To ease your site search, article categories are at bottom of page.

October 13, 2008

Agriculture in Africa offers great new opportunities but old challenges remain

Soaring food prices, supply fears among import-dependent countries and rising demand for biofuels have driven up investment in agricultural land, notably in Africa. The meltdown in financial markets has slowed some of these flows, but some analysts say there are still good opportunities in African land, where investment in infrastructure, fertiliser and equipment has traditionally been lacking.

Here are some facts about farming and foreign investment on the continent:

*The Food and Agriculture Organisation (FAO) says only 14 percent of Africa's 184 million hectares of arable land is under cultivation, with some 21 million hectares in a state of accelerated degradation.

* It said agriculture accounted for 17 percent of gross domestic product in Africa, 57 percent of employment and 11 percent of export earnings.

* Agricultural imports have increased more rapidly than exports in the last 30 years with Africa becoming a net importer of agricultural commodities, 87 percent of which were food products in 2005.

* In 2003, African governments agreed to allocate at least 10 percent of their budgets to agriculture and rural development. The African Union said only one country in five has reached or exceeded that level.

* It is estimated that if the current plateau in agricultural productivity continues, the amount of additional land required just to meet projected food demand in 2050 would be about 3 billion hectares, nearly all from developing countries.

* The China Development Bank has granted loans worth several hundred million dollars to agricultural processing firms, mostly in East Africa. Governor Chen Yuan told African finance ministers in August the bank plans further investments and urged Africans to grow cereals as well as cash crops.

* In 2006, China agreed with some African countries to help raise grain production by using Chinese rice seeds and technology. It has also agreed to set up demonstration farms.

* Cash-rich, water-poor Middle Eastern and Gulf nations are also looking to secure food supplies. Import dependency in food will reach 60 percent in the Gulf Cooperation Council countries by 2010, according to the FAO. Oil producer Abu Dhabi announced plans in July to develop over 70,000 acres of farmland in Sudan to grow alfalfa, used as animal feed, and probably corn, beans and potatoes. The United Arab Emirates has farms in several Sudanese provinces, including a 40,000-feddan (1 feddan is 4,200 square metres) farm where wheat and corn are grown. Saudi Arabia said last June it was in talks with Sudan to allow Saudi companies to establish projects for wheat, barley, soya beans, rice and animal fodder.

* U.S.-based Dole Food Co. and Chiquita Brands International are talking with Angolan authorities to help rebuild the once prosperous banana industry in Vale do Cavaco. Brazilian building giant Odebrecht also recently announced plans to invest in Angola's sugar and ethanol sector.

* The pressure to develop biofuels and non-food oils has resulted in an explosion of foreign-owned plantations in developing countries. Land in emerging markets can cost one-tenth the price of land in industrialised countries. But the global financial crisis means some players believe funding for new biofuel projects may be hard to come by, at least in the near-term.

* Germany's Flora EcoPower is investing $77 million in Ethiopia's Oromia state as part of a purchase of over 13,000 hectares of land for biofuel production. Sweden's Sekab Group, one of Europe's leading ethanol producers, plans to produce 100 million litres of ethanol a year in Tanzania by 2012 at a cost of $200 - $300 million. British-based energy firm CAMS Group said in September it planned to produce 240 million litres of ethanol a year from sweet sorghum in Tanzania at a cost of up to $600 million. Britain's Sun Biofuels plans to grow about 5,500 hectares of jatropha in Tanzania. The company also grows jatropha in Ethiopia and has similar projects in Mozambique.

* Grain yields in sub-Saharan Africa are 40 percent below those in other developing countries, with a hectare of Zambian farmland providing roughly a third of the maize that a comparable Chinese plot would yield.

It may be hard for Africans or outsiders to accept the idea of food being grown for export when local people go hungry. This has been cited as a concern by China, among others. The potential for conflict or upheaval is real. In countries where there are sensitivities to foreigners owning land, some investors fear they may be vulnerable to nationalisation or labour disputes.

INVESTMENT FUNDS: A FEW EXAMPLES -- UK-based Emergent Asset Management said in May it was planning to launch a fund to buy farmland in sub-Saharan Africa. The African Land Fund would initially invest in 12 countries. UK-based investment company, cru Investment Management, has already piloted a farming scheme in Malawi and launched a fund called Africa Invest on the back of that success. Agri-Vie, a new private equity fund, plans to invest in agricultural processing, with backing from a foundation linked to cereal maker, Kellogg Co. It will focus initially on South Africa and neighbouring states; on Kenya, Tanzania and Uganda in East Africa and Ghana and Nigeria in West Africa.

CASE STUDIES: DEMOCRATIC REPUBLIC OF CONGO -- The International Food Policy Research Institute says DRC, could become a breadbasket for the developing world. It has 80 million hectares of arable land, ranking it seventh in the world, and 80 percent of the land that could be farmed is either unused or underutilised. ZAMBIA -- Zambia has demarcated thousands of hectares of land into farm blocs for sale to foreign and local investors. Zambia uses only 10 percent of its more than 40 million hectares of arable farmland. Huge tracts of land remain uninhabited.

Reuters

Article Categories

AGRA agribusiness agrochemicals agroforestry aid Algeria aloe vera Angola aquaculture banana barley beans beef bees Benin biodiesel biodiversity biof biofuel biosafety biotechnology Botswana Brazil Burkina Faso Burundi CAADP Cameroon capacity building cashew cassava cattle Central African Republic cereals certification CGIAR Chad China CIMMYT climate change cocoa coffee COMESA commercial farming Congo Republic conservation agriculture cotton cow pea dairy desertification development disease diversification DRCongo drought ECOWAS Egypt Equatorial Guinea Ethiopia EU EUREPGAP events/meetings exports fa fair trade FAO fertilizer finance fisheries floods flowers food security fruit Gabon Gambia gender issues Ghana GM crops grain green revolution groundnuts Guinea Bissau Guinea Conakry HIV/AIDS honey hoodia horticulture ICIPE ICRAF ICRISAT IFAD IITA imports India infrastructure innovation inputs investment irrigation Ivory Coast jatropha kenaf keny Kenya khat land deals land management land reform Lesotho Liberia Libya livestock macadamia Madagascar maize Malawi Mali mango marijuana markets Mauritania Mauritius mechanization millet Morocco Mozambique mushroom Namibia NEPAD Niger Nigeria organic agriculture palm oil pastoralism pea pest control pesticides pineapple plantain policy issues potato poultry processing productivity Project pyrethrum rai rain reforestation research rice rivers rubber Rwanda SADC Sao Tome and Principe seed seeds Senegal sesame Seychelles shea butter Sierra Leone sisal soil erosion soil fertility Somalia sorghum South Africa South Sudan Southern Africa spices standards subsidies Sudan sugar sugar cane sustainable farming Swaziland sweet potato Tanzania tariffs tea tef tobacco Togo tomato trade training Tunisia Uganda UNCTAD urban farming value addition value-addition vanilla vegetables water management weeds West Africa wheat World Bank WTO yam Zambia Zanzibar zero tillage Zimbabwe

  © 2007 Africa News Network design by Ourblogtemplates.com

Back to TOP