Africa Report: West Africa
9 April 2012 Africa is the next great agriculture frontier. No one knows when the boom will hit, but everyone knows it is coming. The pace of international development has accelerated in the past 10 years beyond anyone’s expectations.
Development that formerly took 20 years now takes five at the pace of the global economy, and African agribusinesses, NGOs and governments are on the precipice of unleashing a wave of technologies that could not only feed a continent but generate agriculture economies that mature into net exporters of specialty crops and propel better livelihoods for farmers, retailers and the distribution chain that serves them.
The reality is that just 4% to 5% of the world’s crop protection products are used in Africa, and even a modest increase in adoption could create opportunities for limitless expansion almost overnight if agriculture businesses are ready to react to market conditions.
“Our mission is to lift millions of farm households out of poverty, and our programs in Africa for better seed systems, soil health, market access, policy unity and financing for actors in the value chain are teaching farmers how to be more productive, but more importantly, how to be better businesses,” says Dr. Kehinde O. Makinde, program officer for Agro-dealer Development in West Africa and Ghana country officer.
The approach to generate better access to agriculture inputs is a comprehensive one at the grassroots level. Much of the investment infused into the agriculture economy here is pouring in from private foreign investment, foundations and NGOs. Ghana is one of the few West African countries spending at least 10% of its national budget on agriculture, and much of it goes to input subsidies for cash crops, especially cocoa.
But many countries are catching up. Nigeria, for example, under the leadership of new Agriculture Minister Akin Adesina, is engaging private industry like few national governments in the region have before. Adesina began his tenure by restructuring the Ministry of Agriculture, most importantly by centralizing payments to private industry, NGOs and other stakeholders under one department to create more accountability within the Ministry.
He announced in February that farmers would be able to access fertilizers through SMS text on their mobile phones through a $189 million private equity fund that will be administered by the companies, instead of forcing a structure of government distribution as done in the past. The SMS text will create a system of accountability to ensure companies are supplying efficacious products at reasonable prices.
“We are thinking of agriculture in Nigeria today as a replacement of oil,” Adesina said during the Feeding the World investor summit in February. “Think of agriculture as an investment. We see this as government-enabled. The private sector is going to have to lead it. We want Nigeria to be an agricultural and industrialized economy.”
Much of the Nigeria’s agriculture restructure and reallocation process is guided by Adesina’s Agriculture Transformation Action Plan. This plan aims to do everything from subsidize more fertilizer to courting private investment for the development of specific sectors.
Rice, for example, is slated for significant growth. An investment group is sinking $40 million into 30,000 hectares in Taraba state for rice cultivation, which is a key objective under the plan.
Nigeria’s rice consumption is expected to balloon from 5 million tonnes today to 35 million tonnes by 2050, largely because of population growth. That’s a 7% annual increase, which will require a corollary increase in crop inputs. Adesina’s plan is to eliminate rice imports entirely by almost doubling production by 2015.
Investing in Tomorrow
Much of the focus and investment in developing economies is centered on key export commodities. In Ghana, a pilot program by CNFA – an NGO that engages private industry in the value chain – cocoa farmers saw year-over-year yields almost double, and income rose 142% in its initial year in 2010. Just as encouraging was the near 100% repayment rate of loans for the initial $76,000 put aside for the program. The final results for 2011 are still being evaluated due to a late harvest season, but with a $4.5 million outlay for 10,000 farmers, yields, income and repayment trends could provide a case study for the rest of West Africa.
Many NGOs, including AGRA, CNFA, USAID and others, are working with the government to create better knowledge transfer of good agriculture practices and guidelines for the application of fertilizers and crop protection products.
“There is quite a big increase in importation of agrochemicals during the past couple years, but the usage per hectare is still very low,” says John A. Pwamang, chief director of pesticides for the Ghana Environmental Protection Agency. “Farmers still don’t have adequate income to buy enough pesticides to use them well. The result is that many farmers don’t use enough insecticides. They have adopted herbicides to some extent, but they are not using enough of any of them.”
The solution, Pwamang says, is to launch a formal education campaign with retailers about proper use guidelines and the detection of counterfeit products. The EPA helped train more than 1,000 agrodealers in 2011, and plans for 2012 are more aggressive. “Agrodealers are beginning to understand that offering education services to farmers ultimately is going to help their business.”
AGRA provides financing to more than 2,300 agrodealers in Ghana to help them build the financial acumen necessary to eventually earn credit from traditional banks, Makinde says. Similar programs are underway with the 13,000 retailers it works with in Sub-Saharan Africa, where the NGO provides credit and teaches them to provide loan facilities for farmers to perpetuate intensification. Ultimately, it means better productivity and farm incomes that can allow them to invest more heavily into productivity technology.
Private industry is the linchpin for change, as it often is in emerging economies. Successful companies are investing in social development to help improve the system and invest in long-term profitability. CropLife Ghana works with retailers and farm-level distribution networks to educate farmers about yield gains from increased intensification.
CropLife and its member companies conduct tours to educate farmers about specific products and good agricultural practices, especially on staple grains. CropLife President William Kotey, also general manager of Ghana Weinco, spends a great deal of time traveling to key growing regions to promote the adoption of a comprehensive pest management systems that includes the right seeds, fertilizers, herbicides, insecticides, fungicides and education necessary to help farmers expand yields.
In maize, for example, Ghanaian farmers yield about 1.3 tons per hectare due to insufficient inputs. Intensified croplands often yield 8 tons per hectare. Some progress is being made, but Kotey is aiming for higher adoption among more small shareholders.
“A 10% adoption of good agricultural practices and intensification is not a success story,” he says. “We need to get at least 50% of our farmers on better protocols. In principal, agriculture has reached about 30% to half of its potential. A lot can be done better. In any crop, the proper use of fertilizers and crop protection can raise productivity 150% to 300%.”
Similar programs are being directed for staple crops as well. Similar to the rest of West Africa, most of the land under cultivation and subsequent GDP is generated by staple crops, including maize, millet, sorghum and rice (see chart). Palm oil and vegetable crops are on the rise too. Vegetables could unleash a wave of prosperity in West Africa, where farmers enjoy a climate where vegetables can grow all year with access to key export markets, especially the EU and India. Intensification of these staple crops in a very fragmented growing system could materialize into exponential gain in the volumes and values of crop inputs sold in the region.
Fertilizer Phenomenon
Fertilizer, of course, is a major focus for the region. Soil composition necessitates a nutrient overhaul, and farmers are just beginning to realize the benefits of nitrogen, let alone other key supplements. Again, private industry is leading the way to pragmatic progress, according to Patrice Annequin, market information specialist for the International Development Fertilizer Center.
“There are too many talks and emphasis on policy. We need to focus on the point of view from the private sector and how industry must participate in the process of devising good agriculture practices along with researchers in order to take into account the real issues of private investment,” Annequin says.
Many in the region are optimistic about the African Fertilizer Agribusiness Partnership (AFAP), a public-private partnership established in October 2011. AFAP includes five major partners namely: the New Partnership for Africa’s Development (NEPAD); AGRA, IFDC, The African Development Bank (ADB) and the Agricultural Market Development Trust- Africa (AGMARK).
“Through this new facility, we are looking for better data on regional, national and subnational levels to generate a better understanding of current subsidies, regulations, quality issues, standards and market news, to monitor the industry – not for guys not who want to invest for millions of dollars – but we want to made more data available for the mid-level guys who want to import and distribute in the region.”
The AFAP facility has a $125 million goal with about $1 million already guaranteed and letters of credit for $1 million in the works with other private entities.
An additional possible boon for the crop protection industry is the rapid adoption of biotechnology in Africa. Africa’s GM area under cultivation is still relatively small, but it is gaining ground. South Africa, Burkina Faso and Egypt planted 2.5 million hectares of biotech cotton, corn and soybeans. Three more African nations – Kenya, Nigeria and Uganda – are conducting field trials, with Malawi to follow.
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