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Asia AgriBusiness Forum

Unlocking the Food Belts of Asia and Africa

Government of India

February 4-6, 2014

Unlocking the Food Belts of Asia and Africa

Executive Summary

1. Introduction

2. Cereal Production

3. Horticulture

4. Plantations

1

3

1.1. Agriculture global perspective 4

1.2. Importance of agriculture in Africa 5

1.3. Importance of agriculture in Asia 5

1.4. Key agriculture sub-sectors in both the continents 6

7

2.1. Status of cereal production and consumption - Global 8

2.2. Overview of cereal sector in Africa 9

2.3. Overview of cereal sector in Asia 13

19

3.1. Fruits and vegetables - A global perspective 20

3.2. Fruits and vegetables - profile of Africa 21

3.3. Fruits and vegetables - profile of Asia 27

33

4.1. Status of plantation crops - Global 34

4.2. Role of plantation crops in Africa 35

4.3. Role of plantation crops in Asia 40

Table of contents

5. Meat, Poultry and Fish

6. Dairy

7. Partnership Themes

8. Case Studies

9. Conclusions and Recommendations

47

5.1. Meat, poultry and fish market - Global 48

5.2. Meat, poultry and fish sector review - Africa 49

5.3. Meat, poultry and fish sector review - Asia 53

57

6.1. Global dairy sector 58

6.2. Dairy Sector - Africa 58

6.3. Dairy Sector - Asia 62

65

7.1. Identification of opportunities 66

7.1.1. Facilitating access to inputs and technology 66

7.1.2. Access to finance for developing agribusiness sector 67

7.1.3. Upgrading agriculture infrastructure 67

7.1.4. Building skills and promoting entrepreneurship in agribusiness 68

7.1.5. Inclusive growth of agribusiness 69

7.2. Partnership model 69

7.3. Role of governments in partnerships 70

73

83

Table of contents

Unlocking the Food Belts of Asia and Africa1

Agriculture and agribusiness are at the top of the agenda for economic transformation and

development in Asia and Africa. It is due to the fact that agribusiness plays an important

role in initiating the economic development through promoting agro-based industries and

creating additional employment. In addition to economic development, investment in

agribusiness stimulates the development of new markets which, in turn, develop

agriculture activities and makes agriculture a commercial enterprise.

Agriculture has been a focus sector in the Asian and African countries for decades, but the

major attention was towards increasing production and productivity. In the current

scenario, where the agriculture sector is growing at a remarkable rate, the need is to focus

not only on increasing the production or productivity but also on promoting agribusiness.

Consolidation of both agriculture and agribusiness is important for overall development of

agriculture sector. In this report, the great potential of the agribusiness sector in Asia and

Africa is highlighted. The facts and various successful case studies across different

countries in Asia and Africa establish that good policies, support from government,

favourable business environment can promote agribusiness in both the continents. The

report also highlights the significance of forming strategic partnerships (among different

countries of Asia and Africa) for overall growth of the agribusiness sector. With global

agribusiness sector growing at an unprecedented rate, such partnership could transform

the agribusiness sector across Asia and Africa.

The report draws attention to major agriculture sub-sectors of both the continents. It

provides an analysis of various sub-sectors in terms of production, demand and supply,

export potential and processing capability. This, in turn, helps to identify various business

and investment opportunities in the agriculture sector of both Asia and Africa.

The report also examines various constraints towards the development of the agribusiness

sector. Many of these constraints are well identified while some are specific to individual

value chain which needs to be addressed in a specific manner. The report discusses

challenges majorly in areas like market policies, increasing agriculture input accessibility,

access to finance, infrastructure enhancement, skill development, etc and probable ways

to overcome these challenges.

In conclusion, the report reviews various practical suggestions for overall development of

agribusiness sector in Asia and Africa. Although it broadly covers agribusiness

opportunities in both the continents, the huge diversity in agro-ecology, business

environment and difference in market conditions requires specific adaptation according to

local requirements.

Executive Summary

Introduction1


1.1. Agriculture – Global perspective

In the developing countries, agriculture continues to play a prominent role in economic 1development. In many of these, the sector contributes as much as 30% to the gross

domestic product (GDP) and acts as a major source of employment. A considerable 2

proportion of the world's population, nearly three billion people , lives in rural areas. It is 3also reported that nearly 2.5 billion of these rural people earn their livelihood from

agriculture or allied activities.

Agriculture is benefiting from technological innovation and there is a growing recognition

among the governments as well as the donor agencies about agriculture being the

mainstay of economic growth policies. The acknowledgement of the sector's role in

development and growth lays a fresh impetus for fostering investments in agriculture

which will lead to a rise in productivity and income generation.

The world's most important cereal crops are wheat, rice and corn. Rice, being the source

of more than one-fifth of the world's calorie consumption, assumes the position of the

most important food crop. The Asian countries lead the rice production in the world. China

is the largest producer, followed by India and Indonesia. Wheat, the second most important

crop, covers the maximum area under cultivation. China again is the largest producer

followed by India and Russia. Corn acts as a staple crop for a majority of the Sub-Saharan

Africa and is a major source of carbohydrates, protein, iron and minerals. The US is the

largest producer, followed by China and Brazil.

In many developing countries, the agriculture sector faces numerous challenges. Although

it is an important economic activity, its growth suffers greatly due to lack of investment in

infrastructure, R&D, climate change, inadequate policy formulation, etc. The lack of or weak

agricultural infrastructure along with low agricultural productivity is adversely affecting

agricultural growth. In addition, the current downward trend in the global economy further

exacerbates the situation.

Over the last 50 years, the world's agricultural production has grown on an average of 2% 4to 4% per year, while the cultivated area has grown by only 1%. Under such

Introduction1

1 FAO Statistical Year Book 20132 FAO Statistical Year Book 20133 FAO Statistical Year Book 20134 FAO Statistical Year Book 2013


circumstances, it becomes imperative to increase agricultural productivity to meet the

growing food demand of the population.

Agriculture, apart from supplying food, acts as a major source of income and employment

to the African population. About 65% of Africa's labour force is employed in agriculture, 5

which contributes around 32% to the total GDP.

It has been noted that the productivity in African agriculture lags behind compared to the

other continents. The agricultural sector's weak performance is a major barrier in the

development of the agribusiness sector. Agricultural productivity and growth largely

depends on the physical environment, technology, policy and micro and macro-economic

factors.

The availability of land for agriculture is a crucial factor for food production. The continent is 6

endowed with 733 million hectares of arable land, which accounts for 27.4% of the total

arable land in the world. Currently, only 183 million hectares of land is under cultivation in

Sub-Saharan Africa and approximately 452 million hectares that are suitable for agriculture

still remain uncultivated. The major cereal crops of Africa are corn, wheat and rice, while

bananas, pineapples and oranges are the major fruits. The major plantation crops include

cocoa and coffee.

Even after having enhanced and diversified agro-climatic advantages, Africa is a net 7

importer of agricultural products . Cereals (including rice, maize and wheat), and livestock

products (dairy and meat) represent more than 50% of Africa's total food imports. Africa's

agricultural exports lag way behind the country's imports. 'Non-traditional' export products

(flowers, semi-processed fruits and vegetables and textile products), traditional products

(coffee, cocoa, tea, and spices) and tobacco constitute a significant share of Africa's

agricultural exports.

In Asia, more than 2.2 billion people directly or indirectly depend on agriculture for their

livelihood. The Asian countries together constitute more than 60% of the world's

population and heavily depend on agriculture to meet an ever - increasing food demand.

Asia has made remarkable progress in agricultural production while dealing with an

increasing population and a resultant increase in the food demand. Food production has

increased at a rate higher than the growth in population. The Green Revolution, a scientific

1.2. Importance of agriculture in Africa

1.3. Importance of agriculture in Asia

5 Africa Agriculture Status Report: 2013, AGRA6 http://philmatibeceo.wordpress.com/2011/11/07/africa-the-world%E2%80%99s-potential-food-producer/7 Why has Africa become a net food importer? – An FAO report – Rome 2011.


revolution with enhanced and improved seeds, better irrigation facilities and fertilizers, was

the engine of this transformation.

Asian agriculture has evolved with the introduction of new high - yielding inputs for cereals.

The continent has become an important destination for the production of rice, wheat and

corn. Asia is now a major supplier of rice to the rest of the world. The main varieties of

fruits produced in Asia are bananas, mangoes, apples, oranges and grapes. Alternatively,

the main plantation crops grown in Asia are palm kernel, rubber, cotton and tea.

The availability of land for agriculture in Asia is continuously decreasing due to its rising

population. This indicates that these continuously shrinking and deteriorating land

resources need to be judiciously used in order to sustain the needs of the future. Adequate

policies, strategies, technologies and human resources must be put in place to meet the

environmental as well as socio-economic challenges.

In Africa, major sub-sectors are horticulture, plantation crops such as cocoa and cotton.

Africa is known for production of fruits, cashew, cocoa and cotton. These are also major

exporting commodities from Africa. In terms of production, oranges and bananas are the

major horticultural crops of Africa. These are also the major exporting fruit crops from

Africa. Apart from fruits, a substantial quantity of cashews and cocoa is also exported from

Africa.

In Asia, major sub-sectors identified are cereals, horticulture, meat, palm oil, tea and

rubber. These are the major producing and exporting commodities in Asia. The export is

both intra continent and to international market. In terms of production, cereals are the

most important sub-sector in Asia. China, India, Thailand, Vietnam and Malaysia are the

major cereal producing countries in Asia. The major cereals produced in Asia are rice,

wheat and maize. Rice is majorly produced in China, India, Vietnam and Bangladesh. After

cereals, horticulture is the major sub-sector in Asia. China and India are the major players in

fruits and vegetables sector in Asia. The other major sectors of great importance in Asia are

palm oil, rubber, meat and tea.

1.4. Key agriculture sub-sectors in both the continents

Cereal Production2


2.1. Status of cereal production and consumption - Global

8 9World's cereal production reached 2,589 million tonnes in 2011-12, 4.6% more than the

10previous year. This increase comprises a 6.0% rise in wheat, 2.6% growth in the global

coarse grains harvest and 3.4% increase in rice production.

11The total cereal consumption in 2011-12 reached 2,309 million tonnes , 1.6% more than

2010-11. Out of this, approximately 1,000 million tonnes is consumed as food; 750 million

tonnes is used as animal feed and the remaining is processed for industrial use.

It has been observed that the global cereal food production is catching up with the rise in

population despite the slow economic recovery. This is primarily due to the investments in

agriculture by the developing countries in order to boost the sector's growth.

Cereal Production2

8 FAO Global Outlook 20119 FAO Global Outlook 201110 FAO Global Outlook 201111 FAO Global Outlook 2011

Figure 1: Global demand and supply of cereals (in million tonnes)

2527.12495.2 2474.1

2589.1

2201.52179.7

2272.72308.6

1900

2000

2100

2200

2300

2400

2500

2600

2700

2008 2009 2010 2011

Production Consumption

Source: FAOSTAT, PwC analysis


2.2. Overview of cereal sector in Africa

Reflecting on the Sub-Saharan Africa's uneven availability of land and water and its varying

soil, land form and climate characteristics, its agriculture includes a widely diverse system

of crops, livestock, fishing and forestry. Most farms in the continent follow mixed-cropping

practices. Mixed farming in Africa generally involves different degrees of crop–livestock

integration which maintains sustainability and creates an alternate source of income for the

small farmers.

In addition, African agriculture is highly dependent on rains. It is also characterised by poor

land productivity, minimal mechanisation, weathered soil, weak land tenure systems and

inefficient markets. Although challenging, these characteristics also present opportunities

in the form of unused and underused arable land with the potential to boost agricultural

productivity.

Cereal production in Sub-Saharan Africa has increased by more than four times since the 12 13early 1960s, rising from 38 million tonnes in 1961–1963 to 164 million tonnes in

2011–2012. This increase in production can be attributed to the policy support from

government agencies.

Countries including Liberia, Rwanda, Niger, Ethiopia and Sierra Leone have previously

suffered low production levels due to the lack of support from government. However,

following the introduction of the agriculture supporting policies, they have experienced

stable production patterns. Notably, Ethiopia has almost doubled its domestic grain 14

production (from 8 million metric tons in 2,000 to 15.6 million metric tons in 2010) and is

now Sub-Saharan Africa's second - largest grain producer after Nigeria. However, this

production growth is projected to further accelerate in the coming years.

12 FAO stat data13 FAO stat data 14 USDA data

2009 2010 2011

0

5

10

15

20

25

30

Burudni

Ehi pi

to

a

Ghana

eya

Kn

Ma awl

i e

Moza

iqu

mb Nigeria

Rwan

da

ana

ia

Tz

n

Uang

da


159.1

162.9163.9

167.5

154

156

158

160

162

164

166

168

170

2009 2010 2011 2012

Production

Figure 2: Production of Cereals in Africa (in million tonnes)


Figure 3: Production of Cereals in Selected African Countries (in million tonnes)



The above graph shows that the demand for cereals is growing at a rate higher than what

can be supplied. The compounded annual growth rate (CAGR) for demand of cereals in 15 16Africa is 2.81% as compared to the CAGR in production which is 2.29% . This implies

that in the coming years, if the African countries are not able to increase their productivity

substantially, they will have to depend on the import of cereals to feed its growing

population.

Currently, the major imported commodities in Africa are wheat, maize and barley. The

distribution is shown below:

Figure 4: Supply and demand of Cereals in African Countries (in million tonnes)

134141

130144 146

163 164 167

178 182 186 191199 205 211 217

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012



15 FAO stat data and PwC analysis 16 FAO stat data and PwC analysis

2%

71%

25%

2%

Barley Wheat Maize Others

Figure 5: Major cereal imports in Africa in 2011



The above graph indicates that wheat is the major importing cereal in Africa, constituting 1771% of the total cereal import. The major countries that indulge in this import are Egypt,

Algeria, Nigeria, Morocco, South Africa, Ethiopia, Tunisia, Kenya and the United Republic of

Tanzania.

The production of cereals in Africa is characterized by low productivity. The average cereal

yield in Africa is below one tonne per hectare, far below the global average of four tonnes

per hectare. This sluggish growth in agricultural productivity is due to the modest use of

improved agricultural technologies (mainly seeds and fertilizers). Climatic and agronomic

conditions in Africa also act as barriers in agricultural growth, because most of Africa is not

suitable for new high-yielding crop varieties that have done well in Asia.

In many Sub-Saharan African countries, significant progress has been made by developing

improved crop varieties. However, the adoption rate of improved seeds continues to lag

behind. African governments and development agencies have deregulated the seed sector

after recognising the critical role of improved seeds in agricultural transformation. This, in

turn, has led to an increased participation by the private, local, regional and multinational

seed companies. There are a number of institutional and policy bottlenecks that still hinder

the expansion and smooth functioning of the seed sector.

On the other hand, the modest use of fertilizers is adding to the existing productivity

issues. The use of fertilizers in Africa can be regarded as the lowest in the world, averaging

only 8 kg per hectare with a range of less than 1 kg per hectare in Uganda and DRC to 18about 48 kg per hectare in Zimbabwe. The reason for the low fertilizer usage is the

increase in the cost of cultivation for the farmers. Higher costs of other agricultural inputs

due to poorly developed input market and costly transportation due to lack of

infrastructure, have further increased the overall cost of cultivation for the farmers in Africa.

African agriculture generally suffers due to the lack of or poor infrastructure. This includes

road and rail transport, storage facilities, power availability and telecommunications. The

extra cost of carrying the produce due to the delay in transportation and the wastage due

to lack of infrastructure reduces domestic competitiveness. This wastage destroys around 19

8% of the total domestic supply of cereals.

17 FAOSTAT 2011 and PwC analysis 18 African Agriculture and Productivity Report by AGRA: 2011. 19 FAOSTAT data and PwC analysis

Figure 6: Maize value chain


An indicative value chain of maize in Kenya has been provided below in order to understand

the value chain of cereals in Africa:

Source: PwC analysis

Input Supply

KeyStake -holders

Input supplybyGovernmentor privateplayers

Farmers areprovided withfinancialassistancefrom banks

Collectionand storageby ruralassemblersor brokers ortraders

Trading atmarketplacewith marketpriceinformationprovided byMoA

Small - scaleand large -scale foodprocessingunits for value -addedproducts

Export andimport of maize withstandardcertificationservicesprovided byKEPHIS

Storage anddistributionby privatesector player

Distributionto consumers

ProductionCollection

and Storage Trading ProcessingImporting/Ex porting Wholesale Retail

The following are the key constraints in the cereal value chain:

• Low utilization of fertilizers

• High adulteration in agriculture inputs

• Low availability of farm machinery

Agriculture services

Storage & logistic

• Increased accessibility of farm inputs and machinery

• Investment in the supply chain facilities and effective monitoring

• Investment in water conservation infrastructure

• Lack of extension facilities

• Weak and poorly coordinated mechanisms for dissemination, and improved technology transfer

• Investment in agriculture R&D in order to increase productivity

• Investment in extension services to farmers for effective dissemination of technology among farmers

• High post-harvest losses due to lack of adequate storage facilities and poor condition of rural roads

• Investment in the formulation of infrastructure for better storage and transportation facility

Sector Constraints Opportunities

Input

2.3. Overview of cereal sector in Asia

Asia alone produces around 90% of the world's supply of rice. The proportion of land under

rice cultivation as compared to the total arable land is the highest in Vietnam, Bangladesh

and Sri Lanka. The other major cereal crops grown in Asia are wheat, maize, millets,

sorghum and barley.


In the last few decades, rice production in Asia has increased by more than 100%, making

it the most important crop in Asia. The major rice - producing countries are China, India,

Indonesia, Vietnam, Thailand, Bangladesh, Myanmar, the Philippines, Pakistan, Cambodia,

Japan and Sri Lanka. The area harvested under rice is the highest in India, followed by

China, Indonesia, Thailand and Bangladesh. In terms of productivity, the Republic of Korea

with 7.4 tonnes per hectare, has the highest yield, followed by Turkey with 7.3 tonnes per 20

hectare and China with 6.7 tonnes per hectare . Though India has the largest area under

rice cultivation, India lags behind in terms of overall production due to comparatively low

productivity.

Wheat ranks second after rice as the staple food grain in Asia. It is commonly grown in

Kazakhstan, North China, Pakistan, Middle East, India and Afghanistan. China is the leading

producer of wheat in Asia, followed by India, Pakistan, Turkey and Kazakhstan. India has the

largest area under wheat cultivation, followed by China, Kazakhstan and Pakistan. The UAE

has the highest yield of 7 tonnes per hectare, followed by Saudi Arabia which has 6.4

tonnes per hectare and China which has 4.9 tonnes per hectare. The productivity of wheat

in India is lower compared to its neighbouring countries such as China, about 3.1 tonnes

per hectare.

Maize is the third most important cereal crop of Asia. China is the largest producer and

produces nearly 70% of the total maize production in Asia. China is followed by India and

Indonesia. Apart from maize, other cereals such as barley, sorghum and millets are also

grown in Asia. Major barley - producing countries are Turkey, Iran, China and India. Millets

are majorly grown in India, China and Nepal. India and China also produce sorghum.

20 FAOSTAT

Figure 1: Global demand and supply of cereals (in million tonnes)

887

917

947

968

985

1011 1011 1011

820

840

860

880

900

920

940

960

980

1000

1020

1040

2005 2006 2007 2008 2009 2010 2011 2012

Cereal Production Source: FAOSTAT, PwC analysis


The demand and supply of cereals in Asia is graphically represented below. The Asian

countries are net importers of cereals. The deficit in cereals is due to the shortage of

wheat and maize in Asia. The graph indicates that if the overall production parameters

remain the same, the growth in production will be slower and the deficit of cereals will be

much larger than it is today. Under such circumstances, the Asian countries will be heavily

dependent on imports to meet the rising demands of the population.

Figure 8: Supply and demand of cereals in Asia (in million tonnes)

887

917

947

968985

1011 1011 1011956

974990

10121029

10481067

1087

850

900

950

1000

1050

1100

1150

2005 2006 2007 2008 2009 2010 2011 2012



Asia is known for its rice exports in the world. Thailand, Vietnam, India and Pakistan are

major exporters. India is the leading exporter of rice and exported 10.7 million tonnes in

2012. India is followed by Vietnam with 7.7 million tonnes and Thailand with 7.1 million

tonnes.

Apart from rice, wheat and maize are other major cereals being exported, though their

exports are majorly within Asia. Wheat is primarily exported by Kazakhstan and Pakistan

and around 85% of the total export of wheat is from Asia. Maize is primarily exported by

India, which constitutes more than 75% of the maize exports by Asia.


The Asian countries largely import wheat and maize. These imports are mostly intra-Asia

imports. Japan, Indonesia, Republic of Korea, Bangladesh, Iraq and the Philippines are the

major importers of wheat.

Japan, Republic of Korea, China, Iran, Indonesia and Malaysia import maize.

Figure 9: Major cereals exported by Asian countries 2011

11%

13%

60%

16%

Maize Wheat Rice Others


Figure 10: Major cereals imported by Asian countries in 2011

8%

32%

36%

10%

14%

Barley Maize Wheat Rice Others


The value chain can be a very useful and conceptual tool while trying to understand the

factors that impact the demand and supply of a commodity.

Figure 11: Value Chain of Wheat in India



The key constraints along the cereal value chain in Asia are:

• Non-availability of essential inputs to farmers for timely sowing

• Lack of water resources in some countries

• Lack of access to farm machinery


Storage & logistic

Processing

• Increased accessibility of farm inputs and machinery

• Investment in the supply chain facilities

• Investment in water conservation programmes and related infrastructure

• Lack of extension facilities

• Low agriculture productivity

• Investment in agriculture R&D in order to increase productivity

• Investment in extension services to farmers

• Poor post - harvest infrastructure

• Low level of processing in some major production regions


• Investment in food processing sector


Input

Primary Market or Commission Agents

Primary Market Wholesalers

Urban arket Wholesalers

M

Retail Shops

Consumer

Processors, Large Flour Mills

Small Processors

Food Corporation of India

State Civil Supply Department

Fair Price Shops

Farmers

Horticulture3


3.1. Fruits and vegetables – A global perspective

The global fruit and vegetable production has experienced an impressive growth, recording

an annual growth rate of 3% over the last decade. In 2011 alone, almost 640 million tonnes

of fruits and more than one billion tonnes of vegetables were produced throughout the

world.

The growth in the production of fruits and vegetables has largely been driven by the

growing global demand. Countries such as China have significantly increased their

production capacity to keep up with the growing domestic consumption and capitalise on

export opportunities. China has emerged as the world's largest fruit and vegetable

producer, with global output shares of about 20% in fruits and 50% in vegetables. India is

the second - largest producer of fruits and vegetables in the world, with global output

share of about 12% in fruits and 14% in vegetables.

Sub-Saharan Africa and Southeast Asia have also recorded strong growth rates in fruits and

vegetables. The main reason for this significant growth rate is the fact that horticulture crop

production generates more income per unit of land, offering high returns to smallholders.

Apart from this, horticulture is labour - intensive farming and creates more employment

opportunities.

High demand of fruits and vegetables creates opportunities for poor farmers in the

developing countries of Africa and Asia. However, an efficient supply chain, low post-

harvest losses and adequate infrastructure are necessary before farmers can reap the full

benefits of cultivating these perishable crops.

The consumption of fresh fruits and vegetables is highest in China. Chinese customers

purchase most of their fresh fruits at street retail shops and marketplaces. The trend

towards fresh vegetable consumption is one indication of the population's preference, but

in some parts of the world, fresh vegetables lose their market share to the processed

products. Many vegetables can be processed into canned products that cater to local

tastes.

Horticulture3


3.2. Fruits and vegetables - profile of Africa

Key African fruit produce includes pineapples, bananas and mangoes. Banana, the most

commonly produced fruit, accounts for 25% of the total fruit production (by volume) in

2011.

Nigeria, the largest producer of fresh fruit in Sub-Saharan Africa, accounted for 22% of the

region's production, followed by South Africa with 18%. Smaller producers such as Kenya

have a limited range of export - oriented fruits such as pineapples, mangoes and bananas

along with papayas, watermelons, plums and avocadoes that tend to be consumed on the

farms or in local markets. East and West African countries, especially Ghana, Kenya,

Nigeria, Rwanda, and Uganda, are Sub-Saharan Africa's largest fresh fruit consumers.

Figure 12: Global fruits and vegetables production (in million tonnes)

566 591 604 613 638

962 995 1019 10491090

0

200

400

600

800

1000

1200

2007 2008 2009 2010 2011

Fruits Vegetable Source: FAOSTAT, PwC analysis

70.3 73.4 73.7 75.5 78.385.7 88.9

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011

Fruits Production

Figure 13: Production of fruits in Africa (in million tonnes)



Developing countries in Africa have become the main exporters of fresh vegetables to the

European Union. Some Sub-Saharan African countries have increased vegetable production

significantly during the past two decades. In the international market, African countries

such as Kenya, Cote d'Ivoire and Senegal have become important vegetable exporting

countries of French beans, green onion and tomatoes, respectively.

The domestic consumption of fruits varies from region to region. However, Africa's current

production of fruits is not only sufficient to meet its domestic demand but also export it to

the European nations for foreign exchange. Increase in consumer demand in the developed

countries for out-of-the-season fresh fruits and vegetables has opened a niche opportunity

for these African countries to produce these crops for export during the void period at

attractive prices.

70.3

73.4 73.775.5

78.3

85.7

88.9

67.269.5 70.3

72.374.6

76.578.5

55

65

75

85

95

2005 2006 2007 2008 2009 2010 2011

Fruits Production Fruits Consumption

Figure 14: Supply and Demand of Fruits in Africa (in million tonnes)


Africa is a major exporter of oranges, apart from grapes, pineapples, mangoes and

bananas. Namibia is the primary exporter of grapes; Cameroon and Côte d'Ivoire lead the

export of bananas and pineapples; and mango exports have the most diversified origins

within Africa, with countries from both East Africa and West Africa. Fresh fruit exports from

East Africa tend to cater to the demand of the countries in the Middle East and South Asia.

However, West African countries export fruits largely to the European Union.


Egypt, South Africa and Morocco are major exporters of oranges. These three countries

constitute nearly 96% of the total exports by Africa. On the other hand, bananas are

exported from Cameroon and Côte d'Ivoire and these two countries constitute nearly 91%

of the total exports by Africa. Mangoes are majorly exported from Kenya and Senegal and

apples and grapes are majorly exported from South Africa.

Figure 15: Major fruits exported from Africa in 2011

Oranges Bananas Apples Others

52%

15%

8%

25%


Figure 16: Quantity of fruits exported from Africa (in million tonnes)

3.5 3.74.0 3.9

4.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2007 2008 2009 2010 2011

Total quantity Exported


It can be observed that the growth in production and exports by these African countries

has not been proportional. This, in turn, shows that Africa has not fully capitalised on the


possible export opportunities. It can be noted that the export of fresh fruits from Africa has

almost been constant over the years.

The fruit processing industry in Africa is still at a very nascent stage. Thus, only a broad

insight can be gathered about it, which states that in Sub-Saharan Africa, only South Africa

has a developed agro-processing sector and accounts for more than 70% of the processed

fruits from this region. Kenya is another major fruit processing region, but accounts for only

13% of the total processed volumes of fruit in Sub-Saharan Africa.

A considerable amount of the tropical fruits grown in Africa is wasted due to poor post-

harvest handling, delay in transportation and improper storage. Therefore, processing

presents an opportunity to mitigate waste, add value to crops and create a driving force for

an increased economic activity in rural fruit-growing areas. While fresh fruit exports can be

constrained by the costs of shipping perishable products over long distances, processing

offers an alternative route to the market. Investing in processing facilities can, thus, be an

important means to bring many African fruit crops to the international market.

In terms of vegetables, Africa is important for the production of tomatoes, potatoes, okra,

sweet potatoes, cooking banana (plantain), cassava, yams, green bananas, African

eggplants, amaranth, spider plant and African kale. Moringa, peanuts, common beans,

peppers, cucumber and cassava are the staple products in Africa along with onion. These

vegetables are consumed locally and sold in local markets.

58.1161.57 62.35 64.55 65.57

70.87 70.88

0

10

20

30

40

50

60

70

80

2005 2006 2007 2008 2009 2010 2011

Vegetable production

Figure 1: Global Demand and Supply of Cereals (in million tonnes)

The most important vegetable crops of Africa are tomatoes and potatoes. Tomatoes are

majorly grown in Egypt, Nigeria, Tunisia and Morocco. These countries together constitute

nearly 70% of the total production of tomatoes in Africa. On the other hand, potatoes are

majorly grown in Egypt, Algeria, Malawi, Kenya, South Africa and Rwanda. The share of

these countries in the net production of potatoes is more than 67%. Other major


vegetable crops include onions and okara. Onion is majorly grown in Egypt, Nigeria, Algeria

and Sudan. These countries hold more than 60% share in the net production of onions in

Africa. Okara is produced in Nigeria, Côte d'Ivoire, Sudan and Ghana.

Africa is almost self - sufficient in terms of vegetable production and consumption. Most of

the vegetables produced are consumed locally.

58.11

61.5762.35

64.5565.57

70.87 70.88

58.62

61.8363.65

65.3766.57

70.90 70.93

50

55

60

65

70

75

2005 2006 2007 2008 2009 2010 2011

Vegetable production Vegetable consumption

Figure 18: Supply and Demand of Vegetables in Africa (in million tonnes)

Onions and potatoes are the most

commonly traded vegetable crops

in Africa. Together, these crops

constitute nearly 70% of the trade

in the vegetable segment. Onions

are majorly exported from Egypt,

South Africa and Niger. These

countries together export more than

95% of the total exports of onions.

Egypt, South Africa and Ethiopia are

major exporters of potatoes in

Africa. More than 90% of the export

in potatoes is from these countries.

Tomato is another major vegetable

crop being exported from Africa

majorly from Morocco and Egypt.

Onion Potatotes Tomatoes Others

29%

40%

16%

15%

Figure 19: Major Traded Vegetables in Africa in 2011


• Increased diseases, pests attacks

• High cost of pesticides

• Limited funds to improve farm productivity

• Dependency on rainfall which leads to seasonality in production

• Lack of training sites for farmers

• Lack of research facilities

• Lack of access to effective transport system

• Poor post-harvest infrastructure

• Market reforms and policies to encourage investment in food processing sector

• Increase accessibility to farm inputs

• Formation of farmers organizations to access financial services

• Investment in water conserving infrastructure

• Support through research and extension services

• Investment in better and efficient transportation facilities


• Formulation of the national policy to encourage food processing sector


Input


Logistics

Storage infrastructure

Processing


An indicative value chain of tomatoes in Uganda has been provided below in order to

understand the value chain of fruits and vegetables in Africa:

Figure 20: Value Chain of Tomatoes in Kenya


The major constraints and underlying opportunities in African fruit and vegetable value

chain are indicated below:

ProductionInputs TradeMarketing or Processing

Consumption

Inputs supply companies

Tomato Farmers

Brokers at farm level

RetailersPrivate

Consumers

Brokers at market

SupermarketsLarge

Consumers

ProcessorsWholesalers

Large suppliers


3.3. Fruits and vegetables - profile of Asia

Asia being highly diversified in terms of climatic conditions produces a wide variety of

fruits. The primary fruits produced by the Asian countries are bananas, apples, mangoes,

grapes, oranges, pears, peaches and pineapples. India is the largest producer of bananas,

accounting for more than 48% of the total banana production in Asia, It is followed by

China and the Philippines. However, other fruits such as apples and mangoes are primarily

grown in China and India. India is the leading producer of mangoes in Asia, followed by

China, Thailand and Indonesia. These countries together produce more than 82% of the

total mango production in Asia.

250263

275295 304 312 312

0

50

100

150

200

250

300

350

2005 2006 2007 2008 2009 2010 2011

Production of fruits

Figure 21: Production of Fruits in Asia (in million tonnes)


In Asia, the consumption of fruits and vegetable is in proportion to their production. The

rate of consumption of fruits is increasing at a CAGR (Compounded Annual Growth Rate)

of 4.9%. Stagnation in the production of fruits over the recent years has led to Asian

countries importing fruits.

250263

275

295304

312312

245257

270

285297

312

328

230

250

270

290

310

330

350

2005 2006 2007 2008 2009 2010 2011

Production of fruits Consumption of fruits

Figure 22: Supply and Demand of Fruits in Asia (in million tonnes)



21The major fruits imported by Asian

countries include bananas, apples and

oranges. Bananas are majorly imported

by Japan, the Republic of Korea and

Saudi Arabia. These three countries

together constitute nearly 43% of the

net imports of bananas in Asia. The

next major fruit being imported by the

Asian countries is apple, primarily

imported by Saudi Arabia and

Indonesia. On the other hand, oranges

are primarily imported by China, Saudi

Arabia, UAE and Japan.

21 Imports constitute both intra continental and inter-continental22 Exports constitute both intra continental and inter-continental

Figure 23: Major Fruits imported in Asia in 2011

Bananas Apples Oranges Others

35%

19%

19%

27%


22Asia is a major exporter of

bananas in the international market

a n d t h e P h i l i p p i n e s a l o n e

constitutes more than 80% of the

total exports of bananas from Asia.

Other fruits such as apple are

majorly exported from China. It

alone constitutes around 63% of

the total exports of apples from

Asia. Oranges and grapes are

majorly exported from Turkey.

These fruits together constitute

around 67% of the total exports of

fruits from Asia.

Dates Pears Pineapple Others

Bananas Apples Oranges Grapes Mangoes

30%

19%

9%

9%

7%

6%

6%

4%

10%

Figure 24: Major Fruits exported from Asia in 2011


In Asia, the main vegetables grown include tomatoes, onions, potatoes, cucumbers,

cabbages, eggplants, carrots, leguminous vegetables, garlic, chilies & peppers, beans,

cauliflower, broccoli, lettuce, pumpkins, squash and gourds. Other vegetables include

artichokes, asparagus, cassava leaves, mushrooms, truffles and okra.


Tomatoes in Asia are majorly grown in China, followed by India and Turkey. These three

countries together produce nearly 80% of the total tomato production in Asia. China is also

the largest producer of onions (dry) in Asia, followed by India and Iran. India and China

together produce more than 70% of the total onions produced in Asia. After tomatoes and

onions, potato is the third major vegetable crop in Asia. It is primarily grown in countries

such as China, India, Bangladesh and Turkey. China is the leading producer of potatoes in

Asia.

Asia is also major consumer of vegetables in the world. China, the largest producer of

vegetables, is also the largest consumer of vegetables. Due to big consumption centres in

Asia, majority of the Asian countries are only self-sufficient in vegetables, with little

exports. The rise in the demand of vegetables is in accordance with the rise in production.

650.2681.2

716.1745.7 759.7

798.9836.1

0

100

200

300

400

500

600

700

800

900

2005 2006 2007 2008 2009 2010 2011

Production of vegetables

Figure 25: Production of Vegetables in Asia (in million tonnes)



650.2

681.2

716.1

745.7759.7

798.9

836.1

644.1

673.1

708.0

738.0752.1

781.8

812.7

600

650

700

750

800

850

2005 2006 2007 2008 2009 2010 2011

Production of fruits Consumption of fruits

Figure 26: Supply and Demand of Vegetables in Asia (in million tonnes)


Figure 27: Major Vegetables exported from Asia in 2011

A distinguishing characteristic of fruit and vegetable

exports from this continent is dominated by China,

particularly in the intra-regional Asian market.

Currently, it is a top exporter for a majority of fruits as

well as vegetables.

Onions Potatoes Tomatoes Garlic Others

24%

20%

17%

14%

25%


Figure 28: An indicative value chain of mangoes in India is illustrated below in order to understand the existing value chain of fruits and vegetables in Asia


The major challenges and opportunities along fruit and vegetable value chain in Asia are

indicated below:


• Lack of availability quality seeds

• Inadequate field sorting, grading and packing protocols for commodities

• Lack of maturity index for local and export markets

• Poor infrastructure (roads, bridges) and lack of appropriate transport systems; lack of refrigerated transport

• Limited availability of suitable varieties for processing

• Inadequate appropriate processing technologies

• Inadequate commercialisation of new technologies and lack of basic infrastructure

• Inadequate market infrastructure

• Investment to increase accessibility to farm inputs

• Establish sorting, grading and packing protocols for reducing losses

• Support during research and development to develop maturity indexes for different fruits

• Encourage investment from private sector and policy support from government

• Development of suitable varieties for processing

• Technology transfer from developed countries

• Establishment of pilot plants for commercialisation of new technologies



Input


Logistics

Processing

Marketing

ConsumptionInputs Production Trade Marketing or Processing

Input supply companies

Mango farmersTrader or

Contractor or Middleman

Wholesalers in mandis

Exporters

Large exporters

Retailers

Supermarkets

Processors

Private Consumers

Large Consumers

Plantations4


4.1. Status of plantation crops - Global

The term, plantation crops, refers to crops which are cultivated on an extensive scale

within a large area of land, owned and managed by an individual or a company. These kinds

of crops include tea, coffee, rubber, cocoa, coconut, cotton, oil palm, cashew, cinchona,

etc. Such crops are high-value commercial crops and play a vital role in a nation's economy.

They contribute to the national economy by earning foreign exchange through exports.

Plantation industries provide direct as well as indirect employment to millions of people

around the world.

Cotton is the most widely grown plantation crop worldwide. The leading cotton - producing

countries in the world are China, India, US, Pakistan, Brazil and Uzbekistan. The major

exporters of cotton in the world are Brazil, Egypt and Greece. The major importers of cotton

are Bangladesh and Vietnam. For almost two decades, cotton yields have been the highest

either in Australia or Israel.

Globally, coffee is a major plantation crop. It is majorly produced in countries such as Brazil,

Vietnam, Colombia, Indonesia, India and Ethiopia. The major coffee - importing countries

are the US, Germany and Italy.

Cocoa is widely produced in West Africa, which produces 70% of the total world

production of cocoa. The two main supplier countries within this region are the Cote

d'lvoire and Ghana. Demand for chocolate products drives the supply of cocoa. If cocoa

growers are to stay in business, manufacturers that use the crop must provide support to

cocoa farmers by giving them fair prices.

Cashew production takes place mainly in the central and South American zones, Asia, the

oceanic zone and African zones. The consumption states that the American zone,

consisting of the US and Canada, is the major consumer of cashew. These countries

currently import over 50% of the total cashew exported worldwide. The major cashew -

producing countries are Vietnam, Nigeria, India, Côte d'Ivoire and Brazil.

Tea is a major plantation crop for Asian countries. In the global tea production and export

scenario, India, Sri Lanka, China and Kenya contribute more than 75% to the production

and 71% to the global exports. In addition, Vietnam and Indonesia contribute substantially

towards the production and exports of tea. Vietnam, in particular, has increased its

production in the recent past. As a result of the increase in production and exports from

Plantations4


these countries, Indian tea, which maintained its dominance both in production and exports

for more than a century, has started to lose its supremacy. Increase in production in China

has pushed India to the second position in terms of overall production. Increase in exports

from countries such as Sri Lanka, Kenya and China has pushed India to the fourth position

as an exporter of tea at present. However, the growing domestic consumption in India has

largely been compensating the loss in exports.

Rubber plantations are found majorly in Thailand, Indonesia, Malaysia, India and Vietnam.

Around 48% of the global demand for natural rubber comes from China, India and

Malaysia, which are the three major natural rubber - consuming countries. The most

important consuming sector is the tyre sector, which constitutes around half the total

rubber consumption. The demand of natural rubber depends upon several factors, including

production capacity, input and processing costs as well as price differential when

compared to synthetic rubber.

Oil palm is one of the most important oilseed crops in the world. Among the 10 major

oilseeds, oil palm accounted for 5.3% of global land use for cultivation, but produced

31.3% of global oils and fats output in 2011. Indonesia and Malaysia produce around 85%

of the world's total palm oil. Other producer countries include Thailand, Columbia and

Nigeria. High palm oil consumption countries include China, India, Indonesia, and the

European Union. Global consumption of palm oil was 49.05 million tonnes in 2011.

Globally, there has been a shift in the tobacco market from developed countries where

people are moving away from smoking to developing countries where sales are continuing

to rise. Consequently, tobacco companies have been expanding their international

operations into Eastern Europe, Asia-Pacific, Latin America, Arab nations and Africa.

Government - owned China National Tobacco is the world's largest producer of tobacco,

and accounts for one-third of the global market alone. The Asia-Pacific region is the fastest -

growing tobacco market in the world, with rapidly - growing markets such as Malaysia,

Indonesia, Pakistan and Vietnam. The top five tobacco - growing countries are China, India,

Brazil, the US and Malawi.

All major plantations crops such as coffee, tea, cocoa, palm kernel, rubber, tobacco, cotton

and cashew are grown in the African continent. Among these, cocoa, coffee, cashew and

cotton are Africa's most important export crops that provide income for millions of

smallholder families. Tea, on the other hand, is a minor crop in terms of production, but has

been of great importance to farmers in areas that have unfavourable agro-climatic

conditions for other crops.

Yield levels of the three crops (coffee, cashew and cotton) are heavily dependent on the

use of inputs, government policies and interventions. The impact of these can be

4.2. Role of plantation crops in Africa


substantiated by the fact that in the recent past, delayed payments to coffee farmers in

Kenya have resulted in reduced input use and a marked decline in average yields.

8.7

8.6

8.4

8.5

8.3

7.8

8.4

7.2

7.4

7.6

7.8

8.0

8.2

8.4

8.6

8.8

2005 2006 2007 2008 2009 2010 2011

Production

Figure 29: Production of Major Plantation Crops in Africa


Coffee Cashew Cocoa Palm Kernal Cotton Lint Others

11%

18%

30%

16%

12%

13%

Figure 30: Share of Major Plantation Crops grown in

Africa in 2011

In Africa, cocoa is the most commonly grown plantation crop. The major cocoa producing

countries are Côte d'Ivoire, Ghana, Nigeria and Cameroon. These countries together

produce more than 94% of the total production of cocoa in Africa. Cashew is the second -

largest plantation crop grown in Africa. Major cashew - producing countries are Nigeria,

Côte d'Ivoire, Benin and Guinea-Bissau. Cotton is the third - largest plantation crop grown



in Africa. It is majorly produced in countries such as Burkina Faso, Mali, Egypt and Nigeria.

Other major plantation crop such as palm kernel is majorly grown in Nigeria and Côte

d'Ivoire. These two countries together produce more than 75% of the total palm kernel

production of Africa. In Africa, tea is majorly grown in Kenya and tobacco is majorly grown

in Malawi, Republic of Tanzania and Zimbabwe.

The demand of plantation crops in Africa is limited and majorly Africa is a net exporter of

plantation crops to international market.

Figure 31: Supply and Demand of Plantation Crops grown in Africa (in million tonnes)

8.7 8.6 8.4 8.5 8.37.8

8.4

4.3 4.6 4.65.1 5.0 5.2 5.4

0

1

2

3

4

5

6

7

8

9

10

2005 2006 2007 2008 2009 2010 2011



Figure 32: Supply and Demand of Cocoa in Africa (in million tonnes)


2.83 2.892.67

2.882.65

2.78

3.11

0.48 0.59 0.53 0.64 0.66 0.71 0.76

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2005 2006 2007 2008 2009 2010 2011



The above graph indicates that Africa produces surplus cocoa in the continent. This

provides a great opportunity for the chocolate industry to procure raw material from Africa.

Africa is a major exporter of cocoa, cotton, cashew and coffee. Cocoa is majorly exported

from Côte d'Ivoire, Ghana, Nigeria and Cameroon. The second - largest exporting

commodity is cashew. Even though Nigeria is the largest producer of cashew in Africa, it

does not contribute significantly in the export of cashews. The commodity is majorly

exported from Côte d'Ivoire, Ghana, Guinea-Bissau and Benin. These countries together

constitute more than 72% of the total exports of cashews from Africa. The third - largest

exporting plantation crop from Africa is cotton. It is predominantly exported from countries

such as Burkina Faso and Togo. These two countries export nearly 34% of the total exports

of cotton from Africa.

The other important plantation crops exported from Africa are rubber, tea and tobacco.

Rubber is majorly exported from Cameroon, Nigeria and Côte d'Ivoire. Tea is mainly

exported from Kenya and tobacco is exported from Malawi and Zimbabwe.

Cocoa Cotton Coffee Cashew Others

41%

15%

10%

17%

17%


Figure 33: Export of Plantation Crops grown in Africa in 2011

Figure 34: Tea Value Chain in Kenya


An indicative value chain of tea in Kenya is shown below to explain the roles played by

various stakeholders along the value chain:


The major constraints and underlying opportunities in the plantation sector of Africa are

indicated below:

• High tariffs on export of coffee

• High distribution cost

• Cocoa trees are vulnerable to pests and diseases

• Limited availability of improved seeds

• Lack of more efficient farming techniques that reduce crop yield and income

• Poor infrastructure (roads, bridges) and lack of appropriate transport systems

• Lack of access to finance

• Conversion of rubber farm land to arable farm

• Destruction of rubber trees for firewood

• Investment in infrastructure and distribution system

• Availability of farm inputs to reduce pests and diseases

• Increased availability of improved seeds

• Investment in modern techniques and farm machinery for growth of cocoa

• Encourage investment from private sector and policy support from the government

• Availability of low interest loans from banks

• Farmer who shows interest in planting of rubber must be given adequate assistance for the period of gestation

Commodity Constraints Opportunity

Coffee

Cocoa

Palm kernel

Rubber

Tea Farmer

Tea Picker

Buying Centres

Processing & Grading

Storage in warehouses

Traders/Brokers

Buyers (Local/Foreign)

Blending/Packaging

Branded Tea

Retail OutletsBig Consumer Companies Direct Sale


4.3. Role of plantation crops in Asia

In Asia, plantation crops are important for maintaining the balance between food and

income. The major plantation crops of Asia are cotton, palm kernel, tea and tobacco. In

terms of production, cotton has the largest share, followed by palm kernel and tea.

Cotton is important to the countries such as China, India and Pakistan. These countries

together contribute more than 83% of the total cotton production in Asia. One of the major

commodities, i.e. palm oil, has gained importance in Indonesia and Malaysia. It is a basic

source of income to many farmers in this region. However, due to environmental concerns,

palm oil plantations are under increasing scrutiny.

Rubber plantation, on the other hand, was brought into Asia from Brazil in the 19th century.

The major rubber - producing countries are Indonesia, Thailand, and Malaysia, with lesser

quantities from India, China, and the Philippines. Rubber yield per hectare in Thailand is the

highest of the three leading rubber-producing countries. This is due to governmental

support for smallholder rubber cultivation, and especially the use of improved planting

material.

Tea is grown at commercial plantations of India, Sri Lanka, Indonesia, China, Taiwan and

Japan. In terms of the area dedicated to tea plantations, China leads the world, followed by

India, Sri Lanka and Vietnam. It is also the largest producer of tea, followed by India, Sri

Lanka and Turkey.

• High costs of selling tobacco

• Access to inputs, production information, financing, and certain management skills


• Complex taxation policies

• No proper marketing

• Transportation problem from rural areas

• Lack of information about prices

• Lack of processing at local level

• Existing regulations be changed to permit direct contracting of tobacco production

• Reducing marketing and transaction costs in the tobacco supply chain

• Development of suitable market infrastructure

• Taxes must be consolidated and rationalised

• Investment in development of proper marketing channels.

• Investment in local level processing of cashews

• Investment in marketing channels development

Commodity Constraints Opportunity

Tobacco

Cotton

Cashew


Figure 35: Production of Major Plantation Crops in Asia (in million tonnes)

3437 38 39 39 40

43

0

5

10

15

20

25

30

35

40

45

50

2005 2006 2007 2008 2009 2010 2011

Total Plantation Production


Figure 36: Share in Production of Major Plantation Crops in Asia - 2011

44%

27%

5%

10%

14%

Cotton Palm Kernel Cashew Tea Others



Figure 37: Supply and Demand of Plantation Crops in Asia (in million tonnes)

The demand and supply of major plantation crops is indicated below which shows that the

production of the plantation crops is increasing at a steady rate as compared to their

demand:

34.0

36.5

38.1

38.9 38.8

40.4

43.2

35.6

38.139.0

40.7

38.7

39.640.6

32

34

36

38

40

42

44

2005 2006 2007 2008 2009 2010 2011

Total Production Total Consumption


The supply and demand of major plantation crops in Asia are indicated below:

Figure 38: Supply and Demand of Tea in Asia (in million tonnes)


3.0 3.13.3

3.6 3.63.8

4.0

2.5 2.72.9 3.1 3.1

3.33.4

0

1

1

2

2

3

3

4

4

5

2005 2006 2007 2008 2009 2010 2011



The above graph indicates that the production of tea is increasing at a rate higher than the

rate of increase in consumption. This provides a good opportunity for the export of tea to

the European countries where the demand for tea is higher.

Figure 39: Supply and Demand of Palm Kernel in Asia (in million tonnes)

7.58

8.248.60

9.65

10.04 10.06

10.98

7.56

8.298.58

9.59

10.01

10.74

11.52

7.00

7.50

8.00

8.50

9.00

9.50

10.00

10.50

11.00

11.50

12.00

2005 2006 2007 2008 2009 2010 2011


The above graph points out that the demand

for the palm oil (which is only commercial

product palm kernel) is continuously

increasing. In the past two years, the

demand for palm oil in Asia has surpassed its

production capacity. Majorly the demand for

palm oil is met by intra-continent exports

from Malaysia and Indonesia.

In terms of exports, palm oil constitutes

82% of the total exports of plantation crops.

Almost 97% of the total exports of palm oil

is from countries such as Indonesia and

Malaysia. These two countries lead the palm

oil production throughout the world. After

palm oil, cotton is the second - largest

plantation crop being exported from Asia. It

is largely exported from India, followed by

Uzbekistan and Pakistan. China even though

being the largest producer is still a major

importer of cotton due to its high

consumption of cotton within the country.

Figure 40: Major Exporting Plantation Crops

from Asia - 2011

82%

5%

3% 3%

7%

Palm Oil Cotton Lint Coffee

Tea Others


Figure 41: An indicative value chain of rubber in Indonesia is illustrated below to have a

close look at the value chain of plantation crops in Asia:


Private or Government estate

Smallholders

Importers

Village level collector

District level collector

Provincial level collector

Latex processor

Overseas manufacturers

Local manufacturers

Supply & cultivation

Distribution Processing Markets



The major constraints and underlying opportunities in the plantation sector of Asia are

given below:

• Poor transportation infrastructure

• Access to credit in certain countries

• Cocoa trees are vulnerable to pests and diseases

• Lack of more efficient farming techniques which reduce crop yield and income

• Decreasing availability of land

· Stagnant national yields

• Lack of labour

• Decreasing acreage under rubber plantation

• Complex supply chain

• Government regulations on imports and exports

• Access to inputs, production information, financing and certain management skills

• Water availability

• No proper marketing

• High taxation in some regions

• Transportation problem in rural areas

• Lack of processing at local level

• Investment in infrastructure and distribution system

• Increase in the presence of microfinance institutions

• Availability of farm inputs to reduce pests and diseases

• Investment in modern techniques and farm machinery for growth of cocoa

• Encourage investment from private sector and policy support from government

• Increase in replanting rates

• There is need to provide training to farmers especially on effective tapping of the rubber trees

• Regulations be changed to permit import and export of tobacco

• Reducing marketing and transaction costs in the tobacco supply chain

• Development of sustainable cotton production

• Investment in development of proper marketing channels

• Development of a rationalised taxation system

• Investment in local level processing of cashews

• Investment in marketing channels development

Commodity Constraint Opportunity

Coffee

Cocoa

Palm Kernel

Rubber

Tobacco

Cotton

Cashew

Meat, Poultry and Fish5


5.1. Meat, poultry and fish market - Global

Growth in the meat sector has been majorly due to the rising demand for poultry meat,

which has consistently increased over the past five decades. The other meat production

and demand growth have been stagnant, especially for ruminants (beef, sheep and goats)

and pigs.

High feed prices, changing climatic conditions and disease outbreaks have hampered the

growth of the meat sector in 2011. Under such circumstances, countries such as Brazil and

China have emerged as the major meat - producing regions in the world. These two

countries account for nearly 40% of the global production.

Robust import demand especially from the Asian countries and the Russian Federation is

expected to lift the trade in meat products. The major beef - importing countries are US,

Japan, Russia and Mexico. On the other hand, the major poultry - importing countries

include Germany, UK, Japan and France.

Meat, Poultry and Fish5

Figure 42: Global Supply and Demand of Total Meat (in million tonnes)

259

265

272

280

256

263

270

278

240

245

250

255

260

265

270

275

280

285

2005 2006 2007 2008



On the contrary, world fisheries production reached 154 million tonnes in 2011. Out of the

total fisheries production, 90.4 million tonnes was captured fish and 63.6 million tonnes

was from aquaculture fisheries. Africa's fish consumption was lowest clocking at 9.1


million tonnes. However, Asia accounted for 85.4 million tonnes of fish consumption. China

is the world's leading producer of fish. The largest consumers are EU, US and Japan.

In majority of the African countries, livestock rearing is an important economic activity that

generates income for the population. Meat is one of the most important livestock products

in Africa. Meat accounted for about 47% of the gross value of total SSA livestock output.

Africa majorly produces beef, chicken meat, pork and sheep meat. The major meat -

producing countries in Africa are South Africa, Egypt, Nigeria and Morocco. These countries

together produce more than 44% of the total meat production in Africa. South Africa is the

major producer of beef, chicken meat and pig meat. On the other hand, Egypt is known for

the production of chicken meat and buffalo meat. Also, Nigeria is a major producer of goat

meat and beef.

5.2. Meat, poultry and fish sector review - Africa

Figure 43: Production of Meat in Africa (in million tonnes)

9.5 9.810.2

10.5 10.911.5 11.6

3.4 3.53.9 4.1 4.3

4.8 4.9

0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011

Meat Production Poultry production


Marine fisheries support the livelihood of millions of citizens in Africa's coastal countries.

Africa's marine resources are gaining strategic as well as financial value. As fish resources

are decreasing and the demand for fish is steadily rising, foreign fishing fleets are looking

to gain access to unexploited water resources around the world. This, in turn, offers a great

opportunity for developing fisheries sector in the African countries.


Meat in Africa undergoes minimal processing

and value addition. Majority of the meat

produced is directly consumed by the

consumers. The major meat - consuming

countries in Africa are South Africa, Egypt,

Nigeria, Morocco, Sudan and Ethiopia. These

countries together consume 54% of the total

production of meat in Africa.

Figure 44: Fish Production in Major African Countries - 2011 (in million tonnes)

1.38 1.36

0.73

0.52

0.35

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Nigeria Egypt Kenya Uganda Tanzania

Fish Production


36%

9%16%

8%

31%

Bovine meat Meat, other Mutton or goat meat

Pig meat Poultry meat

Figure 45: Meat Consumption in Africa - 2009



Africa is a net importer of meat and meat products. Poultry and beef remain the biggest

imports into the region. The major meat - importing countries in Africa are South Africa,

Angola, Egypt, Ghana and Benin. These countries together constitute more than 67% of

the total imports of meat into Africa. South Africa's major meat imports consist of chicken

meat and pig meat. Chicken meat is majorly imported in to Egypt, Ghana and Benin.

12.913.3

14.1

14.715.2

16.3 16.5

14.0

14.6

15.415.9

16.4

17.1

17.8

11

12

13

14

15

16

17

18

19

2005 2006 2007 2008 2009 2010 2011

Figure 46: Supply and Demand of Meat in Africa (in million tonnes)



0.38 0.37

0.190.18

0.16

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

South Africa Angola Egypt Ghana Benin

Imports of meat

Figure 47: Import of Meat in Major Countries of Africa - 2011 (in million tonnes)


Figure 48: An indicative Broiler Value Chain in Etiopia


Imported DOC Hatcheries

Broiler Farms

Broiler Processors

Traders

Consumers

Supermarkets/Restaurants

By-product Consumers

Feed Mills


• Poor feed availability

• There is a shortage of extension services at the district and village levels for training livestock farmers on animal husbandry, primary processing and marketing

• Lack of cold chain infrastructure

• Low level of processing in meat products

• Improve management of feeding, reproductive management

• Investment in providing extension services

• Investment in post-production infrastructure such as refrigerated vans

• Investment in increasing processing of meat

• Increase production of export - oriented processed meat products

Sector Constraints Opportunity

Input

Extension services

Logistics and infrastructure

Processing

Here are the major constraints in the meat and poultry value chain in Africa:


5.3. Meat, poultry and fish sector review - Asia

The major meat - producing countries in Asia include China, India, Vietnam and Indonesia.

In the markets of Malaysia and Indonesia, the consumption of chicken within the diet of

the overall population is increasing due to its lower price point and wider availability.

China is the largest meat producer in the world, in spite of the backward traditions of its

supply base. It accounts for half of the world's pork production. The broiler meat production

in China is growing due to new government subsidies for breeding. The total Chinese meat

production was 79 million tonnes in 2011 which was more than 63% of the total meat

production in Asia.

India, on the other hand, is the second - largest meat producer in Asia. It is the third -

largest beef exporter, and a major producer of beef. Broiler meat production in India is 23

forecast to rise at 6% to 3.6 million tonnes due to increasing demand for animal protein

and a growing preference for processed poultry products.

Countries such as South Korea, Japan and Malaysia have in place some of the most

modern production within the region, with quality standards that will be recognized by

western consumers. These meat markets in these countries are mature and production of

meat is mainly stable.

Figure 49: Production of Meat in Major Asian Countries - 2011 (in million tonnes)

23 USDA – International Egg and Poultry review – December 3, 2013.

79.2

6.2

4.13.2 3.0 3.0 2.8 2.6 2.4

1

10

100

China India Vietnam Japan Indonesia Philippines Pakistan Turkey Thailand

Meat Production Source: FAOSTAT, PwC analysis

36.7

4.6

2.72.3

1.3 1.4

1

10

100

China India Vietnam Indonesia Bangladesh Thailand

Fish Production

Figure 50: Fish Production in Asia - 2010 (in million tonnes)

Figure 51: Supply and Demand of Meat in Asia (in million tonnes)



Asia is also known for its fish production. Currently, China is the leading producer of

fisheries. The other major fish - producing countries in Asia are India, Bangladesh and

Vietnam. The major fish producing countries in Asia are indicated below:


105.2

108.7 108.3

113.4

118.4110.3

114.0 114.8

120.9

125.2

95.0

100.0

105.0

110.0

115.0

120.0

125.0

130.0

2005 2006 2007 2008 2009


The demand for meat in Asia will show a further rise due to the increase in the income

levels of the overall population, and demand for animal protein products. Presently, Asia is

the net importer of meat as well as meat products. Poultry and pork cuts remain the

biggest products to be imported in the region, predominantly from the US. Hong Kong

majorly imports poultry meat as well as pork. Japan is a major importer of beef, poultry,

2.5

2.1

1.0 1.0 1.00.8

0.4 0.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Japan Hong Kong SAR

China, Mainland

Saudi Arabia

Republic of Korea

Vietnam United Arab Emirates

Iraq

Meat Imports

Figure 52: Major Imports of Meat in Asia – 2011 (in million tonnes)

Figure 53: Poultry Value Chain in China


pork and processed poultry products. On the other hand, Vietnam is the major importer of

poultry meat.

In fisheries, shrimp continues to be the most important commodity traded in value terms.

The other main group of exported species is salmon and trouts. Major exporting countries

include China, followed by Thailand, Vietnam and India. Within Asia, Japan is the major

importer of fish.


Farmer Slaughter house Processor Retailer Consumer

Market or middleman

Market or middleman



The key constraints along the meat value chain in Asia are as follows:

• Poor feed availability

• Lack of scientific approach for rearing of animals

• Lack of veterinary support services

• Inadequate infrastructure facilities and poor post-production management


• There is minimal integration between the animal farming community, meat producers, processors and marketing channels

• Socio-economic taboos associated with consumption of meat

• Improve management of feeding, reproductive management

• Investment in providing extension services

• Investment in post-production infrastructure such as refrigerated vans

• Investment in creating cold chain infrastructure to reduce losses

• Investment in increasing farmer linkages to market

• Increase investment in export - oriented meat products


Input

Extension services


Processing

Markets

Dairy6


6.1. Global dairy sector

The global milk production has reached a mark of 706.2 million tonnes in 2011, which is a

3.2% increase from the previous calendar year 2010. Most of this increase has come from

the developing countries, particularly Argentina, China and India. Output of milk has also

increased in a number of developed countries, including European Union (EU), New

Zealand and the US. The key drivers for the increase in milk production have been factors

such as favourable milk prices, weather conditions and the growing global demand for milk

as well as milk products.

Increased trade is anticipated for all the major dairy products, although variation in

consumer demand for milk products depends largely on local preferences, culinary habits,

income levels and availability of milk. Overall, most of the major trading countries are likely

to record an increase in sales, especially Argentina, Belarus, the EU, New Zealand and the

US.

Dairy6

Figure 54: Global Supply and Demand of Milk (in million tonnes)

643.3

661.5

677.1

690.8697.8

636.6

652.8

671.6

680.6

691.1

600

620

640

660

680

700

720

2005 2006 2007 2008 2009

Milk Production Milk Consumption

6.2. Dairy Sector - Africa

For several years, traditional systems have dominated the production of milk in Africa, and

the systems still supply considerable amounts of milk (accounting for above 90% of the



total milk supply in Sub-Saharan Africa). Currently, milk production in the region is growing

slowly as compared to other developing countries because of the factors such as poverty

and adverse climatic conditions.

The top five African milk - producing countries in terms of volume include Sudan, Egypt,

Kenya, South Africa and Ethiopia. It is also observed that the first four countries alone

produce 45% of the total milk production in Africa. Raw milk production in these countries

is primarily by smallholder farmers. Therefore, it can be stated that milk production is also

acting as a major source of employment for the rural population of Africa.

It can be observed that over the years, milk production in Africa has almost remained

constant with little growth.

Figure 55: Milk Production in Africa (in million tonnes)

34 3538 38 39

43 42

0

5

10

15

20

25

30

35

40

45

2005 2006 2007 2008 2009 2010 2011

Milk Production


Presently, Africa is a net importer of milk. The total milk import in Africa in 2011 was 1.6

million tonnes with whole milk being the major importing dairy product. Whole milk alone

constitutes around 46% of the total imports of dairy products by volume. The major milk

importing countries include Algeria, Egypt, Libya and Nigeria. These countries constitute

around 57% of the total imports of milk within Africa.

Looking at the overall trend in the demand and supply of milk in Africa over the years, it can

be observed that the region is currently facing a continuous gap in the demand and supply

of milk. Hence, the continent is importing a considerable amount of milk in order to meet

its domestic demand. In the future, it is essential for all the African countries to start

focussing on increasing their productivity in milk to become self - sufficient in milk

production.

Figure 56: Supply and Demand of Milk in Africa (in million tonnes)

Milk Production Milk Consumption

91%

5%4%

Direct Consumption Feed Waste


In Africa, countries majorly consume milk in the form of raw milk. Processing of milk is

currently at a low level. It is also observed that nearly 4% of the total supply of milk is

wasted due to improper handling and the lack of an efficient supply chain in the region. In

Africa, except for Kenya, there are only a few cases of the successful linking of smallholder

dairy producers to milk processors, through a formal marketing system, involving large-

scale processing plants. Even though Zimbabwe has a well-developed formal dairy

marketing system for large-scale commercial producers, it has yet to involve a large

number of smallholder farmers.

3435

38 38 39

4342

3941

4544

45 4547

25

30

35

40

45

50

2005 2006 2007 2008 2009 2010 2011


Figure 57: Consumption Pattern of Milk in Africa - 2011


Figure 58: An indicative milk value chain in Nigeria is indicated below to understand the

milk value chain in Africa:


Major constraints along the milk value chain in Africa are as follows:

Final consumeror market

Medium to large business and buyer

Small producer

Market

SupplyInputs and Services

Vertical Integration


• Low productivity

• Poor feed quality and availability

• Small - scale farming

• Poor husbandry management practices

• Lack of farmer support services (such as artificial insemination Artificial Insemination, veterinary services, farm mechanization service, and extension services

• Post-production losses

• High cost of collection


• Improve management of feeding, reproductive management and milk harvesting

• Increase the area of land for growing forages

• Increase herd sizes, overcome shortage of breeding stock

• Formulation of dairy developmental plans

• Investment in providing extension services to milk producing farmers.

• Invest in post-production infrastructure such as refrigerated vans

• Investment in creating cold chain infrastructure to reduce losses in milk


Input




6.3. Dairy Sector - Asia

In the past few decades, Asia has seen a rapid growth in the production as well as the

consumption of dairy products. However, there is a wide variety in the production and

consumption patterns within the region. South Asia has a much longer tradition of milk

production and dairying. There has been a growth in milk production and consumption in

East and South East Asia, led by private sector investment in avenues such as processing

and distribution. This region has significantly altered the dairy landscape of Asia.

India is the world's largest producer and consumer of milk. Yet, it neither exports nor

imports milk. Recent years have seen a significant growth in milk production in India due to

the development of large cooperatives. China and Russia are the world's largest importers

of milk as well as milk products.

Pakistan is the world's fourth - largest producer of milk, with an estimated annual milk

production of 34 million tonnes. Dairy production systems in Pakistan are similar to those

in India. Most (50%) of the milk is consumed by farming households or sold in the informal

market (40%). Less than 10% is delivered to formal milk processors. Like India, Pakistan

has always been completely self-sufficient in milk.

Dairy production systems in Bangladesh are also similar to those in India and Pakistan.

However, milk production and yields are significantly lower when compared to these two

countries. On the other hand, China is the world's third - largest producer of milk. Despite

the fact that until a few years ago, China had one of the lowest milk consumption per

person in the world, over the recent years, it has seen a significant increase in both milk

production and consumption. Today, China's annual milk production is estimated to be 40

million tonnes.

• Poor quality milk for industrial processing

• Restricted access to market

• Increase the focus of farmer on milk quality through contract farming

• Increase the farmer and market linkages


Processing

Markets


The past decades have seen rapid growth in the consumption of dairy products in several

parts of Asia, driven by factors such as economic growth and rising income levels of the

population. The other factors affecting the rising demand of milk in Asia are population

growth, increasing urbanisation and growing popularity of dairy products. The strongest

demand growth is expected in countries such as China and India. Asia as a continent is a

net importer of milk.

Figure 59: Production of Milk in Asia (in million tonnes)

215226

239 244 250267

276

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011

Production of Milk

Figure 60: Supply and Demand of Milk in Asia (in million tonnes)

215226

239 244 250267 276

228240

252 256266

277288

0

50

100

150

200

250

300

350

2005 2006 2007 2008 2009 2010 2011

Production of Milk Consumption of milk



Figure 61: An indicative Milk Value Chain in Vietnam


The major milk - importing countries in Asia include China, Indonesia, Saudi Arabia and

Japan. These countries together import more than 40% of the total imports of milk and

milk products in Asia.

Inputs Operations Processing Trading Consumer

Domestic cattle farming

Milking and milk quality

maintenance

Collection, processing and

packaging

Transportation and distribution

Consumption


Due to factors such as increasing complexity of dairy production and distribution,

constantly changing demands, deepening regional and global integration, diverse

expectations from the sector and growing public health as well as environmental concerns,

the region faces many challenges in dairy development.

• Low productivity

• Poor feed quality and availability

• Small - scale farming

• Lack of developmental plans

• Post-production losses


• Low processing

• Improve management of feeding, reproductive management and milk harvesting

• Increase the area of land for growing forages

• Increase herd sizes, overcome shortage of breeding stock

• Formulation of dairy developmental plans

• Invest in post-production infrastructure such as refrigerated vans

• Investment in creating cold chain infrastructure to reduce losses in milk

• Increase the value addition in dairy by attracting investment through favourable policies


Input



Processing

Partnership Themes7


7.1. Identification of opportunities

The present global scenario provides opportunities for African countries to expand and

diversify their economies, particularly in the agribusiness sector. Agriculture remains the

single largest source of employment as well as income in Africa. It contributes 32% of the

overall GDP, almost two-thirds of the total employment (64.7%), and accounts for more

than 75% of domestic trade by value, thereby providing livelihood for the majority of the

economically-active population. Agriculture plays an even more dominant role in the lives of

the poor, who continue to be primarily rural and are either directly engaged in farming or

dependent on activities connected to the sector. Alongside its role in stimulating economic

growth, agribusiness as well as agro-industrial development has the potential to contribute

substantially to poverty reduction and improved social outcomes.

In an attempt to address the key constraints prevailing within the agricultural sector of

Africa and Asia, it is imperative to transform the challenges within the agribusiness sector

into opportunities. One of the efficient ways to address these challenges is to setup

strategic partnerships within the countries of Asia and Africa for mutual benefit into

agribusiness sector. The key partnership opportunities identified are based on the

identification of constraints as well as the corresponding paths of action. The key

opportunities are as follows:

• Facilitating access to inputs and technology

• Access to finance for developing the agribusiness sector

• Upgrading the agriculture infrastructure

• Building skills as well as promoting entrepreneurship within agribusiness

• Inclusive growth of agribusiness

Growth in the use of these inputs has accounted for a large share of agricultural growth.

Countries that have developed dynamic seed as well as fertiliser sectors, such as India and

Thailand, have seen annual yield gains for rain-fed crops of 2% to 3% since 1990,

compared to about 1% in Sub-Saharan Africa. Likewise, widespread adoption of improved

feed, breeds and veterinary inputs has spurred the livestock revolution in the developing

economies.

Factors such as low, inconsistent use of improved seed as well as fertilizer, remains the

single most important factor for the low yields in the African and Asian countries. The

7.1.1. Facilitating access to inputs and technology

Partnership Themes7


fertiliser gap has grown in the first decade of the 21st century, since the intensity of

fertiliser use in Africa has declined. Low fertiliser use not only constrains yields in the

present, but causes them to decline in the future, since soil nutrients are continually

mined.

The production and the distribution of agricultural inputs are primary opportunities for

agribusinesses (local as well as foreign) to grow. The potential maize seed market in Africa

is around 430,000 tonnes, with a value of at least 500 million USD. Only 100,000 tonnes

are currently produced. Likewise, Africa cannot meet its agricultural growth targets without

increasing fertiliser consumption from its current 1.5 million nutrient tonnes annually to at

least 4.5 million tonnes by 2015. Currently, that market is estimated to be worth over 5

billion USD. Hence, countries from Asia can form a strategic partnership with the African

countries so as to make accessibility of farm input easy and efficient, thereby not only

benefiting the African countries, but also facilitating the expansion of its agriculture input

industry.

Limited access to finance is widely recognised as a perennial constraint on agricultural

performance for smallholders or even larger agribusinesses. The peculiarities of agriculture,

such as its high seasonality and risks (related to weather and policy), lack of secure

property rights, heterogeneity across commodities, farmers, and regions, and bankers'

inexperience within the sector severely limit formal lending to the sector. In many

instances, the only financial services available are provided by informal agents or

mechanisms, which offer a narrow range of financial services to a limited number of

customers.

The agribusiness sector requires finance from various sources for working capital as well

as to build equity. Some firms are able to finance their needs with the help of retained

earnings, family income, and a variety of finance providers such as commercial banks,

agricultural banks, microfinance institutions, and input suppliers. Generally, large

commercial firms in many countries of Asia and Africa benefit from inward foreign direct

investment, while others can obtain credit from commercial banks, largely based on

relationships built over time. Therefore, in order to address the credit requirements of the

Asian and African countries, some of the investing firms and banks can form a strategic

partnership with these countries.

Investment in infrastructure is a high priority for jump-starting the agribusiness sector

throughout Asia and Africa. It will require a sharp increase in public investment in

partnership with the private sector to the maximum extent possible. The major

infrastructure investment sectors are irrigation, water conservation infrastructure, roads,

and markets.

7.1.2.Access to finance for developing agribusiness sector

7.1.3. Upgrading agriculture infrastructure


Predictable access to water is the key to increase productivity within the agricultural

sector. Access to irrigation infrastructure in order to provide affordable priced water often

has been a central theme for improving productivity in agriculture. Irrigation facilities allow

producers to take full advantage of productive inputs and opportunities for high-value

agriculture. Large irrigation investments need to be based on an assessment of the current

as well as the future needs for water within the area, available water resources, market

opportunities, and expected impacts of climate change.

High transport costs are a major constraint for agriculture, and poor infrastructure is not the

only cause of the problem. Agriculture high transport costs are widely documented. They

frequently result in high producer-to-consumer price difference and create fragmented

markets, with regions of food scarcity and surplus existing alongside one another within

the same country.

Public investment, to setup advanced and strategically located wholesale markets, can

stimulate the growth of regional as well as urban wholesale markets. It will also make it

easier to improve the quality and safety standards, especially for expanding fresh produce

markets. These investments in hardware can be most effective when combined with

market software (for example, market information systems) and collective action by the

traders themselves. Similarly, with the need to maximise the shelf-life of fresh fruits and

vegetables, public-private partnerships need to be chalked out in order to overcome high

start-up costs involved in building cold chains. Therefore, countries from both the

continents can form a strategic partnership in order to mutually invest and develop

agriculture infrastructure.

Today, commercial farming and agribusiness are managerially and technically complex

sectors. Managers as well as decision-makers need new skills, mentoring, as well as

ongoing access to information in order to cope with the rapidly - changing technology,

markets, climatic risk and price volatility.

Agribusinesses often seek specialised skills that can be provided through highly focussed

short-term training. Lack of a particular set of skills can be a major constraint to

establishing new industries. For example, despite favourable conditions for floriculture in

East Africa, companies in Uganda and Ethiopia lacked well-trained middle managers and

technical workers. At the request of the growers' associations, experts from the

Netherlands worked with African academic institutions in order to provide short-term

training in specific skills to farm supervisors and assistant managers of various

departments, including skills in greenhouse, fertigation (fertilisation and irrigation), post-

harvest handling, and pest management. In many cases, an obsolete curriculum had to be

replaced by new processes as well as problem-solving approaches, especially using the

internet.

7.1.4.Building skills and promoting entrepreneurship in agribusiness


Hence, in order to facilitate capacity building and skill development in the Asian and African

countries, research institutions can form a strategic partnership to develop a skill

development programme beneficial for the countries from both the continents.

Agribusiness development programmes need to pay particular attention to inclusive growth

that integrates market-oriented smallholders and rural communities into dynamic value

chains through contract farming and the generation of jobs. This strategy makes good

business sense, given the complementary character of assets of each party — investors

with access to capital, technology, as well as markets, and smallholders with access to

assets such as land, labour, and local knowledge. The way these assets are combined will

vary widely according to the industry, type of market, local institutional context, and factor

endowments. Hence, in order to facilitate better usage of these assets, countries from

both the continents can come together for inclusive growth within the agribusiness sector.

• Government-Government Partnerships (between governments): The

governments of different countries from both the continents recognise and

acknowledge the importance of a government-to-government relationship in order to

derive mutual benefits within the agricultural sector. The intent of such partnerships

is to set the guidelines under which these countries may collaborate in order to

improve the status of the agricultural sector within these respective countries.

In the current context, countries in Asia and Africa can come up with such

partnerships in the field of agriculture human resource development. This will

mutually benefit both the continents, which are currently facing a dearth of skilled

human resources in the agricultural sector. Mutual cooperation in skill development

will help in improving knowledge, skills as well as the outlook of farmers and support

staff. Such a partnership model will develop and strengthen cooperation for skill

development in agriculture and its related sectors. Such projects can involve

exchange of experts within countries to assist sector skill councils for producing

skilled workforce within the farm sector.

• Government-Private Partnership (between an Asian government and an African

private player): The partnership between the government of an Asian country and

private player of an African country will be an attempt to provide solution to

widespread basic research to commercial deployment. Such a partnership model will

overcome both the public sector's usually limited ability to take research outputs to

the market, as well as the private sector's limited scope for operation in a situation

where there is no commercially viable market.

7.1.5. Inclusive growth of agribusiness

7.2. Partnership model


• Private-Government Partnership (between an Asian private player and an

African government): The initiative of building partnership between the government

of an African country and private player of an Asian country will be a step towards

development of the African agribusiness industry. Such partnerships models can help

in generating employment, encourage large - scale farming, attract investment as

well as commercialise agriculture.

• Private-Private Partnership (between private players): A partnership between

private players from both the continents can formalise a mutual goal of transforming

agriculture in both the continents. Such partnerships further promote agricultural

development, improve economic growth, reduce poverty, enhance food security and

stop the degradation of natural resources through appropriate and sustainable soil

fertility management practices and agricultural policies.

For decades, policy solutions for transforming Asia and Africa's stagnant agricultural sector

into a dynamic agribusiness industry have been prescribed with numerous actions plans by

developmental institutes such as the World Bank. Yet, little progress has been made in this

avenue. The table below provides a synopsis of critical determinants and options for policy,

strategy and institutional development, which governments of both the continents can

administer to facilitate agribusiness development:

7.3. Role of governments in partnerships

Developmental agenda

Agriculture value chain

R&D

Business climate and trading

Critical factors

Value chain conditions

R&D

Policy

Indicators

Fragmented supply conditions, scarce vertical integration and economies of scale. Often, market power of retailers towards the farmers

Low level of public R&D and private initiatives

for innovation

Inefficient domestic economic policies of some governments within Africa

Policy measures Key actors

Measures to promote cooperation amongst major stakeholders in a value chain (bureaucracy, laws,

infrastructure),

University and private partnerships, innovation institutions, Promotion of trans-boundary knowledge

Use of domestic policy instruments on the basis of sound economic principles (for example, addressing market failures)

Foreign investors, national and local authorities, local communities, consortia

Universities, private companies, national and international policymakers, and donors

National and local

policymakers


Developmental agenda

Finance

Infrastructure

Critical factors

Financial system

Infrastructure

Indicators

Fragile financial systems vulnerable to crisis and commodity price fluctuations, credit restrictions

Poor infrastructure leading to high transaction costs

Policy measures Key actors

Linkages to international financial systems and investors. Robust regulatory framework and institutions so as to eliminate market failures

Transport and communication systems integration plans, and pooling of resources across countries, public or private partnerships

Banks, development finance institutions, donors, private investors, social or impact investors, national and international policymakers

National policymakers, donors, banks and finance providers, and private

companies

Case Studies8


Amul, India

Amul (Anand Milk Union Limited) is the

biggest dairy cooperative in India, established

in 1946, based out of Anand, in the state of

Gujarat. Its genesis can be traced back to the

pre-Independence period of India, when the

dairy sector was dominated by private

companies. In India, there are two major

value chains that compete with each other

under their respective brand names - Amul

and Mother Dairy.

Amul value chain organises farmers and enables them to gain control over aspects such as

procurement, processing and marketing, while eliminating the middlemen. Amul started

with two village societies and 247 litres of milk collected per day. In 1973, the Gujarat

Cooperative Milk Marketing Federation (GCMMF) was established, which is an apex

organisation responsible for marketing milk as well as milk products of cooperative unions

within the state of Gujarat. Currently, in the state of Gujarat, Amul produces 10.16 million

litres of milk daily, which is collected from 2.7 million farmers, processed through 30 dairy

plants, and distributed through 500,000 retail outlets, and its group turnover clocked at

INR 19,100 crore or USD 3.2 billion in 2013.

The NDDB launched the Operation Flood (OF) programme in order to create a nationwide

milk grid. Operation Flood established linkages between the rural milk producers and urban

consumers by organising farmer dairy cooperative societies. Operation Flood was one of

the world's largest rural development programmes that helped dairy farmers direct their

own development, placing control of the resources they create in their own hands.

A national milk grid links milk producers throughout India with consumers in over 700

towns and cities, thereby reducing seasonal as well as regional price variations. Late Dr

Varghese Kurien, a dairy engineer who was the first chairman of NDDB, was the architect

of the OF programme and is considered the father of India's 'white revolution'.

Case Studies8

DAIRY


Operational Model

The entire value chain right from procurement, to processing and marketing, is controlled

by the farmers cooperative, which is directly linked to the final customer. The cooperative

collects the milk directly at the producers' doorsteps. Membership is open to anyone who

owns at least one cow and is able to provide at least 700 litres of milk per year. The final

price of Amul products are decided by the GCMMF, which conducts market surveys on

various aspects, including the costs of milk, labour, processing, packaging, advertising,

transportation and taxes. The overall value chain is indicated below:

Feed fodder

Village dairy cooperative society

District milk cooperative union

Marketing federation

Veterinarysevice

Training

Milk collection

point

Processing and

packaging

Marketing and

distribution

Final consumer

Milk producers

Impact on farmers: Farmers receive 80% of the total retail price through upfront payments,

once the milk is sold and subsequent distribution of profits as corporate members.


Zambeef - Zambia

The Zambeef group has been incorporated as a small - scale start-up business, through

both organic growth and acquisitions, to become one of Zambia's largest agribusinesses

with annual revenues of approximately USD 255 million. It currently employs over 5,500

staff members.

Vertically integrated business model: Zambeef continues to pursue a vertically

integrated business model, right from primary production to processing and distribution to

retailing the finished products in a value-added form directly to the end-consumer through

its own extensive retail network.

It is involved in the production, processing, distribution and retailing of beef, chicken, pork,

milk, dairy products, eggs, edible oils, stock feed, flour and bread. The group also has large

cereal row cropping operations and is also in the process of rollingout its expansion in

West Africa. It also operates one of the largest transport as well as trucking fleets in

Zambia, and has its own workshop to service and maintain its vehicle fleet.

Cropping

Zambeef has one of the largest irrigated row cropping operations in Zambia, with 8,350 Ha

irrigated and 8,650 Ha rain - fed, arable, developed land available for planting each year.

Crop production is focussed primarily on soya beans the during the summer cropping

season and wheat during the winter cropping season, with a capacity to produce over

100,000 tonnes of cereal grains per annum. The group also has storage capacity of over

115,000 tonnes. The Farming Division provides an internal source of raw material inputs

(soya beans, wheat and maize) for further processing and value add within the Group.

Beef

Zambeef is one of the largest suppliers of beef in Zambia, with a capacity to slaughter

120,00 cattle per annum. Zambeef is also one of the largest feedlotter of quality beef in

Zambia, with a capacity to feedlot 24,000 grain-fed cattle p.a. Zambeef currently has 8

abattoirs and 3 feedlots located throughout Zambia.

Chicken & Egg

Zambeef is one of the largest chicken and egg producers in Zambia, currently processing 5

million chickens p.a. and producing 40 million eggs p.a.

Further investment in new layer and broiler houses has been planned for 2013 to 2014, as

well as a new chicken abattoir, to include a value-added products range.

MEAT


Pork

Zambeef's 100% subsidiary, Masterpork Ltd., operates one of the largest piggeries, pig

abattoir and pork processing plant in Zambia, with a capacity to slaughter 100,000 pigs p.a.

Masterpork produces a full range of cooked, smoked and processed meat products.

In 2012, Masterpork commissioned its new, state-of-the-art Hirsch-Pro 400 automated

processing plant, capable of processing 30 tonnes of processed meat products per day.

Masterpork also built an additional abattoir in Chingola in 2012.

Milk & Dairy

Zambeef has its own dairy farm, with over 1,900 dairy cattle, with 700 currently lactating,

and producing an average of over 4 million litres of milk p.a.

The milk is pasteurised and homogenised in a modern milk processing plant and further

value added in producing yoghurt, drinking yoghurt, cheese, butter and milk - based juices.

Further investment was planned in 2013 to increase processing capacity & meet increased

consumer demand.

Edible Oils

Zambeef's 100% subsidiary, Zamanita Ltd., is one of the largest edible oil and soya cake

producers in Zambia.

Zambeef acquired Zamanita in January 2008 as part of a process of vertical integration,

enabling it to add value to edible oil seeds such as soya beans produced by Zambeef's

farming division, while obtaining a source of supply of feed cake which is the primary

ingredient in stock feed production.

This acquisition was strategically important to Zambeef as edible oils complement the

group's range of food products distributed through its retail network in Zambia. The by-

product from the crushing of oil seeds (soya cake) is also a major source of protein for

stock feed production in the group's stock feed division.

In October 2012, Zamanita successfully commissioned a large upgrade and expansion of

its soya bean crushing and Solvent Extraction Plant, which has doubled the crushing

capacity from 50,000 tonnes per annum to 100,000 tonnes per annum. The upgrade will

also enhance and improve the efficiency and safety of the facility.


Stock Feed

Zambeef commissioned its stock feed plant in 2010 as part of a plan to increase its stock

feed production, initially to cater for its internal livestock divisions and with a long - term

vision to be one of the leading stock feed suppliers in Zambia.

The plant is currently operating at full capacity of 7,000 tonnes p.m. and essentially adds

value to the protein by product from the Zamanita crushing plant (soya cake).

The stock feed division currently supplies all of Zambeef internal requirements (33%) and

the surplus stock feed (67%) is sold to third parties in Zambia and the region.

Further investment has been planned in 2012 to 2014, to improve production efficiencies

and capacity, as well as a new ruminant plant.

Mill and Bakery

Zambeef commissioned its wheat mill and bakery in 2007. The mill and bakery adds value

to the wheat from the Zambeef farms. Currently milling 30,000 tonnes of wheat p.a. and

baking 9 million loaves p.a.

Leather & Shoes

Zambeef's 100% subsidiary, Zamleather Ltd., operates the group's tannery and shoe plant,

allowing the group to add further value to the main by-product of its beef abattoir business,

being the cattle hides, and sell these in a processed form as wet blue and finished leather

and industrial footwear and protective leather clothing.

Zamleather has a processing capacity of 72,000 hides p.a.

Palm

Zambeef's 100% subsidiary, Zampalm Ltd., commenced the first commercial palm

plantation in Zambia in 2008.

The initial pilot phase is to plant up to 2,800 hectares, plus crushing mill and physical

refinery, subject to proving viability in the pilot phase.

Zampalm's aim is to provide Zamanita Ltd., with locally produced raw material feed stock in

the form of palm oil.

Shoprite is Africa's largest retailer and Shoprite has chosen Zambeef as its strategic

partner to run and manage its own in-house butcheries in Zambia, Nigeria and Ghana.

Zambeef's strategic partnership with Shoprite dates back to 1998.


West Africa

Zambeef entered the Nigeria and Ghana markets in 2005 and 2007, respectively, in

partnership with Shoprite. This is an exciting opportunity for the Zambeef group.

Currently, Zambeef operates 8 Shoprite butcheries and 4 of its own stores in West Africa,

but Shoprite has large expansion plans for West Africa, and is expected to open 5 new

stores, totalling 18,000m2, over the next 2 to 3 years.

In order to meet this increased demand from Shoprite's planned expansion, and to control

the consistency and quality of meat products, Zambeef has acquired a 25 - year lease on a

287 Ha piece of land, approximately 60 km north of Lagos, which will be developed to

house a feedlot, abattoir, processing plant and cold room facilities.

The vast majority of Zambeef's food products are retailed directly to the end consumer

through Zambeef's extensive retail network.

Zambeef has one of the leading distribution and retail footprints in Zambia, which currently

consists of 91 retail outlets, 3 wholesale centres, 6 fast food outlets and 20 Shoprite

butcheries.

Zambeef's 3 wholesale centres were started in 2011 in order to attract the large informal

and commercial sector in Zambia.

Zambeef is continually investing in upgrading and refurbishing existing stores as well as

opening new retail outlets each year.

Zambeef also operates one of the largest transport and trucking fleets in Zambia and has

its own workshop to service and maintain its vehicle fleet.

The Group continues to deliver strong financial performance in turnover, gross profit,

EBITDA and profit after tax, both in US$ and Zambian Kwacha terms.

The Group's turnover and gross profit is reasonably well diversified across 14 business

segments, which obviously helps reduce the Group's earnings volatility.

The vast majority of Zambeef's food products are retailed directly to the end-consumer

through Zambeef's extensive retail network. It has one of the leading distribution and retail

footprints in Zambia, which currently consists of 91 retail outlets, three wholesale centres,

six fast food outlets and 20 Shoprite butcheries. Shoprite is Africa's largest retailer and has

chosen Zambeef as its strategic partner to run and manage its own in-house butcheries in

Zambia, Nigeria and Ghana.


Segmental Dominance

Vietnam: Success as a rice exporting nation

Rice is a way of life for the Vietnamese population. Cultivated on 82% of arable land, this

staple crop is deeply rooted in the cultural heritage of the country. It not only contributes to

the national food security, but also provides income and reduces poverty for the millions of

people within the rural sector. From being a chronic net rice importer in the 1980s, Vietnam

has transformed itself into the world's second - largest exporter of rice, after Thailand in the

late 1990s.

The Doi Moi (renovation policy) in the mid-1980s marked Vietnam's transition. In 1981,

Vietnam departed from the collective agricultural production system by introducing the

group-oriented contract system of production. The policy is significant since it granted

farmers the right to own land and opened Vietnam's economy to the free market.

Investment in avenues such as infrastructure and technology also helped further to boost

the country's rice production capacity.

This success of breaking into world markets has created a new trade-off for Vietnam's

policymakers between ensuring sufficient supplies of rice at affordable prices to domestic

consumers on the one hand, and generating foreign exchange earnings from rice exports

on the other hand.

The Ministry of Agriculture and Rural Development in the country also gears to further

improve and consolidate research, development, and agricultural policies in order to sustain

long-term national food security, make the country's rice sector prosperous, and generate

more income for rice farmers.

Region of operation

Cropping: Zambeef has one of the largest irrigated

row cropping operations in Zambia, with 8,350

hectares of irrigated and 8,650 hectares of rain-fed,

arable, developed land available for planting each

year, with 100,000 tonnes of total production

capacity and 115,000 tonnes of storage capacity.

Beef: Zambeef is one of the largest suppliers of beef

in Zambia, with a capacity to slaughter 12 000 cattle

per annum. It is also one of the largest feedlotter of

quality beef in Zambia, with a capacity to feedlot

24,000 grain-fed cattle per annum.

,


Key features

• Farming population: Dominated mainly by small-scale farmers and 85% of farm

holdings less than 0.5 hectares of agricultural land.

• Land fragmentation: Each household holds an average of six to 11 plots of land.

Major policy initiatives

• Land reforms (1981 to 2003): Transformation of land and production materials from

collective to household system.

• Land policy: Maintaining a minimum of 3.8 million hectares of available land for

paddy production so as to ensure national food security.

33 million hectares

7.75 million hectares

Approximately 10 million hectares

43.4 million tonnes (paddy)

7.72 million tonnes (rice)

5,600kg per hectare

Fields24

Figures

33 million hectares

Rice land

Cultivated area

Production

Exports

Average yield

24 Ministry of Agriculture and Rural Development (MARD) 2012, Vietnam, FAO Stat

Rice supply chain in Vietnam

Input supplier

• Paddy seeds

• Pesticide

• Fertiliser

Polishing plants

Companies

• Supermarket

• Wholesalers or retailers

Export

Domestic consumer

Collector

Farmer’s cooperatives

Dehusking-mills


• Investment: Large investments into the transport and irrigation system.

• R&D: Accounts for one-third of the governmental's budget investing in agricultural

research, extension and information activities. Support hybrid rice for farmers.

• Support to farmers: Settingup floor paddy prices to ensure a minimum profit margin

of 30% for rice growers.

Large - scale rice production policy

Aim: To improve the quality of the country's rice products

Policy details: A zero-interest loan will be given to farmers who invest in rice dryers as

well as warehouses of under 10-tonne capacity. This is expected to account for about 70%

of the total costs of such equipment.

Companies that cooperate with farmers to setup large-scale rice fields and build

warehouses will be exempt from land rental fees, and will also be offered loans to buy

machines and equipment. Under the model, food companies will order rice from the

farmers and guarantee a sales outlet for these farmers.

In addition, agricultural promotion centres that produce and transfer technology of rice

seeds will benefit from governmental preferential policies.

Rice farmers who agree to volunteer in a large-scale cultivation project will receive 5 million

VND per hectare under a proposal currently being finalised by the Ministry of Agriculture

and Rural Development (MARD).

Major Impact: The policy has reduced costs of production and increased the rice

productivity along with quality and hence resulted in increased incomes for farmers. This

policy has considerably reduced the number of middleman within the system so that

farmers can garner the true benefits.

Conclusions and Recommendations9


In SSA and most of Asian countries, agro-based industry needs a major transformation in

order to generate more job opportunities, revenues and food for the growing population.

Apart from the industrial transformation, farming techniques also need improvement in

order to offer good opportunities to a large number of smallholder farmers who, in turn,

could pave their way out of poverty.

To remain competitive in the international market, the agro-industries of both the

continents need to be agile, to adopt according to the frequently - changing demand

patterns and rapidly - changing technology. Industrial transformation can be achieved by

adhering to the changes in technologies in the agricultural sector and the good news is that

the environment for technological advancement necessary for the growth of the agro-

processing industry sector is favourable in both the continents. The rising demand offers

immense opportunities for the agro - based industries of both the continents but the

challenge lies with effective access to markets and maintaining stringent quality standards.

Adherence to change in technology alone is not sufficient. There is a need for favourable

business environment for strengthening the agricultural and agribusiness sector. In order to

have an encouraging business environment, policy formulation by governments of both the

continents should be on increasing the investment by private players which, in turn, could

create autonomous business organizations to foster the growth in the agro-processing

sector. This will not only resolve the problem of coordination among producers and

processors but also expedite the growth of agro-processing industry. This linkage between

producers and processors will also ensure adequate supply of raw materials for the

industry which is a critical factor for achieving overall growth and competitiveness in

international markets.

The development of the agribusiness sector also requires a well - established value chain

since it is an important factor for matching specific standards, volume and continuous

supply of raw material to entrepreneurs. An efficient value chain stimulates upgradation,

effective technology transfer and public-private cooperation. In order to further develop the

agricultural sector and meet the growth and poverty reduction targets of Millennium

Development Goals, African and Asian countries will have to support regional and local

value chains and exploit the emerging opportunities in both domestic and international

markets.

Finance plays a crucial role in the development of agricultural sector, as it facilitates farm

development, storage, transportation and marketing of agricultural produce. The

Conclusions and Recommendations9


importance of appropriate financing mechanisms for the developing agribusiness and value

chains in Africa and Asia should not be underestimated. All businesses require sufficient

and appropriate financing mechanisms in order to sustain and grow, whether they supply

farm inputs or distribute agricultural outputs. However, the finance sector in agriculture is

anticipated as risky and with unattractive return, but mobilising both traditional and

innovative sources of financing can be advantageous for agro-industrial development.

The liability of increasing investment and facilitating financing in agribusinesses lies with

the policymakers. These policymakers, in order to make this sector more attractive, require

a comprehensive investment-friendly strategy which could address major constraints in the

value chains. Similarly, infrastructure is an important part of policy making. A reliable and

adequate infrastructural system is essential for significant agro-industrial development. A

weak infrastructure affects economic growth, cost of transactions, innovations,

diversification and competitiveness. Farmers in the rural areas, in particular, are most

affected by their geographical isolation and associated transport constraints. In such

regions, even marginal changes in infrastructural services have the potential to significantly

accelerate productivity and diversification.

There is huge potential for agribusiness in the both the continents, but growth of the

sector depends upon policy environments, capacity and resources. The opportunities in the

agribusiness sector have the potential to address various social and economical issues in

both the continents such as employment generation, income generation, poverty

reduction, etc. but there remain substantial barriers for growth of the sector. The challenge

for both the continents is to overcome these challenges together and make agribusiness

an efficient business enterprise which is capable of competing in the international market.

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