Crop Protection Market Development in Africa

By Derek Oliphant
Contributor

This article will outline the development of the crop protection markets in key developing markets in Africa, examining the current situation as well as the key future trends expected to influence market development over the coming years. The countries profiled are:

• Egypt
• Tunisia
• Zambia

These countries have been selected due to their differences in crop choice, grower profiles, and agrochemical markets. Each country can be considered a representative of key parts of the region: Egypt – northeast of the continent, with close similarities to many Middle Eastern markets; Tunisia – north Africa, with similarities to other countries in the Maghreb region; and Zambia – in the south of the continent with similarities to more developed markets such as South Africa.

 • EGYPT •
Overview

Egypt has been a defined country and area for more than 5,000 years. Britain seized control of the country in the 1880s but granted independence in 1922. Lake Nasser was formed by the damming of the Nile in 1971, which significantly altered agriculture in the country. Egypt has the largest population of any country in the Arab world, which puts pressure on the country’s limited natural resources.

The country has, over time, been drawn into Middle Eastern conflict that resulted in political instability. Following a period of military rule, President Elsisi was elected in 2014 and re-elected for a second six-year term in 2018. The House of Representatives is directly elected for a five-year term. In 2019, a referendum approved the restoration of the legislative body’s upper chamber, a third of which will be appointed by the president and the remainder directly elected.

The Egyptian economy is highly dependent on agriculture, oil, manufacturing, tourism, and other service sectors. Former President Nasser operated a highly centralized economy that Presidents El Sadat and Mubarak subsequently liberalized. Economic weakness in the mid-2010s led to a period of high inflation, which has since been partially offset following the floatation of the country’s currency and increasing foreign investment.

Egypt is a party to numerous trade agreements, including the Agadir Agreement with Jordan, Morocco, and Tunisia; the Common Market for East and Southern Africa; the European Union-Egypt Association Agreement; the Egypt-EFTA Free Trade Agreement; the Greater Arab Free Trade Agreement (GAFTA); the Egypt-Turkey Free Trade Agreement; and the Egypt-Mercosur Free Trade Agreement, amongst others. As a Qualified Industrial Zone (QIZ), designated geographic areas within Egypt enjoy a duty-free status with the United States.

Agricultural land in Egypt is confined to the Nile Valley, its delta, and a number of oasis in the Sinai Peninsula. The country is divided into four areas.

• Southern Egypt: (Upper Egypt) along the Nile River from Cairo to Aswan. Low mountains and desert characterize more southerly areas.
• Northern Egypt: Wide valleys near the Nile and desert to the east and west.
• Nile River Delta: (Lower Egypt) to the north of Cairo, the capital. The most fertile area of the country.
• Sinai Peninsula: to the east of the Nile to the north of the country.

The government’s Ministry of Agriculture and Land Reclamation (MALR) has formulated a Strategy for Sustainable Agricultural Development (SADS) 2030, which focuses on three priorities for agricultural development:

1. Improving agricultural productivity through water use efficiency.
2. Improving food security.
3. Sustainable use of natural agricultural resources, especially water incorporating a National Policy for the Sustainable Reuse of Wastewater in Agriculture.

The majority of Egypt’s population is concentrated along the Nile River, which puts pressure on agricultural land. In addition, salination, desertification, and loss of the Nile delta due to rising groundwater levels are also negative factors that continue to affect the region. The main cities are Cairo, Alexandria, and Giza.

Historically, land reforms resulted in the distribution of land between many small producers. Private ownership is limited to 50 feddans (about 21 hectares), and a family cannot own more than 100 feddans (about 42 hectares). Publicly leased land benefits from a capped cost of irrigation (5% of land value).

Egypt’s land-tenure system revolves around shuyu’, a collective property system under which heirs’ own shares of property. Land may be secured through inheritance or purchase and may also be leased from the government or private owners.

In 2008, the Egyptian government approved the cultivation of genetically modified (GM) maize, however, this was suspended in 2012. A law regarding GM foods was drafted in 2016 but still awaits parliamentary approval.

There has been significant interest in biofuel production in Egypt, although there is no evidence of any significant production. Investment in a plant in the United Arab Emirates has been proposed.

The largest crops cultivated in Egypt are grains (wheat, maize, and rice), fruit (citrus, grapes, olives, and mangoes), and vegetables (tomatoes, potatoes, and onions). Cotton production is significant, although the cultivated area varies greatly year on year. Oilseed production is limited, with sesame being the most significant.

An improvement in the general economy is benefiting the agriculture sector and has led to the government increasing crop procurement prices through the General Authority for Supply Commodities (GASC) to the benefit of the farm economy. In addition, a policy is also in place to improve the quality of produce for export, aimed at facilitating trade.

Egypt is the world’s largest wheat importer, hence the balance of trade in arable produce benefits when crop prices are depressed, although remains significantly negative.

Since 2005, the growth of the Egyptian agrochemical market has been steady despite fluctuations in commodity prices. The country is relatively insulated from these as the market is driven by fruit and vegetables, potatoes and rice, rather than the major row crops. There is a perception that cotton is a driver of the Egyptian market due to the high quality of the crop, however agrochemical usage on the crop accounts for less than 5% of the total. The focus of the market on fruit and vegetables is commensurate with citrus, potatoes, and onions being the leading arable exports from the country.

Company Involvement

There is limited basic manufacture of active ingredients in Egypt, notably by CAM for Agrochemicals. Import statistics show a significant level of technical product entering the country, with several companies claiming formulation capability, including Chema Industries, Kafr el Zayat, ICM Group, El Helb, EAD, and Bio Organic.

There are many importers and distributors of agrochemicals in Egypt, including Shoura Chemicals (formerly known as Tawkilat), Agrinovatech, Gardenia, Leader, Elmostafa, Agrolink, Kanza, Cairochem, Agres, AAKO Chemicals, El Watania, Agromatco, Asia Chem, Aghsan, Ein Shams, Tiba Al Khadraa, Semadac, Green Egypt Agriculture Development, Al-Fath and Kwana.

Major multinational and local companies lead the market. While imports are led by Chinese companies, Indian companies hold a larger share than in many other developing markets.

Egypt Outlook

Agriculture accounts for 11.5% of gross domestic profit (GDP) and 20.6% of the workforce in Egypt. Agrochemical usage on a per hectare basis is already higher than in many developing countries. However, agriculture is limited by water supply, although attempts have been made to expand agriculture into the deserts east and west of the Nile to increase land use for cultivation.

Agricultural policy is split between investing in crops for export to support the economy while increasing production of crops to feed a relatively poor but growing population, with population growth being among the highest of all developing countries. The Egyptian government in fiscal year 2017/18 allocated $4.72 billion for food subsidies. Of this, roughly 53% was earmarked for the supply of bread and 47% for sugar. Agriculture is now some way behind crude oil and petroleum as the major export earner for the country.

Key trends in production are the increase in the planting of mangoes, citrus, onion, date palm, and potato, driven by export demand, while the cultivated area of more traditional crops such as cotton, cereals, maize, and rice is essentially static.

The country has a limited agrochemical active ingredient manufacturing infrastructure, with more significant formulation capabilities, indicated by 34.7% of imports being of technical material. The major source of product is China, but with more advanced products coming from the European Union (EU). Egypt is a member of the World Intellectual Property Organization; however, patent infringement is believed to be widespread. Industrial property law is overseen by the Egyptian Patent Office, the Academy of Scientific Research and Technology (ASRT) and the Ministry of Scientific Research.

Despite the increasing industrialization of the country, agriculture remains an important part of the economy, both through export income and feeding a large and growing population, with poverty still an issue. Many challenges face the agriculture sector, not the least water availability and the limitation this has on land available for cultivation. The continuation of current policies should, however, result in further positive development of agriculture and the agrochemical market.

• Tunisia •
Overview

Tunisia was recognized as an independent state by France in 1956. It is an Arab nation but has since then been comparatively liberal. The country was governed as a one-party state for many years before poverty, food shortages, unemployment, and corruption resulted in widespread rioting in 2010 (the Arab spring revolution). Subsequently, a national unity government was formed. The current president, Kais Saied, took office in October 2019 for a five-year term.

Traditionally the Tunisian economy has focused on bolstering exports, foreign investment, and tourism. Key exports include textiles and apparel, food products, petroleum products, chemicals and phosphates, which are primarily exported to the EU. Current policies aim to boost the economy to offset high unemployment, low wages, and strikes that have held back economic performance.

Tunisia has a free trade “Association Agreement” in industrial goods with the EU and is working toward a more comprehensive agreement. In 2019, it ratified official accession to the Common Market for Eastern and Southern Africa (COMESA) and is negotiating membership of the Economic Community of West African States (ECOWAS).

Agriculture accounts for 11.7% of Tunisia’s GDP and 13.8% of the labor force. The majority of arable agriculture occurs in the central and northern regions of the country, with part of the south being in the Sahara Desert, although crops are also produced in oasis areas. The risk of drought increases the further south you travel. In the north, the climate is strongly influenced by the Mediterranean Sea, with most of the rainfall occurring between October and May, while in the south, the key influence is the Sahara Desert.

Tunisia suffers from a negative balance of trade in all commodities and for arable products. Key imports are cotton (to supply the important textile industry), oilseeds (with olives the only significant oilseed produced in the country), grains, and sugar.

Tunisia currently has a problem with poverty, with more than 15% of the population living below the national poverty line. Poverty in the country is focused in rural areas where unemployment is at its highest. Agricultural development has been held back by water availability, poor soil fertility, underdeveloped marketing chains, and limited access to finance.

Tunisia can be divided into four geographical zones.

1. Sahara Desert: part of the great Eastern Erg in the south.
2. The Tell central region, or Tunisian Dorsal, which incorporates the east part of the Atlas mountain range. The north is the country’s most fertile agricultural region, with high plains fed by the Majerda river.
3. Salt lakes (or chotts) to the south of, and at a lower altitude than, the dorsal plains.
4. The Coast (or Sahel) is the mainstay of Tunisia’s economy, including important agricultural activity, industry, and ports.

Northern Tunisia enjoys a Mediterranean climate (hot, dry summers and mild, wet winters), becoming hotter and more arid to the south and into the Saharan desert. However, low average rainfall and increasing exposure to adverse weather (droughts and floods) coupled with poor quality soils and erosion are an issue in the country. In 2018, flooding affected the northeast corner of the country, negatively affecting agriculture. More than 75% of the country’s territory is classified as desert.

More than 50% of farms are below five hectares, although 41% of cultivated land is in farms between 10 and 50 hectares and 22% greater than 100 hectares. There are three forms of tenure in the country, private, state-owned/forest, and collective.

The country’s five-year development plan of 2016 targeted improvement in farm incomes, strengthening agricultural production, creating jobs, and improving national food security. The government has a policy of food price subsidy, which is costly to the economy, but often maintains the cost of staples (bread, semolina, pasta, couscous, and vegetable oil) at below the cost of production. The 2020 development plan calls for the construction of further dams, increased water catchment lakes and wells to enhance water availability, and the expansion of water desalination.

The importation of GM crops into Tunisia is banned, although the country does allow GM crop research to be undertaken. The country is developing a regulatory framework for the assessment of GM food and setting up a competent authority. The Ministry of the Environment has set up a national biosafety committee that oversees the National Biosafety Framework, National Network of GMO Control Laboratories, Communication, Awareness and Public Participation in Biosafety.

Tunisia does not produce any bioethanol, although research is ongoing into the use of waste dates. Biodiesel is produced from waste cooking oils and castor oil.

The largest crops cultivated in Tunisia include grains (wheat and barley), olives for oil production, fruit (dates, grapes, citrus and peaches/nectarines), nuts (almonds and pistachios), and vegetables (broad beans, potatoes, tomatoes, chilies/peppers, green peas, and carrots). Oilseed production from sunflower and rape is limited but growing. Small amounts of cotton and sugarbeet are produced, although significant levels are imported to provide for sugar refineries and clothes production.

In local currency terms, the growth of the agrochemical market in Tunisia since 2002 has been steady. Much of the market is dependent on weather and water availability, with above-average precipitation recorded in 2019 and dry weather in 2020.

Exports of agricultural products increased steadily from 2000 to 2008, supporting growth in agrochemical usage. Since then, export performance has been more stable, except for a spike in 2015. Despite that, the development of the agrochemical market has continued.

There is no basic manufacture of agrochemicals undertaken in Tunisia and very limited local formulation capacity. Formulation in the country is predominantly focused on insecticides, with alpha-cypermethrin, chlorpyriphos, cypermethrin, malathion, deltamethrin, and permethrin being imported in technical form. Due to the registration system, most imports are of formulated products ready for sale, mainly from Europe. In 2018, agrochemical imports into the country amounted to $57 million, while exports amounted to $5 million. The primary source of imports was France, Spain, Germany, the United Kingdom, and Italy.

Company Involvement

There is no basic manufacture of active ingredients in Tunisia. Import statistics show only a low level of technical product entering the country, suggesting only limited formulation capability.

Due to agrochemicals having to be registered by a local company, the major companies have to work through local representatives in Tunisia. These representatives and other importers and distributors include A.C.I Tunisie, Agri plus, Agromatco, Agri plus, Agriprotec, Agronomic Land, Agrosystemes, Aloha Agriculture, Aminco, Atlas Agricole, Bioprotection, CMA, Cotugrain, Delta Agricole Plus, EL KHADRA, EL Moussem Agricole, Ets. Mezghani, Fertiplant, Fertitech, Halab Tunisie, Hortimed, Innova, Jadwa Agrotec, Lien Agricole, Linde Gas Tunisie, Neganor Fft, Nutriplant, Promochimie, Protagri, Rayen Phytagri, Sanabel Agro, Sepa Ayed, Sepcm, Slda, Soccopec, Solagri, STEC, STIMA, and Tasmid.

The market is led by the major multinational and local companies. While imports are led by Chinese companies, Indian companies hold a larger share than in many other developing markets.

Tunisia Outlook

While Tunisia has a relatively low economy, for a country of this size still in development, agriculture accounts for a relatively low proportion of GDP (11.7%) and only 13.8% of the workforce. Agrochemical usage on a per hectare basis is, however, higher than in most other African developing countries. Agriculture is limited by water supply, particularly in the south, verging into the Saharan Desert. The 2020 development plan calls for the construction of further dams, increased water catchment lakes and wells to enhance water availability, and the expansion of water desalination.

Agricultural policy is more focused on food security and feeding a growing population, often achieved through subsidies and price control for staple crops rather than agricultural development. In the past, development has focused on the more productive regions in the north rather than the less affluent areas of the country. Despite this, the trend in the importation of agricultural produce is one of reduction in the ten years to 2018.

The country has limited agrochemical formulation capabilities. The major source of the product is the EU, promoted by the country’s registration system that requires a local representative to operate on a foreign company’s behalf. Tunisia is a member of the World Intellectual Property Organization; industrial property law is overseen by the National Institute for Standardization and Industrial Property (INNORPI) and copyright by the Tunisian Organization for the Protection of Copyrights and Related Rights (OTDAV). In 2017, Tunisia enacted an agreement with the EU that provides automatic protection for European patent applications through the European Patent Organization. Informal cross border trade with Libya is reportedly a problem.

Agricultural development focuses on the more niche crops that lead exports rather than on staple crops for domestic production. Despite this, yields of all major crops have been in a trend of increase. The agrochemical market has recorded steady growth in local currency terms, although in dollar terms, the recent performance has not been so impressive. Much depends on winter rainfall, which can have a significant impact on crop survival, harvested areas and agrochemical usage. Government policies based on the development of irrigation programs should be a benefit. However, greater support for staple crop production would also be a benefit to agrochemical market development. In the immediate term, the recent trend in market performance is expected to continue, although opportunities exist for this to accelerate.

• Zambia •
Overview

Zambia gained independence from Britain in 1964, however, economic uncertainty, drought and low copper prices led to a period of political unrest. The Zambian economy depends on copper, making it vulnerable to commodity prices, which were strong in the decade to 2014, but weak in 2015 to 2017. Rural poverty and unemployment are significant issues, with around half the population reportedly below the poverty line.

The country has significant natural resources based on copper, cobalt, silver, uranium, lead, coal, zinc, gold, and emerald. Numerous major rivers, including the Kafue, Kabompo, Luangwa, Zambezi, and Lungwebungu, provide an ample water supply, although management, regional variations and usage is an issue. This results in the country having one of the strongest economies in developing Africa.

The Zambian capital, Lusaka, is the headquarters of the Common Market for Eastern and Southern Africa (COMESA). The country is also a member of the Southern African Development Community (SADC). It has duty and quota-free access to the EU market, under the “Everything but Arms” program for the world’s Least-Developed Countries, and benefits from trade benefits with the United States under the African Growth and Opportunity Act.

The major crop exports are tobacco, cotton, maize, sugar, and soybeans. The key commodities that have to be imported into the country are grains and oilseeds. Zambia has a positive balance of trade in arable produce, with exports amounting to $306 million in 2020, compared to imports of $83 million.

Agriculture is of limited importance to Zambia’s economy compared to mining; however, the country has the potential to significantly increase agricultural output, with currently less than 30% of potentially arable land cultivated. Key issues for agriculture in Zambia have been low product prices, availability and distribution of credit and inputs, and shortage of foreign exchange.

Agriculture in Zambia is divided into three regions:

1. Southern, Eastern and Western Zambia, a semi-arid region, incorporating most of the country’s valleys, but with a relatively short growing season and variable rainfall. The region is primarily small-scale farms producing sorghum, millet, maize, groundnuts, cowpeas and pumpkins.
2. Central Zambia, incorporating most of the Central, Southern, Eastern and Lusaka provinces, a region with higher rainfall, more fertile soils and a longer growing season, and are the location for most of the country’s commercial farms producing maize, soybeans, wheat, cotton, tobacco, coffee, vegetables and flowers.
3. Northern Zambia, a high rainfall area incorporating the copper belt. Mostly small-scale, semi-permanent production of cassava, maize, sweet potato, pumpkin, millet, and beans.

Although lying within the Tropics, much of Zambia enjoys a subtropical climate due to its high altitude, with two main seasons — a hot, dry season from May to October and a wet season between November and April. Zambia lies within the Zambezi River and the Congo River basins. A number of irrigation schemes are in place to reduce the volatility of rain-fed production and improve food security.

Most government initiatives focus on improving food and nutritional security, reducing poverty, and increasing agriculture sector growth and employment. Agricultural policy in the arable sector focuses on improving crop varieties and seeds, the development of farm blocks, efficient use of fertilizer and agrochemicals and improving irrigation technology.

Zambia has a Food Reserve Agency that purchases crops to ensure adequate domestic supply, and an Electronic Farmer Input Support Program, that provides information, financial support and inputs; these two programs account for around half of the agriculture budget. The Input Supply programs are more focused on fertilizer and seed rather than crop protection products, and often take product selection away from the farmer. The government has not been able to meet its commitment to the Comprehensive Africa Agricultural Development Program of providing 10% of its annual budget to agriculture, and the contribution of agriculture to GDP has been in decline throughout this century.

The Zambian government operates a Farm Block Development Program aimed at promoting agricultural growth. Large areas of land are converted to ‘farm blocks’ and made available for leasehold for commercial farmers. Each farm block is supposed to have one core large-scale farm of 10,000 hectares; one to three commercial farms (1,000-5,000 hectares); medium-scale farms (100-1,000 hectares); emergent farmers (50-100 hectares); and small-scale farmers (25-50 hectares). Crops grown in core venture farms are meant to be predominantly for export. Smaller farms have the option of collaborating with the core venture and using common processing facilities.

The majority of farmers in Zambia are small scale, although large scale farms account for 22% of cropped land. Most of the land (94%) in Zambia is held under customary (communal) tenure, with the remaining 6% owned by the state.

The cultivation of GM crops in Zambia is not allowed; however, the country cleared the importation of genetically modified food products in 2019, overseen by the National Biotechnology Authority. The government had previously refused U.S. food aid shipments found to be containing GMOs during the country’s famine in 2002/03.

Zambia produces bioethanol from several sources, including sugarcane, cassava, and sweet sorghum. There is limited biodiesel production from jatropha, moringa, and soybeans. Biofuel production started in 2006 following the setting up of a Biofuels Association, and blending ratios were adopted in 2011.

The main cereal crop grown in Zambia is maize, with much smaller areas of millet, sorghum, and wheat cultivated. The key oilseed crops are groundnut, soybean, and sunflower, key export crops are tobacco, cotton, and maize, while the major fruit crops are tropical fruits, bananas, and oranges, and the leading vegetable crops are cassava, pulses, sweet potato, tomatoes, and onions.

Since 2008, the growth of the agrochemical market in Zambia has been accelerating in local currency terms, with the sector enjoying significant growth in the 2017/18 season, but slowing in 2018/19 due to dry weather in the south and west of the country. Reduced hydroelectric capacity resulted in rising fuel prices and electricity rationing.

Company Involvement

There is no basic manufacture of active ingredients in Zambia and only limited formulation capability. All major agrochemical companies have offices or subsidiaries in Zambia, including Bayer, Syngenta, BASF, Corteva, FMC, United Phosphorus/Arysta, and Adama. Zambia Agro-chemicals Association (ZAA) represents the industry in the country.

There are many local importers and distributors active in Zambia, including Farmchem Services, Dunavant, Farmers Barn, Nemchem International, CHC Commodities, Cropchem Services, Cropserve, Hygrotech, Zambia Cooperatives Federation, Agchem Tech. Services, Agrichem, Reckitt Benkiser, Index Investments, Lamise Investments, Agrocentre, Danatract, Cure Chem, Amiran, ETG Inputs, Simmer Enterprises, Crop Care Solutions, Twiga chemicals, Swinney Enterprises, Mana Agrochemicals, Femitech Enterprises, Croppack Agro Services, Plant Agrichem Services, Arostel, Base Chemicals, ATS Agro, Precision Farm Holdings, and NWK Agri-Services.

The market is led by the major multinationals and local companies. Imports are led by Middle East and African countries.

Zambia Outlook

Zambia has one of the smaller economies amongst the major African agrochemical country markets. However, for a developing country of this size, agriculture accounts for a relatively low proportion of GDP (2.7%), despite 49.6% of the workforce being employed in the sector. The country’s economy is dependent on copper mining; however, subsistence agriculture is practiced by a large proportion of the workforce. Agrochemical usage on a per hectare basis is higher than in most other African developing countries. The more stable political environment in the country has resulted in a migration of farmers from both Zimbabwe and South Africa into the country due to land ownership concerns. This has resulted in an improvement in agricultural practices in commercial farms to the benefit of the agrochemical market, particularly on maize and soybeans.

Despite the elevated nature of the country’s geography, mountainous regions, and rivers, water availability and drought remain significant issues for crop production. Many crops are rainfed, which can result in crop failure, as was seen in the southern and western parts of the country in the 2018/19 season. A lack of hydroelectric power affected the ability to run irrigation pumps.

The high level of subsistence farming coupled with water issues means that crop yields are low compared to similar countries.  Government initiatives aim ‘To develop an efficient, competitive and sustainable agricultural sector, which assures food and nutrition security, increased employment opportunities and incomes.’ One key aim is to develop ‘agribusiness’ (processing, retail, input supply, farming and logistics) to improve the level of value retained in the country through agricultural production.

Input supply programs are more focused on fertilizer and seed rather than crop protection products, with centrally purchased products supplied through a single distributor in each region.

The country has limited agrochemical formulation capabilities. As a result, the primary source of products coming into the country is South Africa and other Middle East and African countries. It is likely that a significant proportion of products that are imported into the country were originally sourced from China and India, although multinationals may also import products via South Africa. Despite the registration system, there is reportedly a high level of unregistered product used in the country.

Zambia is a member of the World Intellectual Property Organization; Industrial property law is overseen by the Patents and Companies Registration Agency (PACRA), part of the Ministry of Commerce, Trade and Industry. The country is a member of the African Regional Intellectual Property Organization (ARIPO).

The focus of agricultural development has been on food security and the improvement of wealth, although this has not resulted in increased value from exports. The agrochemical market has recorded steady growth as agricultural practices improve. Water availability is an issue for crop production and farmer wealth, although agrochemical market growth has continued despite water shortages. If government support were extended beyond fertilizer and seed, the crop protection market growth would likely be enhanced. In the immediate term, the recent trend in market performance is expected to continue, although opportunities exist for this to accelerate.  •

Photo of Derek Oliphant, courtesy of AgbioInvestor .