Wednesday, November 06, 2019
/02:03PM / By FBNQuest Research / Header Image Credit: CortevaAME
Agribusiness has been a major beneficiary of the application of technology in several ways, yet not at the expense of following best (and often traditional) practice. This was the main takeaway from a discussion we recently attended in London, organized by InvestAfrica and bringing together five investors for a session on 'The future of Africa's agribusiness industry'. There are reputational challenges for the industry but we emerged with the feeling that it is hands-on, highly visible on the ground and raising the level of skills and the income of farmers.
Olam, headquartered in Singapore but born in Nigeria about thirty years ago, has mapped all its farmers, shares weather updates and offers them support "24/7" through mobile phones. Venkarataramani Srivathsan, its regional head for Africa and the Middle East, said that the company covers 2.5 million farmers in a total of 25 African countries.
Nick Earlam, founder and chief executive of Plexus Cotton, wants to introduce facial recognition so as to eliminate the risk of ghost farmers receiving agrichemicals and then disappearing. ATM trucks with such recognition would allow the company to pay out the right farmer for his crop after deducting the cost of inputs.
Plexus owns 4,000 hectares (ha) in Mozambique and works with 165.000 cotton farmers. Earlam noted that just 25,000 farmers produced 40% of the crop. Corteva Agriscience, spun out of DowDuPont this year, develops hybrid seeds and has a comparable business model. Its farmers have been able to boost their yields from 2mt/ha to 5mt/ha with support from Corteva, which offers its skills free initially. The company is an advocate of the use of drones.
Frank Braeken rued building a strategy around claims that there are 350 million middle class consumers in Africa. A senior employee of Unilever for many years and now the holder of several directorships including Zambeef, he was apparently referring to the analysis of the African Development Bank, a prominent South African bank and others.
The panelists played down the influence of government in their operations. There is sensitivity around the price of maize in countries where it is a staple food. Earlam also observed that farmers on Plexus land and their dependents totaled 750,000 people in just one province of Mozambique (Cabo Delgado).
The five panelists represented multinational businesses and their activities in Africa clearly cannot reach the majority of SMEs in agriculture. Braeken noted that smallholders in the tea industry in Kenya have benefited from the transfer of skills from Unilever, the leading local player. Nonetheless there surely has to be a role for government, not least in the provision of irrigation.