Africa Economic Forum

Food and Agriculture Industry in Africa

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Food prices have been rising since mid-2010, driven by increases in energy prices, bad weather and natural disasters, among other factors. By early 2011, the FAO food price index exceeded its peak during the mid-2008 food crisis. The price of wheat rose by 90 percent between June 2010 and March 2011, while that of rice climbed by 33 percent during the same period. Food prices are projected to stay high over the medium and longer term. Rising global food prices have been accompanied by increased volatility.

The short term global food price increases are caused mostly by supply shocks such as conflicts, natural disasters, oil price increases, and exchange rate fluctuations. Recently, commodity investments by financial institutions and hedge funds have also played a role. For example, in mid-2010 the Armajalo’s investment fund bought all cocoa supplies on the market, causing the highest surge in the cocoa’s price in 33 years. The rising demand due to population growth, higher incomes, changing tastes, demand for bio-fuels has driven the upward trend in food prices in the longer run. In Africa, the impact of these factors has been exacerbated by low agricultural productivity, severe distortions in agricultural markets, vast infrastructure gap, higher incidence of conflict, and a disproportionate damage from climate change. Higher global prices could stimulate agricultural production, but price transmission mechanisms in Africa operate with a lag and are impeded by market imperfections.


Despite favorable weather conditions for cereal production in most Africa’s subregions, real growth in the agricultural sector has averaged at about 22.5 percent a year since the late 1970s to the same rate or below the population growth. Agricultural productivity thus remains far below world average. Clearly, raising agricultural productivity including that of smallholder farmers is a key component in reducing poverty and hunger in Africa. Raising Agricultural Productivity through GM Methods The recent gene revolution -- adoption of bio-technology in agricultural production driven largely by private companies from industrialized countries brings a lot of opportunities and challenges for African farmers. According to a FAO report, the world's top ten transnational bioscience corporations' collective annual expenditures on agricultural biotechnology R&D amounts to nearly US$3 billion. This is ten times the expenditures of the Consultative Group on International Agriculture Research (CGIAR), the largest international public sector supplier of agricultural technologies focusing on the needs of developing countries. Agricultural biotechnology gives farmers numerous opportunities to raise their productivity through, for example, improved and disease-free planting material; pests/diseases resistant crops; and use of less harmful environment. However, there are concerns about affordability, adaptation, and relevance for local needs (especially for smallholder farmers) of the recent agricultural innovation through genetically modified crops.

Africa is the region most vulnerable to the impacts of the climate change. Preliminary estimates for the period up to 2080 suggest that agricultural productivity could decline by 15-30 percent on average and by 50 percent in the most climate change exposed countries. Occurrence of humanitarian and food crises is likely to rise due to more frequent extreme weather events. Poor farmers will be most vulnerable to negative implication of these developments. In some parts of Southern Africa, these challenges have been amplified by the high prevalence of HIV/AIDS.

African agriculture is in crisis, the CAADP affirms, and that situation “demands a crisis response.” Although urbanization is increasing rapidly, agriculture still provides livelihoods for about 60 per cent of the continent's active labour force, contributes 17 per cent of Africa's total gross domestic product and accounts for 40 per cent of its foreign currency earnings yet farmers' yields have essentially stagnated for decades. Although total output has been rising steadily often by simply extending the land area under cultivation this growth has barely kept pace with Africa's increasing population. Food production in particular has lagged, so that the number of chronically undernourished people increased from 173 million in 1990-92 to 200 million in 1997-99, the latest years for which accurate figures are available. Of that total, 194 million were in sub-Saharan Africa . This growth in hunger has come despite high levels of food imports costing $18.7 bn in 2000 alone.

After decades of economic stagnation and with the number of chronically malnourished people now reaching 200 million, Africa's leaders are intensifying efforts to find “sustainable solutions” to hunger and poverty, says Nigerian President Olusegun Obasanjo. The main framework for that undertaking, he notes, is the New Partnership for Africa's Development (NEPAD), which emphasizes that “agriculture will provide the engine for growth in Africa .”

Government agricultural policies also have been poor, providing only weak economic incentives to rural producers. Privatization and other structural adjustment policies led to an “over-hasty withdrawal” of the state from direct production. In the absence of a sound private sector, this caused “severe dislocation of production, farm trade and farmer support services.”

Agriculture also has been starved of investment. Many African governments devote less than 1 per cent of their budgets to agriculture. Not only have overall donor aid levels declined, but donor priorities have simultaneously shifted away from agriculture toward other sectors. Worldwide, the amount of aid allocated to primary agriculture declined from $11 bn in 1990 to $7.4 bn in 1998. The decline has been especially sharp in the case of the World Bank, which provided 39 per cent of its total lending to agriculture in 1987, but only 7 per cent in 2000.

Although available financial resources should be managed better, the CAADP acknowledges, overall investments in agriculture need to be drastically increased if Africa is to pull out of its agricultural crisis. The four pillars highlighted in the plan will require $251 bn in investments between 2002 and 2015 (see table). Although an ambitious amount, the annual average of $17.9 bn is less than the continent spends each year on food imports. The plan expects that Africa will be able to mobilize about half of the total amount from its own resources, with its share gradually increasing as the continent strengthens its domestic.

The public sector must drive the political ambition and develop policies structured around three main intervention areas: The production of public goods, mainly by investment in transport and communication, energy and market infrastructure; the deployment of efficient services (support and advice, for example), investment in research, and knowledge management, etc. The use of economic policy instruments with the capacity to guide strategies for economic producers and stakeholders. This mainly involves credit policies, risk management, and market regulation, etc.Regulations in areas as varied as rules governing access to and use of resources (land and forest codes, for example), the formulation and monitoring of compliance with sanitary and phytosanitary standards, and legislation in the area of cooperatives or interprofessional organisations, etc.


To succeed, Africa's efforts to boost agricultural output must also rely on greater use of science and technology, the plan's fourth, long-term pillar. Currently, only about 20 per cent of cropland in Africa is sown with improved cereal varieties. Many new varieties of maize and rice have been developed in laboratories, but must be better adapted to Africa's environmental conditions, as in the case of the New Rice for Africa (see page 10). Research has shown that improved varieties of millet, sorghum and other traditional African grains can also significantly boost yields. Beyond seeds, farmers need access to animal health remedies, safe pesticides and other inputs, as well as training in agro-forestry and various skills.

Africa's agricultural research institutes and extension services have very little capacity to engage in new scientific research or get existing technologies out into farmers' fields. In part, such problems can be overcome by finding new ways to generate and handle scientific knowledge, says the CAADP. Farmers themselves should be more closely involved in both research and dissemination.

While changes in functioning are important, says the CAADP, so too is greater financing. Public spending on agricultural research rose rapidly between 1961 and 1976, but stagnated during the 1980s and 1990s, at around $1.2 bn annually. African agricultural research institutes meanwhile became more dependent on donor financing, which rose from 28 per cent of the total in 1986 to about 40 per cent today. Overall spending on agricultural research should double within 10 years, says the NEPAD agricultural plan. To achieve that, research and extension services will need to diversify their sources of financing, increasing not only allocations from national budgets and donor agencies, but also by tapping the private sector, selling consultancy services to producers' organizations, deriving income from patents and urging governments to place levies on commodity sales. With adequate resources, says the plan, it will be much easier to build “a pluralistic and integrated system of agricultural research, extension and education that are responsive and accountable to farmers, agribusiness, consumers and other stakeholders.


Feeding 1.5 billion and then 2 billion Africans in 2030 and 2050 respectively is a challenge that Africa is capable of meeting. But there is more to this challenge. It is not simply a matter of how much food is needed and the amount of agricultural growth required. Indeed, Africa will be unable to achieve food security unless it succeeds in drastically reducing the poverty level undermining its production capacity and its food and nutritional security. It must, therefore, invent an agricultural growth model that simultaneously responds – or helps to respond – to its different challenges, relating to agriculture, demography, society (poverty, employment, reduction of inequalities, gender), environment (protection of natural resources and biodiversity) land (development, settlement regulation) and food. The regional integration process in which the regional economic communities and the African Union are currently engaged is one of the main assets that the region’s countries and stakeholders possess. Promoting agriculture and agricultural trade is one of the tools for building and deepening the regional integration process by and for Africans and by and for regional products. Regional cooperation and integration are tools for boosting agri-cultural performance, contributing to efficient, shared natural resource management and improving the region’s capacity for ensuring its food security and sovereignty.

AEF Food and Agriculture Industry Core Group

The Food and Agricultural Industry committee of the AEF brings together the top 100 Food and Agricultural companies in Africa as ranked by the AEF Industrial Index, and to others by invitation only. The national economies within which agriculture in Africa is changing are extremely heterogeneous. While agriculture still holds a dominant position, especially in terms of employment creation, urbanization is rarely accompanied by economic diversification.

Agriculture is central to fostering economic growth, reducing poverty, and improving food security in the African region. More than 70 percent of the rural population depends on agriculture for their livelihoods, and regional economic growth has been constrained by poor performance in the agriculture sector. Achieving the Millennium Development Goals on poverty in Africa will largely depend on increasing agricultural productivity and trade.


Global advisory committee

A standing committee of the AEF Food and Agriculture industry committee (FAIC). It provides global advisory and related industry insights to the Food and Agriculture industry committee on how to globally scale-up the operations and impact of the Food and Agriculture industry in Africa; to promote its global competitiveness and improve its collaboration with science and technology Research Institutions in Africa and other parts of the world. It would also help to build collaborations with other partners in other parts of the world.
It would be made up of the following:

  • 2 Co-chairpersons
  • A Vice chiarman
  • 9-15 other persons
  • Membership would reflect the 5 sub-regions of Africa and the 5 major regions of the world.

Oversight Committee

Would be responsible for the oversight of the Food and Agriculture industry committee. It will work to ensure the continued growth and development of the Food and Agriculture industry committee in Africa and to promote its continued upscaling within the African region and globally.
It would be made up of:

  • A Chiarman
  • A Vice chiarman
  • 13 other members
  • Membership shall reflect the various regions of Africa and also the various strata of the industry.

Technical Committee

Would be responsible for the review of emerging technical, business, political and related issues impacting on the industry in Africa and advising the Food and Agriculture industry committee appropriately. It shall have powers to set up various technical and or expert committees to execute various aspects of its assignment related to the industry in Africa with a view to enhancing its growth and development including organizing various meetings for this purpose.
Membership of the committee:

  • Chairperson, been a member of the Oversight Committee
  • Vice Chiarman
  • 7-9 other members, 3 of which must be members of the oversight committee

Public Private Partnership (PPP) Committee

Would be responsible for the smooth engagement of the Food and Agriculture Industry in Africa with relevant Government Agencies/regulatory bodies concerned with the setting up and or operations of the Food and Agriculture industry in Africa. It will ensure continued the good relationship of members of the Food and Agricultural industry committee and various public agencies concerned with regulation and or operations of the industry in Africa. It would ensure the creation and operation of appropriate platforms for promoting good understanding between the industry members and those of the relevant publics in Africa.
Membership of the Committee:

  • Chairman, being a Vice-Chairman of the oversight committee.
  • Vice-Chairman
  • 7 - 9 other members, 3 of which must be members of the oversight committee.


Nominations are invited for membership of the following committees.

  • Membership of the Global Advisory Committee for the Food and Agriculture Industry Committee.
  • Membership of Food and Agriculture Industry oversight committee.
  • Membership of Food and Agriculture Industry Technical committee.
  • Membership of Food and Agriculture Industry PPP committee.


Food and Agriculture Industry in Africa Events