in Africa (AGRA) are gaining momentum.

Second, and more controversially, foreign land leasing deals are on the increase. Estimates vary, yet it is believed that between 50 mn and 60 mn ha of land in SSA has been purchased or leased since 2001. The majority of land leasing agreements are structured on a government-to-government basis. Unsurprisingly, Gulf States have been prominent. Meanwhile, select Asian nations are prioritising Africa as a means to ensure long-term food security.

Third, inspired by Africa’s dormant potential, particularly within a climate of elevated demand and volatile prices, private and institutional investor interest is growing. For instance, London-listed Agriterra owns a variety of agricultural assets in Africa, including 14,000 ha of land for ranching, as well as a maize processing facility in Mozambique. And, Indian horticultural firm Karuturi Global has emerged as the world’s largest exporter of fresh cut roses on the spine of its investments in Kenya and Ethiopia.

While there are meaningful objections to the nature and structure of much of the new investment in African agriculture, it is clear that the introduction of new capital, skills, and technology is an essential component in unlocking the continent’s ultimate allure. Africa’s agricultural sector has persistently underperformed for much of the past half century—having been a net food exporter in the early 1960s, Africa is now a net importer. Between 1998 and 2008 the number of hungry people in SSA increased by 20%. And, between 1967 and 2007, farm output per person in SSA fell by one-quarter, even while it doubled in South Asia and tripled in East Asia.

The reasons for Africa’s poor agricultural performance are complex, and myriad. For one, on average, African countries allocate only 4% of their budgetary expenditures to agriculture, compared to 14% in Asia. Only around 6.5% of African farmland is irrigated, compared to 40% in Asia. And, according to the World Bank, SSA uses just 11.6 kilograms (kg) of fertilizer per ha of arable land, compared to a world average of 119 kg/ha. Meanwhile, post-harvest grain losses due to inade-quate storage and transport facilities in SSA are equal to USD4 bn per year—around 15% of total output.

Though much is required, and a collective inertia still in large part remains, there are increasing signs of how Africa’s agricultural fortunes are changing. Under CAADP, 22 African countries have committed to raise the budget share for agriculture to 10%. And, in partnership with AGRA, commercial banks are beginning to lend to small-scale farmers. According to OECD/Food and Agriculture Organization (FAO) projections, Africa’s production of wheat is expected to increase by 30%, rice by 75%, and milk and sugar by 35% within the next decade. Approximately 25% of the source of crop production growth in SSA between 2010 and 2050 will come from arable land expansion, 7% from increases in cropping inten-sity, and 68% from an increase in yields. Other estimates have posited that the value of Africa’s annual agricultural output could double by 2020, based largely on gains produced by new land placed under cultivation, yield growth, and the transfer to higher-value crops.

Quite clearly, Africa’s agricultural allure is vast, yet central to the realisation of commensurate socio-economic benefits is an appreciation, on the part of African stakeholders, of how pivotal and intensely valuable this opportunity is—and to position accordingly.

1 https://research.standardbank.com/DocumentReader?docId=1671-FFABD6E8FCE0470FB3661B430B4FA12D
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Paris, 15 December 2018