18 November 2011
Agriculture activity in Africa set to explode as food becomes world's 'new oil'
With food expected to become the "new oil" of the 21st century, Africa's agricultural
output is set for explosive growth in coming decades. as the continent's largely
untapped potential gains elevated attention, writes Standard Bank Group research
analyst Simon Freemantle in his latest report in a series about key trends that
will change Africa.
The first three reports in the series, aimed at unpacking what Mr Freemantle believes,
are going to be the five most prominent trends driving Africa's on-going economic
and commercial reinvigoration, dealt with Africa's rising, youthful population;
urbanisation, and mobile and internet usage.
Mr Freemantle says the continent's agriculture is already among the key factors
that are contributing towards a swelling interest in Africa's natural resources.
While Africa is known for its dominant share in a number of core commodities, such
as platinum, chrome and cobalt that are in great demand, agriculture is also expected
to feature prominently as a key driving force in the continent's resurgence.
"Regarding agriculture, the opportunity is immense. Though much is required, and
a collective inertia still in large part remains, there are increasing signs of
how Africa's agricultural fortunes changing. There could be a doubling in African
agricultural output within the next decade. Demand for upstream products linked
to the broader agri-business sector will also result, creating new economic opportunities
for a range of African and international enterprises," writes Mr Freemantle
He highlights increasing concerns about the earth's ability to feed a population
of 7-billion people, expected to rise to 9-billion by 2050. In order to feed the
world's population in 2050, food production will have to increase by 70%, necessitating
a total average annual net investment in developing world agriculture of $83-billion.
He says two recent and alarming global food price hikes have added to the fears.
Much of the new demand for food continues to originate from the developing world's
rising and increasingly affluent population.
For many emerging markets, rising demand is being met with diminishing local resources
such as arable farm land and water. Mr Freemantle believes that attention will turn
on Africa as a result because of it has these resources in abundance.
"In China, home to 20% of the world's population and less than 8% of its arable
land, total cropland is expected to decline from 135-million hectares today, to
129-million ha in 2020. Almost half of China's cities face water shortages. Other
areas in the emerging world are even more pressed. In 2011, Bahrain, Qatar and Saudi
Arabia were ranked as three of the four most water stressed nations in the world.
Already, Gulf States import around 60% of their food, and natural water reserves
are able to support only 30 more years of agricultural production."
"Given these threats, attention is increasingly turning to Africa. It is estimated
that over 60% of the world's available and unexploited cropland is in Sub-Saharan
Africa. Of Sudan's 105-million ha of cultivable land, only 16% (or 16.6-million
ha) had been cultivated by 2009. A similar ratio is evident in the DRC, where less
than 10% of the country's 80-million ha of cultivable land has been cultivated.
The Congo River Basin alone holds 23% of Africa's irrigation potential, with the
Nile River Basin holding a further 19%," writes Freemantle.
However, Freemantle cautions that while Africa's agricultural allure is vast, central
to the realisation of commensurate socio-economic benefits is an appreciation, on
the part of African stakeholders, of how pivotal and intensely valuable this opportunity
is - and to position accordingly.
Read the full report here.