african agricultural and mechanization trends
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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
3 | Immersion| Africa Prioritization | 10 October 2013
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
4 | Immersion| Africa Prioritization | 10 October 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
5 | Immersion| Africa Prioritization | 10 October 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
6 | Immersion| Africa Prioritization | 10 October 2013
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
7 | Immersion| Africa Prioritization | 10 October 2013
Source: Informa Economics, September 2013
CRB Futures Index – All CommoditiesJanuary 1970 – September 2013
7
8 | Immersion| Africa Prioritization | 10 October 2013
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.
9 | Immersion| Africa Prioritization | 10 October 2013
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.
10 | Immersion| Africa Prioritization | 10 October 2013
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
11 | Immersion| Africa Prioritization | 10 October 2013
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
12 | Immersion| Africa Prioritization | 10 October 2013
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 %
13 | Immersion| Africa Prioritization | 10 October 2013
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
14 | Immersion| Africa Prioritization | 10 October 2013
% 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
15 | Immersion| Africa Prioritization | 10 October 2013
Improving agricultural output requires the management of these agronomic fundamentals.
AgronomicFundamentals
InputPlacement
Application Timing
Application Rate
Input Form
16 | Immersion| Africa Prioritization | 10 October 2013
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
17 | Immersion| Africa Prioritization | 10 October 2013
Mechanization for the placement of fertilizer is critical to making more nutrients available to the crop, especially in tropical soils.
Banded Fertilizer
Broadcast Fertilizer
AgronomicFundamentals
Input Placemen
t
Application Timing
Application Rate
Input Form
18 | Immersion| Africa Prioritization | 10 October 2013
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
AgronomicFundamentals
Input Placement
Application Timing
Application Rate
Input Form
19 | Immersion| Africa Prioritization | 10 October 2013
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
20 | Immersion| Africa Prioritization | 10 October 2013
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.
AgronomicFundamentals
Input Placement
Application Timing
Application Rate
Input Form
21 | Immersion| Africa Prioritization | 10 October 2013
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.
22 | Immersion| Africa Prioritization | 10 October 2013
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
23 | Immersion| Africa Prioritization | 10 October 2013
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
24 | Immersion| Africa Prioritization | 10 October 2013
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.
25 | Immersion| Africa Prioritization | 10 October 2013
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
26 | Immersion| Africa Prioritization | 10 October 2013
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
27 | Immersion| Africa Prioritization | 10 October 2013
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.
28 | Immersion| Africa Prioritization | 10 October 2013
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.
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