Tag Archive for: Farming

In response to the economic devastation caused by the coronavirus pandemic, most sub-Saharan governments are developing economic recovery plans. These will require some different thinking, particularly when it comes to agriculture. Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa, explains to Michael Aliber, a professor of agricultural economics at the University of Fort Hare, what that new thinking might look like.

You have argued that governments should use the post-Covid environment to think differently about agriculture. What should be done differently?

African governments should have a fresh look at agriculture. This involves embracing technology (information technology, mechanical and biotechnology) and also private sector partnerships. There also needs to be confidence in the citizenry to manage their land parcels. This will involve the granting of title deeds or tradable long-term leases in various African countries. And in the case of better seeds, the evidence from South Africa is there for many countries to observe and learn.

The economic recovery from the pandemic therefore presents an opportunity for governments to explore available technologies that could help in the registration of land rights. These include global positioning systems, mapping and blockchain technologies.

This will help solve disputes and also with the tradability of land rights. This process can be piloted on agricultural land. The proper recording and confirmation of land rights will encourage individual entrepreneurs to invest in their farmland and thereby trigger the commercialisation and growth of the agricultural sector.

There are also examples of technologies that various countries could use to document land. Examples include the use of drones in India, and aerial photography in Rwanda. This would help change the troubling statistic that roughly 90% of rural land in Africa is not formally documented.

How would you envisage overcoming the concern that ambitious rights formalisation and documentation strategies tend to extinguish secondary rights, often held by women?

The overall intention is to ensure formalisation of land rights, with the objective of attracting investments in the agricultural sector and unlocking its potential.

Africa has, indeed, a history of disadvantaging women on land matters. Any strategy for the formalisation of land rights will have to be well thought out and transparent. The aim should be to ensure that there isn’t bias towards men and politically connected individuals as has been observed in land reform cases in South Africa.

Are you perhaps placing too much faith in technology?

To date, South Africa is the only country in sub-Saharan Africa that has embraced biotechnology. This is primarily because it’s the only country in the region that has adopted the use of genetically engineered cotton, maize and soybean seeds. Other countries that have done so include the US, Brazil and Argentina. In these countries, the use of the genetically engineered seeds has seen lower insecticide use, more environmentally friendly tillage practices and improvements in crop yields.

How productive is sub-Saharan African agriculture relative to other regions of the world? What can be done to improve yields?

There is compelling evidence of the increase in yields within the sub-Saharan Africa region. Consider South Africa. It produces about 16% of sub-Saharan Africa maize, according to the International Grains Council. But it uses a relatively small area of land – an average of 2.5 million hectares since 2010. In contrast, countries such as Nigeria planted 6.5 million hectares in the same production season but only harvested 11 million tonnes of maize. Nigeria’s output equates to 15% of the sub-Saharan region’s maize production.

South Africa began planting genetically engineered maize seeds in the 2001/02 season. Before its introduction, average maize yields were around 2.4 tonnes per hectare. That has now increased to an average of 5.9 tonnes per hectare as of the 2019/20 production season.

Meanwhile, the sub-Saharan Africa region’s maize yields remain negligible, averaging below 2.0 tonnes per hectare.

While yields are also influenced by improved germplasm (enabled by non-GM biotechnology) and improved low- and no-till production methods (facilitated through herbicide tolerant GM technology), other benefits include labour savings, reduced insecticide use, and improved weed and pest control. These labour-saving benefits, also for small-scale livelihood farmers, were also observed in a research study in the KwaZulu Natal province of South Africa.

Other countries like Kenya and Nigeria are increasingly field-testing genetically engineered crops. They should accelerate the process, and when it meets their scientific standards, should embark on commercialisation as part of the recovery from the economic slump caused by the pandemic.

Each country will have its domestic regulatory process which safeguards consumers and farmers. But these need not be too prohibitive to the extent that they disadvantage farmers. A case in point is Zimbabwe, where the importation of genetically engineered maize has recently been permitted but planting by domestic farmers is prohibited.

But high yield – that is the amount produced per unit area – typically means high input costs, which is one reason why small-scale farmers’ uptake of these technologies is limited. Also, won’t the emergence of larger and more commercially oriented and technologically capable African farmers result in agriculture absorbing less and less labour?

Africa’s smallholder farmers will generally struggle to access some technologies because of the associated costs. But if the goal is to ensure that the African continent can compete globally with the likes of the US, Brazil and Argentina, among others, then the focus should be on commercialisation of farmers and encourage the economies of scale on the continent. There have to be trade-offs. These include job losses in certain subsectors such as grains as farmers would be adopting more technologies.

But there are potential gains in other subsectors such as horticulture. If supported and developed to scale, these could create large numbers of jobs. Again, a case in point is South Africa, where there were job losses in field crops but horticulture created many jobs.

The key is to ensure job mobility so that people can progressively move to higher paying jobs in agro-processing and other subsectors.

In sum, this is not to mean we should move away from smallholder farming per se. We need a mixed farming system. Where conditions allow, commercialisation at large scale should be encouraged. This is precisely the case in Brazil, where there is a mixed farming system.

 

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Sources: [1], [2]. Image sources: [1], [2].

There are no defensive postures here. Undaunted by the potential for pandemic induced collapse in demand for commodities like sugar and cement, Nigerian billionaire Abdul Samad Rabiu sees only possibility – especially in agriculture, especially in Nigeria.

Not only is agribusiness relatively simple in terms of its business model, but it is urgent to save needed foreign exchange and to boost employment, he explains. Rabiu’s major focus is on promoting more production and processing to meet national demand and make more profits for his conglomerate BUA Group. BUA listed its subsidiary BUA Cement in January to raise capital for industrial projects in the glass, steel and oil sectors, citing the rigour and “scrutiny” of the process as a way of “de-risking” Nigerian opportunity for investors domestic and foreign.

“The opportunities are here,” enthuses the group chairman and chief executive during our videoconference, a portrait of South Africa’s former president Nelson Mandela beaming over his shoulder. That has not really been the case for the man on the Lagos Danfo, to twist a phrase – the city buses were restricted due to measures against transmission of COVID-19.

Most Nigerians are still reeling from the economic impact of the pandemic. Traders have ceased operation, farmers have thrown away produce due to the lack of transport, and businesses have mothballed investment projects. Most of BUA Group’s expansion programme remains undisturbed. Chief executive Rabiu unveiled plans for 3 million tonnes per annum (mtpa) in cement capacity and 50MW of power in Adamawa State in July.

However, he put off the announcement of a glass project that was slated for the postponed June France-Africa summit. While COVID-19 disrupted most firms, greater automation in BUA Group’s agribusiness and cement plants allows them to operate at about 40-50% of their normal capacity. “We are lucky for the fact we are even at 50%. Many others have not been able to work at all,” says Rabiu.

The ban on travel between Nigeria’s states was the greater challenge, “and that is lifting now”. He argues that “the impact [of the coronavirus] is going to be with us for quite some time” and that “entire industry business models are going to have to change.”

Better than 2019

Learning from operating his family business as a young man, Rabiu has built up his empire slowly but surely. BUA Group has moved from a trading company importing commodities to a manufacturing powerhouse in agribusiness and construction materials. From edible oils, through sugar and cement projects, the group also operates a shipping terminal in the oil town of Port Harcourt and owns a real-estate portfolio.

Cement is the industrial star. BUA Cement had a solid first quarter in 2020, banking nearly $60m in profit. This means, according to Rabiu, that it can absorb the slowdown from April to June, and have year-end results that may be “better than 2019”. That is not something many other Nigerian companies are predicting. It is bullish given the record year the company had in 2019; a 47.5% increase in turnover, with profit jumping nearly 70%.

He attributes the leap to the launch of a second line at the Obu plant in March 2019, adding 3mtpa to BUA’s output, and the first full year of the Kalambaina plant’s second line operations. The cement expansion does not stop; while BUA Cement currently has capacity for 8mtpa, Rabiu is targeting 14mtpa over the next few years.

Analysts do not share Rabiu’s optimism about the sector in the short term. “We expect the deterioration in the macroeconomic conditions – caused by the outbreak of COVID-19, which triggered a sharp decline in oil prices – to constrain activities in the construction industry as fiscal spending on capital projects weakens,” wrote Nigeria’s CSL Stockbrokers.

The scars will remain for some time for the Nigerian economy at large, Rabiu says, with the damage hitting the poorest first. “The price of goods has gone up, especially food items,” he says, partly as a result of the devaluation of the naira but also because the virus has hurt port logistics, making the clearance of imports difficult. That could be seen as an opportunity to intensify Nigeria’s great push to support food production, something that the government of President Muhammadu Buhari has supported for rice in particular.

As part of Nigeria’s CACOVID (Coalition Against Covid-19), an organisation of private-sector operators pooling funds to help relief efforts, BUA has put money into feeding programmes in Lagos and other cities, to cushion the blow of the pandemic. Fundamentally, Rabiu is unhappy about the high level of food imports. “It should not be happening at all, not only here in Nigeria, but generally in Africa. We have 60% of the world’s arable land. We have the people [to farm]. We have the climate. We have everything it takes.”

He is keen for that opportunity to go beyond food crops to cash crops, and again focus on keeping value in Africa. “The US, Germany, Switzerland and Belgium produce 75% of the entire chocolate production worldwide. And if we look at the cocoa industry worldwide, what are we talking about, $150bn-$160bn? And Africa gets maybe $10bn-$15bn of that?”

Sugar for resilience

He expects agriculture to provide the resilience that Nigeria needs in the post-COVID-19 era. Next year, for example, will see the ramping up or opening of operations at three major sugar plantations, including BUA’s own in Kwara State, as well as projects for Dangote Sugar and Golden Sugar.

BUA is Nigeria’s second-largest sugar producer after Dangote Sugar. “With that plantation, we will be able to produce 150,000tn of white sugar with millions of litres of ethanol, employing over 10,000 people in direct jobs,” says Rabiu.

He was inspired by a visit to Uganda’s Kakira sugar estate, run by the Madhvani family: “It was the most impressive sugar plantation I had ever seen.” And Mayur Madhvani told Rabiu that while he could get yields of 9tn per hectare in Uganda, the soils and potential in Nigeria were far greater.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Zambia has over two million smallholder farmers and a rural population of about 9.7 million people, with approximately 40% of them being financially excluded

The average rural farmer in Zambia lives several kilometres away from their nearest neighbour and even further away from the nearest settlement where shops, agro-dealers and other services, such as agency banking and mobile money booths, would be located. Because the farmers live in remote locations making payments, sending and receiving money are activities not done at their convenience.

Zambia has over two million smallholder farmers and a rural population of about 9.7 million people, with approximately 40% of them being financially excluded. These rural people do not have adequate access to financial infrastructure and services. Not being able to make payments for supplies, receive digital payments or send money as needed means farmers’ productivity is limited. Subsequently, they cannot plan their next growing season, are unable to manage the shocks they may experience and cannot reach their potential. Therefore, providing smallholder farmers with the services they need to improve their productivity has a ripple effect on their livelihoods and the rural community.

Zanaco Bank recognised that smallholder farmers are an important segment of Zambia’s economy, and partnered with the UN Capital Development Fund (UNCDF) and Agrifin Accelerate (AFA)/Mercy Corps to develop and test the go-to-market strategy for an account that offers farmers services to transact, save, send and receive money. Zanaco will also add features such as agronomic information and financial literacya to help the farmers become more productive, be financially included and better participate in the Zambian economy.

How was AgriPay brought to market?

To bring the account – called AgriPay – to market, the partners undertook several activities. The first was a research conducted by AFA to understand precisely what the farmers needed and what their specific financial challenges were. This research informed the human-centred design process of product development undertaken by Zanaco.

Once a product was available, strategies were designed to bring the product to the rural market. This strategy involved applying the Booster Team model – a concept adapted from UNCDF’s work in Uganda with a coffee value chain. UNCDF championed the use of the Booster Team to onboard agents that would enhance last-mile service delivery and build a strong ecosystem around the use of the AgriPay account. In addition, the Booster Team onboarded smallholder farmers. Zanaco, AFA and UNCDF also analysed what other factors would influence the success of AgriPay. 

One factor identified was collaborating with other players in the value chain that could provide linkages to agribusinesses. These linkages to agribusinesses turns shops or agribusiness locations into agents offering the banking services to smallholder farmers. These partners also leverage their network to onboard customers who could benefit from the services offered by the AgriPay account. By the end of the pilot, 50% of the Xpress Agents onboarded were a result of the partnership with Musika (a non-profit organisation that aims to support private sector development in small-scale agriculture) and 60% of the activated farmers accounts were members of the Cotton Association of Zambia.

The bank piloted the product in six provinces. The Booster Teams, comprising 15 – 20 youths, received adequate training in sales and product knowledge, and approached potential customers with a product they could demonstrate.

Who opened AgriPay accounts?

In May 2019, Zanaco and UNCDF deployed the Booster Team to undertake their sensitisation and on-boarding activities, beginning in Central and Lusaka Provinces, continuing to Copperbelt, Eastern, Luapula, and Southern. Each Booster Team answered smallholder farmers’ questions or concerns in a timely manner. This first-tier support increased the customers’ confidence and comfort levels with the new account. Using the Booster Team enabled 307 Xpress agents to become part of the AgriPay ecosystem.

By September 2019, 3030 customers, 53% female and 31% youth, had been onboarded onto AgriPay, and farmers were pleased with the introduction of the account designed with their specific needs in mind.

Brillian Handondo, a farmer in Southern Province said, “This account has really helped me. Once I receive money, I’m able to easily transact, such as sending money to my child in college.” This simple transaction was not something she could do easily before.

What were the critical factors for AgriPay’s success?

The learnings gained from piloting AgriPay helped in scaling the product. One area of success was pre-sensitisation activities. This critical component was done through partners such as the Cotton Association of Zambia, Vitalite Zambia and the Dairy Association of Zambia and helped to build trust in the product. The partnerships with the various farmers’ associations, non-profit organisations, and other implementing partners meant these organisations could approach farmers as ‘ambassadors.’

These organisations leveraged their strengths to become agents or reach potential customers, for example, Cotton Association savings groups and Vitalite traders became agents for AgriPay.

These relationships were also a key driver to the Booster Team’s success. Having organisations facilitate these partnerships elevates the product because of the inherent trust agribusinesses and customers have in the partner or the agribusinesses they are used to working with. This is an immeasurable success factor for AgriPay.

To successfully scale AgriPay to other parts of Zambia, the sales team has to gain a better understanding of the culture of the communities. Conducting sensitisation activities requires that farmers are available and involves learning the type of farming conducted in the community and planning around the schedule farmers follow.

To improve rollout, the bank might consider using roving agents in some areas who could better reach farmers rather than agents using fixed locations like shops or booths.

The AgriPay pilot achieved what it aimed to do – increase access and usage of digital financial services by underserved segments of the population. AgriPay is also successful because it provides a platform to increase farmers’ financial inclusion, and the account also allows digital expansion for the smallholder farmer and the community in which they live. Schools, hospitals, district or provincial offices can leverage the digital platform to carry out other activities in the community. This digital ecosystem of services greatly improves life in these rural communities and farmers can become more active in the economy.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], Megan Thomas [2].

Zambia’s vice-president has recently called to reduce maize dominance and increase crop and diet diversification in his country. The reality is that maize is and will remain a very important food crop for many eastern and southern African countries.

Diet preferences and population growth mean that it is imperative to find solutions to increase maize production in these countries, but experts forecast 10 to 30% reduction in maize yields by 2030 in a business-as-usual scenario, with projected temperature increases of up to 2.7 degrees by 2050 and important drought risks.

Knowing the importance of maize for the food security of countries like Zambia, it is crucial to help maize farmers get better and more stable yields under erratic and challenging climate conditions.

To address this, the International Maize and Wheat Improvement Center (CIMMYT) and its partners have been developing hundreds of new maize varieties with good drought tolerance across sub-Saharan Africa. Stakeholders in the public research and African seed sectors have collaborated through the Drought Tolerant Maize for Africa (DTMA) project and the Stress Tolerant Maize for Africa (STMA) initiative to develop drought-tolerant seed that also incorporates other qualities, such as nutritional value and disease resistance.

A groundbreaking impact study six years ago demonstrated that drought-tolerant maize significantly reduced poverty and food insecurity, particularly in drought years. A new study from CIMMYT and the Center for Development Research (ZEF) in the main maize growing areas of Zambia confirms that adopting drought-tolerant maize can increase yields by 38% and reduce the risks of crop failure by 36%.

Over three quarters of the rain-fed farmers in the study experienced drought during the survey. These farming families of 6 or 7 people were cultivating 4 hectares of farmland on average, half planted with maize.

Another study on drought-tolerant maize adoption in Uganda estimated also good yield increases and lower crop failure risks by 26 to 35%. Drought-tolerant maize has a transformational effect. With maize farming becoming less risky, farmers are willing to invest more in fertilizer and other inputs and plant more maize.

However, taking the decision of adopting new farm technologies in a climate risky environment could be a daunting task. Farmers may potentially gain a lot but, at the same time, they must consider downside risks. As Gertrude Banda, a lead farmer in eastern Zambia, put it, hybrid seeds have a cost and when you do not know whether rains will be enough “this is a gamble.” In addition to climate uncertainty, farmers worry about many other woes, like putting money aside for urgent healthcare, school fees, or cooking nutritious meals for the family.

An additional hurdle to adoption is that farmers may not know all the options available to cope with climate risks. While 77% of Zambia households interviewed said they experienced drought in 2015, only 44% knew about drought-tolerant maize. This unequal access to knowledge and better seeds, observed also in Uganda, slows adoption of drought-tolerant maize. There, 14% of farmers have adopted drought-tolerant maize varieties. If all farmers were aware of this technology, 8% more farmers would have adopted it.

Because farmers are used to paying for cheap open-pollinated varieties, they are only willing to pay half of the hybrid market price, even though new hybrids are performing very well. Awareness campaigns on the benefits of drought-tolerant maize could boost adoption among farmers. According to the same study, the potential for scaling drought-tolerant maize could raise up to 47% if drought-tolerant varieties were made available at affordable prices at all agro-dealers. Several approaches could be tested to increase access, such as input credit or subsidy schemes.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], Jen Theodore [2].