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African Agricultural and
Mechanization Trends
Mechanization Trends in Africa
Macro Economic Review
– Growth
– Demand
– Crop Value
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| Immersion| Africa Prioritization | 10 October 2013
Global Macro Economy
World GDP growth
10
Annual % Change
8
6
4
2
0
1998
2000
2002
2004
2006
2008
-2
Developed
Developing
-4
Source: International Monetary Fund (IMF), World Economic Outlook , October 08, 2013
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| Immersion| Africa Prioritization | 10 October 2013
2010
2012
2014F
2016F
2018F
Sub-Saharan Africa
GDP Growth
8
Annual % Change
7
2000/12 Avg.
= 5.5%
6
5
4
3
2
1
0
2000
2002
2004
2006
2008
Source: International Monetary Fund (IMF), World Economic Outlook , October 08, 2013
4
4
| Immersion| Africa Prioritization | 10 October 2013
2010
2012
2014F
2016F
2018F
Population Growth in Emerging Markets
Geographic Distribution of Population Growth, 2000 to 2013
More Developed Regions*
10
Less Developed Regions
Least Developed Regions
2050
Billions
2000
5
2013
9.6B
7.2B
6.1B
0
1950
1975
2000
1.1B
2025
1.2%
4%
56%
30%
9%
*More Developed Regions: Europe, North America, Japan, Australia, New Zealand
Source: United Nations, World Population Prospects 2012 Revision
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| Immersion| Africa Prioritization | 10 October 2013
2050
Global Grains
Production and Consumption
2,500
Global Grains (mmt)
Production
Consumption
2,400
2,300
2,200
2,100
2,000
1,900
1,800
1,700
00
01
02
03
04
05
06
07
08
09
10
11
12
Consumption has exceeded production 8 of the last 14 years
Source: USDA/WASDE, September 2013
6
6
| Immersion| Africa Prioritization | 10 October 2013
13F
CRB Futures Index – All Commodities
January 1970 – September 2013
Source: Informa Economics, September 2013
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| Immersion| Africa Prioritization | 10 October 2013
Key Messages
The potential for increased Ag
production in Africa is enormous and
some countries matter more than
others
Factors other than agronomic
potential will enable or constrain
each country’s growth potential.
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| Immersion| Africa Prioritization | 10 October 2013
Key Messages
The potential for increased Ag
production in Africa is enormous
and some countries matter more
than others
Factors other than agronomic
potential will enable or constrain
each country’s growth potential.
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| Immersion| Africa Prioritization | 10 October 2013
Gross value of crop production in SSA* totaled $201
Billion in 2010, and was largely the result of a few
key crops
Yams
$30.9 billion
(15.4%)
Sorghum
$8.8 billion
(4.4%)
Cassava
$24 billion
(11.9%)
Fruit
$29.6 billion
(14.7%)
Rice
$17.8 billion
(8.8%)
Vegetables
$22.5 billion
(11.2%)
Maize
$13 billion
(6.4%)
1% 3%
5%
Cereals
14.7%
24%
Roots & Tubers
11%
Fibre Crops
11.2%
1%
4%
Pulses
33%
Vegetables + Melon
Fruit
Production Value
Source: FAO, Harvested Area (185M ha)
10
15%
Treenuts
5%
1%
50%
Oilcrops
2%
13%
Harvested Area
*
26 countries reporting
| Immersion| Africa Prioritization | 10 October 2013
18 countries account for 85% of the harvested area of
all crops in SSA with high agriculture potential and
macroeconomic and geopolitical stability.
45
40
35
30
2007-2011 Average Harvested Area (Million Hectare)
25
20
15
10
5
0
*
SOURCE: FAO, 2007-2011 Average
* Data representative of Sudan (former), majority of harvested area in current South Sudan
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| Immersion| Africa Prioritization | 10 October 2013
Current yield attainment is generally higher in
developed countries as a result of better agronomic
practices. Potential yield is driven by the climatic fit
of each crop.
Ton/ha
Ton/ha
Maize
12
10
100%
8
90%
7
80%
70%
8
60%
6
50%
40%
4
Potential Yield
(ton/ha)
100%
90%
80%
6
70%
5
Current Yield
(ton/ha)
4
Yield
Attainment %
3
60%
50%
40%
30%
20%
2
0
Africa
18
US
1
0%
0
Brazil India China Russia
| Immersion| Africa Prioritization | 10 October 2013
30%
2
10%
Source: Foley at al. nature10452-s1.pdf
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Rice
20%
10%
0%
Africa
18
US
Brazil
India
China
Smallholders manage the vast majority of farmland in
SSA
They account for 80% of the harvested area
Harvested
Area
(M Ha)
% of
Total
Area
Cereals
92.2
50%
Oil Crops
27.5
15%
Roots &
Tubers
23.9
13%
Pulses
20.6
11%
Fruit
9.1
5%
Vegetables
5.2
3%
Fiber Crops
4.2
2%
Tree Nuts
2.2
1%
Total
185
Customer
Segment
Harvested
Area (M Ha)
% of Total
Area
Smallholder
(working up to
10 Ha)
148
80%
Commercial
37
20%
SOURCE: FAO Smallholder Factsheet
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| Immersion| Africa Prioritization | 10 October 2013
Asia & Africa Agricultural Customer Census Data
% of
Contractors
Less than 12% of African
farmers own 4 wheeled
87%
tractors,
China
40% of them are also
working as contractors
3%
India
12%
52%
1%
41%
19%
0.3%
3%
5%
0.2%
22%
98%
Asia
1%
0.8%
5%
SSA
(Less
RSA)
0.2%
8%
0
0.25
84%
0.5
9%
1
2
5
10
25
100
(in Hectare)
Land Holding Size
Subsistence Famer
Micro Holders
Small Holder
Medium Holders
Large Holders
Cano not afford
mechanization/
outsourcing
Starting Mechanization
Ownership
(0-20%)
Mechanization
Ownership at (20% 80%)
Mechanized
(80%-100%)
Fully mechanized
(100%)
Note:
1.
Land holding size includes the land customers owned, rented or leased land
| Immersion| Africa Prioritization | 10 October 2013
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2.
Mechanization is measured by either a. owning a 2 axle Ag equipment or b. outsourced to a mechanized method.
3.
SSA uses different criteria: 10% for outsourcing and 20% for self servicing
Improving agricultural output requires the
management of these agronomic fundamentals.
Input
Placement
Input
Agronomic
Application
Form
Fundamentals
Timing
Application
Rate
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| Immersion| Africa Prioritization | 10 October 2013
Low natural soil fertility levels impact on yield is
compounded by annual mining of soil N-P-K.
On average, 13 kg/ha of nutrients are applied compared to
38kg/ha of nutrients removed through the harvesting of grain.
300
Total Fertilizer Applied kg/ha (N + P2O5 + K2O)
Fertilizer NPK
250
Input Placement
200
150
Input Form
Agronomic
Fundamentals
Application
Timing
100
50
Application
Rate
0
* Maize Grain and Biomass only
Source: World Bank
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| Immersion| Africa Prioritization | 10 October 2013
Alfisols
Oxisols
Ultisols
Grain* NPK
Mechanization for the placement of fertilizer is critical to
making more nutrients available to the crop, especially in
tropical soils.
Broadcast
Fertilizer
Input
Placement
Input Form
Agronomic
Fundamentals
Application
Timing
Application
Rate
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| Immersion| Africa Prioritization | 10 October 2013
Banded
Fertilizer
Timing of planting to capture early season rains
can have a significant impact on yield.
Timing can be optimized with mechanization compared to hand
planting, which is limited to after the rains have started due to
hard ground conditions.
High Temp oC
Low Temp oC
Precipitation (cm)
Input Placement
40
Central Zambia
30
Input Form
Agronomic
Fundamentals
Application
Timing
20
10
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
0
Application
Rate
Ideal planting
Current
window
planting
window
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| Immersion| Africa Prioritization | 10 October 2013
Open-Pollinated Variety conversion to Hybrid seeds
Input Placement
Input
Form
Agronomic
Fundamentals
Sales Agronomist
Application
Timing
Pioneer Extension
Partners
Retailer
Distribution
Application
Rate
Sales,
Education
& Support
Farmer
Pioneer Extension Partners
• Commissioned Sales
• Quantity growing 3x to nearly 11,000
employees in next 5 years
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| Immersion| Africa Prioritization | 10 October 2013
The limited access to knowledge of agronomic
fundamentals and financing to acquire inputs and
mechanization is contributing to the yield attainment gaps
in Sub-Sahara Africa.
Input Placement
Agronomic
Input Form
Fundamentals
Application
Timing
Application
Rate
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| Immersion| Africa Prioritization | 10 October 2013
Key Messages
The potential for increased Ag
production in Africa is enormous and
some countries matter more than
others
Factors other than agronomic
potential will enable or constrain
each country’s growth potential.
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| Immersion| Africa Prioritization | 10 October 2013
Africa’s projected CAGR growth is forecasted at
approximately 4.6 % between 2008 and 2023. The
forecasted growth is second only to emerging Asia.
African GDP,
2005 $ billion PPP
Compound annual
growth rate, %
Compound annual GDP growth, 2008–23
%, 2005 PPP$
Emerging Asia
4.6
4.1
3.8
4.1
4.4
4.6
Middle East
3.6
4.5
SOURCE: Global Insight
| Immersion| Africa Prioritization | 10 October 2013
4.6
Africa
Central and
Eastern Europe
3.3
Latin America
3.9
World
3.8
Developed
economies
22
6.7
1.7
GDP per Capita for the top and middle 6 countries
remains reasonably strong relative to the immense
population growth during this time period.
Top 6
Middle 6
Bottom 6
30,908
10,000.0
4.5%
9,000.0
4.0%
8,000.0
3.5%
7,000.0
3.0%
6,000.0
2.5%
5,000.0
2.0%
4,000.0
1.5%
3,000.0
1.0%
2,000.0
0.5%
1,000.0
0.0%
0.0
-0.5%
2010
SOURCE: Global Insight
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| Immersion| Africa Prioritization | 10 October 2013
2043
CAGR
The infrastructure deficit in Africa is significant,
particularly in rural areas.
Rural Access Index
SSA Electricity access is only 25%
1 in 3 rural Africans have access to an all-season road.
Source: The World Bank Group
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| Immersion| Africa Prioritization | 10 October 2013
Sub-Sahara Africa has great need for infrastructure
and it’s impact on Ag can be significant
Top 6
25%
Middle 6
Bottom 6
% Paved Roads
20%
15%
10%
5%
NA
0%
SOURCE: CIA.gov
500
Delivered Fertilizer Price (US$)
Losses
400
Corruption & Red Tape
Dealer Cost & Margin
300
Importer Margin
200
Transport & Storage
Port Costs & Duties
100
CIF
0
US
SOURCE: Alliance for a Green Revolution in Africa, 2013
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Financial Costs
| Immersion| Africa Prioritization | 10 October 2013
Zambia
FOB
Rural Accessibility Index
Improving rural accessibility would entail a huge
expansion of Africa’s road network. The cost of
addressing Africa’s infrastructure needs is around
$93 billion a year, about one-third of which is for
maintenance.
100%
80%
R2 = 0.97
60%
40%
20%
0%
0
200
400
600
800
1000
1200
1400
1600
Thousands of kilometers of all season road needed
Source: Africa’s Infrastructure, A Time for Transformation; Foster and Briceno-Garmendia
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| Immersion| Africa Prioritization | 10 October 2013
Zambia, the tipping point.
Production
CORT (kt)
6,000
Tractors
Industry (units)
800
Zambia FRA implemented premium
price for smallholder corn together
with seed and fertilizer subsidies.
700
600
4,000
500
3,000
400
300
2,000
200
1,000
100
-
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
CORT = Cereals, Oilseeds, Root and Tubers
FRA = Food Reserve Agency
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| Immersion| Africa Prioritization | 10 October 2013
FY08
FY09
FY10
FY11
FY12
Tractor Units
Production and GDP Units
5,000
AG GDP
(Curr. USD Mil)
In Conclusion
– Sub-Sahara Africa has enormous potential and when the
catalysts of agricultural development act, growth can be rapid
– Small holder success is the key to unlocking agricultural
productivity across the region
– Mechanization is key a key facilitator of small holder success
– Governments are a critical enabler of the development of
agriculture. Their ability and effectiveness vary by country,
but once they engage, advancement can be rapid.
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| Immersion| Africa Prioritization | 10 October 2013