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Agricultural Outlook 2016

By Alex Hitzemann

This year’s FOECD-FAO Agricultural Outlook is a special edition featuring an in-depth look at the opportunities and challenges facing Sub-Saharan Africa in the next decade. The 140 page report is a wealth of information thanks to all the resources and talent employed by the UN, FAO, and OECD. We are very fortunate to have individualized predictions for each crop and analysis of which specific factors could trigger growth spurts in the Sub-Saharan agribusiness market.

The Sub-Saharan Africa (SSA) region contains around 950 million people, which  is approximately 13% of the global population. Despite drastic changes to economies in this region, agriculture remains a crucial sector providing livelihoods for millions of people. Agricultural makes up a significant portion of most Sub-Saharan countries GDP, ranging from from 30-60 percent.

expendThe report finds that while the outlook for agriculture in Sub-Saharan Africa is broadly positive, it could be much improved by improvements in government policies across the region, by an increase in strategic public and private investments (especially in infrastructure) and by suitably adapted research and extension. Such investments could improve access to markets, reduce post-harvest losses, and make much needed inputs more widely available.

A great example of exactly this kind of investment is the new Norwegian funded company Arise. Arise is a cooperation by Norfund, FMO and Rabobank which seeks to invests in financial institutions in SSA to grow their financial services and capability to supply capital to small-holder farmers in Sub-Saharan Africa. The establishment of joint ventures, such as this, will contribute more to the development of banking than just one bank or investment fund on its own.

FAO reports that foreign investment and external financial flows into Africa have quadrupled since 2000. These flows are expected to increase two times further in the next decade.

Sub-Saharan Africa will continue to experience rapid population growth. This, in combination with rising incomes, urbanization, and continuation of current policies and market structures, the production of food crops in many countries is projected to grow more slowly than demand.

Sub-Saharan Africa’s net imports of food commodities are anticipated to grow over the next decade, although productivity enhancing investments would mitigate this trend. Food import dependency of resource poor regions, such as North Africa and the Middle East, is projected to intensify providing a huge market for any grain exporters in Africa. In SAA countries grain imports will increase 50% in ten years. Comparatively, North Africa will only see only as 15% increase.

intakeDue to extremely high population growth, SSA has a very young population. The World Bank predictes that more than half of young Africans will enter agricultural careers, mostly in the format of small family farms. Inovating ways for youth to participate in agriculture has the potential to greatly reduce poverty and hunger. Success for these young African farmers relies on their education of land access and tenure, access to financial services, access to markets, access to green jobs and involvement in policy dialogue. All of this has the potential to make the agricultural sector more attractive to young people, providing an additional push that may be needed for them to enter the sector

 Yield Improvements

FAO believes that the single greatest factor in improve crop outputs over the next decade will be yield improvements. Currently, it’s not uncommon to see post-harvest crop losses above 50 percent in the region. In the next decade African farmers will gain new metholodgies and technologies to improve their yields. The opportunity for large fertilizers and machinery companies to penetrate the African market is likely to greatly increase as farmers seek new ways to improve their output.

changeYield improvements will account for 80% in the increase in crop output in Africa from now to 2020.

Recently, there has been a furry of concern about land-use and crop rotation in the region. But continuous cultivation of existing plots would not necessarily pose problems for sustainable intensification if sufficient use of fertilizers, soil amendment practices and other land-augmenting investments are employed and coupled with continued education to maintain and improve soil quality.

However, a large body of literature in SSA points to soil degradation arising from unsustainable cultivation practices in regions with a high population density, for example parts of Kenya and Malawi. Continuous cultivation and lack of crop rotation deplete organic carbon levels, making soil less responsive to fertilizer application. This also makes it more difficult for smallholder farmers to benefit from yield gains offered by plant genetic improvement.

There is also an opportunity to improve output by increase agricultural area sustainability. This is likely to make up a much smaller part of the growth in the region. The majority of new crop areas in Africa will be dedicated to cereals. Africa’s existing agricultural resources (crops and fisheries) can all be characterized as underutilized.

intakeOther Themes

Maize production is expected to increase considerably, especially in Eastern Africa. Ethiopia alone accounts for almost 40% of additional production to 2025, followed by Nigeria (14%) and Sudan (10%). Increases in caloric intake in Africa will remain modest.

East Africa will see the greatest changes. Its possible that the eastern part of the continent will see up to 8 percent increases in daily caloric intake by 2020. On the other hand, central Africa will remain relatively the same in the coming decade only increasing daily intake by 1.5 percent in the same time period.

There is a large opportunity for fisheries. Projections reflect a 36% increase of food fish supply by 2025 compared to the average 2013-15 level, but accounting for significant population growth, the per capita increase is a mere 3%.

Milk production also has enormous potential in economic development and food security in rural areas. This makes dairy an important subsector in SSA. Particularly in Southern and Eastern Africa, commercialisation of the sector has illustrated dairy’s potential to provide a regular income source that reduces poverty and improves living standards. Eastern Africa currently constitutes more than half of total milk production in SSA and a vibrant

Check out the whole report here:

http://www.fao.org/3/a-i5778e.pdf