Sustainable Growth and Social Development Through Agribusiness Industry

Professor Kelly Kingsly

Independent; Copperstone University ; Charisma university

Date Written: June 15, 2016 Download this paper

Abstract

After years of neglect, agriculture is once again seizing the attention of African governments, business leaders, communities, and development donors, as a powerful driver of the continent’s relentless growth. Some estimated that Africa’s population will be reaching 2 billion in 2020, with resultant consequences for food security, growing urbanization, and youth unemployment. Therefore, the majority of African countries urgently need to refocus their future agricultural growth strategies. To make things worse, the continent’s agriculture is substantially under-capitalized, with extremely low levels of mechanization and value addition. Some statistics give for the continent an average of 13 tractors for each one hundred square kilometers of arable land compares unfavorably both with the global average (200/100km2 of arable land) and with the average for other developing regions, such as South Asia (129/100km2 of arable land). The same applies to irrigation: sub-Saharan Africa (SSA) has only 4% of arable and permanent cropland under irrigation, compared with 39% in South Asia and 11% in Latin America and the Caribbean.

The African agribusiness’s present share of total Gross Domestic Product is very low. Data from the World Bank shows that the value of agribusiness production in Thailand matches that of the entire Sub Saharan Africa region, while that of Brazil is nearly four times the African total. In addition, in two African countries (South Africa and Zimbabwe), agriculture’s share of GDP exceeds that of agribusiness by 10 percentage points, highlighting the region’s failure to add value to farm production. This is surprising for South Africa who has a tradition of high volumes agriculture. This inability to produce and process considerable volumes of agro-industrial commodities stifles the scope for industrialization, and means that these countries are failing to benefit from opportunities to add value and create sustainable jobs. While high-income countries add about US$180 of value by processing one tonne of agricultural products, African countries generate less than US$40. Moreover, while 98% of agricultural production in high-income countries undergoes industrial processing, in African countries less than 30% is processed. Rural areas in African countries have limited agro-processing activity and capacity. Sub Saharan African countries experience large post-harvest losses, especially for perishable commodities such as fruit and vegetables, with post-harvest losses above 50% of total attainable production, with grains losses below 25%.

Although high value and non-traditional agro-industrial production for export provides dynamic and growing market opportunities for some African countries, the most important demand driver in Sub Sahara Africa is the local and regional market. Looking at the demographics and changing consumption habits for food and non-food agricultural products, domestic markets and intra-African trade will remain important, representing more than three-quarters of total African market value, with domestic markets alone constituting 80% of total market value in regions such as East Africa.

Keywords: Agriculture, industries, Africa, growth, transformation, jobs, transformation, business management

Suggested Citation:Kingsly, Professor kelly, Sustainable Growth and Social Development Through Agribusiness Industry (June 15, 2016). Available at SSRN: https://ssrn.com/abstract=2796348 or http://dx.doi.org/10.2139/ssrn.2796348