For Big Ag, the sub-Sa­ha­ran farm cri­sis is a busi­ness op­por­tu­nity

Big Ag takes on prob­lems like cli­mate change and food spoilage “Po­ten­tial for Africa to feed its vi­brantly grow­ing pop­u­la­tion”

Bloomberg Businessweek (Asia) - - CONTENT - The bot­tom line −Alan Bjerga Global food and agri­cul­ture com­pa­nies are turn­ing to­ward Africa, whose pop­u­la­tion is ex­pected to dou­ble by 2050.

The 48 coun­tries that make up sub-Sa­ha­ran Africa have in­creas­ingly acute food needs as cli­mate change turns the re­gion’s grow­ing sea­sons more arid. The drought now dev­as­tat­ing south­ern and East Africa, which threat­ens 50 mil­lion peo­ple with famine, is just the start, cli­mate fore­cast­ers say. The World Bank projects that, given present trends, about 40 per­cent of the land used to grow corn in sub-Sa­ha­ran Africa will no longer be suit­able for cur­rent va­ri­eties by 2030.

Mon­santo says it has part of the so­lu­tion. On small plots of land in Kenya, Mozam­bique, South Africa, Tan­za­nia, and Uganda, the com­pany— in col­lab­o­ra­tion with, among oth­ers, the Bill & Melinda Gates Foun­da­tion— is test­ing corn va­ri­eties that hold up bet­ter against dry weather and in­sects. Mon­santo’s Wa­ter Ef­fi­cient Maize for Africa project is as much about do­ing well as it is about do­ing good. “The long-term growth has to be looked at as a busi­ness op­por­tu­nity,” says project di­rec­tor Mark Edge, whose work in­volves hy­brid seeds rather than the ge­net­i­cally mod­i­fied va­ri­eties Mon­santo pro­duces, which are con­tro­ver­sial on the con­ti­nent. “The short-term chal­lenge is creat­ing the mar­ket and un­der­stand­ing what in­vest­ments can do that,” he says.

China has been driv­ing global food trends for al­most two decades, and In­dian di­ets are be­gin­ning to move world mar­kets. But the big­gest longterm pay­off for agribusi­ness may be in Africa. Its pop­u­la­tion is set to more than dou­ble by 2050, to 2.5 bil­lion, ac­cord­ing to United Na­tions pro­jec­tions.

Mon­santo ri­val DuPont, which is big­ger in Africa, has its own Ad­vanced Maize Seed Adop­tion Pro­gram to shift farm­ers to­ward hardier seed va­ri­eties. Cargill, the world’s big­gest grain trader, last year ex­panded an an­i­mal-feed fa­cil­ity in South Africa.

Olam In­ter­na­tional, among the world’s largest food traders, is boost­ing its in­vest­ments in branded foods, in­clud­ing Tasty Tom tomato paste and Pearl bis­cuits. Agco, the world’s third-big­gest maker of farm ma­chin­ery af­ter Deere, is de­vel­op­ing small, so­lar-pow­ered cool­ing fa­cil­i­ties— a huge need in Africa.

The raw in­gre­di­ents for an agri­cul­ture boom are in place. Africa has the world’s most un­used farm­land. Crop yields badly trail those in the de­vel­oped world but could be im­proved quickly with bet­ter seeds and fer­til­iz­ers. “We see clear po­ten­tial for Africa to feed its vi­brantly grow­ing pop­u­la­tion,” says Tim Bodin, an econ­o­mist for Cargill.

Gen­er­a­tions of sub­sis­tence farm­ing have left soil de­pleted of nu­tri­ents. Howard Buf­fett, son of Berk­shire Hath­away Chair­man War­ren Buf­fett, has called for a “brown rev­o­lu­tion” to re­store soil health in Africa as part of the more than $700 mil­lion he’s pledged to com­bat global hunger over the next decade. The Demo­cratic Re­pub­lic of Congo and Rwanda top the list of coun­tries where his epony­mous foun­da­tion is work­ing to im­prove farm­ing prac­tices and link grow­ers to mar­kets.

The re­gion also suf­fers an in­fra­struc­ture deficit—whether it’s stor­age si­los, prop­erly main­tained roads, or ship­ping ter­mi­nals. Says Mon­santo’s Edge: “You wouldn’t be­lieve how dif­fi­cult it is to trans­port 2 tons of grain 20 miles in Kenya,” one of East Africa’s more de­vel­oped coun­tries. Across the con­ti­nent, the amount of grain that spoils af­ter har­vest would feed 48 mil­lion peo­ple a year.

Gov­ern­ment rules are an­other ob­sta­cle to devel­op­ment. With global food prices at their lowest since 2009, drought-stricken African coun­tries could ramp up im­ports. But in coun­tries such as Zim­babwe, which said in Fe­bru­ary that it wouldn’t ac­cept GMO corn for food relief, reg­u­la­tions de­signed to in­su­late lo­cal farm­ers from global com­pe­ti­tion make ship­ments from abroad more ex­pen­sive, says Maximo Torero, mar­kets and trade di­rec­tor at the In­ter­na­tional Food Pol­icy and Re­search In­sti­tute in Wash­ing­ton.

The hur­dles threaten to over­whelm in­vest­ment, which is why global agri­cul­ture com­pa­nies say they can’t fund Africa’s farm boom on their own. “You need each piece of the puz­zle to fit cor­rectly,” Edge says. “It’s not only go­ing to come from agri­cul­tural com­pa­nies, though we are a piece of that puz­zle.”

Com­pa­nies weigh­ing whether to in­vest in Africa may be tempted to wait un­til higher prices jus­tify it, rather than plow­ing money in now, when lower com­mod­ity prices make riskier in­vest­ments less at­trac­tive. The pa­tience of early in­vestors will be re­warded, says Paul Schick­ler, pres­i­dent of DuPont Pi­o­neer, the com­pany’s seed divi­sion. Agribusi­ness’s big­gest con­tri­bu­tion is to blend global re­sources with re­gional needs, so the prob­lem of cli­mate change can be man­aged on the ground by the farm­ers af­fected by it. “You won’t be able to im­port enough food to feed Africa sus­tain­ably,” Schick­ler says. “We can help de­velop lo­cal so­lu­tions.”

$700m Amount Howard Buf­fett pledged to com­bat global hunger Farm­ers in Kenya har­vest corn from Mon­santo’s Wa­ter Ef­fi­cient Maize for Africa project

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