Managing Post-harvest Systems

to Enhance Agricultural Productivity

Competitiveness and Markets

in Western and Central Africa

by Dr. Geoffrey C. Mrema

DirectorRural Infrastructure and Agro-industries DivisionFood and Agriculture Organization of the United Nations (FAO)

2

Effects rise in food prices and financial crisis

Because of high food prices, the import bill for cereals of African countries rose substantially by 49 percent in 2008 alone.

The financial crisis led to a slow down in economic growth from 6.0% in 2007 to 5.1% percent in 2008.

3

Ratio of Share of Agri-enterprise and Agriculture in GDP

Share in GDP

Agriculture(1)

Agri-enterprise(2)

Ratio of (2) to (1)

Agriculture Based Countries

0.39 0.22 0.57

Transforming Countries 0.16 0.32 1.98

Urbanized Countries 0.08 0.27 3.32

USA 0.01 0.13 13.00

4

Structural Changes and Agro-industries Development

Empirical data show that: In agricultural countries that have

not undergone a structural transformation, 63% of the value added in the agri-food system was created on the farm.

In the USA, by contrast, farming accounted for only 7 percent, with the remaining value being created by input producers, agro-industries, transport firms, retailers, restaurants, and others in the agribusiness system.

5

ITEM Sub-Saharan Africa

1. Primary Production (including mechanization & other power sources) 496

2. Downstream Support Services (storage; markets & first stage processing) 444

TOTAL 940

Source: Capital Requirements for Agriculture in Developing Countries to 2050, FAO, Rome, 2009

US$ 15 billion/year in additional investment needed

Cumulative Investments over 44 year period to 2050 in billion US$

Capital Requirements to Overcome Hunger

6

Post-harvest Losses (PHL)

Assuming very conservative estimates of quantitative PHL of 10% in cereals, 30 percent in fruits & vegetables and 20% in root & tubers, and using 2007 production data for the 22 CORAF/WECARD countries, quantitative losses in the region are: 5.37 million tonnes of cereals 2.43 million tonnes of fruits and vegetables and 27.59 million tonnes of roots and tubers

This amounts to a total monetary value of US$17.46 billion.

7

Regional and Local Market Opportunities

Demand for agricultural commodities and high-value products across Africa is expected to grow from US$ 50 billion in 2000 to US$150 billion in 2030.

The potential income that farmers could derive at the farm level from increased trade in domestic and cross-border markets is expected to grow to US$30 billion in 2030;

Developing the necessary market links could increase rural incomes by up to another $60 billion.

8

Population Figures for CORAF/WECARD Countries

Population of the 22 countries considered together will increase from current level of 417 million to 527 million in 2020 and over 883 million in 2050.

By 2020, an equal number of the population will live in rural and urban areas.

Beyond 2020, the urban population is projected to rapidly outgrow the population in rural areas.

By 2050, 67% of the region’s population will live in urban areas.

9

Population Centers in West and Central Africa

10

Africa in Global Trade and Value Addition

African countries contribute less than 10% to global value addition. Africa’s share in world agricultural trade declined from 15% in the

1960s to 5.4% in the 1980s and 3.2% in 2006. Africa’s international trade is dominated by primary commodity

exports - almost 60% of total export value, remaining 40% being fuels/petroleum.

Non-fuel primary commodity exports, agricultural products account for more than 25% of trade revenues

Intra-African trade barely 10% of Africa’s total agricultural trade. Intra-regional exports averaging US$ 3.8 billion between 2000 and

2005 while imports of agricultural commodities from outside Africa averaged US$ 33 billion.

11

Rice Import FiguresRICE IMPORTS IN SSA AND WCA REGIONS 2005 (in 1000 MT)

Global Rice ImportsSSA Total Imports (% global)West & Central Africa Region (% global imports)

29,58011,050 7,756

37.4%26.4%

Benin 710

Cameroon 751

Congo (Bra) 92

Cote d’Ivoire 1160

Gambia 116

Ghana 627

Guinea 158

Liberia 168

Mali 173

Niger 60

Nigeria 1841

Senegal 1319

Sierra Lone 108

Togo 473

Sub-total WCA Region (as a % SSA) 7,756 70.2%

Source: World Grain Statistics (2007), International Grain Council, London (August 2008)

12

Key Intervention Areas

Four main areas of support are essential for development of post-production agro-enterprises and agro-industries:

1. Enabling policies & public goods;

2. Value chain skills & technologies;

3. Post-production institutions & services;

4. Reinforced financing & risk mitigation mechanisms

13

Enabling policies and provision of public goods

Sector Strategies & Plans; Legal and Regulatory Frameworks; Grades & Standards; Agricultural Mechanization; Markets & Trade Infrastructure; National & Regional Trade Policies

14

Skills & technologies

Development of skills & technologies needed for post-production segments of agricultural value chains should address:

Producer, Commodity & Industry Associations;Value Chains Facilitation;Business Development ServicesProducer & SME Skills Building;Technology Development & Transfer;Vocational, Business & University Training

15

Innovative Institutions and Public Services

Contract Farming & Out-grower Schemes;

Business Incubators, Hubs & Clusters;

Research, Technology & Agro-Food Parks;

Product Labeling & Certification Schemes;

Commodity Exchanges & Market Information

16

Finance & Risk Mitigation

Public-Private Partnerships Loan Guarantees Investment Funds Value Chain Finance Risk Mitigation Products

17

HLCD-3A Co-organizers

• Government of the Federal Republic of Nigeria (Hosts)

• African Union Commission (AUC)

• African Development Bank (AfDB)

• Food and Agriculture Organization of the United Nations (FAO)

• International Fund for Agricultural Development (IFAD)

• United Nations Economic Commission for Africa (UNECA)

• United Nations Industrial Development Organization (UNIDO) 17

18

To increase private sector investment flows going into the agriculture sector in Africa by mobilizing resources for agribusiness & agro-industrial development from domestic, regional & international financial systems

3ADI Main Objective

19

3ADI - What the Initiative will do?

Specifically the Initiative will:

1. Leverage current attention to agriculture in Africa to accelerate the development of agribusiness & agro-industries sectors that ensure value-addition to Africa’s agricultural products;

2. Support a well coordinated effort to share knowledge & harmonize programmes in ways that capture synergies, avoid fragmented efforts, & enhance developmental impacts;

3. Support an investment programme that will significantly increase proportion of agricultural produce in Africa that is transformed into differentiated high-value products.