Grain Production in Africa: Opportunities and Challenges

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1 Grain Production in Africa: Opportunities and Challenges BAYER Corn & Soybean Future Forum John Purchase 30 October 2014

2 For today.. Setting the scene Production and yield Trade trends Challenges and opportunities Conclusion

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4 FAO Food Price Index Source: FAO, Oct 2014

5 Food Security Imperative Many definitions to food security, but the one we will use is the FAO definition (World Food Summit 1996): A situation that exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.

6 Components of Food Security FOOD UTILISATION Nutritional Value Social value Food safety FOOD ACCESS Affordability Allocation Preference Purchasing power key to access Food Security FOOD AVAILABILITY Production Distribution Exchange/trade Stability over TIME Complex concept: Difficult to measure and evaluate.

7 Global Food Security Index Score 0-100, 100=best environment Best performance Good performance Moderate performance Needs improvement Source: Economist Intelligence Unit/Du Pont

8 Demographics..

9 Economy & value chain development.. Ghana Tanzania South Africa South Africa

10 Resources: Land & Water Land and water resources and the way they are used are central to the challenge of improving food security across the world. Demographic pressures, climate change, and the increased competition for land and water are likely to increase vulnerability to food insecurity, especially in Africa and Asia. The challenge of providing sufficient food for everyone worldwide has never been greater.

11 Dominant Land Cover and Use

12 Current and potential arable land in developing countries, 1997/1999 and 2030 Region Total land suitable Arable land in use (million ha) Land in use as % of potential Balance (million ha) (million ha) 1997/ / / Developing countries Sub-Saharan Africa Near East/North Africa East Asia South Asia Latin America Source: Prof N. Vink, 2010

13 Current and potential irrigated land in developing countries, 1997/1999 and 2030 Region Total land suitable for irrigation (million ha) Irrigated land in use (million ha) Irrigated land in use as % of potential Balance 1) (million ha) 1997/ / / Developing countries Sub-Saharan Africa Near East/North Africa East Asia South Asia Latin America Source: Prof N. Vink, 2010

14 Employment..

15 Innovation: R&D spend.

16 Production and yield..

17 Coarse grain producing countries

18 Oil crop producing countries

19 Yield (Kg/ha) 2500 Mean Maize and Soybean yields for Africa (Kg/ha) Maize Yield 500 Soya Yield Year

20 Total Production (Million tonnes) Basic facts on maize production and trade in Africa - Africa accounts for about 7% (72 m tonnes) of global maize production (1016m tonnes) - Maize yields in Africa (2.0 tonnes/ha) account for about 36% of global maize yields (5.5 tonnes/ha) - Maize production in Africa (4.5% pa) increasing slower than global production (5.1% pa) - Africa is a net importer of maize at an average of 14.3 million tonnes imported and an average of 2.3 million tonnes exported for Biggest producers: South Africa: 13,5 million tonnes Nigeria: 7,5 million tonnes Ethiopia: 6,5 million tonnes Africa's Maize Production (MMT) Year Source: FAOSTAT, 2014

21 Soybean Production (Million tonnes) 2000 Significant soybean producers in Africa: Coloured countries Africa's Total Soybean Production (MMT) Year Source: FAOSTAT, 2014

22 Trade trends..

23 Africa s Imports and Exports of Agricultural Products (current values)

24 Africa s net Imports of Food Groups (current values)

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26 MAIZE - Top 10 largest maize exporters by value (2013) account for 89% of total global maize exports from Africa - South Africa ranked 8 th largest exporter of maize in the world, and accounts for 2.2% of global exports - 23% of South Africa s grain exports went to southern Africa in 2013; 44% went to Far East; 6% EU; 14% Americas, 12% others - Largest markets for maize in the region include Zimbabwe (11%), Namibia (8%), Botswana (7%) and Swaziland (3%). - South Africa largest exporter of maize into Africa: average of 55% of total regional exports between 2009 and Zambia and South Africa account for 84% of total maize exports into Africa.

27 SOYBEAN TRADE Soybean seed : - Broadly, Africa is a net importer of soybean seed - Africa accounts for 0.1% of the value of global soybean exports - Africa accounts for 2% of global imports (~2 million tonnes). - This reflects very low levels of soybean trade if Africa is compared to other parts of the world.

28 Where is Africa sourcing its soybeans from? Source: ITC, Oct 2014

29 White and yellow maize trade flow scenario 2014/15 Source: BFAP, 2014

30 Rail map of Africa (AICD Database) Source: BFAP, 2014

31 Challenges Constrained policy environment and governance Lack of reliable price discovery mechanisms/markets (SA excluded) Lack of warehouse receipts/silo certificates system Insufficient grain information systems/services Infrastructure constraints (Rail, ports, storage, ICT, energy, etc.) Lack of sufficiently competitive input markets Lack of harmonized grading/quality systems & uniform standards Dysfunctional regional trade agreements and NTB s Poor border post management and control Lack of harmonized exchange control regulations Poorly developed processing market value chain development Skills paucity Innovation and R&D (e.g. GM situation & Climate Change)

32 Opportunities Growing population and changing consumer behaviour Economic growth at around 5.0% for a number of years Supermarket phenomenon Resources: Land & Water Improved democratization and policy environment Attracting more FDI, but requires much more Productivity improving, but huge gains possible with use of even basic technology Various value chain players investing in Africa

33 Conclusion Africa different, and each country different Various and significant challenges However, many opportunities and much potential CAADP development positive Some positive trends emerging over past couple of years.

34 THANK YOU