Economic Performance of the Agro-processing sub-sector

28-29 November 2015 Durban, South Africa

3rd PAFO Continental Briefing

Mmatlou Kalaba University of Pretoria and

Bureau for Food and Agricultural Policy (BFAP)

Presentation outline

• The GAP (Great Agricultural Potential) • Agribusiness Opportunity • Trade Agreements • Future-trends: Threats or Opportunities

The GAP: Agricultural Deficit Can Africa close this gap?

How long will it take

Africa: net-importer of food

Food demand and who meets it

• Population growth- implications for food demand. • Gap as African supply fails to meet demand. • Expansion in production • Role of infrastructure • Net food importer

Agribusiness Potential Massive growth is predicted by the World Bank

Who will own what?

Africa agribusiness future

Agribusiness 22%

Others 78%

SSA GDP in 2014 ($1.3 tri)

Projected SSA Agribusiness in 2030

• Who will have a share of this? • What needs to be done now?

• Which institutions • What policies?

• SSA • Agribusiness • Share of GDP

Who will gain from the projections?

• Answer- it depends on: • Integrated value chains – rural, small farmers and

regional, global • Transformation of the structure of sector • Competitive, high standard and thriving sector • Growth in agro-processing • Investment (infrastructure, irrigation, ) • Strengthening institutions (enforcement and

regulation) • Policy environment, and • Many other factors

Source: FAO. 2015. “FAOSTAT: Food Balances”

Demand: Income

0

200

400

600

800

1,000

1,200

1960 1970 1980 1990 2000 2010

Co

nst

ant

20

05

US$

Nigeria Zambia

GDP per capita , 1960-2014 (constant 2005 US$)

6.02% 5.39% 3.04% 3.58%

10.41% 9.62% 7.04% 6.36%

15.52% 14.45%

12.31% 10.36%

23.04% 21.61%

21% 17.54%

45.01% 48.93%

56.61% 62.16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1985 2010 1993 2010

Nigeria Zambia

Income Shares by Quintiles

Quintile 5 Quintile 4 Quintile 3 Quintile 2 Quintile 1

1.7 Million 2.6 Million

Rising Income but skewed distribution

Source: World Bank Development Indicators, 2015

16.8 Million 31.9 Million

Target market?

Regional Trade Agreements

Will the Tripartite FTA create additional opportunities?

Will agriculture respond to incentives?

Demand for agric & agro-processed products: AEC regional blocs

Intra-regional trade

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

COMESA ECOWAS ECCAS AMU SADC

Intra-Africa Import Trade by REC in 2012

COMESA AMU SADC ECCAS ECOWAS EU RoW

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

COMESA ECOWAS ECCAS AMU SADC

Intra-Africa Import Processed Trade by REC in 2012

COMESA AMU SADC ECCAS ECOWAS EU RoW

Tripartite FTA • National markets absorb most of the production. • TFTA will create opportunities up to where supply

is available. • Major benefits accrue to few countries. • Generally there is low African agric trade, and

even lower agro-processed products trade • There is need for supply expansion

• Additional area • Yield • diversification?

• Trade barriers.

Future trends: Opportunities or threats

What does it take to create Africa that we want?

What do we know about the future?

What can we do to realise the future we want?

Opportunities in African agriculture

• Market Dynamism

• African investment

• Growing urbanisation

• Linking rural markets with urban consumers

• Increase manufacturing

• Strengthening value chains

• Increased role of private sector role

Creating Africa that we want

• Population growth • Youth population • Technology • Energy • Land markets • Climate change shocks

Challenges: Can we overcome them?

• Political decisiveness, • Insurance and financial markets, • Regional markets (and value chains), • Investing in R&D, extension, and education • Infrastructure improvement. • Policy environment and regulation/

Thank you!

For more information: www.bfap.co.za and www.up.ac.za Contact us mmatlou.kalaba@up.ac.za admin@bfap.co.za

http://www.bfap.co.za/http://www.up.ac.za/mailto:mmatlou.kalaba@up.ac.zamailto:admin@bfap.co.zamailto:admin@bfap.co.za