Africa needs more contract farming schemes to reduce food import bill
AFRICA has been gradually turning into a net importer of food, as countries have continuously failed to produce enough to cover their consumption needs.
Although agriculture remains the mainstay of many economies in the region, a consistently growing population and a little diversifying agricultural sector has seen an increase in demand for food, which cannot be met locally.
The continent is abundantly endowed with approximately 50 percent of the world’s uncultivated land, abundant fertile soils and favourable climate.
Yet it still fails to feed itself, depending mostly on imports.
Grains top the list of foods that Africa imports, especially wheat, rice and maize.
However, due to the massive volumes that are traded on the global market every year, grains attract more traders and speculators resulting in volatile prices.
But this has not deterred African countries that continue to buy.
A Support to Agricultural Research for Development of Strategic Crops (SARD-CS) meeting held last year, revealed that Africa spends approximately US$15 billion every year on grain imports.
SARD-CS co-ordinator, Dr Solomon Assefa, said it was unfortunate that Africa was spending billions of dollars to import food when it had the potential to be self-sufficient.
“Africa has huge arable land but cannot meet its potential. About 49 percent of the population in the region is living on less than US$1.20 per day. By addressing productivity, we will ensure people have decent lives. The US$15 billion being spent by Africa on importing food can be spent on other developmental programmes,” he said.
Market watchers have said Africa cannot reach its full economic potential without food security. They say the continent will remain poor as long as it continues to depend on other nations for food it can grow in its backyard.
And how can Africa address food self-sufficiency?
To be able to do this, there is need for greater private sector participation in the agricultural sector. If the private sector can join hands with government to come up with out-grower schemes that will benefit both the farmers and the company, economies will automatically benefit from a reduced import bill.
And contract farming is nothing new. It has existed since time immemorial.
In ancient Greece, the practice was widespread, with specified percentages of particular crops being a means of paying tithes, rents and debts. China and the United States also had such a practice at the turn of the century.
The concept has over the years been modified to benefit both the farmer and the contractor instead of favouring one partner.
According to the Food and Agriculture Organisation of the United Nations, the contract farming system should be seen as a partnership between agribusiness and farmers.
“To be successful, it requires long-term commitment from both parties. Exploitative arrangements by managers are likely to have only a limited duration and can jeopardise agribusiness investments. Similarly, farmers need to consider that honouring contractual arrangements is likely to be to their long-term benefit,” FAO said in a 2014 report.
One such arrangement has seen Dangote Group coming in to fund rice production in Nigeria.
Earlier this month, the group announced that its subsidiary Dangote Rice will launch a multi-million-naira rice out-grower scheme in Nigeria’s Sokoto state.
Dangote Rice projects when operational, are expected to generate a “significant number of jobs and increase income for smallholder farmers, all while diversifying Nigeria’s economy and reducing the nation’s food import bill”.
Official statistics in Nigeria show that rice demand stood at 6.3 million metric tons in 2015 but local production has been failing to satisfy that demand, only reaching 2.3 million tonnes.
The gap of about 4 million tonnes left by local production has been filled through rice imports.
Nigeria, along with South Africa, Senegal, Cote D’Ivoire, Ghana, Cameroon, Kenya, Tanzania and Angola are the continent’s top rice buyers, contributing to an import bill of more than US$3.5 billion every year.
But Africa has been growing rice for more than 3,500 years but due to the huge demand, local producers fail to meet demand.
So, if more companies can invest in rice production, the continent can significantly reduce that import bill.
Wheat has been part of the African every-day diet for decades. Wheat flour is used by bakeries and food processors across the continent to make bread, noodles, biscuits and several other pastries.
Up to 85 percent of wheat consumed in Africa is imported so Africa spends no less than US$6 billion on imports every year.
The leading importers are Nigeria, South Africa and Angola.
While Zimbabwe’s import bill is small compared to these big economies, it is still necessary to mention it.
Agro-processing firm, National Foods, has been investing into contract farming for wheat production, but this has not been enough to improve production to meet Zimbabwe’s requirement of between 350,000 and 450,000 tonnes of wheat per year.
This means that there is need for more firms to contribute towards wheat productions if that is to happen.
Contract farming schemes are also needed in maize production, which is a staple food for over 500 million Africans.
Africa produces roughly 50 million tonnes of maize every year, but still imports nearly 30 percent of its maize consumption. This is largely because most maize is rain-fed making it susceptible to droughts, as was the case last year when most parts of the continent, especially Southern Africa, were hit by the El Niño-induced drought.
More agribusinesses need to take up such schemes and correct the continent’s ineffective grain supply value chains.
This includes production, processing and marketing.
We have already seen such organisation in the brewing industry in Africa, which has been growing tremendously with several companies contracting farmers to grow their sorghum, barley, cassava and other grains used in beer production.
In Uganda, contract farming of sorghum for brewing purposes was first pioneered in 2008 by SABMiller. Sorghum-based beer now accounts for half of SABMiller’s 55 percent share of the Ugandan beer market.
In Zimbabwe, Delta Beverages last year injected more than US$4 million into its Beverages Sorghum Contract Farming Scheme (BSCFS) and received about 15,675 tonnes of the grain, which was more than enough to meet its annual requirement of 15,000 tonnes.
So if there is the same organisation in out-grower schemes for food crops, as there is in the brewing industry, we can begin to see a shift in Africa’s need to import.