Agro-Food Industry as Engine for Growth and Wealth - EMRC

Export rather than
import!
A message from Monty Jones, Executive
Director of FARA (Forum for Agricultural Research
in Africa)
“Africa is today in a very difficult
situation”, says Monty
Jones, Executive Director of
FARA. “The poorest countries in
the world are in Africa and unfortunately
we are not producing
enough food to feed our people.
And now global food shortages
are forcing prices up leading to
demonstrations and even riots.
The present crisis is the outcome
of many interlinked factors.
The traditional low-input lowoutput
farming systems and acquired
preferences for imported
foods combine to create local
food deficits. This has left Africa
very vulnerable to the impacts of
rising energy costs. Since oil prices
are predicted to stay high we have
to act very fast to avoid famine.
We must make food production
for local consumption an immediate
priority.
In addition to increasing food
production, African countries,
with the potential to produce
biofuels, will seek to do so for
import substitution and to earn
foreign exchange. My feeling is
that those countries that wish to
produce biofuels should do so, on
condition that they have examined
all the trade offs and potential
for unintended consequences
very carefully and that the decisions
are made transparently with
the involvement of the affected
communities.
In addition to Biofuels, the
rising demand for food makes
every crop a potential export commodity.
To take advantage of this
we need to improve our production
methods to produce higher
and more profitable yields. We
also need to improve our market
infrastructure and information
systems so that producers are
better and more efficiently connected
to markets.
National governments have a
major responsibility for creating
policy environments that are attractive
to investors. In the last
5 years Africa has taken major
strides in establishing continental
and regional frameworks to support
national efforts. AU-NEPAD
has developed the Comprehensive
Africa Agriculture Development
Programme (CAADP).
FARA, which is responsible for
leading CAADP’s agricultural
research pillar, has a comprehensive
set of five Networking Support
Functions; advocacy and resource
mobilisation; information
and technology dissemination,
policies and markets, capacity
strengthening; and partnerships
and strategic alliances which
exemplify, in practical terms, the
spirit of partnership involving all
institutions. This is also demonstrated
by the EMRC which is
making a major contribution to
partnerships across the board”.
Dr Jones is confident that Africa
can achieve its agricultural development
goals, which would
improve the livelihoods of over
60% of African labour. If this sector
improves, it will be the driving
force for all the other sectors
of the economy and lead to more
equitable and healthier societies.
■
Confidence transforms
The Heineken experience
The Heineken group brews over
170 international premium, regional,
local and speciality beers
and ciders and is one of the
world’s leading brewers in terms
of sales volume and profitability.
The group is also a leader in terms
of social accountability. Heineken
requires all of its operating companies
to implement a specially
developed program to combat
corruption, child labour, sexual
harassment, discrimination and
the spread of HIV/AIDS.
It has a long-standing presence in
Africa, where increasing purchasing
power has made beer more affordable.
Heineken began operations
in Sierra Leone in 1962 but
had to suspend its activity during
the civil war, re-opening again in
2000. Since the brewery’s installations
and infrastructure were
completely destroyed, an investment
of €20 million was pumped
into the Sierra Leone Brewery
Ltd, (SLBL) by the joint shareholders
Heineken and Diageo to
get the business running again.
“Heineken is one of the few foreign
companies that demonstrated
the necessary confidence to re-invest
in the local economy”, says
John Mbonu, General Manager of
SLBL. “Several major tobacco,
pharmaceutical and confectionary
concerns who were here when
the going was good, have not returned”.
To reduce its dependency on
imported raw materials, SLBL
initiated a project for the development
of sorghum cultivation in
collaboration with the European
Cooperative for Rural Development
(EUCORD).
“It may have been easier to find
major farming consortiums to
invest in large scale mechanised
grain farming, but preference was
given to small-holder farmers.
Today the 3,500 local farmers and
co-operatives provide 45% of the
brewery’s needs”, says Mbonu.
“We are also investing in a cleaning
and milling plant for processing
the sorghum and are able to
send our employees to nearby
Nigeria for training instead of
Europe. I have been with
Heineken for many years and can
truly say that seeing this transformation,
and the impact on the
community, makes me feel very
happy.” ■
Diageo: Labor, grains
and water
Diageo is the world’s leading
premium drinks business, offering
an impressive range of beverages
available worldwide. The
company employs over 23.000
people worldwide with offices
in 80 countries and a trading
presence in 180.
Diageo is active in brewing and
distilling in the majority of sub-
Saharan African countries and
Nigeria has become the second
largest market for Guinness
worldwide. Diageo Africa region
is responsible for nearly
one third of Diageo’s net sales
of beer globally and its 4.000
employees represent 20% of the
global workforce.
As a business that relies heavily
on agricultural inputs and is committed
to the growth of wealth in
Africa, Diageo seeks to expand
the link between agriculture and
development, recognizing that
agriculture can provide opportunities
to address extreme poverty
in Africa. The company is
involved in hundreds of community
activities and strives to create
mutually fulfilling relationships
and partnerships.
The raw materials used in brewing
include hops, sugar, water
and rice and especially grains:
barley, sorghum and maize. In the
past these were imported, but new
recipes and seed varieties have
been developed, enabling the
use of local barley and sorghum.
Specific investments ensure access
to high-yield seeds as well
as fertilizers and herbicides. The
grass roots business partners are
those who need the income most:
the local small-scale farmers.
Another area of involvement is
the supply of water. The Diageo
program ‘Water of Life’ was
launched in 2000, focusing on
the supply of clean drinking water
to people in Africa. It was accelerated
in 2006 under the title
‘1 Million Challenge’ and aims to
supply one million people annually
with clean water until 2015.
In 2007 over 840.000 people benefitted
from 38 water and sanitation
projects in Kenya, Uganda,
Tanzania, Nigeria, Burkino Faso,
Ethiopia, Cameroon, Ghana and
South Africa. The projects are
based on local needs, low cost
solutions and available technologies
and are carried out in close
collaboration with local governments,
NGOs and community
organizations. ■
“All is not doom
and gloom”
FAO calls for urgent action on
food security
“With respect to the present
international crisis in food supply
and food prices, it is to the
credit of the FAO that we alerted
the world to the need for urgent
action in June 2007”, says Nick
Parsons, Director, Communications
Division of the FAO. “We
are all the more happy that food
security was high on the agenda
at the recent G8 summit in Japan.
On this occasion Robert
Zoellich, President of the World
Bank, stated ‘What we are witnessing
is not a natural disaster
– a silent tsunami (…) It is
a man-made catastrophe and as
such must be fixed by people’.
Indeed: people - governments,
international institutions and
private enterprises - need to take
note and take action, get the priorities
right and make the inevitable
commitments and investments.
The challenge is that this is a
complex issue, requiring solid,
long term strategies, but the
good news is that the problem
can become the solution. Precisely
because food prices are
high, this thing can be turned
around and become an opportunity.
As we all know, investors
are attracted to areas where there
is some guarantee of returns!
And there is money to be made
in investments all along the food
chain – from healthy planting
material, irrigation and fertilization
to packaging and distribution.
We need to be creative, take
a holistic view of the situation
and look at what can be gained.
Despite the urgency, all is certainly
not doom and gloom”.
On the issue of local versus
global markets, the general consensus
is that in countries where
there is the most poverty and
malnutrition, the priority should
be to improve the livelihood of
local populations, both rural and
urban, before looking to export.
To achieve this, however, more
investment is needed in storage
facilities and transport infrastructure.
The present loss of harvests at
local and regional levels – up to
50% in some countries in Africa
– needs to be turned around. This
means that local government
policies should favour these
areas of development.
It goes without saying that good
governance is essential to attract
private sector investment. Noone
can be expected to invest
without assurances that their
money will reach its destination
and do the job it is meant
for! Private Public Partnerships
bring good results in many cases,
but partnerships between countries
also look very promising.
For instance: between countries
that have abundant arable land
but no money and those that
have no arable land, but strong
financial resources.
“Facilitating such partnerships
is where the EMRC can
play a key role”, says Mr Parsons.
“The bottom line is: no
one country can fix the problem
alone, but if we tackle this together
the results can be terrific!
The international community
should not see developing countries
as receivers of charity, but
as lands of opportunity” ■
- DIALOGUES - EMRC
Quarterly - Summer 2008 -