FARM NEWS

Agribusiness in Africa: Investor reveals which areas hold the most potential

Published

4 years ago

September 24, 2020

witnessradio.org

Chris Isaac, chief investment officer of AgDevCo

by Betsy Henderson

Agribusiness in Africa: Investor reveals which areas hold the most potential

AgDevCo is an impact investment firm specialising in agribusiness in sub-Saharan Africa. It has a portfolio consisting of over 40 active investments throughout the continent. How we made it in Africa speaks to Chris Isaac, chief investment officer at AgDevCo, about the continent’s agribusiness opportunities and the investment lessons he has learnt.

Which agribusiness sub-sectors in Africa are you most enthusiastic about from an investment perspective?

We’ve been involved in many ventures over the past decade. We’ve learnt a lot of lessons from our investment mistakes and successes, which has led us to focus on a few areas where we see the greatest potential.

The first is tree crops, particularly avocados and macadamia. There is significant – and still growing – global demand for these crops, and if you can provide the right quality into the international supply chains, then it’s a good business. There are some risks, as there are major new plantings happening in Africa and around the world because prices are good at the moment. However, there are advantages to having export crops that bring in dollar revenue. Southern and East African countries have the possibility of being globally competitive because they can hit particular seasonal windows, they’ve got the right agro-ecological conditions, and you can build profitable new industries, as we’re seeing developing in Mozambique and Malawi.

Another area is livestock for supply to domestic markets, which plays into Africa’s demographics with an emerging middle class, increasing affluence, and a switch towards more protein-based diets. We’re doing quite a lot in poultry, including some innovative work that provides improved breeds to small-scale farmers. We also have investments in pig breeding.

The third sub-sector would be high-quality, competitively-priced basic foodstuffs. African consumers will buy good quality, locally-produced products if you can come in at the right price point. We’re currently involved in maize meal processing and groundnuts. You can find success in this area if you can assure the consumer the food is safe and if it’s well-packaged and well-branded.

Are there any areas you would be hesitant to invest in?

We’ve found you really need to know what you’re doing if you are going into large-scale production of commodity crops – like maize, soya or rice. These are relatively low-margin commodities where there is global competition and significant economies of scale (especially if you look to South America or Asia), so you really need to be sure that you can be an efficient producer and you’ve got the necessary scale. You are also sometimes dealing with unpredictable policy environments, where there may be intermittent export bans or changing tariff regimes, so primary production of low-value commodity crops is really difficult. It can make sense as part of a strategy where you’re vertically integrated and you’re also involved in the processing, but we’ve found it very challenging to make a success of doing straight primary production of those crops.

A similar challenge is if you move into, say, tomato processing or cassava starch – again, you’re taking on global suppliers who often benefit from subsidies, which makes it very difficult to get the cost of production below that of imports. It can be very tough to make those models work.

Explain the long-term impact of Covid-19 on Africa’s agribusiness industry.

We don’t know, is the honest answer. So far, the agriculture sector in Africa seems to have weathered the storm reasonably well. As one of our non-executive directors, Sir Paul Collier, has said, we are operating in a situation of “radical uncertainty”, and so all you can do is try and design strategies that will be more or less robust regardless of the pandemic’s outcome.

Initially, there was quite a lot of obstruction to logistics – borders closing, congestion at ports, supplies not going in or out – which seems to have eased. I would be surprised if we were to see further lockdowns. We were concerned earlier in the year that this was really going to hit our portfolio quite hard; we haven’t seen that yet, but I don’t think anyone knows what is going to happen over the next year or so. Hopefully, growth in the agriculture sector will be able to continue, as it has done remarkably well relative to other parts of the economy thus far.

In a sense, we are dealing with this type of uncertainty in agriculture all the time. You never know if a harvest is going to fail or if prices are going to collapse, so it’s one reason why you need an investment approach that is long-term, flexible, and that allows you to ride out the bumps that will inevitably come.

Covid-19 has focused attention on the fact that the continent is a net importer of food products, which needs to be reversed. It accelerates the trend toward orientating businesses to cater for growing demand in local and regional markets. That said, I don’t think it completely changes the game, and we’re not expecting a complete breakdown in international supply chains. You still have to focus on being internationally competitive and be able to deal with the fact that chicken can be imported from Brazil to southern Africa at very low cost and rice processing costs in Asia are a fraction of what they are in Africa.

Various stakeholders have highlighted the potential for African agribusinesses to tap into the global health and wellness trend by exporting organic products from Africa to Western markets. Do you agree that this is a good opportunity?

At one level, yes. There is value if you have full traceability back to the farmer who supplied the product, and can be sure that banned chemicals haven’t been used, coupled with sustainable and equitable trade relationships with farmers.

For example, we’re involved in sourcing organic cocoa from farmers in Sierra Leone. This achieves a premium in the market, allows us to share more value with the farmers, and it’s a good business. You could see this happening in coffee, tea, and some of the other traditional export crops, which are otherwise very low margin. If you can show consumers they’re getting a quality product and they know the farmers are getting a fair deal, I think there is a willingness to pay for that.

However, if you shift focus to niche crops – such as superfoods and that sort of thing – the challenge that you face is how big the market demand really is and to what extent you can supply that market and earn a reasonable margin without having to invest in a sophisticated marketing operation. Some people do this brilliantly, but they are really marketing businesses rather than farming businesses.

We’ve found that in order to be successful in these markets, you need a certain scale to be able to build a network of farmers and suppliers, and ensure that the company is going to be sustainable, profitable, and therefore able to maintain those relationships with farmers over time. There is a risk with new crops where the level of demand is not proven yet, and we’ve seen too many businesses spring up for a few years, but then don’t manage to achieve long-term sustainability, which risks farmers being left without a market.

What other agribusiness trends are you seeing in Africa?

Besides increasing domestic demand for better quality food and more protein-based diets, we’re seeing companies realising they need to think about vertical integration. The more successful players are becoming involved all along the supply chain in order to ensure end-to-end quality and consistency of supply. Currently, you can’t always rely on there being a steady supply of raw materials – for example, quality feed, if you are involved in the livestock sector. As markets mature, I think you’d see more specialisation again, but right now vertical integration – either through companies building it themselves or acquiring complementary firms – is a sensible strategy.

Which African country are you most optimistic about?

One country that is perhaps under the radar but where we’ve had great success is Malawi. It has a relatively small economy, but a history of commercial agriculture in tobacco, sugar, and to some extent tea, and an investment climate that is very good for agriculture. There’s also a strong overall supportive environment; Malawi has a solid legal system, it’s relatively painless dealing with the authorities, and you can get things done. We started investing there about eight years ago and have businesses in poultry, macadamia, sugar and peanuts that are all doing well.

Describe one of the investment lessons you have learnt over the years.

Perhaps the key lesson as an investor is getting the balance right between sensible caution and being decisive. In the early days of my career, there was perhaps a tendency to see every opportunity as exciting and I might have been tempted to give benefit of the doubt to a business plan. But then as you get more experience, you see more, and you become a little more sceptical. The thing is to not go too far in that direction – it’s too easy to start saying “no” to every opportunity. There are always risks and at some point you have to take the plunge and say “yes”.

One thing that is challenging in the African agriculture sector is that you have to make decisions without perfect information. We are often backing companies that are doing pioneering things and who are the first movers. So, you’ve got to do your due diligence and you can try to look at things from every angle, but at the end of the day, you do have to be decisive and trust your judgement. You won’t get it right all of the time. You are most likely to succeed if you build a team with experienced people who have seen what works and what doesn’t on the ground. We’ve also found that, as an entrepreneur, it’s important you have a business model that incorporates flexibility and allows you to course correct as you go along in order to manage uncertainty.

Original source: How we made it in Africa

FARM NEWS

Coffee Leaf Rust disease hits Mbale region farmers

Published

4 days ago

November 18, 2024

witnessradio.org

Mbale, Uganda | Coffee farmers from Bulambuli and Sironko districts are counting their losses after being attacked by coffee leaf rust disease. The disease, caused by the rust fungus Hemileia vastatrix, can reduce coffee production by between 30% to 50%.

The most affected sub-counties in Sironko include Buhugu, Masaba, Busulani, Bumasifwa, Bumalimba, and others. In Bulambuli, the hardest-hit areas are Lusha, Bulugeni Town Council, Buginyanya, and Kamu, among others.

In an exclusive interview with our reporter, Francis Nabugodi, the Sironko District Agricultural Officer, spoke about the devastating effects on farmers. “This disease has negatively impacted farmers in terms of production, and since it’s coffee season, they are going to make losses,” Nabugodi said.

He added that he had instructed extension workers to start massive sensitization campaigns in the six affected sub-counties about preventive measures, such as spraying, to curb the spread of the disease.

Nabugodi also urged the Ministry of Agriculture, Fisheries, and Animal Husbandry to supply the district with chemicals so they can distribute them to farmers, as many cannot afford to buy them.

Julius Sagaiti, the LCIII Chairperson of Lusha Sub-County in Bulambuli District, stated that his sub-county is the worst affected, with over 100 farmers having all their gardens hit by the disease. He called for urgent action from Bulambuli district leaders, warning that the situation would have severe consequences for farmers.

Timothy Wegoye and Suzan Nanduga, both affected coffee farmers from Bukisa, the worst-affected sub-county, shared their concerns. “The majority of farmers are ignorant about preventive measures and do not know the chemicals for spraying,” they said, urging extension workers to use the media to sensitize them.

Original Source: URN Via The Independent

FARM NEWS

Drought ruining Kasese farmers’ livelihoods

Published

2 months ago

October 7, 2024

witnessradio.org

Along Bwera-Mpondwe road, in Kasese district, farmers till the land, with every hoe raising more dust than dirt, a testament of how hard the sun has scorched the ground. Located at the slopes of the Rwenzori Mountains, the low altitude leads to high temperatures as the district also sits on the Equator. In January this year, the average temperatures were 25.1 °C

Gideon Bwambale walks through drying maize garden.

Today, the temperature is 28.6 °C. The most affected areas are low-lying sub-counties like Kahokya, Nyakatonzi and Muhokya.

High deforestation levels have also exposed the mountain slopes and tampered with rain formation. Twelve sub-counties in the district have been hit with drought and prolonged dry spells. The dried maize and banana plants on Gideon Bwambale’s quarter-acre garden, in Kahokya sub-county, could mean there was a harvest a few weeks ago. However, he is quick to share that they did not harvest a single cob.

“Before the cobs would form, the sun dried them. Indeed, the sun has defeated us this season. The situation has been the same for the last eight seasons (four years). We are waiting on the mercy of God to send us rain because we do not have an alternative source of livelihood,” he laments.

To mitigate the effects of the sun, Bwambale and his neighbours are now planting trees in the hope that the rains will come. Bwambale’s neighbour opted to grow cotton and beans, which are believed to be more drought resilient than other food crops.

However, his cotton garden speaks a sad story because although planted a month ago the cotton is stunted, looking like it is a week old. Kasese District has two rainy seasons – March to May and September to December, and there is hope that with the rains on the way, agriculture will pick up.

On the descent to River Nyamugasani, the situation is no different for Sam Nabugere, a mango farmer who started planting when it began drizzling in late August.

“I planted 400 mango trees on four acres, but now, a month later, half of the trees have died. The weather forecast indicated that we would get rain by September 15, but that has not happened. I believe I will only salvage about 100 mango trees,” he says.

Nabugere has eight acres of land but is now irrigating six of them to try and help his mango trees develop.

“My farm is about 500 metres from the river so I use a pickup truck to ferry 500 litres of water for irrigation. Every day, I spend Shs100,000 on watering the farm. My long term plan is to build a ground tank on the next hill to store water for irrigation,” he says.

Cattle keepers not spared

Among the Basongora community, who are mainly cattle keepers, up to 1,000 heads of cattle have been known to perish in some dry seasons.

Kenneth Muyambi, the vice chairperson of Muhumuza Cattle Keepers Cooperative Society in Nyakatonzi sub-county, says the government has constructed three valley dams – Kakogye 1, Kagongo and Kyasenda – to try and address the crisis.

“The valley dams have minimised cattle deaths as they facilitate a constant water supply, even in the dry season. The main source of water is rainfall and the Kyanyampara water canal. When the valley dams are full, the water can last for up to six months before it is used up,” he says.

However, the valley tanks were last full in January. Now, they are now dry. Each dam feeds about 40,000 heads of cattle from the three different communities.

“Since there is no rain, the valley dams are empty. The Kyanyampara water canal feeds a number of sub-counties. During the dry season, like this one, farmers build channels to divert the water to their farms for irrigation. This means the cattle keepers downstream are deprived of water,” Muyambi adds.

The community calls on the government to instead tap into River Nyamugasani and create a canal through which water can flow into the valley tanks.

“We thank the government for building the valley dams. But the dams need water. Besides channelling water from River Nyamugasani, we request the government to dig solar powered boreholes to pump water into the dams,” Muyambi says.

Tapping into River Nyamugasani will increase the milk production in the area to satisfy the available market around the Mpondwe-Rubiriha border. The cooperative society has 4,000 heads of cattle, but its milk production stands at 5,000 litres in the dry season and 15,000 litres in the rainy season.

The pastoralists say this can improve if the cattle is well watered.

Government response

Julius Rukara, the principal agricultural officer for Kasese district, says the sub-counties experiencing drought are on the leeward side of the Rwenzori Mountains.

“We used to have two rain seasons but because of climate change, the seasons are unpredictable. For instance, the second rain season of the year starts in September and ends in November, but right now there is no rain. In other parts of the country, people plant crops throughout the year. Our farmers struggle to plant crops but end up depending on the mercy of God,” he says.

The district has four rivers and lakes but the farming population is yet to adapt to irrigation. Rukara says the biggest challenge the district is facing is mind-set change.

“Many still view farming as a punishment rather than an opportunity, making it difficult to encourage sustainable practices like agroforestry. People need to be sensitised to understand why we have a drought and then be encouraged to adopt climate smart technologies. People also do not have enough land to plant trees. The population in Kasese now stands at one million,” he explains.

Kasese town has two irrigation schemes – Mobuku and Mobuku II – which can cover 4,000 acres. With support from the government and development partners, the district is constructing smaller irrigation schemes in different sub-counties to cover 100 to 200 acres.

“Additionally, under the UgIFT Micro-scale Irrigation project, some farmers in the dry corridor are being helped to procure irrigation equipment. About 45 micro-irrigation systems, that can irrigate one or two acres, will be set up for small-scale farmers by the end of September,” Rukara adds.

The Micro-scale Irrigation program, hosted by the Ministry of Water and Environment, supports farmers to purchase and use individual irrigation equipment. Cattle farmers in Kahokya are being advised to dig shallow underground wells to store water for irrigating their pasture and watering their animals.

Eliphaz Muhindi, the LCV chairperson of Kasese district, is optimistic about ongoing efforts to improve the situation, especially in the water distressed areas like Kahokya sub-county.

“With support from the Ministry of Water and Environment and the local government of Kasese, we are constructing a solar-powered borehole that will have six tap stands. Secondly, we are also constructing the Nyamugasani Gravity Flow Scheme, which will have two lines, one with 1,500 tap stands and the other with 2,000 tap stands,” he says.

Construction of the Nyamugasani Gravity Flow Scheme will cost Shs61 billion. The district has also allocated funds to sensitise farmers who are diverting water from Kyanyampara canal to rationalise it so that cattle farmers in Nyakatonzi can also benefit.

Rukare says the district is also urging farmers in Kahokya, Muhokya and Lake Katwe sub-counties who are far from fresh water to dig shallow wells.

Kasese’s population continues to grow and yet the arable land between the Rwenzori Mountains and QENP is limited. If the effects of a changing climate are not intentionally dealt with, matters can only worsen.

Source: Daily Monitor

FARM NEWS

Farmers count losses as dry spell scorches maize gardens

Published

4 months ago

July 22, 2024

witnessradio.org

Many farmers say they had borrowed money from banks and Saccos

During the first planting season, which usually kicks off in March, many farmers had hoped for a bumper harvest.

However, the unrelenting dry spell in some parts of the country has withered the crops, resulting in poor food harvests mainly maize and beans.

Although some districts received rains last week, many farmers, especially those growing maize and groundnuts, are counting losses after several acres of the crops got scorched by sunshine.

In the central region, the most affected are farmers in the districts of Nakasongola, Kiboga, Kayunga, Mubende, Kyankwanzi, Gomba, and parts of Rakai.

In Nakasongola District, the most affected sub-counties include; Nabiswera, Wabinyonyi, Kalungi, and Kalongo where farmers now stare at eminent hunger and lost cash invested in their respective gardens.

In Mulonzi Parish, Nabiswera Sub-county, Mr Simon Male has lost 35 acres of maize.

“I grow maize on a commercial scale, but my entire garden is scorched by the hot sun. I have lost the hope of harvesting any grains from this particular season. I did not anticipate the hot sun. Part of the money invested in my agriculture projects is from the loans,” he says.

Mr Ali Kisekka, a maize farmer and chairperson of Kabulasoke Sub-county in Gomba District, says all his 30-acre maize plantation withered two months after germination (between March and April).

“I spent money on renting the land, labour, purchase of seeds, and other inputs, amounting to Shs6m. Unfortunately, the rain did not come in sufficient amounts,” he says.

“Almost 50 percent of farmers in my sub-county are counting losses. We are now praying for the next season,” he adds.

Irreparable damage

Mr Emma Kintu, another farmer in Kabulasoke, says: “The damage has already been caused and we cannot save anything even if we get rain now, we are going to cut the maize and use it for mulching.”

Mr Samuel Muwata, a produce dealer in Kampala’s Kisenyi suburb, says the poor maize harvest may cause a spike in maize flour prices as was the case last year.

“The demand [for maize ] is increasingly high, and if there is no importation of maize from countries like Tanzania, there will be shortage which will cause prices to increase possibly in August or at the beginning of September when schools open for Third Term,” he says.

Currently, a kilo of maize grains costs between Shs800 and Shs1000, down from Shs500 a month ago while maize flour (corn) is between Shs1,800 and Shs2,000, down from Shs1,500.

Mr Augustine Wafula, a farmer in Busabana Village, Lunyo Sub-county, Busia District, says he only harvested four acres of maize from his five-acre garden. “I got a bank loan to plant five acres of maize, but ended up harvesting only four bags,” he says.

Mr Wafula’s loss has dealt a huge blow to his marketing prospects, especially in Kenya, which is a good destination for maize from Sofia and Marachi markets in Busia Municipality.

Because of the relatively good market for cereals in Kenya, several Ugandans were forced to rent land to plant maize. Unfortunately, the weather has left most of them counting losses.

Mr Anatoli Kizza, a farmer in Kiyindi Village, Buikwe District, says he used to supply schools with maize grains, but since the beginning of the year, he had not planted any because of the dry season.

“I tried to purchase the maize grains locally, but they could not reach the kilogrammes desired by the schools,” Mr Kizza says, adding that the dry spell is a result of abuse of the environment, including deforestation and encroachment on wetlands.

In Bugiri District, Mr Imani Mumbya, a groundnuts farmer in Isegero Village, Nabukalu Town Council, says he harvested nothing after planting the crop in his five-acre garden last season [August to December 2023] due to the unpredictable weather pattern, which was characterised by scorching sunshine.

Abrupt weather change

Mr Mumbya says following the first rains in January, he rushed to plant groundnuts. However, the rains abruptly stopped before the seeds barely sprouted.

He adds that because few seedlings sprouted, he cleared the garden in preparation for the second rains in April, which lasted until the end of May and helped the seedlings to sprout.

“But before the groundnuts could spend their entire 86-day period to mature, another drought came which prevented me from harvesting,” Mr Mumbya further explains, describing it as “the worst season during the 10 years he has been a farmer”. Mr Aloysious Kizito, a renowned farmer in Bbugo Village, Kyotera District, says maize harvests in the area have been too low as compared to last season which has reduced farmers’ expected returns on invested funds.

Although this area previously received heavy rains, Mr Kizito believes it was not evenly spread throughout the whole season, which led to poor harvests.

“We received heavy rains for two and half months yet most seasonal crops take three to four months to completely mature,” he says.

The most affected seasonal crops are maize, soya beans, peas, and Gnuts, which is likely to result in food shortages in the coming months.

Mr Abdul Birungi, a cereal farmer in Lubumba Village, Kyotera District, says although he reaped seven tonnes of maize last season from his seven-acre garden, this season he got only one tonne .

He attributes the poor harvests to what he describes as misleading messages issued by experts from the Uganda National Meteorological Authority (UNMA) which warned farmers against planting crops in January and early February.

“I wanted to plant in early January, but changed my mind upon getting their [UNMA] advice, I feel puzzled because those that didn’t go with their advice in our area at least got good harvests,” he says.

But Ms Lillian Nkwenge, the UNMA principal public relations officer, says many farmers always fail to follow their forecasts as issued and end up blaming the Authority.

“The country is not expected to have major changes in the usual rainfall patterns this year. Most parts of Uganda normally have two rainfall seasons separated by dry season. So , we hope to get the second wet season in early September,’’ she says.

Weighing options

In Teso Sub-region where farmers have for decades relied on rain-fed farming, they have started having a discourse on how to wholly revert to livestock or continue to depend on crop farming which continues to be affected by the erratic rainfall pattern.

The call to revert to livestock farming comes amid yet another failed crop harvest.

Mr John William Ejiet, the Kapelebyong District production officer, says when farms were at a critical stage of flowering, the drought again set in, leaving hundreds of farmers dejected.

He says now is the time for farners to invest in micro-scale irrigation.

“Whereas there are small grants for small irrigation from the government for farmers, the rate of adoption is still low yet we are at a critical moment when we need to adapt to new farming techniques other than the rain-fed farming which is no longer reliable,” Mr Ejiet says

Ms Joyce Akwii, a resident of Omodoi in Ocokican Sub-county, Soroti District, says she invested more than Shs3m in crop farming but got less than Shs500,000.

“I have resolved that come next year, my five acres of land that I have been using for crop farming will be turned into a goat and sheep farm,” Ms Akwii explains.

Last resort

Mr Mike Odongo, the chairperson of Ngora District, says for farmers to have a win -win situation, it is high time that they invested in both livestock and crop farming,.

“The goats and sheep can scavenge in the harsh environment,” Mr Odongo reasons.

He says the once good environment that defined Teso has heavily been depleted and it is one of the reasons for the altered rainfall patterns.

“There is a need for soul searching among people of Teso, and deliberately focus on a greening campaign like we have started in Ngora with over 20,000 trees donated by Roofings Group and Centenary Bank. This is one of the mechanisms that may enable farmers to manage to retain water in the soil,” the district chairperson advises.

Mr Stephen Ochola, the Serere District chairperson, says the ultimate answers lie in livestock farming.

“If you can’t find Shs10m in growing cereal crops, you can find that in only three fattened animals and you will readily be able to have your children at university,” he says.

Contradiction

While agriculture is the backbone of Uganda’s economy and employs more than 70 percent of the population, most farmers practice it without any training, something that has limited their opportunities of transitioning to large-scale merchandised commercial agriculture. In the new budget (2024/25 budget), the government reduced the allocation to the sector by 37 percent from Shs1 trillion last year to only Shs644.39b. This budget allocation is already far below the required 10 percent allocation to the sector agreed under the 2003 Malabo declaration.

Original Source: Monitor