african agricultural and mechanization trends

African Agricultural and Mechanization TrendsAfrican Agricultural and Mechanization Trends

2 | Immersion| Africa Prioritization | 10 October 2013

Mechanization Trends in Africa

Macro Economic Review

– Growth

– Demand

– Crop Value


1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014F

2015F

2016F

2017F

2018F

-4

-2

0

2

4

6

8

10

Developed Developing

Annual % Change

Global Macro EconomyWorld GDP growth

3

Source: International Monetary Fund (IMF), World Economic Outlook , October 08, 2013


Sub-Saharan AfricaGDP Growth

4

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014F

2015F

2016F

2017F

2018F

0

1

2

3

4

5

6

7

8Annual % Change

2000/12 Avg. = 5.5%

Source: International Monetary Fund (IMF), World Economic Outlook , October 08, 2013


1950 1975 2000 2025 20500

5

10

More Developed Regions* Less Developed Regions Least Developed Regions

Billions

Source: United Nations, World Population Prospects 2012 Revision

56%

30%

4%

9%

1.2%

7.2B9.6B

2013

2050

Population Growth in Emerging Markets Geographic Distribution of Population Growth, 2000 to 2013

6.1B

2000

1.1B

*More Developed Regions: Europe, North America, Japan, Australia, New Zealand

5


1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

00 01 02 03 04 05 06 07 08 09 10 11 12 13F

Global Grains (mmt)

Production Consumption

Global GrainsProduction and Consumption

6

Source: USDA/WASDE, September 2013

Consumption has exceeded production 8 of the last 14 years


Source: Informa Economics, September 2013

CRB Futures Index – All CommoditiesJanuary 1970 – September 2013

7


Key Messages

The potential for increased Ag production in Africa is enormous and some countries matter more than others

Factors other than agronomic potential will enable or constrain each country’s growth potential.


Key Messages




50%

13%2%

15%

11%

1% 3%5%

Gross value of crop production in SSA* totaled $201 Billion in 2010, and was largely the result of a few key crops

24%

33%1%

5%

4%1%

11%

15%

Harvested AreaProduction Value

Source: FAO, Harvested Area (185M ha) * 26 countries reporting

Yams $30.9 billion (15.4%) Sorghum $8.8 billion (4.4%)

Cassava $24 billion (11.9%) Fruit $29.6 billion (14.7%)

Rice $17.8 billion (8.8%) Vegetables $22.5 billion (11.2%)

Maize $13 billion (6.4%)

Cereals

Roots & Tubers

Fibre Crops

Oilcrops

Pulses

Treenuts

Vegetables + Melon

Fruit


18 countries account for 85% of the harvested area of all crops in SSA with high agriculture potential and macroeconomic and geopolitical stability.

SOURCE: FAO, 2007-2011 Average

2007-2011 Average Harvested Area (Million Hectare)

Niger

iaNig

er

Ethi

opia

Suda

n

Tanz

ania

Ugand

a

Burki

na Fa

soDRC

Mali

Mozam

biqu

e

Sout

h Afri

ca

Ghana

Kenya

Camer

oon

Côte

d Iv

oire

Angol

a

Zimba

bwe

Zambi

a0

5

10

15

20

25

30

35

40

45

*

* Data representative of Sudan (former), majority of harvested area in current South Sudan


Current yield attainment is generally higher in developed countries as a result of better agronomic practices. Potential yield is driven by the climatic fit of each crop.

Maize

Africa 18

US Brazil India China0

1

2

3

4

5

6

7

8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Rice

Source: Foley at al. nature10452-s1.pdf

Ton/ha Ton/ha

Africa 18

US Brazil India China Russia0

2

4

6

8

10

12

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Potential Yield(ton/ha)

Current Yield(ton/ha)

YieldAttainment %


Smallholders manage the vast majority of farmland in SSA

SOURCE: FAO Smallholder Factsheet

Harvested Area

(M Ha)

% of Total Area

Cereals 92.2 50%

Oil Crops 27.5 15%

Roots & Tubers 23.9 13%

Pulses 20.6 11%

Fruit 9.1 5%

Vegetables 5.2 3%

Fiber Crops 4.2 2%

Tree Nuts 2.2 1%

Total 185

Customer Segment

Harvested Area (M Ha)

% of Total Area

Smallholder (working up to

10 Ha)

148 80%

Commercial 37 20%

They account for 80% of the harvested area


% of Contractors

19%

5%

22%

5%

Subsistence Famer Micro Holders Small Holder Medium Holders Large Holders

Cano not afford mechanization/

outsourcing

Starting Mechanization Ownership

(0-20%)

Mechanization Ownership at (20% -

80%)

Mechanized(80%-100%)

Fully mechanized(100%)

Asia & Africa Agricultural Customer Census Data

Land Holding Size

Note:1. Land holding size includes the land customers owned, rented or leased land2. Mechanization is measured by either a. owning a 2 axle Ag equipment or b. outsourced to a mechanized method.3. SSA uses different criteria: 10% for outsourcing and 20% for self servicing

0 0.25 0.5 1 2 5 10 25 100 (in Hectare)

87%

52%3%

12% 1%

41%

98% 1%

0.3%

3% 0.2%

0.2% 0.8%

84%8% 9%

China

India

Asia

SSA(Less RSA)

Less than 12% of African farmers own 4 wheeled

tractors, 40% of them are also

working as contractors


Improving agricultural output requires the management of these agronomic fundamentals.

AgronomicFundamentals

InputPlacement

Application Timing

Application Rate

Input Form


Niger

Ugand

a

Suda

n

Cote

d'Iv

oire

Mozam

biqu

eDRC

Mali

Tanz

ania

Kenya

Ghana

Niger

ia

Camer

oon

Angol

a

Zambi

a

Ethi

opia

Sout

h Afri

ca

Unite

d St

ates

0

50

100

150

200

250

300Fertilizer NPK Grain* NPK

Low natural soil fertility levels impact on yield is compounded by annual mining of soil N-P-K. On average, 13 kg/ha of nutrients are applied compared to 38kg/ha of nutrients removed through the harvesting of grain.

Total Fertilizer Applied kg/ha (N + P2O5 + K2O)

* Maize Grain and Biomass onlySource: World Bank

Agronomic

Fundamentals

AlfisolsOxisols

Ultisols


Mechanization for the placement of fertilizer is critical to making more nutrients available to the crop, especially in tropical soils.

Banded Fertilizer

Broadcast Fertilizer


Input Placemen

t

Application Timing

Application Rate

Input Form


Timing of planting to capture early season rains can have a significant impact on yield. Timing can be optimized with mechanization compared to hand planting, which is limited to after the rains have started due to hard ground conditions.

05

1015202530354045 Central Zambia

High Temp oCLow Temp oCPrecipitation (cm)

Current planting window

Ideal planting window


Input Placement

Application Timing

Application Rate

Input Form


Open-Pollinated Variety conversion to Hybrid seeds

Agronomic

Fundamentals

Retailer Pioneer Extension Partners

Farmer

Sales, Education & Support

Distribution

Pioneer Extension Partners • Commissioned Sales• Quantity growing 3x to nearly 11,000

employees in next 5 years

Sales Agronomist


The limited access to knowledge of agronomic fundamentals and financing to acquire inputs and mechanization is contributing to the yield attainment gaps in Sub-Sahara Africa.


Input Placement

Application Timing

Application Rate

Input Form


Key Messages




Africa’s projected CAGR growth is forecasted at approximately 4.6 % between 2008 and 2023. The forecasted growth is second only to emerging Asia.

1.7

3.8

3.9

3.3

3.6

6.7

4.6

Developedeconomies

World

Latin America

Central andEastern Europe

Africa

Middle East

Emerging Asia

African GDP, 2005 $ billion PPP

Compound annual growth rate, %

Compound annual GDP growth, 2008–23%, 2005 PPP$

SOURCE: Global Insight

4.13.8

4.14.4

4.5

4.64.6


GDP per Capita for the top and middle 6 countries remains reasonably strong relative to the immense population growth during this time period.

Niger

ia

Ethi

opia

Tanz

ania

Mozam

biqu

e

Sout

h Afri

ca

Zambi

a

Ugand

a

Angol

a

Ghana

Kenya

Zimba

bwe

DRCNig

er

Sout

h Su

dan

Burki

na Fa

soMal

i

Camer

oon

Côte

d Iv

oire

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

9,000.0

10,000.0

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2010 2043 CAGR

30,908

Top 6 Middle 6 Bottom 6

SOURCE: Global Insight


Rural Access Index

Source: The World Bank Group

The infrastructure deficit in Africa is significant, particularly in rural areas.

SSA Electricity access is only 25%

1 in 3 rural Africans have access to an all-season road.


Sub-Sahara Africa has great need for infrastructure and it’s impact on Ag can be significant

Niger

ia

Ethi

opia

Tanz

ania

Mozam

biqu

e

Sout

h Afri

ca

Zambi

a

Ugand

a

Angol

a

Ghana

Kenya

Zimba

bwe

DRCNig

er

Sout

h Su

dan

Burki

na Fa

soMal

i

Camer

oon

Cote

d'Iv

oire

0%

5%

10%

15%

20%

25%% Paved Roads

Top 6 Middle 6 Bottom 6

Delivered Fertilizer Price (US$)

US Zambia0

100

200

300

400

500 Financial Costs

Losses

Corruption & Red Tape

Dealer Cost & Margin

Importer Margin

Transport & Storage

Port Costs & Duties

CIF

FOB

SOURCE: CIA.gov

SOURCE: Alliance for a Green Revolution in Africa, 2013

NA


0 200 400 600 800 1000 1200 1400 16000%

20%

40%

60%

80%

100%

Improving rural accessibility would entail a huge expansion of Africa’s road network. The cost of addressing Africa’s infrastructure needs is around $93 billion a year, about one-third of which is for maintenance.

R2 = 0.97

Ru

ral A

ccessib

ilit

y I

nd

ex

Thousands of kilometers of all season road needed

Source: Africa’s Infrastructure, A Time for Transformation; Foster and Briceno-Garmendia


Zambia, the tipping point.

CORT = Cereals, Oilseeds, Root and TubersFRA = Food Reserve Agency

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 -

1,000

2,000

3,000

4,000

5,000

6,000

-

100

200

300

400

500

600

700

800

ProductionCORT (kt)

AG GDP(Curr. USD Mil)

TractorsIndustry (units)

Pro

du

cti

on

an

d G

DP

Un

its

Tra

cto

r U

nit

s

Zambia FRA implemented premium price for smallholder corn together with seed and fertilizer subsidies.


In Conclusion

– Sub-Sahara Africa has enormous potential and when the catalysts of agricultural development act, growth can be rapid

– Small holder success is the key to unlocking agricultural productivity across the region

– Mechanization is key a key facilitator of small holder success

– Governments are a critical enabler of the development of agriculture. Their ability and effectiveness vary by country, but once they engage, advancement can be rapid.

african agricultural and mechanization trends

Documents

world economic outlook

option of gdp constant

imf website

annual percent change5

junejulydata source

commonwealth of mongolia

central eastern europe

middle east