Is Asian agribusiness example perfectly suited to Africa

One of the most obvious ways of adding value to agricultural production is by processing that output within Africa. Pineapples can be canned for export and sugar can be refined locally but too much produce is exported in a raw state. The lack of manufacturing and processing in Africa is not restricted to agribusiness. Sub-Saharan Africa accounts for a miserly 1% of global manufacturing output.

South Africa has the continent’s most developed food manufacturing and processing sector, while its established grain and sugar sectors look set to grow over the next few years. Pretoria is seeking to promote manufacturing and processing exports in all sectors. In April, the Ports Regulator of South Africa imposed a 43.2% reduction in tariffs on the export of full containers in order to aid exporters.

Other governments are also encouraging investment. In July, Blumberg Grain signed a memorandum of understanding with the government of Ghana regarding the development of a processing plant and export hub in the north of Ghana. 

US firm Blumberg intends to employ about 1,000 people at the new facility. The government hopes that the scheme will reduce crop losses and encourage agricultural investment in the north of the country by providing a ready market for production, although the hub will seek to attract supplies from the wider West African region. 

Blumberg plans to invest in local, privately owned farms, where it can introduce high-yield farming technology. A new Agriculture and Farming Institute will also be opened at the selected location, which has yet to be confirmed, in conjunction with Ghana’s Food and Agriculture Ministry, Iowa State University and several non-governmental organisations.

In July, the African Development Bank (AfDB) agreed to give an $80m loan to the Olam Africa Investment Programme (OAIP) to fund palm oil and wheat processing projects in four countries: Cameroon, Ghana, Mozambique and Senegal. OAIP is owned by the OLAM Group, a global integrated supply chain manager. (See story on page 30.) It is worth noting that the loan is to be made in the local currencies of the countries concerned, which reflects slowly growing confidence in African currencies. 

OAIP estimates that the money will be used to provide 600,000 tonnes a year of additional food processing capacity. In a statement, the AfDB reported: “It is expected to enhance the regional food supply chain and act as a catalyst to support job creation and improve sustainability of agribusiness sector, thereby enhancing food security on the continent.” 

Almost all agencies agree that public-private partnerships (PPPs) are the way ahead for agribusiness and agricultural development. A combination of public and private investment and control is already the dominant model in many supposedly commercial sectors in North America, Europe and Japan, where subsidies on production are common and governments help to fund R&D programmes. 

While advanced seeds, fertilisers and other components have been developed in other parts of the world, environmental conditions vary from location to location and so it is important that situation specific technology is deployed. Again, it is generally helpful if it is developed locally. In particular, Africa has a number of subsistence crops that form part of the staple diet of many people but which have rarely been developed as significant cash crops. Given the right support, however, they can be adapted to generate more income.

To take one example, the Root and Tuber Improvement Programme was launched by the International Fund for Agricultural Development in Ghana in 1999. Focusing on cassava, it developed strains that offered higher yields, faster growth and improved disease resistance. They have now entered mainstream agriculture and production levels have increased, enabling small-scale farmers to make a profit. 

Apart from providing a local staple, cassava is now exported in greater volumes, used as animal feed, turned into glue and supplied as an industrial starch. The same strategy is being followed with regard to rice, as the African continent currently imports $3.5bn worth of rice a year. The New Rice for Africa (NERICA rice), which has been developed specifically for cultivation in arid areas, is now being grown in Sierra Leone and Guinea.