Southern Africa Trade Hub Overview

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3 Southern Africa Trade Hub Overview The USAID Southern Africa Trade Hub: Enhancing Economic Growth and Food Security through Trade Duration: September 20, 2010 September 30, 2014 Contacts: Chief of Party: John James The goal of the United States Agency for International Development (USAID) Southern Africa Trade Hub is to increase international competitiveness, intra-regional trade and food security in Southern Africa. With a team of regional and international experts based in Gaborone, Botswana, the Trade Hub provides targeted technical assistance to governments, the private sector and civil society organizations to advance regional trade within Southern Africa while incorporating gender integration, environment compliance and strategic outreach in all activities. As a regional program the Trade Hub works to: Reduce time and costs of transporting goods across borders by deploying modern trade facilitation tools such as coordinated border management, customs connectivity and national single windows along key transport corridors which include the Coast to Coast, the Beira and Dar es Salaam corridors. Strengthen the competitiveness of the grain, soy and groundnut value chains by reducing post-harvest losses, introducing better seeds and technologies, strengthening regional agricultural institutions and supporting trade and investment links. Increase trade and investment x- tile and apparel sector. Increase the capacity for regulating and enhancing the clean energy sector to increase investments. Improve the regional trade, investment and integration enabling environment through legal and regulatory reform. The Trade Hub supports the USAID Feed the Future program and the African Competitiveness and Trade Expansion (ACTE) initiative. The project is a four-year contract from with a potential one-year extension. (January 2013) USAID Project Officer: Rick J. Gurley rgurley@usaid.gov

4 Agricultural Value Chains The USAID Southern Africa Trade Hub: Enhancing Economic Growth and Food Security through Trade The driven by! " # $! % & % gy and focus on intraregional trade in targeted value chains: maize, soybeans and groundnuts. Primary support is directed to the Feed the Future focal countries within the region (Malawi, Mozambique and Zambia) with special emphasis on encouraging investment and technology transfer from South African organizations in line w & ' ( & ) * &! " # $! South Africa. Within the regional Feed the Future strategy, the Trade Hub supports initiatives that improve trade in targeted agricultural commodities and improve food security, including: Program Objectives: Regional Markets and Market Access Standards and Quality Production Enhancement Regional Organization Strengthening Chief of Party: John James jjames@satradehub.org Director, Agriculture: Rob Turner rturner@satradehub.org USAID Project Officer: Rick J. Gurley rgurley@usaid.gov Regional Markets and Market Access: The Trade Hub is supporting the development of structured trade in commodities to facilitate cross-border trade and to better integrate farmers and producer organizations in regional markets. In addition, the Trade Hub is supporting the development and regional expansion of warehouse receipts and services such as market information. Storage infrastructure and management are also key areas of focus across our target countries. Standards and Quality: Aflatoxin control in groundnut supply chains is a key standards and quality focus for the Trade Hub. The Hub is working with a broad range of stakeholders to develop, disseminate and commercially test integrated management practices and technology to reduce aflatoxin contamination and open lucrative markets to regional groundnut producers and processors. The Trade Hub also supports investment in accredited commercial laboratory services to improve sustainable food and feed sector growth and trade. Production Enhancement: The Trade Hub supports contract farming models and intraregional partnerships to introduce and test improved seeds, extension and other technologies to boost small holder productivity and market integration in all target countries. Regional Organization Strengthening: The Trade Hub offers targeted support to relevant industry and producer organizations to improve their services and partnerships within the region. (January 2013)

5 Trade Facilitation The USAID Southern Africa Trade Hub: Enhancing Economic Growth and Food Security through Trade Program Objectives: Promote coordination between border agencies Connect stakeholders via a single electronic data exchange platform Provide electronic connectivity between customs management systems Share best trade facilitation practices and build synergies with other institutions Support customs modernization Chief of Party: John James jjames@satradehub.org Director, Trade Facilitation: Godwin Punungwe gpunungwe@satradehub.org USAID Project Officer: Rick J. Gurley rgurley@usaid.gov In Southern Africa, high import and export costs significantly constrain trade-based growth, limit product diversification and increase the price of consumer goods, including food. This is a serious problem in the region, where transportrelated costs contribute up to 14 percent of the final consumer price of a product double the global average. In an effort to help reduce the time and costs of importing and exporting, the Trade Hub is promoting several modern trade facilitation tools throughout Southern Africa and assisting in their adoption. National Single Window (NSW) connects trade-related stakeholders within a country via a single electronic data information exchange platform. Mauritius was the first SADC country to have a Single Window and is currently ranked 21st on the Trading Across Borders Index + the highest in Africa. Mozambique launched its pilot NSW in December Building on this regional success, the Trade Hub is, -. /, / 5, : ;. -, 2 < - / = > : < 2 : 0 3? 7 1 / = / n- nect to its NSW. Customs Connectivity connects the customs management system of one country to another. In partnership with Microsoft and customs authorities of Botswana and Namibia, 1? : < : B , 9 2 =? 0 2 3, C = - / 9 < -based customs connec- 1 0 D 0 1 E F G 0 - / 1. E. 1 : 6 7 : 1 H : : 2 1? :. : two countries. Coordinated Border Management (CBM) entails greater coordination between border management agencies to achieve improved regulatory efficiency and effectiveness in order to reduce the time required to move goods across borders. The Trade Hub is currently implementing CBM activities at the Songwe, Mwanza, Dedza, and Mchinji borders in Malawi and Zambia. One Stop Border Post (OSBP) enables neighboring countries to coordinate import, export and transit processes so that traders and tourists stop only once at either side of the border to undertake regulatory formalities for crossing. The < : B 9 7?,.. 9 G G 1 : < I, ,, 2 < J / 1. H, 2, ;. : ffort to develop an OSBP between their countries and is promoting similar initiatives between Botswana and South Africa, and between Malawi and Mozambique. (January 2013)

6 USDA Foreign Agricultural Service GAIN Report Global Agriculture Information Network Template Version 2.09 Required Report - public distribution Date: 3/25/2012 SF9000 South Africa, Republic of Oilseeds and Products Annual Report GAIN Report Number: 2012 Approved by: Ross Kreamer U.S. Embassy - Pretoria Prepared by: Dirk Esterhuizen Report Highlights: With the increase in local demand for soybeans due to the building of new crushing plants, post expects that the area to be planted with soybeans in the 2012/13 MY will increase by six percent to 500,000 hectares, which could produce a soybean crop of 835,000 tons - 22 percent more than in the 2011/12 MY. Although unfavorable weather conditions impacted negatively on all the summer rainfall crops, soybean production for the 2011/12 MY is expected to be at the same level as the previous season due to an increase in plantings. With an increase in crushing capacity, it is expected that South Africa will crush a record 400,000 tons of soybean in the 2011/12 MY and will almost double that to 750,000 tons in the 2012/13 MY. On the back of increased local production of soybean meal, imports are expected to decrease by almost eight percent to 880,000 tons in the 2011/12 MY and even further to 720,000 tons in the 2012/13 MY.

7 GAIN Report - SF9000 Page 2 of 20 Executive Summary Post forecasts that sunflower seed production for the 2012/13 MY 1 will be around 575,000 tons on 460,000 hectares. It is expected that the area to be planted with soybeans in the 2012/13 MY will increase by six percent on the back of increasing crushing capacity to 500,000 hectares, which, on average yields, could produce 835,000 tons of soybeans (22 percent more than in the 2011/12 MY). Peanut production for the 2012/13 MY is expected to decrease marginally to 50,000 tons on 40,000 hectares. On the back of a decrease in hectares planted and unfavorable weather conditions, total oilseed production is expected to drop by almost 23 percent to 1.3 million tons in the 2011/12 MY. Seasonal rainfall from October through March was below average despite expectations of above-average rainfall during a La Niña year. Sunflower production is expected to decrease by 42 percent to 498,000 tons. Soybean production for the 2011/12 MY is expected to be at the same level as the previous season due to an increase in plantings. Hence, post expect a soybean crop of about 707,000 tons. Peanut production is expected to decrease by 14 percent to 55,000 tons. Post forecast that by the 2012/13 MY, South Africa will crush more soybeans than sunflower seeds due an increase in soybean production and soybean crushing capacity. South Africa will produce 873,000 tons of oilseed meal in the 2012/13 MY, almost 53 percent of local consumption, and an increase of 47 percent from the previous season. It is expected that locally produced soybean oil will almost double to 135,000 tons, while sunflower oil production will stay constant at 247,000 tons in the 2012/13 MY. South Africa will crush a record 1.1 million tons of oilseeds in the 2011/12 MY on the back of increased soybean crushing capacity. This will produce approximately 593,000 tons of oilseed meal and 319,000 tons of oilseed oil. In the 2012/13 MY soybean meal imports is expected to drop to 720,000 tons on the back of increase local production of soybean meal, while sunflower meal imports is expected to stay constant at 90,000 tons. For the 2011/12 MY imports for soybean meal is expected to decrease by almost eight percent to 880,000 tons, while sunflower meal imports are expected to increase by 18 percent to 90,000 tons. US$1 = Rand 7.68 (03/29/2012) Sources: The marketing years (MY) used in the text refers to the USDA marketing years in the PS&D table and do not necessarily correspond with the marketing years used by the South African oilseed industry.

8 GAIN Report - SF9000 Page 3 of 20 Total Oilseeds Production A new soybean crushing plant, with a capacity of 132,000 tons per annum, will start operating in May this year. In addition, another three plants, with a combine crushing capacity of about 435,000 tons will start operating from the middle of This will increase the local demand for soybeans and consequently the local production of soybeans. However, on the other hand corn planting is also expected to increase in the 2012/13 MY on the back of relative low stock levels because of South Africa s export commitments and a current crop that is expected to be relatively lower due to unfavorable weather conditions. This could influence farmers decision to plant less oilseeds and more corn. In addition, local oilseed stock levels are on record highs. Hence, post expects that the area to be planted with oilseeds later in 2012 for the 2012/13 MY will increase only marginally to one million hectares. Post forecasts that sunflower seed production for the 2012/13 MY will be around 575,000 tons on 460,000 hectares. It is expected that the area to be planted with soybeans in the 2012/13 MY will increase by six percent to 500,000 hectares, which, on average yields, could produce 835,000 tons of soybeans (22 percent more than in the 2011/12 MY). Peanut production for the 2012/13 MY is expected to decrease marginally to 50,000 tons on 40,000 hectares. The South African Crop Estimates Committee (CEC) released its second oilseeds production estimate for the 2011/12 MY on March 27, According to the CEC, South Africa planted, for the first time ever, more soybeans then sunflower seed. This illustrates the remarkable increase, of almost 4-fold, in the hectares planted with soybean in South Africa the past ten years. Many South African producers are now recognizing the value of soybeans in a crop rotation system with corn and, in addition, the production of soybeans is made relatively easier with the GM cultivars that are available in South Africa. With the increase in crushing capacity, indications are that this upward trend in soybean plantings will continue in future. According to the CEC, total oilseed plantings for the 2011/12 MY were down by 13 percent from the previous season to 970,800 hectares (see also Figure 1). The main reason for the decline in oilseed plantings is that total corn plantings, at 3.2 million hectares, are ten percent more than in the 2010/11 MY. Corn plantings are up in response to higher domestic corn prices (almost double) compared to the previous season. Domestic corn prices were up on the back of speculation that corn stock levels in South Africa are decreasing due to increased exports. According to the CEC, producers planted 453,350 hectares of sunflower, 30 percent less than in the previous season. Soybean plantings are up by 13 percent to 472,000 hectares, another record high for South Africa. Peanut planting are down by 18 percent to 45,450 hectares.

9 GAIN Report - SF9000 Page 4 of 20 Figure 1: Trends in the area planted with oilseeds in South Africa since 2000 On the back of a decrease in hectares planted and unfavorable weather conditions, total oilseed production is expected to drop by almost 23 percent to 1.3 million tons in the 2011/12 MY. Seasonal rainfall from October through February was below average despite expectations of above-average rainfall during a La Niña year. Furthermore, the seasonal rains arrived several weeks late, delaying the launch of the planting campaign. Oilseeds typically are planted from October through December in South Africa. In addition, a dry-spell from mid-february through early March in most of the oilseeds growing area did impact negatively on yields and subsequently yields will be less than last year. Sunflower production is expected to decrease by 42 percent to 498,000 tons. Soybean production for the 2011/12 MY is expected to be at the same level as the previous season due to an increase in plantings. Hence, post expect a soybean crop of about 707,000 tons. Peanut production is expected to decrease by 14 percent to 55,000 tons. Figure 2 illustrates the trends in oilseed production in South Africa since 2000.

10 GAIN Report - SF9000 Page 5 of 20 Figure 2: Trends in the production of oilseeds in South Africa since 2000 The following table contains area planted and production figures for sunflower, soybeans and peanuts for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). Table 1: Area planted and production of oilseeds in South Africa Oilseeds Area Yield Prod. Area Yield Prod. (1,000ha) MT/ha (1,000 (1,000ha) MT/ha (1,000 Area (1,000ha MT) MT 2010/ / /13 Yield MT/ha Prod (1,000 MT Marketing year Sunflower Soybeans Peanuts* TOTAL 1, , ,260 1, ,460 Source: SAGIS *Data supplied on a shelled basis, converted to in-shell (X1.33). Consumption Figure 3 illustrates the trend in the usage of sunflower seed in South Africa. Almost the entire sunflower crop that is produced in South Africa is destined for the processing industry for conversion to sunflower oil. Sunflower meal, a by-product of the oil extraction process, is sold to feed manufacturers domestically. It is generally regarded as a low-value product that does not compare well to soybean meal in terms of nutritional value and fiber content. For example, broiler rations cannot include more than seven percent sunflower meal. Hence, sunflower meal is mainly used as feed in the dairy and beef industries. The crushing capacity for sunflower seed in South Africa is estimated at around 1.1 million tons per annum, while the capacity for oilseed refineries is estimated at 950,000 tons per annum. Figure 3 illustrates the strong correlation between the local production of sunflower seed and crushing capacity utilized per annum, meaning imports are limited. Due an expected lower sunflower seed crop

11 GAIN Report - SF9000 Page 6 of 20 in the 2011/12 MY, crushed sunflower seed will drop to 650,000 tons. Post forecast that the sunflower seed that will be crushed in the 2012/13 MY will also be around 650,000 tons. Figure 3: The utilization of sunflower seed in South Africa since 2000 Figure 4 illustrates an increasing trend in the local utilization of soybeans in South Africa, mainly driven by an increase in local soybean production. Like in the case of sunflower seed, is local soybean utilization strongly correlated with local soybean production. However, in 2009 and 2010, local production of soybeans outstripped local utilization and as a result South Africa exported almost 30 percent of its local produced crop. This illustrated the need for the soybean industry in South Africa to increase and modernized the local processing ability. Fortunately, investors have realized that the increasing trend in soybean production in South Africa will continue and that real opportunities exist in investing in new and modernized crushing facilities. Hence, 132,000 tons per annum of new soybean crushing capacity will be added to the existing 240,000 tons in May this year, with an another 435,000 tons of crushing capacity to be added in Figure 4: The utilization of soybean in South Africa since 2000

12 GAIN Report - SF9000 Page 7 of 20 With an increase in crushing capacity, it is expected that South Africa will crush a record 400,000 tons of soybean in the 2011/12 MY and will almost double that in the 2012/13 MY to 750,00 tons. The change in the utilization of soybeans in South Africa is also illustrated in Figure 5. For example, in 2000, only 69,500 tons of soybeans or 31 percent of total utilization were crushed, while in 2012, it is estimated that 400,000 tons of soybeans or 68 percent of total utilization will be crushed. Soybean meal is mainly used for feed in the poultry and pork industries. The local demand for soybean meal, as a quality source of protein for animal feed, has increased in correlation with the increase in poultry production in South Africa. The South African poultry meat industry, with a gross value of more than R23 billion ($3 billion), is the country s largest individual agricultural industry and is contributing almost 18 percent to Agriculture s Gross Domestic Product. Broiler production makes up most of the poultry industry. Although South Africa produces less than 1.5 percent of the world s broiler meat it is the major broiler producer, with almost 80 percent of total broiler production, in the Southern African Development Community (SADC). Since 2000, broiler production in South Africa grew by an average of four percent per annum. However, in 2009 the growth rate dropped to less than one percent as a result of high commodity prices followed by the worldwide economic recession. Fortunately, the South African economy recovered in 2010 from the recession and domestic demand for poultry products increased again. As a result the productions of broilers meat increased by four percent in 2010 and by almost two percent in Broiler meat production is projected to increase further as South Africa s economy is expected to grow by 2.7 percent in 2012 and by 3.6 percent in 2013, which will increase the demand for more protein products.

13 GAIN Report - SF9000 Page 8 of 20 Figure 5: Comparing the utilization of soybeans in the 2000 MY and 2012 MY The domestic utilization of sunflower seed and soybeans for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast) are summarized in Table 2.

14 GAIN Report - SF9000 Page 9 of 20 Table 2: The utilization of sunflower seed and soybeans by South Africa Oilseeds ( 1,000 MT) Marketing year Sunflower Soybean s Total Sunflower Soybean s Total Sunflower Soybean s Total 2010/1 2011/1 2012/ Crush , ,400 Food Animal feed Seed Other Exports TOTAL* , , ,660 Source: SAGIS & Grain SA * Including carryover stocks from previous seasons and imports The domestic consumption for peanuts is shown in Table 3 for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). The domestic market is relatively stagnating at around 60,000 tons with about 35,000 tons of peanuts being consumed in the direct edible market and about 25,000 tons for the peanut butter market. Table 3: The utilization of peanuts in South Africa Peanuts* ( 1,000 MT) Marketing year 2010/ / /13 Direct edible market Peanut butter market Oil and oilcake Seed Exports Other TOTAL** Source: SAGIS & Grain SA *Data supplied on a shelled basis, converted to in-shell (X1.33) ** Including carryover stocks from previous seasons and imports Prices The SAFEX prices for sunflower and soybeans as of 03/23/2012 are shown in Table 4. Local sunflower prices are trading six percent higher than a year ago, while soybean prices are three percent lower due to the availability of carryover stock which is putting downward pressure on prices.

15 GAIN Report - SF9000 Page 10 of 20 Table 4: SAFEX prices for sunflower and soybeans SAFEX Futures prices Commodity 2011/ / /07 Sunflower R4,580/t R4,635/t R4,640/t Soybeans Source: SAFEX Trade ($596/t) R3,713/t ($483/t) ($604/t) R3,745/t ($488/t) ($604/t) R3,795/t ($494/t) Although, South Africa s trade in oilseeds is mainly directed to the imports of oil and protein meal, South Africa became a net exporter of soybeans the past few years, due to the increased production and limited processing facilities. However, in anticipation of the new crushing facilities, exports have decline sharply in the 2010/11 MY to only 43,505 tons. Exports are expected to be on the same level in the 2011/12 MY and 2012/13 MY at about 50,000 tons. South Africa exported soybeans in 2010/11 MY mainly to two countries, namely, Malaysia (40,022 tons) and Mozambique (1,889 tons). South Africa imported a small amount (26,435 tons) of sunflower seeds in the 2010/11 MY according to the Global Trade Atlas (10,900 tons according to SAGIS). Sunflower seed were mainly imported from Romania (25,227 tons). Due to an expected decrease in the sunflower seed crop, imports is expected to increase to about 50,000 tons in the 2011/12 MY and 2012/13 MY. Exports of peanuts (according to SAGIS) reached about 20,000 tons for the 2010/11 MY. Exports are expected to decrease to 8,000 tons in the 2011/12 MY and 2012/13 MY, due to a decrease in local production. Current import tariffs for oilseeds and oilseed products are summarized in Table 5. Last year, the International Trade Administration Commission (ITAC) in South Africa announced that the import duty on soybean meal will remain unchanged for three years to allow local producers to increase production and for soybean crushers to generate the needed capacity to service the local market in terms of quality and quantity. Both appear to be within reach. Table 5: Current import tariffs of oilseeds Product General rate of duty EU and SADC Sunflower seed (12.06) 9.4% Free Soybeans (12.01) 8% Free Peanuts (12.02) 10% Free Soybean meal (23.04) 6.6% Free Sunflower meal (23.06) 6.6% Free Soybean oil (15.07) 10% Free Sunflower oil ( ) 10% Free Source: SAGIS

16 GAIN Report - SF9000 Page 11 of 20 Oilseed, Sunflower seed South Africa 2010/ / /2013 Market Year Begin: Apr 2011 Market Year Begin: Apr 2012 Market Year Begin: Apr 2013 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted Area Harvested Beginning Stocks Production MY Imports MY Imp. from U.S MY Imp. from EU Total Supply MY Exports MY Exp. to EU Crush Food Use Dom. Cons Feed Waste Dom. Cons Total Dom. Cons Ending Stocks Total Distribution HA, 1000 MT Oilseed, Soybean South Africa 2010/ / /2013 Market Year Begin: Jun 2011 Market Year Begin: Jun 2012 Market Year Begin: Jun 2013 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted Area Harvested Beginning Stocks Production MY Imports MY Imp. from U.S MY Imp. from EU Total Supply ,172 MY Exports MY Exp. to EU Crush Food Use Dom. Cons Feed Waste Dom. Cons Total Dom. Cons Ending Stocks Total Distribution , HA, 1000 MT

17 GAIN Report - SF9000 Page 12 of 20 Oilseed, Peanut South Africa 2010/ / /2013 Market Year Begin: Apr 2011 Market Year Begin: May 2011 Market Year Begin: Apr 2013 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted Area Harvested Beginning Stocks Production MY Imports MY Imp. from U.S MY Imp. from EU Total Supply MY Exports MY Exp. to EU Crush Food Use Dom. Cons Feed Waste Dom. Cons Total Dom. Cons Ending Stocks Total Distribution HA, 1000 MT Total Meals Production In the 2010/11 MY, South Africa crushed about 923,000 tons of oilseeds, marginally less than in the 2009/10 MY, which produced 482,000 tons of meal. Post estimates that South Africa will crush a record 1.1 million tons of oilseeds in the 2011/12 MY on the back of increased soybean crushing capacity. This will produce approximately 593,000 tons of oilseed meal. This is 23 percent more locally produced meal than in the 2010/11 MY, but represent only 38 percent of local consumption (see also Table 6). In Figure 7, the expected trend in oilseeds crushed in South Africa from 2009 to 2013 is illustrated. Post forecast that by the 2012/13 MY, South Africa will crush more soybeans than sunflower seeds due to the increase in soybean crushing capacity and a decrease in sunflower production. South Africa will produce 873,000 tons of oilseed meal in the 2012/13 MY, almost 53 percent of local consumption, and an increase of 47 percent from the previous season. In Table 6, the production of soybean meal and sunflower meal in South Africa are shown for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). Crushing yields used includes 42 percent meal for sunflower seed and 80 percent meal for soybeans.

18 GAIN Report - SF9000 Page 13 of 20 Figure 6: Trends in oilseeds crushed in South Africa Table 6: Oilseed meal production in South Africa Oilseeds (1,000MT) Crush Meal produced Marketing year 2010/ / / / / /13 Sunflower (42% meal) Soybean (80% meal) TOTAL 923 1,050 1, Source: SAGIS Consumption In 2010/11, South Africa consumed about 1.5 million tons of oilseed meal. The consumption of oilseed meal in South Africa is expected to grow by three percent in the 2011/12 MY to 1.6 million tons and by almost seven percent in 2012/13 MY to 1.7 million tons, mainly driven by an increase in demand and the availability local produced soybean meal. In Table 7 the consumption of soybean meal and sunflower meal in South Africa are shown for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). Table 7: The consumption of soybean meal and sunflower meal Oilseeds (1,000MT) Marketing year 2010/ / /13 Sunflower meal Soybean meal 1,140 1,190 1,300 TOTAL 1,500 1,550 1,660 In Table 8, the raw material usage and inclusion rates by members of the Animal Feed Manufactures Association (AFMA) for the 2009/10, 2010/11 and 2011/12 April/Marchmarketing years are shown. This amounts to between 70 percent to 80 percent of the total raw material used by feed manufactures in South Africa. The inclusion rate of soybean meal and

19 GAIN Report - SF9000 Page 14 of 20 Table 8: Raw material usage by AFMA members (April to March) Raw materials Total (1,000MT) 2009/10 Inclusion rate (%) Total (1,000MT) 2010/11 Inclusion rate (%) Total (1,000MT) 2011/12 Inclusion rate (%) Sunflower meal Groundnuts meal Soybean meal Full fat soy Cotton meal Cotton seed Canola meal Full fat canola Copra and Palm Kernel Corn germ oilcake Total oilseed 1, , , meal Total corn 2, , , products Total fishmeal Source: AFMA Trade Figure 7 illustrates how the gap between soybean and sunflower meal produced in South Africa and the imports of these meals is expected to close in the 2012/13 MY as current investments in modern soybean crushing facilities will increase the availability of quality local produced soybean meal. Figure 7: The gap between soybean and sunflower meal produced in South Africa and imports of these meals

20 GAIN Report - SF9000 Page 15 of 20 Imports of soybean meal and sunflower meal in the 2010/11 MY at 946,205 tons and 75,595 tons respectively, were basically at the same level as the previous year. Almost all imports of soybean meal and sunflower meal were from Argentina. Below are the import trade matrices of sunflower meal and soybean meal. For the 2011/12 MY imports for soybean meal is expected to decrease by almost eight percent to 880,000 tons, while sunflower meal imports are expected to increase to 90,000 tons. In the 2012/13 MY soybean meal imports is expected to drop even further to 720,000 tons on the back of increase local production of soybean meal. Sunflower meal imports is expected to stay constant at 90,000 tons in the 2012/13 MY. Import Trade Matrix Country South Africa Commodity Sunflower meal Time Period CY Units: MT Imports for: U.S. 0 U.S. 0 Others Others Argentina 73,338 Argentina 75,021 Total for Others 73,338 75,021 Others not Listed Grand Total 73,579 75,595 Import Trade Matrix Country South Africa Commodity Soybean meal Time Period CY Units: MT Imports for: U.S. 0 U.S. 0 Others Others Argentina 957,524 Argentina 946,016 Zambia 1,136 Total for Others 958, ,016 Others not Listed Grand Total 958, ,205

21 GAIN Report - SF9000 Page 16 of 20 Meal, Soybean South Africa 2010/ / /2013 Market Year Begin: Jun 2011 Market Year Begin: Jun 2012 Market Year Begin: Jun 2013 USDA Official New Post USDA Official New Post USDA Official New Post Crush Extr. Rate, Beginning Stocks Production MY Imports , MY Imp. from U.S MY Imp. from EU Total Supply 1,139 1,148 1,205 1,200 1,320 MY Exports MY Exp. to EU Industrial Dom. Cons Food Use Dom. Cons Feed Waste Dom. Cons. 1,124 1,140 1,190 1,190 1,300 Total Dom. Cons. 1,124 1,140 1,190 1,190 1,300 Ending Stocks Total Distribution 1,139 1,148 1,205 1,200 1, MT, PERCENT Meal, Sunflower seed South Africa 2010/ / /2013 Market Year Begin: Apr 2011 Market Year Begin: Apr 2012 Market Year Begin: Apr 2013 USDA Official New Post USDA Official New Post USDA Official New Post Crush Extr. Rate, Beginning Stocks Production MY Imports MY Imp. from U.S MY Imp. from EU Total Supply MY Exports MY Exp. to EU Industrial Dom. Cons Food Use Dom. Cons Feed Waste Dom. Cons Total Dom. Cons Ending Stocks Total Distribution MT, PERCENT

22 GAIN Report - SF9000 Page 17 of 20 Total Oils Production It is estimated that South Africa will produce 319,000 tons of oilseed oil in the 2011/12 MY. This is almost six percent more than the 302,000 tons produced in the 2010/11 MY. For the 2012/13 MY, it is expected that locally produced soybean oil will almost double to 135,000 tons, while sunflower oil production will stay constant at 247,000 tons. In Table 9, the production of soybean oil and sunflower oil in South Africa are shown for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). Crushing yields used include 38 percent oil for sunflower seed and 18 percent oil for soybeans. Table 9: Oilseed oil production in South Africa Oilseeds (1,000MT) Crush Oil produce Marketing year 2010/ / / / / /13 Sunflower (38% oil) Soybean (18% oil) TOTAL 923 1,050 1, Consumption South Africa consumes just over one million tons of vegetable oil per annum. Approximately 30 percent of the vegetable oil is locally produced. In Table 10, the consumption of soybean oil, sunflower oil, palm oil and other vegetable oils in South Africa are shown for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). A positive trend in vegetable oil consumption in South Africa is expected to continue in relation to economic growth. South Africa s economy is expected to grow by 2.7 percent in 2012 and by 3.6 percent in 2013 on the back of robust household consumption and stronger public and private sector investments. Table 10: The consumption of soybean oil, sunflower oil and palm oil in South Africa Oilseeds (1,000MT) Marketing year 2010/ / /13 Sunflower oil Soybean oil Palm oil Other vegetable oils TOTAL 1,020 1,060 1,110 Trade Sunflower oil imports by South Africa decreased by almost 20 percent to 86,774 tons in the 2010/11 MY, on the back of a 15 percent increase in local production. Soybean oil imports at 275,900 tons were on the same level as the previous year. Sunflower oil was imported from the Ukraine (50 percent), Argentina (40 percent) and the United States (10 percent), while

23 GAIN Report - SF9000 Page 18 of 20 soybean oil was imported mainly from Spain (34 percent), Germany (33 percent), and the Netherlands (13 percent). The imports of palm oil increased by five percent in the 2010/11 MY to 365,543 tons. Palm oil is mainly imported from Malaysia (54 percent) and Indonesia (44 percent). For the 2011/12 MY and 2012/13 MY sunflower oil imports is expected to increase to 120,000 tons and 130,000 tons, respectively, on the back of lower local production and a growth in demand. Soybean oil imports for the 2011/12 MY is expected to be on the same level as in the 2010/11 MY at about 270,000 tons. However, in the 2012/13 MY imports of soybean oil are expected to drop by almost 19 percent to 220,000 tons as more soybean oil will be produced locally. South Africa also exports oilseed oils to neighboring countries such as Zimbabwe and Mozambique. In the 2010/11 MY, South Africa exported 53,812 tons of sunflower seed oil and 53,635 ton of soybean oil. These exports is expected to continue at the same level in the 2011/12 MY and 2012/13 MY. Import Trade Matrix Country South Africa Commodity Sunflower oil Time Period CY Units: MT Imports for: U.S. 0 U.S. 8,506 Others Others Argentina 79,955 Ukraine 41,171 Russia 11,983 Argentina 35,295 Ukraine 8,487 Netherlands 4,990 Bolivia 2,323 Total for Others 107,739 76,466 Others not Listed 575 1,802 Grand Total 108,314 86,774

24 GAIN Report - SF9000 Page 19 of 20 Import Trade Matrix Country South Africa Commodity Soybean oil Time Period CY Units: MT Imports for: U.S. 0 U.S. 125 Others Others Argentina 82,711 Spain 93,447 Germany 88,326 Germany 89,927 Netherlands 57,299 Netherlands 36,838 Spain 29,526 Brazil 30,188 Brazil 15,312 Argentina 25,284 Total for Others 273, ,684 Others not Listed Grand Total 273, ,900 Import Trade Matrix Country South Africa Commodity Palm oil Time Period CY Units: MT Imports for: U.S. 0 U.S. 0 Others Others Malaysia 176,924 Malaysia 199,362 Indonesia 169,733 Indonesia 160,821 Argentina 2,593 India 4,020 Total for Others 349, ,203 Others not Listed 110 1,340 Grand Total 349, ,543

25 GAIN Report - SF9000 Page 20 of 20 Oil, Sunflower seed South Africa 2010/ / /2013 Market Year Begin: Apr 2011 Market Year Begin: Apr 2012 Market Year Begin: Apr 2013 USDA Official New Post USDA Official New Post USDA Official New Post Crush Extr. Rate, Beginning Stocks Production MY Imports MY Imp. from U.S MY Imp. from EU Total Supply MY Exports MY Exp. to EU Industrial Dom. Cons Food Use Dom. Cons Feed Waste Dom. Cons Total Dom. Cons Ending Stocks Total Distribution MT, PERCENT Oil, Soybean South Africa 2010/ / /2013 Market Year Begin: Jun 2011 Market Year Begin: Jun 2012 Market Year Begin: Jun 2013 USDA Official New Post USDA Official New Post USDA Official New Post Crush Extr. Rate, Beginning Stocks Production MY Imports MY Imp. from U.S MY Imp. from EU Total Supply MY Exports MY Exp. to EU Industrial Dom. Cons Food Use Dom. Cons Feed Waste Dom. Cons Total Dom. Cons Ending Stocks Total Distribution MT, PERCENT

26 Southern Africa Regional Soybean Roadmap

27 Executive summary (1/2) The soybean industry in the region does not satisfy demand, with insufficient production (due to marginal profitability and limited government support) and a processing sector that is backward integrated from the poultry industry or oil refiners Although soybean is an attractive crop that is well suited to the region and has significant regional demand, the region currently produces <1% of global soybean output and is a significant net importer of soybean products, importing 55% of its total demand Total regional demand is 2m MT, dominated by South Africa (65%) and production is currently 861k MT, again dominated by South Africa (68%) The market has grown rapidly over the last decade Production has grown by over 100%, driven by significant increases in the land planted with soybeans Demand has also doubled, driven by the rapid growth in the poultry market, though the human nutrition market is also important in Malawi and DRC Commercial production dominates in South Africa, Zambia, Zimbabwe and Angola, with smallholder production dominating in the other countries The soybean is currently a marginally profitable product for producers as average yields are low, both due to poor agronomic practices and a lack of inputs, especially among smallholder farmers Soybean competes with the staples (typically maize, which receives significant government support) across the region, leading to volatile production given the interaction between maize and soybean prices There is currently excess processing capacity in the region relative to current production, but it is insufficient compared to current demand; processors are typically integrated back from poultry / feed companies and oil refiners There is currently little government support for the soybean industry, while the policy against the use of GMOs and trade barriers hold the industry back, leading to limited regional trade Even in this context, most countries in the region can produce soybean at a cost that can compete with imported soybean from Latin America, and some countries could even export into South Africa and Zimbabwe (the main importers of cake in the region) The market is expected to grow rapidly over the next decade: Demand will more than double as the domestic poultry industry continues to grow rapidly However, production growth is unlikely to keep up with demand growth, so the region will remain a net importer of soybeans Zambia could become a significant net exporter of soybeans, particularly to South Africa and, in the short term, Zimbabwe.

28 The key challenges facing the industry are: poor agronomic practices the non-gmo policy uncertainty over land tenure poor input availability outside South Africa, Zambia and Zimbabwe poor transport links and high cost of transport poor application of research competition from palm oil Despite these challenges, we believe that the industry could produce m MT by 2020, meeting 40% of its 2020 demand; this would create over $200m of additional revenue p.a. for the industry and improve the lives of over 400k smallholders To achieve this goal and address the challenges, we recommend a three phase approach to developing the industry to Build the platform in years 1-3 Develop regional trade in years 4-5 Scale up the industry in years 6-10 During these phases, the industry must carry out activities to: Improve industry co-ordination Improve industry information Integrate the region, promoting trade Expand commercial production Expand smallholder production Improve the seeds used Use soy for human nutrition Expand the regional market In addition, the industry must work with other industries in the region to: Improve land tenure Promote the use of GMO seeds for soybeans (and other crops)

29 Contents Production & Productivity Demand Costs & competitiveness Forecast Challenges Recommendations

30 Background: TNS, Agland with BMGF support, have conducted a review of the soybean industry in 7 Southern African countries Project background and objectives Objective: To develop a Multi-Country Strategic Soybean Industry Roadmap, which will: o Outline current and potential production of both smallholder and commercial soybean o Detail options for surmounting challenges to a competitive, Southern Africa soybean industry o Lay the foundation for a regional soybean industry group that can help bolster, sustain and monitor growth in this industry Our approach: To develop this roadmap, we collected primary data, used existing research and worked with industry leaders and leading global experts in soybeans all along the value-chain.

31 Background: The steering committee of this work ensured that we had guidance from several leaders of the industry 8

32 Relevance to Africa: soybeans are both attractive to Africa and well suited to its agro-climatic conditions Advantages of soybeans A robust soybean sector will spur development of other sectors (livestock, particularly poultry) Soybean consumption by humans improves nutrition levels When rotated with maize, soybean improves maize yields by 10% - 20% by fixing nitrogen in the soil Soybean is a relatively simple and low cost crop to grow with a short growing season It is relatively easy to add value in-country by processing soybeans There is a rapidly growing existing market for soybeans in the region SSA and Latin America are similar in terms of the important agro-climactic characteristics for soybean production the same latitude similar evapo-transpiration rates (ET) similar solar radiation rates similar rainfall patterns (wet summers) and total annual precipitation volumes similar macro-climatic patterns driven by west coast - cold ocean water currents and east coast warm ocean currents Source: Agland analysis, TechnoServe analysis Soybean agro-climatic suitability map

33 World soybean production: global production has grown rapidly over the last decade, but SSA is still a marginal producer Soybean production, , m MT Global growth drivers Demand growing with Poultry & livestock consumption China, increasing incomes Global population growth Production growing with Improved genetics New land opening up Global soybean production SSA soybean production 60 SSA produces % of global 20 soybean output Source: FAO

34 Production & Productivity Production & Productivity Regional production Commercial & smallholder output Productivity & inputs

35 Regional soybean production: the region produced 861k MT in 2010, with South Africa making up 68% of production Soybean production in Southern Africa, 2010, k MT x Share of region, % South Africa Zambia Zimbabwe Malawi Mozambique 18 Angola 15 DRC If transport and other infrastructure challenges can be addressed, soybean production has a great future in southern Africa Commercial farmer, Zambia Total 861 Source: TechnoServe country analyses, NAMC country analyses

36 Change in production: production in South Africa and Zambia has grown rapidly, driven by increased land planted Change in production, , % South Africa 282 Change in land planted, , % 231 Total land planted, 2010, 000 ha 311 Zambia Zimbabwe Malawi Mozambique Angola n/a n/a 15 DRC n/a n/a 5 Significant yield improvement in Malawi driven by the government input subsidy programme which increased yields for most smallholder crops by a similar amount Source: TechnoServe country analyses, NAMC country analyses

37 Soybean production by farmer type: most of the large producers are dominated by commercial farmers Production by farmer type, 2009/2010, 000 MT Commercial share of production, 2009/2010, % South Africa Zambia Commercial 85 Smallholder* Zimbabwe Malawi Mozambique Angola DRC Source: TechnoServe country analyses, NAMC country analyses * Defined as farmers planting on less than 3hs in total

38 Soybean yields: yields are lower than Argentine yields, making soybean a marginally profitable crop in the region Soybean yields, 2010, MT / ha Commercial Smallholder South Africa Across the region, only the best commercial farmers with Zambia yields above 3.0 consistently make a profit from soybeans Zimbabwe The best route to consistent profitability for commercial producers is through irrigation Malawi (which can double yields, as done extensively in Zambia) Mozambique Soybean is profitable for smallholders on a cash cost Angola n/a n/a basis, but not when the value of their labor is included DRC n/a 0.8 Argentina average yield: 3.4 Most farmers expect to make good money on soy 1 year in 3. Commercial farmer, Zambia Source: USDA/FAS; International Trade Reports/Oilseeds, TechnoServe country analyses, NAMC country analyses

39 Production practices: farmers in the region typically balance the soybean and maize against each other Due to maize surpluses, maize prices have decreased despite international maize price increases, which makes soybean more attractive (and maize less attractive) As farmers reallocate land from maize to soybean through crop rotation, maize prices will rise as the surplus shrinks Increases in maize prices makes soybean less attractive (and maize more attractive) Farmers will then switch from soybean back to maize, which would repeat this cycle Farmers make rational economic decisions on their cropping mix based on: Crop prices & relative profitability Household food security Market access (transaction costs) Subsidies Agronomic knowledge Suitability of soil & water to crop Farmers in South Africa decide how much soy to plant based on soy and maize prices the year before. Commercial farmer, South Africa Source: Interviews, Agland analysis, TechnoServe analysis

40 Farm level decision making: smallholders choose to grow soybeans only when it is more attractive than other cash crops or to diversify their crops Pros and cons of soybean production for smallholders Advantages of soybeans Low cash input required Cash crop with ready market Carryover soil nitrogen Crop diversification Soybean input subsides (Malawi) Can be more profitable than alternative cash crops (e.g., cotton in Malawi) In countries with significant malnutrition, smallholders value the high protein content + Not easy to steal Disadvantages of soybeans Yield and income variable by annual rainfall and geography Soybeans are not typically consumed by smallholders Subsidies (production packages) for other crops Transaction cost may be high if the market is distant from producers Can be less profitable then alternative - cash crops (e.g., tobacco in Zimbabwe) Need for inoculant Requires processing On balance soybean is viewed as a rational choice to include in a smallholder s crop mix as witnessed by 200,000+ small farmers in the region that produce the crop annually. Source: Interviews, Agland analysis, TechnoServe analysis

41 Agricultural practices: Production practices are only good among commercial farmers in South Africa, Zambia and Zimbabwe Country Commercial Smallholder South Africa The best are world class Limited data - v. small number of producers Zambia Well-developed Rudimentary Low priority crop compared to maize Zimbabwe Excellent Mostly inexperienced - poor practices Malawi n/a Few inputs used, but low-cost producers Mozambique Very few producers Limited production; few inputs used - exception of Current producers are poor improved seed (50%) Angola n/a n/a DRC n/a Extremely small volumes produced - limited inputs used Variable, but generally poor practices What do smallholders do wrong? Everything. Extension officer, Zambia Source: TechnoServe country analyses, NAMC country analyses

42 Utilization of soybean farm inputs: while inputs are widely available, they are only well used in South Africa and Zambia Bad Good South Africa Zambia Zimbabwe Malawi Mozambique Angola DRC Importance of market Market characteristics All inputs widely available and used Inputs generally available, but expensive as most are imported Commercial farmers use inputs, smallholders do not Inputs widely available but not widely used, due in part to a lack of credit Poor availability of inputs Even when available, inputs rarely used Poor availability and high cost of inputs Even when available, inputs rarely used Inputs imported from Brazil Commercial farmers use inputs, smallholders do not Poor availability and high cost of inputs Even when available, inputs rarely used I don t use any inputs except seeds this makes soy a cheap crop for me. Smallholder, Mozambique Source: TechnoServe country analyses, NAMC country analyses 19

43 BACKUP Utilization of soybean farm Inputs (1/2): while inputs are widely available, they are only well used in South Africa and Zambia Country Seed Agri-Chemicals Irrigation Inoculant Mechanisation South Africa Widely available from Int l seed firms supply & GMO s and widely used Widely available & widely used 50% of soybeans are irrigated Widely available and widely used Widely available & widely used Zambia Regional seed firms / non-gm Most small farmers save seed & most large farmers buy seed Available & used by large farms, in rural area agri-chemicals available in economic centres Larger growers 65% irrigated, small farms rarely use irrigation Widely used by large farmers, availability to small farmers limited usually provided via outgrower programs Usually limited to large growers, limited number of tractors available for hire in rural area Zimbabwe Most small farmers save seed & most large farmers buy seed Regional seed firms / non-gm Generally available in towns & rural economic centres Used by some large farms, less so by small farmers Some larger growers only; irrigation infrastructure vandalized, little investment in R&M Small farms rarely use/have irrigation Widely available in towns and rural centres, used by some larger farmers, less so by small farmers Usually limited to large growers Small farmers can custom hire equipment but at high relative cost Malawi Available via local firms, NGO s & MOA (subsidised) All seeds non-gm High cost Available but high cost Gov Farmer Input Supple Program (FISP) provides 95% of certified seed Very limited, 99% rainfed Generally not available or used Use limited to <7% of farmers Demand low High quality inoculant not available Very limited, use by <2% of farms Very limited number of tractors for hire Source: TechnoServe country analyses, NAMC country analyses 20

44 BACKUP Utilization of soybean farm Inputs (2/2): inputs are not generally available in DRC and Mozambique Country Seed Agri-Chemicals Irrigation Inoculant Mechanisation Mozambique Regional seed firms sell non-gm 50% of farmers use improved seed Very limited, availability 1% of farms use fertilizer & herbicides Very limited, 1 % of farmers use irrigation. High development potential Only use by2% of farms (in seed multp.) Very limited; 2% of farms use animal tractions. Tractors for hire very limited & high cost Angola Imported from Brazil / non-gm Imported from Brazil, not widely used by small holder Very limited availability and knowledge generally not used General not available or used Usually limited to large growers DRC Very limited availability of improved seed Very limited use Not usually available High cost, limited use Very limited, generally not used due to high rainfall in growing area and high cost Generally not available not used Generally not available not used Source: TechnoServe country analyses, NAMC country analyses 21

45 Demand Demand Current demand by country Processing capacity Capacity utilization

46 There are three main ways that soybeans can be used in Southern Africa Processed for full fat cake + Processed for human solid consumption + Processed into cake or oil The bean is crushed to produce a cake that retains all of the oil Typically used for finisher feed or to mix with low fat cake to produce a more balanced meal 1 MT of bean produces ~1MT of full fat cake Thus, demand for 1MT of full fat cake is equivalent to 1 MT of soybeans The bean is processed to produce soy chunks or other food Also includes processing for soy milk Assume that all of the beans are used up (there is some waste, but not a significant amount) Thus, demand for 1MT of human solid consumption is equivalent to 1 MT of soybeans The bean is processed (using solvent or mechanical extraction) to extract the oil and produce low fat cake in either soybean only or dual extraction plants (which can process either soybean or sunflower) 1MT of beans typically produces ~0.18 MT of oil and 0.8 MT of cake Thus, demand for 1MT of soybean oil is equivalent to 5.56 MT of soybeans and demand for 1 MT of soybean cake is equivalent to 1.25 MT of soybeans It is not possible to produce one without the other, forcing processors to be able to find a market for both products Source: Interviews, Agland analysis, TechnoServe analysis 23

47 Demand for cake & oil: South Africa dominates the region and oil demand generally exceeds cake demand Demand for cake & oil in soybean equivalent, 2010, k MT Demand from soybean cake Demand from soybean oil South Africa Zambia Zimbabwe 1, , Malawi Mozambique Angola n/a n/a DRC Total 20 1, ,099 Throughout this discussion, soybean cake and soybean oil demand are converted into soybean equivalent, calculated by assuming that, when processed, soybean yield 80% cake and 18% oil As processors must be able to sell both the cake and oil produced, we have assumed that the market is limited at the lower of the cake and oil demand in each country Source: TechnoServe country analyses, NAMC country analyses 24

48 Disaggregated demand cake: the poultry feed industry is the main consumer of soybean cake across the region Demand* for soybeans for cake**, 2009/10, k MT 1, , ,950 Poultry Pork Dairy Aquaculture Other feed Total feed Human Other Total The poultry market has grown exponentially in Zambia, more than doubled in 10 years we expect it to grow 25% next year. Poultry association, Zambia Source: TechnoServe country analyses, NAMC country analyses * Excludes Angola ** Calculated by taking total demand for cooking oil (soybean, palm, sunflower) and dividing by solvent oil extraction rate of 18% 25

49 Competing products: palm oil is a significant competitor for soybean oil, but soybean cake has no competitive substitute Main competitor Strength of competition Soybean Cake Cotton cake Sunflower cake Weak limited use for poultry & pigs Weak lower protein, higher fibre Soybean Oil Palm oil Strong palm oil is 10%-20% cheaper and market is generally price sensitive Sunflower oil Strong (South Africa) sunflower oil is preferred oil in South African market due to taste & health Palm oil will play an increasingly important competitive role in the region in the future Trader, Zambia Source: Interviews, Agland analysis, TechnoServe analysis 26

50 Change in demand: the market has grown rapidly over the last 5 years, driven by the poultry market Growth in demand, , CAGR % Demand characteristics Soybean Poultry As average incomes and populations rise: Demand for animal protein rises, leading to a growing market for chicken (the cheapest animal protein) and, in some cases, fish Demand for cooking oils rise In time, consumers will move away from cheap oils and purchase based on taste and health South Africa Zambia Zimbabwe Malawi Mozambique Angola DRC n/a n/a n/a Cake demand driven by poultry industry Vegetable oil market dominated by sunflower oil; soybean oil demand fell by 50% in 2008 due to rise in soybean prices Cake demand driven by poultry industry Soybean oil is main source of vegetable oil; palm oil is a close second Cake demand driven by poultry industry, though aquaculture and pork are also growing rapidly Soybean oil makes up 50% of the vegetable oil market Cake demand driven by poultry industry and market for human consumptions (Corn Soy Blend and soybean pieces) Soybean oil has 70% of oil market; palm oil 25% Cake demand driven by poultry industry Soybean oil demand is significant and almost all imported Cake demand is very low as most poultry is imported Soybean oil is all imported Cake demand is dominated by poultry producers Vegetable oil market dominated by palm oil Source: TechnoServe country analyses, NAMC country analyses 27

51 Human nutrition: the demand for soybean for human nutrition is important in Malawi and the DRC Low High South Africa Zambia Zimbabwe Malawi Mozambique Importance of market Market characteristics Demand for soy chunks is small but increasing Cultural challenges in increasing soybean consumption among smallholders Demand for soy chunks is small but increasing Cultural challenges in increasing soybean consumption among smallholders Demand for soy chunks is small but increasing Previously a significant destination for Corn Soy Blend, but this has tarnished soy s reputation as an aid food Significant consumer and regional exporter of Corn Soy Blend Long established market for likuni phala Soy chunks markets is large and growing rapidly (100% growth p.a.) Cultural challenges in increasing soybean consumption among smallholders Angola DRC Low demand as other crops are easy to grow and there are cultural challenges in increasing soybean consumption among smallholders Significant use of soybean to fight malnutrition, led by a variety of NGOs Regional Source: TechnoServe country analyses, NAMC country analyses Long standing Corn Soy Blend market dominated by World Food Programme 28

52 Capacity utilisation: utilisation is low across the region, and more new capacity is coming on line Design capacity 2010, k MT Actual throughput 2010, k MT Capacity utilisation 2010, % South Africa* 1, Zambia Zimbabwe* Malawi Mozambique n/a n/a n/a Angola n/a n/a n/a DRC n/a n/a n/a 1,648k MT of new capacity is being added as processors seek to capitalise on industry growth 1,333k MT in South Africa 30k MT in Zambia 100k MT in Zimbabwe 185k MT in Malawi Source: TechnoServe country analyses, NAMC country analyses * Includes all dual processing capacity 29

53 Processing capacity versus demand: processors in the region are typically backward integrated from feed / poultry or oil refiners Processing capacity versus demand in Southern Africa, 2010, k MT Industry characteristics Design capacity Demand for cake Demand for oil South Africa 1,500 1,622 1,321 Backward integrated from oil refiners Competes with sunflower oil for refining capacity Zambia Zimbabwe Malawi Mozambique n/a Typically backward integrated from poultry / feed companies Capacity increasing as cake quality from largest processor is variable Backward integrated from oil refiners or poultry / feed companies 15% utilisation due to collapse of production New capacity coming on-line as processors seek to drive down costs Backward integrated from oil refiners or poultry / feed companies New capacity coming on line as processors seek to satisfy domestic oil market Backward integrated from oil refiners or poultry / feed companies Industry is immature Angola n/a Nascent industry DRC n/a Nascent industry Source: TechnoServe country analyses, NAMC country analyses 30

54 Cost & Competitiveness Costs & Competitiveness Operating environment Unit costs Competitiveness Trade flows

55 Policy environment: there is little government support for the industry in the region Bad Good Country GMO Land Trade Direct government involvement South Africa Zambia Zimbabwe Land reforms are underway, but slowly Mixed / unclear land tenure Regular administrative bans on exports Govt involvement in competing crops Government subsidises and guarantees maize market GMB maize prices distort market Malawi Some soy seeds distributed Mozambique Angola DRC Welcomes commercial investors Government supporting smallholders Government considering import tariffs The introduction of five genes in Africa (Bt for caterpillars, Bt/CpTi for beetles, Snowdrop gene for aphids & sapsuckers, Roundup Ready, and nematode resistance) would increase agricultural production on the continent by percent. Plant scientist, Zimbabwe 32 Source: TechnoServe country analyses, NAMC country analyses, Agland analysis

56 Operating environment: finance is generally difficult to get / afford and transport links are poor Bad Good Credit / finance Transport & storage South Africa Zambia Zimbabwe Malawi Mozambique Angola DRC Regional Credit and finance available to commercial farmers Credit and finance is available to commercial farmers, but is expensive Significant lack of liquidity in the country in general All smallholder production with little access to finance All smallholder production with little access to finance Difficult to access finance, though New Agricultural Bank should help All smallholder production with little access to finance Transport links are good Adequate storage Transport costs are high and secondary road quality is poor Storage facilities are improving Transport links are good Adequate storage Roads are reasonable but prone to flooding Shire-Zambezi waterway could improve access to ports Storage is adequate Transport is poor Production is far from demand Inadequate storage Transport is poor but improving with investment in rail and ports Inadequate storage Transport is poor but improving Inadequate storage Border delays hamper regional trade The region is generally competitive on soybean production costs, but poor infrastructure and high transport costs constrain competitiveness globally; must be able to get it out for $30-40/mt, not $100. Trader, Zambia Source: TechnoServe country analyses, NAMC country analyses, Agland analysis 33

57 Soybean delivered cost: domestic soybeans are competitive against imported soybeans in all countries Cost of soybean delivered to local processor, December 2010, USD / MT Soybeans at farm / port Ocean transport & port Land transport Tariff Local origin beans* South Africa Zambia Argentina beans** Zimbabwe Malawi Mozambique Source : USDA/FAS; International Trade Reports/Oilseeds.TechnoServe country analyses, NAMC country analyses * Costs Include: soybeans & transport ** Costs Include: soybeans, duty & transport 34

58 Soybean delivered costs: on a pure cost basis, trade within the region is competitive against Argentine beans Cost of soybean delivered to Reef and Harare, December 2010, USD / MT CIF delivered Reef Soybeans at farm Land transport Ocean transport & port Tariff CIF delivered Harare South Africa Zambia Zimbabwe Malawi Mozambique Argentine bean: 575 Argentine bean: 649 While regional beans are price competitive vs. Argentina, Argentine beans are competitive because They are a more reliable source There are lower aggregation costs Source: USDA/FAS; International Trade Reports/Oilseeds,TechnoServe country analyses, NAMC country analyses * Defined as cost of imported soybeans to main market less cost of transport from main domestic production area to main market 35

59 Regional trade: The region is a significant net importer of processed soybean products Imports and exports as share of domestic demand, 2010, % Exports Imports Cake Oil Beans Cake Oil Beans South Africa* Zambia Zimbabwe* Malawi Mozambique Angola DRC When I want soy cake from Argentine, I pick up the phone and 6 weeks later it is here no problem. Processor, South Africa Source: TechnoServe country analyses, NAMC country analyses 36

60 Forecast Forecast Forecast demand and drivers Production estimates Yield improvements

61 Demand forecast: Demand is expected to more than double in the next decade Projected demand* 2020, k MT Change in demand, , % Current demand, 2010, k MT South Africa 2, ,321 Zambia Zimbabwe Malawi Mozambique Angola DRC ,666 Total 3,554 The market for soy oil in all countries except South Africa and Zimbabwe is already so large that, even without growth, it can already absorb all of the additional oil that would be produced to meet projected cake demand Source: TechnoServe country analyses, NAMC country analyses * Growth projections based on a triangulation between the perspectives of experts in the soybean industry and in industries that use soybean, growth projections for the main users of soybeans, historic growth, and projected GDP and population growth 38

62 Demand drivers: the poultry market is expected to continue to be the main driver of soybean in the next decade Share of future soybean demand due to poultry growth, , % Poultry Other South Africa Zambia Poultry will continue to be the key growth driver for soybean cake demand Zimbabwe Palm oil will become an Malawi increasingly important competitor to soybean oil in the second half of the decade Human nutrition market will be Mozambique an important source of growth in Malawi and DRC Angola n/a DRC n/a Source: TechnoServe country analyses, NAMC country analyses 39

63 Projected trade balance: without significant action, the region is likely to remain in deficit for the next decade Projected demand vs. current and projected* production, k MT Assumptions South Africa Zambia ,720 Yield change, % p.a. Additional area, % Zimbabwe Malawi Mozambique Angola demand DRC production production Source: TechnoServe country analyses, NAMC country analyses, Agland analysis * Based on no significant intervention in the soybean industry 40

64 Resource base: the region would have to increase the area planted with soybean by 237% to be self sufficient by 2020 Land needed for Required increase in soybean self sufficiency* land planted 2020, 000 HA , % Comments South Africa 1, Requires a shift of land from maize Zambia Requires improved infrastructure and clearer land tenure to open up new land Zimbabwe Malawi Mozambique Requires clearer land tenure and credit to open up new land Requires a shift to maize / soybean rotation among smallholders Requires a continued expansion of soybean programmes Angola Requires an improvement in market linkages DRC Requires a continued expansion of soybean programmes An aggregate increase of 237% is needed across the region Source: TechnoServe country analyses, NAMC country analyses, Agland analysis * Assumes yield improvements detailed on previous page 41

65 Yield improvements: there are a number of methods that farmers can use to increase yields in the region Method Improvements to seed genetics Impact on yield Step change: 15 20% Ongoing: 1% p.a. Irrigation 20% - 100% Plant population and row spacing 5% - 10% Inoculant use and effective nodulation 10% - 20% Soil fertility (especially lime and P) 10% - 25% Weed control 10% - 25% Pest control (insects and disease) 10% - 50% Source: Agland analysis 42

66 Trade flow: The region will remain a net importer of soybeans as they continue to build local production capacity 2010 Soybean trade surplus & deficit, k MT 2020 Soybean projected trade surplus & deficit, k MT Imports into region DRC DRC Malawi - 41 Malawi Angola Angola - 85 Zambia - 56 Zambia -3 +2, Zimbabwe Mozambique +2, Zimbabwe Mozambique South - 2,129 Africa ,879 South Africa 43 Source: TechnoServe country analyses, NAMC country analyses, Agland analysis

67 Challenges Challenges Soybean specific challenges General challenges

68 Challenges: the region faces a number of challenges specific to soy that the industry should address Challenge Impact Countries affected Poor agronomic practices Poor input quality and prices Poor application of research Lack of free trade in soybean products Lack of unused land Inconsistent cake protein content Poor agronomic practices, particularly among smallholders, mean that yields are 25% lower than they could be, reducing total production and farmer profitability Farmers (particularly smallholders) choose not to use inputs, leading to lower yields (by up to 25%) and higher costs While there is considerable research on how to increase soybean yields, poor links to producers mean that much of it is not applied, reducing yields Inconsistent trade policy and a lack of free trade limits regional production and keeps prices high A lack of unused suitable means that future production increases will require a reduction in land used to produce competing crops (usually maize) Variations in the protein content of domestically processed cake makes it less attractive than Argentine cake Angola, DRC, Malawi, Mozambique, Zimbabwe Zambia (smallholder only) Malawi, Mozambique, DRC All except South Africa All, particularly Zambia South Africa, Malawi South Africa Lack of credit Credit not available to small holders All, except South Africa 45 Source: TechnoServe country analyses, NAMC country analyses, Agland analysis

69 Challenges: in addition, the region faces wider challenges which can only be addressed in partnership with others Challenge Impact Countries affected Unclear land tenure Poor transport infrastructure Unclear land tenure discourages commercial production and reduces financing available This is particularly true in Zimbabwe where the land resolution process has not been completed Poor transport and border delays make it difficult to get the product to market and reduces the competitiveness of soy produced in the region, hampering trade Angola, DRC, Malawi, Mozambique, Zambia, Zimbabwe In-country: Zambia, Mozambique, DRC Cross-border: all Difficult business The business and policy environment is generally Angola, DRC environment difficult, increasing the cost and risk of operating in country Non-GMO policy Government involvement in competing crops Low national priority of soybeans The use of non-gmo seeds reduced yields (by up to 20%) and increases production costs Government support for politically charges competing crops (e.g., through input subsidies and guaranteed price and purchase programmes) distort the market against soybean production Soybean is a low priority crop (given its low production volumes, low price and cultural barriers to consuming it), making it hard to effect policy change in its favour All except South Africa Zambia, Malawi, Zimbabwe All 46 Source: TechnoServe country analyses, NAMC country analyses, Agland analysis

70 Challenges: poor agricultural practices are the biggest challenge that the industry can address directly Country Agricultural practices Processing Market BACKUP South Africa Zambia Malawi Zimbabwe Mozambique Low use of yield-enhancing cultivars Lack of land allocated to soybeans High input and fixed costs Lack of irrigation [c] Input accessibility [sh] Poor agronomics [sh] Skill transfer needed to small and new farmers Old equipment needs repair and replacement Unreliable electricity for irrigation Poor agronomics Land constraints Poor seed quality, availability, and price Poor inoculant and fertilizer availability Small land holdings Poor input availability (seed/inoculants) Lack of mechanization Poor agronomic practices Low utilization of processing capacity Inconsistent protein content of processed cake Low utilization impacting profitability and jobs Risk of future over-capacity and bean shortage Angola Poor agronomic practices Few skills to develop the soybean processing industry DRC Regional Poor availability and high cost of all inputs Inadequate seed conservation Poor agronomic practices Poor links between research and producers Lack of quality at small scale processing Low acceptance of soybeans for human consumption Lack of accessible market [sh] Volatile domestic demand Lack of cake constraining livestock production Lack of farmer marketing power and information High trade costs Demand is far from production Lack of cohesion, particular the oil market Lack of market linkages Lack of domestic market High distance between markets and producing areas Competition from other foods Small and informal domestic market Little information on international markets Competition from palm oil 47 Source: TechnoServe country analyses, NAMC country analyses, Agland analysis

71 BACKUP Challenges: governments must address the lack of true free trade in soybean products and the non-gmo policy Policy Credit / finance Transport & storage South Africa Land reforms could displace some current soybean farmers Zambia Zimbabwe Inconsistent trade policy Duty free palm oil imports Non-GMO policy Lack of land tenure linked to unresolved land resolution process Non-GMO policy High cost and low availability of financing Lack of liquidity leading to severe financing constraints Malawi FISP s narrow focus on crop Financing cost and availability diversification Non-GMO policy High transport costs Mozambique Non-GMO policy Limited transport infrastructure Inadequate storage facilities Geography that leads to high transportation costs Angola DRC Unstable policy environment Difficult business environment Non-GMO policy Difficult business Non-GMO policy environment Poor rural transport Poor rural transport Regional Lack of free trade limits regional export opportunities Lack of seed harmonisation Source: TechnoServe country analyses, NAMC country analyses, Agland analysis Border delays 48

72 Vision & impact Vision & Impact Vision Economic activity Smallholder

73 Vision: we believe the industry could produce m MT profitably by 2020, driven by commercial producers while supporting 400k smallholders The industry today Total production of <850k MT across the region with almost no regional trade Little commercial production outside South Africa, Zambia and Zimbabwe 200,000 smallholders producing soy, but with little expertise and skills Yields as low as 80% below international standards for smallholders and 50% below for commercial producers Marginally profitable crop for commercial producers and profitable only on a cash cost basis for smallholders Low utilisation of processing capacity Source: TechnoServe country analyses, Agland analysis Our vision for the industry Total production of m MT across the region with increased regional trade Commercial production well established in all countries in the region, driving the growth of the industry 400,000 smallholders producing soy, with good skills and market access, with support from the private sector Yields within 50% of best international standards for smallholders and within 25% of best international standards for commercial producers Consistently profitable crop for commercial producers and smallholders Processing capacity utilisation significantly improved 50

74 Economic impact: the growth of the soybean industry could create $ 217m p.a. increased income for the region by 2020 Additional income from growth of soybean industry, 2020, m USD p.a. Producers South Africa 96 Processor 10.0 Zambia Zimbabwe Malawi Mozambique Angola DRC Total Source: TechnoServe country analyses, Agland analysis 51

75 Smallholder impact: this could improve the lives of over 400k smallholders by between $30 and $600 p.a. Current smallholders growing soybeans New smallholders growing soybeans Number, k in 2010 Increased gross income*, 2020, USD Number, k in 2020 Increased gross income*, 2020, USD South Africa n/a Impact on South Africa not estimated due to uncertainty n/a over timing of land reform process Zambia Zimbabwe Malawi Mozambique Angola n/a n/a DRC Total Source: TechnoServe country analyses, Agland analysis * Allows for the cash and labor costs incurred by smallholders, a 10% increase in maize yield when soybean is rotated with maize but excludes the opportunity cost of profits from alternative costs and the benefits of crop diversification 52

76 Recommendations Recommendations Steps to industry growth

77 Developing an industry that profitably produces m MT of soy by 2020 Fragmented, marginally profitable industry with little regional trade Phase 3: Scale up production Regional free trade zone for soy established Seed harmonisation completed Seeds developed through science based technology permitted and land tenure improved Phase 2: Develop regional trade Improve land tenure regulations, free trade & harmonisation of seed regulation Commercial production expanded through increased external investment Phase 1: Build the platform Regional Soybean Alliance created Smallholder yields and market links improved Market information improved Profitable industry producing and processing at least 1.2 to 1.4 m MT p.a. meeting 35% to 40% demand in the region Source: TechnoServe country analyses, Agland analysis 54

78 National Associations & Regional Alliance Regional Alliance National Associations\ Mission Catalyze the sustainable growth of a globally competitive soy industry in Africa Scope Sub-Sahara African with a focus on supporting countries with the highest production potential Country specific Members National associations Stakeholders with a regional agenda Local public and private sector stakeholders from across the value chain Functions Advocate for regulatory and policy change at a regional level Promote soy production and consumption across the region Support establishment of high performing national soy associations in all member countries Facilitate linkages between member countries (e.g. organise an annual conference, collate member directory) Liaise with international soy related institutions Provide services to members (e.g. Market information services) Advocate for regulatory and policy change at a national level Promote national soy production and consumption Address specific barriers to industry growth across the value chain (e.g., through working groups) Represent members interests at SASA Provide services to members (e.g., Training) Source: TechnoServe country analyses, Agland analysis 56

79 Interventions for Soybean farmers and supply chain and their impact Private company: field department example activities Soil testing & soil fertility management training Irrigation training & irrigation development advising Inoculants use Weed control / management Insect & pathogen management Improved genetics Optimize plant populations Farm business training record keeping Link small farmers to soybean supply chain & develop price risk mitigation mechanism Foster new entrants to soybean farming Impact Reduced risk & higher yields Reduced risk & higher yields Higher yields & income Higher yields & income Reduced risk & higher yields Reduced risk & higher yields Higher yields & incomes Business skill development Reduced transaction costs Increased area planted 58

80 Science based technologies Target Genes: - BT & CpTi worms - RR reduced labor - Snowdrop aphides / suckers - Improved digestibility Activities: - Demo s & trials - Policy maker education - Regional policy harmonization Looper damage in Zambian soybean field, February 2011 Source: Agland analysis The regional ban on GMO s has relegated farmers to using antiquated genetics, and they will become less and less competitive over time. Seed company, South Africa 59

81 K L M NO M P M QR S T R U V S M W P M O NX Y Z X L M K M P L S Y [ M O \ M ] M N Y O X^ X L M Z _` O M N Y O X P V S a M Z Y _ S Q V X L X X N^ b b c c c d X M P L S Y U M O \ M d Y O T b O M U Y _ O P M e `R a O V O f

82 5 DO S FOR RAISING PROJECT FINANCE Posted on: September 25, 2012 Author: Michael Martin DO prepare a Business Plan. Have it written, or at least checked, by a professional. It is easy to overlook key items, or include basic mistakes, that your banker will catch at first reading. Be conservative in your financial projections ( don t count your chickens before they hatch ). DO know and map your Value Chain. Understand the critical points in the supply chain upstream from your business. Make sure you understand who your competitors are, and how much threat they may pose to your success. Downstream, prepare your customer base, understand what they need and when and at what price. Then draw a SWOT (Strengths, Weaknesses, Opportunities and Threats) diagram to visualize where the risks and opportunities are situated. DO explain to your banker/funding source how your process works. Remember, financiers study finance, or accounting or economics, so don t expect them to understand fish or chicken feed manufacturing or protein-starch digestibility in young children. Take the time to explain what equipment you want to buy, from whom, and how it works. Your banker may learn that you are not planning to buy the cheapest equipment on the market, and he has the right to ask why. If necessary, ask your equipment supplier to provide literature, or even have him come and explain to your banker face-to-face. DO remember that few investors are willing to risk their money on a start-up. Your banker has many options where to place his spare cash. He can buy government bonds yielding

83 respectable interest with no risk, and go home after lunch. Why should he put money into a new company that has no track record, and risk his reputation if the project goes sour? If you are a start-up, make sure the management team is experienced and knowledgeable and explain this to your banker. Or start small, at entry-level capacity, begin generating profits and next year return to your bank for a loan to expand capacity. DO knock on every possible Dollar Door. A dollar door is an institution that may lend or even give you money. Here s a quick list: Commercial Banks: find out which banks are lending to similar businesses in your sector, this will improve your chances of finding a bank that understands your business. Private Equity Funds: today, every investment house must have an emerging Africa fund; many claim they will invest in agribusiness and enhance food security for millions In most cases, these guys only want to lend money to established companies, preferably the Africa branch of a multinational, with guarantee from mother hen. Minimum investment is usually $1 million, sometimes $5 million. Start-ups: don t even call us please. These funds will be looking at the strength of your management team and well as your balance sheet. Human chemistry is as important to financial returns you will be taking a marriage partner, not a loan. Development Funds: NGOs, foreign governments, multilateral funding agencies like African Development Bank or IFC, all have money to lend, sometimes in the form of a grant. Many want to invest in projects that bring social, as well as financial, returns. Easy to show when you are buying crops from local farmers and selling food to local consumers. Family: in today s globalized world, most of us have family members living in faraway lands. These family members often want to invest back home in ways that will benefit immediate family, or provide jobs for children and grandchildren. Above all, you will need stamina and optimism. Raising finance for SME agri-processing is a marathon, not a 100 meter sprint.

84 Zambia: Soya Takes Over Maize Production ZAMBIAN commercial farmers have this farming season reduced their concentration on the staple crop, maize and are expected to harvest just 63, 000 tonnes, indicating a reduction of more than 80 per cent from what they harvested last year. According to information from the Zambia National Farmers Union (ZNFU) grain commodity committee, most commercial farmers decided against planting maize in preference to the more rewarding soya beans, a situation which could threaten Zambia's farming season. Statistics released in the ZNFU magazine, The Zambian Farmer, commercial farmers who in the last farming season contributed more then 350, 000 tonnes to the third straight maize bumper harvest, scaled down production to just 63, 500 tonnes. "Commercial farmers have reduced the area of maize cultivation drastically and this indicates that output of the crop could reduce by as much as 80 per cent. "While there was over 350, 000 tonnes last farming season, this farming season could yield as low as 63, 500 tonnes," the ZNFU report says. With farmers preferring soya beans to maize, this has led to Zambia harvesting a record 160, 000 tonnes of soya beans this year, which would take care of the shortfall of stockfeed which hits the country at the end of every year. Commercial farmers' area of maize planting reduced to almost 8, 300 hectares for both rain-fed and irrigated maize from almost 1.3 million hectares from the last farming season, which had a record harvest of 3.2 million tonnes, about 60 per cent more than the national consumption. Commercial farmers compose up to 30 per cent of the farming community in the country. ZNFU first vice-president, Dave Gordon said one key reason attributed to the change of crop preference has been the huge slump in maize prices over the last two farming seasons. The price from the last farming season, pegged at US$270 per tonne, reduced by almost $100 in this farming season. The decision to shift from maize to soya beans has also helped because apart from being more rewarding, cash for soya beans is readily available, some of it even at the planting stage, while payments for maize are usually delayed. "Farmers were buoyed by prices with maize fetching $270 per tonne but reduced to $180 per tonne and is now being sold at some $140 per tonne to local millers as the market has been awash with the commodity," the committee report said. Mr Gordon said the farmers' change of heart for soya beans and cotton has been triggered by delays by the Food Reserve Agency to pay the farmers and that commercial, emerging and small-scale farmers would always switch to crops fetching higher prices.

85 "With maize now going to as low as $140 per tonne, soya beans is now fetching about $615 per tonne from $560 per tonne from last year's farming season, even more than wheat," he said.

86 TIME TO PLANT SOYBEANS Posted on: June 27, 2012 Author:Michael Martin Don t be lulled by the falling Food Price Index. FAO, the UN s Food and Agriculture Organization, announced early May that its Food Price Index which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, fell to 214 points in April from 217 in March. Don t be lulled because soybeans, the vital and strategic food and feed ingredient, are on the way up again. Already at their highest level since July 2008, soybean prices are forecast to continue rising, due to tight supplies following smaller-than-expected crops in the U.S. and South America. World soybean production is expected to drop almost 10% to 240 million tonnes in this 2011/2012 marketing year, one of the sharpest declines on record. Demand for soybeans has increased at almost four times the pace of population growth in the past decade. About 66% of all soybeans grown are used in livestock and poultry feed About 16% becomes vegetable oil for cooking or biofuel Around 18% is processed directly into food, without morphing into meat, milk and eggs first. China has a voracious appetite for soybeans, buying one in every five soybeans grown on the planet. Of the 252 million tonnes of soybeans grown last year, China purchased 53 million tonnes. All this is good news for farmers in Southern Africa who are now finishing their soybean harvest. In Zambia, a record soybean harvest up 74% from last year to around 200,000 tonnes coming on top of a third successive year of abundant maize harvests, is changing people s lives for the better. Poultry farmers, small and large, are increasing production, and earning a good living in the process. Supermarket chicken costs $2.85/kg, an egg costs $0.14, although market prices are lower. Zambian soybeans non-gm fetch $530-$550/tonne, more or less at parity with Chicago. Next door in South Africa, where over 720,000 tonnes of soybeans are being harvested, prices are around $510/tonne. Africa has a chronic shortage of soybeans and soybean-derived products protein meal, oil, flour, soy meat, soy milk. African production is probably around 1.5 million tonnes, edging closer to 2 million tonnes, but that s not even 1% of the world s needs. Soybeans are no less than this planet s best source of protein. Soyflour has twice the protein of lean meat. Cost-efficient production of poultry, eggs, and fish is unthinkable without soybean. But equally important is the fact that the humble soybean is the starting point of a long and complex value chain. This chain adds value and provides employment and economic development for tens of thousands of people along the chain, even before putting nutritious food on family tables. It s time for Africa to get serious about growing soybeans.