EAST AFRICA’S ROLE IN GCC FOOD & AGRIBUSINESS AND … · Cashew nuts Dried Pigeon Peas Dried...
Transcript of EAST AFRICA’S ROLE IN GCC FOOD & AGRIBUSINESS AND … · Cashew nuts Dried Pigeon Peas Dried...
MANAGING DIRECTOR, FARRELLY & MITCHELL
EAST AFRICA’S ROLE IN GCC FOOD & AGRIBUSINESS AND FUTURE PROSPECTS
21 May 2019
AFTI East Africa Agri Food Trade & Investment Summit
Malachy Mitchell
NAIROBI, KENYA
Agenda
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4
Overview of East African Economy
Agri-Food Production & Trade
Trade Potential
Addressing the Opportunity
GCC Market Potential
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5Disclaimer: The information in this presentation is intended to give information in general nature, great efforts has been exerted to ensure the accuracy of this data at the time the presentation was drafted. Farrelly & Mitchell Business Consultants Ltd. and its Branch offices or affiliates does not provide any implicit or explicit guarantees on the validity, timing or completeness of any data or information in this presentation. Also we assume no responsibility on the appropriateness of the data and information for suiting any particular purpose or reliability in trading or investing.
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OVERVIEW OF EAST AFRICAN ECONOMY
01
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East Africa’s Economy is Continuing to Expand… Growing at almost double the average rate of other African countries
Source: World bank
East Africa Region by 2024
160 USD BnAnticipated based on
historic trends
AGRI GDP
650 USD BnExpected to grow at CAGR 7% from 2017
GDP (CURRENT)
495 MnExpected to grow at CAGR 7% from 2017
POPULATION
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…However, Agri Production is Slower than Population Growth The region is mostly self sufficient
Cereals Roots and Tubers
Fruits Dairy
Vegetables Pulses
NET DEMAND BY AGRI PRODUCTS, 2017Cereals, Roots and Tubers, Fruits and Dairy accounts for 87% of total demand
205 Mn tonnesin 2017
34%10%
6%4% 2%
31%
13%
0% 0%
AGRI PRODUCTION, 2013-17Production grew by half the rate of population in the region
189
194 193
193
196
184
186
188
190
192
194
196
198
2013 2014 2015 2016 2017
Units in Mn Tonnes
Source: FAO
CAGR 0.9%
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Select Products are ExportedCereals dominate imports while nuts, pulses, fruits and vegetables are exported
AGRI PRODUCTS DEMAND OVERVIEW, 2017Units in Mn Tonnes
Source: FAO
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Under Developed Supply ChainsLack of appropriate funding is hindering supply chain development in Africa
• Development Finance Institutions• Private Equity• Local Banks• Government Programs
• Developed / Cash Positive Projects• Smallholder Farmers• Agro-processing
• Greenfield / Brownfield Projects• Primary Production
• Limits Scaling• Increases production costs• Limits technology application• Hinders integration
FUNDING SOURCES PROJECTS IMPLICATION
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AGRI-FOOD PRODUCTION & TRADE
02
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Ethiopia, Tanzania, Malawi, Kenya and Uganda accounts 70% of the Production … Cereals, roots and tubers are the main stream products accounting for 50-80% among all countries
Units in Mn Tonnes Roots and Tubers Cereals Fruits Dairy Vegetables Others
ETHOPIA
0 5 10 15 20 25 30
TANZANIA
0 5 10 15 20 25 30
MALAWI
UGANDA
0 5 10 15 20 25 30
KENYA
0 5 10 15 20 25 30
OTHERS
0 5 10 15 20 25 30
0 5 10 15 20 25 30
Source: FAO
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… But Production is ConcentratedEthiopia and Tanzania are by far the largest producers
Source: FAO
Ethiopia Tanzania Malawi
Kenya Uganda Others
PRODUCTION BY COUNTRIES, 2017
196 Mn tonnesin 2017
23%
18%
11%10%
8%
30%
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Import of Agri ProductsWheat and rice account for 60% of total imports
Source: UN Comtrade
Others include Madagascar, Uganda, Tanzania among others
Kenya Sudan Mozambique
Mauritius Zimbabwe Others
IMPORTS BY COUNTRIES, 2017Kenya, Sudan and Mozambique accounts 60% imports
USD 9.1 Bnin 2017
30%
8%
25%
20%10%
7%
Others include Roots and Tubers, Meat, Eggs, Treenuts
Cereals Dairy Pulses
Meat Vegetables Fruits
Others
IMPORTS BY CROPS, 2017Imports are mostly limited to Cereals which account 75% share
USD 9.1 Bnin 2017
9%
75%
6%
3%3%
3%1%
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TRADE PARTNERS FOR CEREALS, 2017
Agri Import Trade Partners for CerealsRussia, Pakistan and Argentina as key trade partners
Source: UN Comtrade
WHEAT RICE MAIZE
RUSSIA37%
ARGENTINA15%
CANADA7%
PAKISTAN38%
THAILAND25%
INDIA14%
MEXICO35%
SOUTH AFRICA
25%
UKRAINE4%
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Nuts Cereals Pulses
Vegetables Fruits Others
Others include Meat, Dairy, Eggs, Roots and Tubers
USD 4.3 Bnin 2017
14% 22%
12%
8%
11%
33%
EXPORTS BY COUNTRIES, 2017Tanzania, Kenya and Uganda accounts near 65% exports
Others include Madagascar, Uganda, Tanzania among others
Tanzania Kenya Uganda
Sudan Mozambique Others
USD 4.3 Bnin 2017
33%
10%
11%
22%18%
6%
EXPORTS BY CROPS, 2017Cashew nut and Pulses exports from Tanzania accounts 30% of the total exports
Export of Agri ProductsNuts and Pulses are the major products exported
Source: UN Comtrade
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Agri Export Trade PartnersIndia and Vietnam are key trade partners
Source: UN Comtrade
Trade Partners for Exports, 2017
NUTS CEREALS, INTRA-TRADE PULSES
VIETNAM44%
INDIA36%
USA9%
KENYA32%
SOUTH SUDAN
17%
TANZANIA8%
INDIA37%
KENYA18%
PAKISTAN10%
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AGRI-FOOD TRADE POTENTIAL
03
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…Strong Export Product Mix from Tanzania and KenyaCashew Nuts, Avocadoes and Pigeon Peas are promising products considering global market dynamics
Source: UN Comtrade, FAQ, Farrelly & Mitchell
IMPORTS EXPORTS
Scale within the Product High Medium Low
Tanzania
Kenya
Sudan
Mozambique
Mauritius
Cereals Dairy PulsesNuts Vegetables Fruit
Wheat, grain & rice
Wheat
Rice & wheat
Milk powder & cream
Milk powder & cream
Milk Powder, Cream, Cheese and Curd
Uganda
Cashew nuts
Dried Pigeon Peas
Dried Green Gram & Pigeon Peas
Fresh Beans and Peas
Avocado & Mango
Banana
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…Further Scope for Global Market PenetrationTarget Asia for cashew nuts and pulses - Europe and NA for fresh produce
Product Global Trade, USD Mn, 2017 Tanzania’s Share Kenya’s Share Imports share by Region Key Importers
Cashew USD 8.7 Bn 7% --Vietnam – 30%USA – 18%India – 17%
Avocadoes USD 6 Bn -- 1%USA – 45%Netherlands – 9%France – 7.3%
Mangoes USD 2 Bn -- <1%USA – 24%Vietnam – 8%Netherlands – 8%
Pulses –Dried Pigeon Peas and Green Gram
USD 1.3 Bn 4% <1%India – 50%Japan – 9%Indonesia – 6%
Vegetables – Fresh Beans & Peas USD 1 Bn -- 4%
USA – 15%Spain – 13%France – 12%
50%20%20%
Asia
NA
EU
48%40%
Asia
NA
EU
22%38%
28%
Asia
NA
EU
2%25%
70%
Asia
NA
EU
82%6%
3%
Asia
NA
EU
Source: UN Comtrade, FAQ, Farrelly & Mitchell
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GCC MARKET POTENTIAL
04
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Demographics trends One of the fastest growing regions and youngest demographics in the world….
GCC EU
Population growth (CAGR 2010-2015) 3.3% 0.2%
Average Age 2015 29 Years 42.6 Years
GDP / Capita 2015 (USD) 26,666 35,100
Consumer Spending / Capita 2015 (USD) 11,307 17,585
Protein Consumption per Capita 2013
90g /capita / day
104g /capita / day
Source: UN Population Division, World Bank, IMF, National Statistics Authorities, Farrelly & Mitchell
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An increasing shift towards protein
Angola
Bermuda
Cyprus
Liberia
LithuaniaLuxemburg
Nigeria
NorwayPortugal
Ghana
Saudi Arabia
India
UAEUSA
0
20
40
60
80
100
120
140
160
- 20,000 40,000 60,000 80,000 1,00,000 1,20,000
Oman
Kuwait
Per Capita Protein Consumption (g/Capita/Day) STRONG RELATIONSHIP BETWEEN RISING INCOME AND DEMAND FOR PROTEIN
GDP Per Capita (USD)
Source: IMF, FAO, Farrelly & Mitchell (2013 data)
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Important to understand that demand is not homogenousSignificant expatriate population provides number of niche opportunities
BREAKDOWN OF GCC POPULATION BY NATIONALITY 2016 Population by Nationality (%)
63%
11%
46%
12%
54%
30%
37%
89%
54%
88%
46%
70%
KSA UAE Bahrain Qatar Oman Kuwait
Citizens Expatriates
Source: National Statistics Authorities
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Economic reforms are also opening doors for in-country partnerships and joint ventures
GCC members plan to investUSD 968 billion over the next 10 years
This investment includes1,638 projects
The oil-rich countries plan to direct from 2011 to 2020, USD 79 billion for rail, including trains, subways and trams
The most ambitious project, valued at USD 30 billion, is the railroad that will connect all the countries of the GCC
For roads construction, investments are put at $18 billion
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ADDRESSING THE OPPORTUNITY
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GCC Market Entry: Checklist
An extensive market needs analysis to be undertaken to fully understand market dynamics and opportunity …..
Clear strategy01Market contacts & cultural understanding02Formal contacts established03Halal registration & certification04Distributor in place05Localised product range06
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What should companies address to capitalise on the opportunity?Certifications and securing buyers are important pillars to develop sustainable business
Source: Farrelly & Mitchell Research
01. Certifications 03. Value Chain
02. Differentiators
• Halal• Global GAP• BRC
• IFS• FSSC22000• SQF
• Organic• Social and
Environment compliance (GRASP and SIFAV certification)
• Secure buyers • Partner with global buyers
and processors• Strengthen cooperatives
05. Promote
04. Essentials• Quality • Packaging• Labelling
Develop campaigns in international market
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Farrelly & MitchellGlobal Specialist in Food & Agribusiness
200+Sector Specialists
GlobalReach & Experience
EstablishedOver 15 years
ClientsCorporate & Government
StrengthOperational & Strategic
Value ChainFarm to Fork
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