Economic Performance of the Agro-processing sub-sector
28-29 November 2015 Durban, South Africa
3rd PAFO Continental Briefing
Mmatlou Kalaba University of Pretoria and
Bureau for Food and Agricultural Policy (BFAP)
Presentation outline
• The GAP (Great Agricultural Potential) • Agribusiness Opportunity • Trade Agreements • Future-trends: Threats or Opportunities
The GAP: Agricultural Deficit Can Africa close this gap?
How long will it take
Africa: net-importer of food
Food demand and who meets it
• Population growth- implications for food demand. • Gap as African supply fails to meet demand. • Expansion in production • Role of infrastructure • Net food importer
Agribusiness Potential Massive growth is predicted by the World Bank
Who will own what?
Africa agribusiness future
Agribusiness 22%
Others 78%
SSA GDP in 2014 ($1.3 tri)
Projected SSA Agribusiness in 2030
• Who will have a share of this? • What needs to be done now?
• Which institutions • What policies?
• SSA • Agribusiness • Share of GDP
Who will gain from the projections?
• Answer- it depends on: • Integrated value chains – rural, small farmers and
regional, global • Transformation of the structure of sector • Competitive, high standard and thriving sector • Growth in agro-processing • Investment (infrastructure, irrigation, ) • Strengthening institutions (enforcement and
regulation) • Policy environment, and • Many other factors
Source: FAO. 2015. “FAOSTAT: Food Balances”
Demand: Income
0
200
400
600
800
1,000
1,200
1960 1970 1980 1990 2000 2010
Co
nst
ant
20
05
US$
Nigeria Zambia
GDP per capita , 1960-2014 (constant 2005 US$)
6.02% 5.39% 3.04% 3.58%
10.41% 9.62% 7.04% 6.36%
15.52% 14.45%
12.31% 10.36%
23.04% 21.61%
21% 17.54%
45.01% 48.93%
56.61% 62.16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1985 2010 1993 2010
Nigeria Zambia
Income Shares by Quintiles
Quintile 5 Quintile 4 Quintile 3 Quintile 2 Quintile 1
1.7 Million 2.6 Million
Rising Income but skewed distribution
Source: World Bank Development Indicators, 2015
16.8 Million 31.9 Million
Target market?
Regional Trade Agreements
Will the Tripartite FTA create additional opportunities?
Will agriculture respond to incentives?
Demand for agric & agro-processed products: AEC regional blocs
Intra-regional trade
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
COMESA ECOWAS ECCAS AMU SADC
Intra-Africa Import Trade by REC in 2012
COMESA AMU SADC ECCAS ECOWAS EU RoW
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
COMESA ECOWAS ECCAS AMU SADC
Intra-Africa Import Processed Trade by REC in 2012
COMESA AMU SADC ECCAS ECOWAS EU RoW
Tripartite FTA • National markets absorb most of the production. • TFTA will create opportunities up to where supply
is available. • Major benefits accrue to few countries. • Generally there is low African agric trade, and
even lower agro-processed products trade • There is need for supply expansion
• Additional area • Yield • diversification?
• Trade barriers.
Future trends: Opportunities or threats
What does it take to create Africa that we want?
What do we know about the future?
What can we do to realise the future we want?
Opportunities in African agriculture
• Market Dynamism
• African investment
• Growing urbanisation
• Linking rural markets with urban consumers
• Increase manufacturing
• Strengthening value chains
• Increased role of private sector role
Creating Africa that we want
• Population growth • Youth population • Technology • Energy • Land markets • Climate change shocks
Challenges: Can we overcome them?
• Political decisiveness, • Insurance and financial markets, • Regional markets (and value chains), • Investing in R&D, extension, and education • Infrastructure improvement. • Policy environment and regulation/
Thank you!
For more information: www.bfap.co.za and www.up.ac.za Contact us [email protected] [email protected]
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