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Idit Miller Agribusiness Presentation at the European Commission
How to boost sustainableagriculture to meet food securitychallenges – the development ofagribusiness in AfricaIdit Miller, EMRC VP & Managing DirectorSEMINAR ON FOOD AND NUTRITION SECURITY ANDSUSTAINABLE AGRICULTURE IN THE FRAMEWORK OF THEPROGRAMMING 2014-2020 OF THE EUROPEANCOMMISSION COOPERATIONBrussels, 28-30 January 2013
Presentation structure 1. EMRC at a glance: mission, history, activities, objectives 2. EMRC’s AgriBusiness Forum and partners 3. General overview of the strengths and weaknesses of Africa’s agriculture 4. Linking smallholder farmers to markets 5. Case studies 6. Lessons learned & Recommendations for an inclusive & sustainable growth to meet food security challenges
Mission & VisionEMRC is an international organisation with a vision is to see a thriving private sector inAfrica through partnerships and investment.EMRC’s mission is to contribute to the development of the private sector in Africa for asustainable and responsible economic growth.We do this by growing cross and intra-continental business partnerships with andbetween the public and private sector.We thus contribute to fulfill the 8th Millennium Development Goal to: develop globalpartnerships for development.
HistoryIn the last 4 years alone, EMRC has gathered over 4500 professionals whoshare the same goal: to create business partnerships for economic growth and sustainable development in Africa!Established in 1992, EMRC has TWO decades of experience, which include:- BUSINESS FORUMS: promoting business partnerships with the developing world andorganising dozens of business meetings in Europe & Africa: Amsterdam, Rome, Lisbon,Cape Town, Johannesburg, Paris, Kampala, Utrecht, Dakar and Brussels.- TRADE MISSIONS: for economic and agricultural knowledge-sharing-PROJECT INCUBATOR AWARD: an initiative launched to encourage innovation andentrepreneurship in Africa among SMEs. Participants submit their proposals and finalistspresent their projects at the forum. The winner receives a US$15.000 prize (sponsorsincluded: Rabobank Foundation, AfDB, Hivos/VC4Africa).- B2B SESSIONS: hundreds of pre-organised meetings where business connections takeplace and potential partnerships are established.
Among our partners: PartnersRepublic of Senegal Republic of Uganda Our forums and missions are supported by our partners who help us champion business partnerships for the sustainable development of Africa’s private sector: Government bodies International organisations Bilateral & multilateral donor organisations Banks Academic & research institutes Global brands
“Africa can feed itself and the world if our governments commit to transforming agriculture into a viable industry.” What is it …? Zimbabwe Prime Minister Morgan R. Tsvangirai – AgriBusiness Forum 2011 - The AgriBusiness Forum is an international showcase event which aims to strengthen the Agri-Food sector in Africa, by encouraging partnerships, exchanging best practices and attracting investment - It is an annual event with about 400 experts and decision makers including private entities, financiers, donors, multinationals, researchers, governments, int’l organisations, NGOs and consultants from around the world - First launched in Europe and now annually taking place in an African business hub, each edition of the forum revolves around a core theme that tackles the challenges and opportunities in the Agri-Food sector in Africa
The world consumes more food every year. By 2050, food consumption will grow by 70% (FAO) Africa’s Agriculture at a glance At EMRC, we believe that the food crisis is a threat that can be looked upon as a business opportunity for Africa’s economic growth. Why?1. Africa contains around 60% of the world’s uncultivatedarable land2. Africa has a young population : 65% below 35 years andhalf of them between 15 and 35 years old3. In contrast to past tendencies, investment in agriculture isincreasing. In 2003 at the AU meeting in Maputo AfricanGovernments committed to dedicate 10% of their nationalbudgets to agriculture (“Maputo declaration”)
Africa’s strengths and weaknesses for agriculturaldevelopment are the result of underutilised assets:1. LAND Land: “There is still a lot of underutilised water and land resources in Africa. Africa has 60% of the world’s remaining uncultivated land suitable for farming.” Ralf von Kaufman, FARA “Africa has the potential to feed not just the continent‘s citizens, but also help create a secure global food system.” AGRA Chair, Kofi Annan. “When done right, larger-scale farming investments can promote sustainable agricultural and rural development, and can directly support smallholder productivity, for example, through out- grower programs.” Ngozi Okonjo Iweala, former MD, World Bank
Africa’s strengths and weaknesses for agriculturaldevelopment are the result of underutilised assets:2. LABOUR Labour: Agriculture employs 65% of Africa’s labour force BUT farmers are aging: the average age of African farmers is 60. In parallel, Africa has a young population: 65% below 35 years and 35% between 15 and 35 years old Smallholder farmers represent 80% of all African farmers, providing essential livelihoods. (Average farm size in Africa is 1.6 ha - 27 ha in Europe and 120 ha in the USA) Smallholder farmers face many problems: - High geographical dispersion; - Weak infrastructure networks; - Weak organization and education; - Tend to market small volumes; - Deal with dysfunctional input markets (lack of certified seeds, fertilizers, etc.); - Lack services: credit, information, technical assistance
Africa’s strengths and weaknesses for agriculturaldevelopment are the result of underutilised assets:3. CAPITAL & MANAGMENT Capital: There’s a shortage of opportunities, not funds “There’s no scarcity of capital for projects in Africa, but investors are seeking capable entrepreneurs that can make a success of their venture.” Barbara D’Amato, CEO, Trilogy Capital, USA “Wide scale investment in agribusiness and agro-industry in Africa is presently constrained by: Human and institutional capacity deficits.” Ralph von Kauffman, FARA New trend: addressing the financial needs of the missing middle gap (SMEs) and financing agric. cooperatives.
Linking smallholder farmers to markets “What needs to be done: recognizing smallholder farms as agribusinesses, regardless of their size or scale” Steps Kandeh Yumkellah, DG, UNIDO Forward Improve access to modern Improve access to markets technologies and assets • Agric. mechanization • Improve rural infrastructures • Modern irrigation • Improve crops shelf life / • Improved seeds post-harvest treatments • Soil fertility (fertilisers) • Process crops • Pesticides • Link producers to markets: • Innovative financing schemes out growers schemes • Agricultural training and research
Linking smallholder farmers to markets…The future of Africa? StepsOut-growers’ schemes Forward • Buyer provides TA/inputs and •Buyer sources directly from services to the farmers, purchases Informal individual farmers Centralized the crop model • Seasonal sourcing; little Model • farmers provide land & labor product specification • Strong buyer/farmer coordination; • Semi-formal • Buyers own or control land used by • Limited direct firm/farmer farmers, who supply laborIntermediary interaction; Nucleus- • Buyers provide TA/ inputs/ services Model • Enhanced but limited Estate Model • Buyers supervise production via in- product specification house technical staff • Buyer sources from farmers or farmer groups, butMultipartite TA/input/services via third Model parties (often cooperatives); • Higher level of product specification
Multipartite Model SAB Miller & CDM Cassava Beer Project Case Mozambique Study SABMiller, the parent Company of Cervejas de Mocambique (CDM), is engaged in a local sourcing initiative to stimulate agriculture in Mozambique. The project utilises recent breakthroughs in brewing techniques to enable SABMiller to produce clear beer replacing traditionally imported malted barley with locally grown cassava. A supply “partnership” has been formed between CDM and DADTCO. CDM is responsible for the supply side of the cassava; DADTCO is responsible for the processing technology; manages the farming programme; cassava processing; Smallholder farmer development; cassava development
Centralized Model AECF/BIO-UNITED Organic Cocoa Beans Project Sierra Leone Case StudyProject financed by the Africa Enterprise Challenge Fund (AECF) AECF agreed to provide a grant of just under US$1 million to BIO-UNITED matching acompany contribution of US$1.3m BIO-UNITED coordinates the harvesting and collection of organic cocoa beans in theproject region among pre-registered farmers, and then sells it to Barry Callebaut By helping farmers improve the quality of the cocoa, fermenting and drying thecocoa appropriately, BIO-UNITED is encouraging smallholders to professionalize theiractivitiesSome results: 1313 tons of cocoa produced in 2010 8000 active farmers Increase of revenues: from Leones 1,600 /lb (in 2000) up to Leones 4,000 /lb (in 2011) – (or : around 0,55€/kg in 2000 to 1,38€/kg in 2011)
Nucleus Estate Model Illovo Sugar Project Malawi Case StudyRural social and economic development through sugar cane agriculture Raise and manage income and provide technical assistance for rural communities Establishment by Illovo Sugar Malawi of a 300 ha irrigated sugar cane farm (with agrant by AECF of US$1.5mln, and a contribution from Illovo and business partners ofanother US$1.5mln) (Cash/Goods/Skills/Services) Support expansion initiatives – secure cane supply / managed by IllovoThe Malawi Sugar Estates provide services for employees and the surroundingcommunities:Some results: 13 000 children attend estate schools - 4 400 houses are provided for employees 12 medical clinics provide healthcare for employees and dependants - 25 000 patients a month visit the clinics Free drinkable water, electricity and sewage are provided
Lessons learned from our lastAgriBusiness ForumsInternational Financial Institutions, Donors, Multinationals, NGOs and experts now adopt two new approaches to address agribusiness development Value Chain Approach Inclusive Market Development (IMD) approach• Definition: full range of activities required to • Inclusive markets are markets that extend bring a product or service to the market choices and opportunities to the poor as through the different phases of production producers, consumers and wage earners.• Adopting a market system perspective: Inclusive markets thus create jobs and investment needs are identified and technical affordable goods and services needed by the interventions are designed to upgrade activities poor. and improve returns at different points along • The IMD approach focuses on entire markets & the chain, including: production, post-harvest sub-sectors that are important to the poor by handling and distribution, marketing and addressing barriers to inclusive market logistics, agribusiness service providers. development at various levels (micro, meso and macro). Such barriers include: lack of appropriate policies & infrastructure, limited access to finance and markets, missing business and value chain linkages, or capacity constraints
Recommendations –Johannesburg Declaration:On engaging the Private Sector in furthering Africa’s AgriBusiness,Food Security and Nutrition Agenda Adopted during the High Level Public-Private Dialogue (PPD), facilitated by the UNDP, at the Agribusiness Forum - 19 October 2011 Among others the declaration urges the public sector to: - Incorporate private sector stakeholders in agricultural policy, design, development and programme implementation efforts – particularly to unlock private sector investments; - Expand policy development efforts that support transformation and value addition in the agriculture and agribusiness sector; - Promote increased public investment in agriculture – supporting infrastructure (e.g. roads, electricity, warehousing, irrigation and distribution) to reduce costs and increase the competitiveness of agricultural value chains; - Implement policies that help improve access to finance within the agricultural/agribusiness sector, especially for smallholders and small and medium enterprises (SMEs); - Strengthen efforts to remove barriers to intra-African trade.
Recommendations –Johannesburg Declaration:On engaging the Private Sector in furthering Africa’s AgriBusiness,Food Security and Nutrition Agenda Among others, the declaration urges the private sector to: - Engage in public-private dialogues and platforms, to explore and further public-private partnerships and collaboration; - Expand inclusive business models to create new jobs and income-generating opportunities within the agribusiness/ agriculture sector; - Accelerate efforts to mobilize private capital in support of value chain development, along with important technical assistance to improve smallholders and SME’s capacity to produce quality products in a timely manner; - Promote capacity development, technology transfer and innovation… Among others, the declaration request Africa’s Development Partners to : - Increase the resources deployed and programmes initiated to support inclusive private sector development …; - Increase support for catalytic financing mechanisms and matching grant facilities to promote the development of inclusive models and inclusive markets.
THANK YOU FOR YOUR ATTENTION!Idit Miller, EMRC VP & MD EMRC Email: email@example.com www.emrc.be TEL:+32.26261515 FAX: +32.26261516