Some 870 million people worldwide – more than one out of every 10 people on the planet – are living with hunger in 2022. Millions more are at risk this year because we have neglected to address risks in the food value chain.
This is a global crisis on par with energy security, with the war in Ukraine exposing the need to radically change supply dynamics. Food security is a key theme for Africa’s development. With over 60% of the world’s available arable land, a huge investment opportunity exists: putting capital to work to fix this major problem whilst also driving strong returns.
To do this, investors must focus on deploying funds across Africa in the following areas: local processing and production, diversification and certification.
Local processing and production
It is now apparent that we must no longer rely on single countries to produce certain foods for the world. Local food production and processing is no longer a “nice to have”, it is an imperative that can radically reduce crop waste. Produce loss, between harvest and processing plant, can be minimised with the right investment at the field gate, maximising the recovery with higher production and yields. This in turn, has the knock-on effect of being able to bring food to the local markets in good quality, while also providing standardised produce for distant markets, like Europe and the USA.
The flows of money from development finance institutions, like the IFC, CDC and AFDB, and private investors recognise this potential gain. Indeed, in 2021, many African states announced major investment projects aimed at developing sustainably processed, local agriculture. In Congo, where the UN FAO estimates that 40 to 50% of root crops and vegetables are wasted due to poor storage and processing, and ineffective logistics, Agri Resources Group, has invested in a first of its kind cooling system in the region of Niari, holding up to 500 tonnes of fresh vegetables, which is used for our own production as well as for local farmers. Furthermore, Benin recently issued a €500m Sustainable Development Goals Bond, the first of its kind in Africa, for sustainable and productive agriculture which is gaining strong support from private investors.
Faced with the headlong acceleration in food prices, national monocultures appear increasingly unwise; diversification of produce is a necessity for local African producers. Furthermore, combining different crops can take advantage of symbiotic associations, improving yields and productivity. But, to make this a reality, the right level of technical and financial support from companies and investors is essential.
The partnership between large companies and local farmers in pursuit of diversification is a win-win. Prang Agro Resources in Ghana grows a portfolio of products that are in high demand locally from vegetables to cereals such as corn, sorghum, and soybeans. To ensure sustainability, the company is setting up an assistance program for local farmers to give them access to a larger market. This approach, which we successfully implemented with more than 900 farmers in Madagascar, will be reproduced in Ghana, Congo and Guinea. It puts small producers at the centre, guaranteeing them viable incomes and giving them confidence to know they can ride out unforeseen events, such as future falls in raw material prices.
Finally, in order to make sure that a local farmer is giving the processor and end-user what they want, you need a common language. Insecurity in food markets will not put paid to consumers wanting to know where their food has come from and one of the bottlenecks hampering value chains in Africa is a lack of access to product certification. To be competitive internationally, local producers must be able to certify their production. Historically, most have not sought this because of the significant time and cost associated.
But, with the right support, the tide should change. Some food and agriculture-linked certifications, required for European or US markets, are challenging. However in Africa, investment in traceability programs and certification will ensure local producers are both connected to global food markets and able to help mitigate current price volatility. These reforms can sit comfortably with good ESG practices.
To meet the challenges of resilience and insecurity, a new agricultural dynamic is emerging in Africa. More local and more sustainable, the new face of African agriculture aims to ensure the continent’s food security while guaranteeing the competitiveness of exported products on the world market. By supporting local producers, agro-industrial players and investors have a vital, constructive and profitable role to play.