26 Feb. 2019 Agribusiness in Africa "Positioning agriculture as a business and economic sector"
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26 Feb. 2019
10:00 AM – 12:00 PM
Agribusiness in Africa
“Positioning agriculture as a business and
economic sector”
#SIMA
#SIMA
Introduction by
Denene Erasmus
Journalist / Columnist, Farmers
Weekly South Africa
Agriculture in Africa and the SIMA commitment in
proposing solutions for agriculture development in
Africa
#SIMA
Keynote speaker
Dr Langa Simela
Business Development Manager,
ABSA Agribusiness
Equipment and technology to enhance small-
scale farmer development in Africa
Technology to enhance small scale farmer development in Africa conditions. Presented by: Dr Langelihle Simela Absa Agribusiness SIMA Africa Summit 2019
My formative years’ story in brief
Grain technology
Storage in the
granary, with a
pesticide.
Manual husking
(removing sheath) and
drying in the rack
Winning as an
when required
Packed in hessian for market or
bag for market or household
grinding mill. consumption
Small-scale farmers are not a homogenous group …
Substance producers, mainly for household
consumption
• On communal land
• Constitute >90% of rural households
• Produce on ≤1ha
• Sell
South African experience
• Smallholder farmers moved from ox-drawn
to tractor drawn equipment in the 70s.
• Vast areas of fallow land because of limited
access to machinery and equipment.
• Smallholders on ~ < 5ha, use manual
processes
• Necessity is the mother of invention
• boer maak n plan
• improvising to solve problems
• https://www.youtube.com/watch?v=gg6Exy
M5tr4 – Michris Janse van Rensburg Back-
saving inventions for smallholder farmers
• Interventions by producer organisations &
partners through training and mentorship
programmes to optimise land use and up
productivity
• Production improved from
Dispense with the image of the hoe as a primary tool …
• Start with the people and work with them to achieve
growth:
• E.g. Irrigation schemes in Taung:
• Annual rainfall ~318mm.
• 1.7ha (1982) → 10ha/household → 700ha
aggregate →3,020ha on aggregate
• Access to machinery & equipment in the narrow
window for planting (machinery rings have not
worked. Partnerships with established farmers
have).
• Small-scale production – 1.6ha per household in
Africa
• Agricultural growth in Africa is generally achieved by
cultivating more land & mobilising more labour, which
produces very little improvement in yields.
• Appropriate interventions & partnerships work!
Handy but not the primary equipment
Planting/re-planting
Harvesting
Weeding between
the maize stocksWe have the means to meet our needs
• People – affordable labour & huge market for agri-products
• Agri value chain players: - training and extension services
• Land
• Research community: - great potential for putting research to use
• Development community: - test new interventions that can be upscaled
• Partnerships in development: - becoming more of a reality
• Lobbying & advocacy” – much more room for engagement between
business & governments
• Africa has led in linking service provision to mobile phone technology:
• Money transfers
• Providing credit
• Collating & sharing agri-information
• Possible enhance this to leap frog into the fourth industrial revolution.Africa is huge and by no means a
homogenous continent
‘000 ha
Total land area 2,964,921
Agricultural land 1,132,602
Arable land 234,952
Irrigated land 15,790
Grazing land 860,962.62
Forestry 621,266.73
Inland water 53,962.50
Unutilised land 202,000?… with divergent cultures, cuisine, …
• Common
challenge/opportunity is to
optimise productivity of the
continent’s resources
(including its people).
• No one size fits all approach…. we can optimise our opportunities • Policy certainty and implementation (CAADP) • Infrastructure – road, water, electricity, etc. • Spend correctly – accountability. • Smart partnerships • Use the existing spring boards • Harness the potential in the people in a way that benefits them • Run profitable businesses whilst holistically solving for people’s needs; in partnership with them. • Innovations in technology can only enhance our interventions.
Session 1
Practical considerations regarding the scaling
up of agricultural production in Africa
through mechanisation
Dr Benard Ngwene
Agricultural Advisory Manager, AGCO Corp Africa
Dr Youssou Diagne
Senegal Country Director, Syngenta Foundation for Sustainable Agriculture
Jean-Christophe Debar
Director, FARM Foundation
Antoine Delabrière,
Lawyer, Fénéon Delabrière Avocat
#SIMA#SIMA
Dr Benard Ngwene
Agricultural Advisory Manager,
AGCO Corp Africa
Scaling up agricultural production through
technology and mechanisationScaling up agricultural production through technology and mechanisation Benard Ngwene SIMA 2019
2018 Global Hunger Index by Severity “Figure 2.4: 2018 Global Hunger Index by Severity.” Map in 2018 Global Hunger Index: Forced Migration and Hunger, by K. von Grebmer, J. Bernstein, L. Hammond, F. Patterson, A. Sonntag, L. Klaus, J. Fahlbusch, O. Towey, C. Foley, S. Gitter, K. Ekstrom, and H. Fritschel. 2018. Bonn and Dublin: Welthungerhilfe and Concern Worldwide.
The
AFRICA demand
POPULATION GROWTH + 117% by
for food produc3tbinon
2050
will soon exceedthe
supply of existing
*Reference: http://www.demographics.at/all-charts_1.html
sources.
2b
n
1b
n
200 201 202 203 204 205
0 0 0 0 0 0GLOBAL AGRICULTURAL SITUATION
GLOBAL FOOD PRODUCTION
Africa needs Soybea
Poultr
Maiz
to increase production
nye
*Reference:
http://chartsbin.com/… current mechanization
ONE tractor per 320 people economically active in agriculture
80% of African smallholders own less than 2 ha of land
> 95% SSA < 2t/ha
Farmers
< 5% SSA > 6t/ha
Farmers… but unlocking of Africa's "Green Revolution" is starting to happen
due to efforts by national governments as well as public, and private sector
Government strategic reforms setting Public sector investment
high aspirations ▪ The G-20’s Global Food and Agriculture
▪ Maputo declaration in 2003: African program aims to disburse $20B over the
governments commitment to increase next 3 years, part of which is for Africa
the share of public spending going to ▪ Bill & Melinda Gates Foundation is
agriculture to at least 10% awarding ~$250M grants annually (half of
▪ 7 countries already reached that goal Embrapa’s budget) focusing on improved
(e.g., Ethiopia), others progressing technologies for SSA smallholders
▪ Several large-scale transformative
programs launched, e.g.
▪ Embrapa has Agric Research office in
Africa supporting ProSavana development
– Ghana breadbasket strategy project based on Brazil cerrado success
– "Green Morocco"
Private sector: Multinationals Private sector: Local
▪ Large public-private infrastructure ▪ Governments are starting to recognize the
deals already taking place critical role of local private sector and are
▪ Government wealth funds and other setting up agricultural growth corridor
investors negotiating large land deals clusters
▪ Increasing interest by fertilizer and – Nucleus commercial farm and
agrochemical producers into Africa outgrower schemes
with experimental investments – Access to agribusiness centres,
warehouses, technology
▪ Planned investments by large – Infrastructure access: feeder roads,
companies and PE sector may be at barges, irrigation
an inflection point – Access to finance
Source: McKinsey analysis… current mechanization Intensification, mechanization and commercialization of agriculture is already underway Use of hybrid seeds High demand for full solutions incl. inputs, finance, market access etc
AGCO AFRICA – SETTING THE SCENE
The Challenge – Fast Facts*:
The modern Agriculture business
must be prepared for those
upcoming challenges with focus on
workforce, food supply and
mechanization
*Reference:
www.un.org
High demand for full solutions incl. inputs, finance, market access etcAGCO – At a glance
• Grain storage
and protein
production
solutions
• Leaders Drive • A World of
Fendt Experience –
Working With
You
• Serious
• Your Working
Machinery, Serious
Machine
ResultsAfrica Strategy
Customer Segments
Segment Markets Needs
Smallholder • Low margin business model
• Very competitive • Focus markets – All
SSA • Rural distribution network
• Remote locations
• Rental or lease offer
• No access to financing • AGCO Future Farm for training
Commercial • AGCOs core segment
• Focus markets - • Looking for a full line offering
• Access to infrastructure RSA
• Looks at total cost of
• Access to financing ownership
Agri-Parks
• Focus markets – Zambia, • Full solutions including protein and grain
• Large professional projects
Zimbabwe, Ivory Coast, • AGCO Future Farm for training and
• Investors and Governments
DRC, Nigeria, Lesotho, demonstration
MozambiqueINTRODUCING Farm In A Box Infrastructure and Community through Agricultural Mechanization
FARM IN A BOX Ensuring farmers have a viable financially sound business
AGCO’s Future Farm in Zambia – delivering best farm practice
Integrated Mechanisation & Technology into Practical Farming Solutions
Remotely support FIAB dealers
through AGCO FUSE technologyTHANK YOU
#SIMA
Dr Youssou Diagne
Senegal Country Director,
Syngenta Foundation for
Sustainable Agriculture
Challenges of providing post-sale services for
agricultural machinery in Africa. Case study on
machine services centre (CEMA) in Senegal and MaliChallenges of providing post-sale services for agricultural
machinery in Africa : Case study on machine services centre
(CEMA) in Senegal and Mali
Dr. Youssou DIAGNE - Tuesday 28
February
35I. Syngenta Foundation for Sustainable
Agriculture (SFSA) commitment : improving
rural livelihoods
Our Mission Our Work
• Focus on «pre-commercial»
Create value for resource-poor smallholders
producers and consumers in • Link smallholders to input &
developing countries through output markets
sustainable innovation in agriculture • Start small, scale up, hand over
and the activation of value chains. sustainably
• Always work in partnerships
36II. CHALLENGES ON MECHANISATION &
POST SALES SERVICES IN WEST AFRICA
Timely completion of field preparation
and harvesting is a major constraint
in growing systems.
Limited access to mechanization
services reduce significantly
productivity in major crops in west
Africa (e.g. rice).
The lack of cost-effective business
model make it difficult for the private
sector to establish sustainable supply
chains and post sales services in
mechanisation.
37III. CEMA-MODEL : PRE-REQUISIT & DESIGNING
Pre-requisit
Designing
SFSA – Guarantee FundIV. HOW CEMA BUSINESS MODEL
OPERATES & PERFORMS
Standards Model of Operation
• Financial Model to calibrate mechanisation Ex: CEMA Profitability in Sénégal (US $)
service offer
160 000 100 000
• Bank linkages to allow access to investment 90 000
140 000 86 484
and working capital 80 000
120 000
• Standard infrastructure design 70 000
65 486
100 000
• Standard manual of operation 60 000
80 000 50 000
• Training for CEMA managers and tractor 40 000
60 000
operators 30 000
40 000
• Training in good agricultural practices 20 000
20 000 11 963 10 000
• Introduction of new technologies 5 023
- -
• Use of digital tools for improved 2015 2016 2017 2018
management and performance tracking and
scaling
Revenue Cost Profit
39IV. HOW CEMA BUSINESS MODEL
OPERATES & PERFORMS
Performance increasing
Numb. CEMA Numb. Farmers reached Number of ha benefiting
9000 CEMA mechanized services
10000
10 99 3500 3170
8000
8000 7000 3000
8 77 6400
2500
6 6000
5 2000 1632
4000
4000 1500 1150
4 3 908
2 1000
2 2000 205 497 743 1150 23490
11 11 1 500 90 120
93 120 186
0 0
0 2015 2016 2017 2018
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Senegal Mali Senegal Mali Senegal MaliV. LESSONS LEARNED FROM
SENEGAL & MALI
CEMA can be operated by Standard Operating
CEMA has to be
farmer cooperatives, Procedure, coaching, guidance
independent (legal status) Access to funding need
, Spare-part providers and the
aggregators, or other type of with a clear business to be guaranteed use of digital tools is key for
organizations focus scaling up
41VI. Type of partnership for scaling up
Public & Non Profit
Market Organization
Finance
- Suppliers - Government - Banks
- Offtakers - Parastatal entities - Leasing companies
- Farmer organizations - Donors - Insurance companies
- Service providers - NGOs - Private Promoters
42VII. SFSA Current key partners
Thank you for your attention
#SIMA
Jean-Christophe Debar
Director,
FARM Foundation
How can contracts between farmers and upstream and
downstream companies serve the transformation of African
agriculture towards greater economic, social and environmental
sustainability?Contract farming,
a powerful tool to transform
African agriculture
Jean-Christophe Debar, Director, FARM
SIMA African Summit
Paris, February 26, 2019Just imagine… • You are a small farmer in Africa, not knowing how to sell your production at a remunerative price • A company proposes you to buy your production at a certain price, provided you commit to deliver it at a certain time
A mutually satisfactory deal • The farmer secures the marketing of his/her crop, at a guaranteed price • The company secures its supplies, at a price known in advance
But harvest comes, and then… • The price of the crop on the market rises above the guaranteed price • Very often, the farmer will prefer to sell the crop to another purchaser, at a higher market price
What can the company do? • Go to court? Tell the farmer they will never work with him/her again? • A better option is to find ways to improve farmer’s loyalty by giving him/her access to a range of services
A range of services • Providing inputs, to be reimbursed « in kind » • Other - Technical assistance - Climate insurance - On-farm mechanization services - Etc.
Other options for the company • Propose contracts without fixing prices • Propose an additional price if the average market price has been higher than the contract price • Propose contracts giving access to high value, certified markets (fair trade, organic, etc.), with a price premium • Work with PO’s to improve contract terms
Conclusion • Main challenge for the companies: working with small farm holders -> contracting meets policy challenge to reduce poverty and increase employment in rural areas • A way to develop farm mechanization services through contracting companies and producers’ organizations
FARM working group on
contract farming in Africa
• « Contractualiser avec les agriculteurs en Afrique »,
http://www.fondation-
farm.org/zoe/doc/rapportgtpoursite.pdf
• Contact: jean-christophe.debar@fondation-farm.org#SIMA
Antoine Delabrière
Lawyer at Fénéon Delabrière Avocat and
OHADA (organisation for the harmonisation
of business law in Africa) expert
The challenges of drafting and enforcing the
terms of agricultural machine sales contracts in
Africa.FDA
SOCIÉTÉ D’AVOCATS
The challenges of drafting and enforcing
the terms of agricultural machine sales contracts in
Africa
Antoine DELABRIERE
Attorney at Law
Fénéon Delabrière Avocats
Avocats au Barreau de Paris
15 rue Mesnil– 75016 Paris
Tél : (33) 01 45 04 26 35
antoine.delabriere@feneon-delabriere.com
56PLAN
INTRODUCTION
PART I:
THE FORM OF THE CONTRACT
PART II:
THE CONTENT OF THE CONTRACT
PART III:
LITIGATION AND WARRANTIES
57INTRODUCTION
AFRICA
Population:
1 billion in 2010 – 4.2 billion in 2100
Growth 2018
Europe 2.2% - Africa 3.5%
58PART I:
The form of the contract
• E-mail exchanges
• Commercial proposition & acceptation
• Formal contract
• General conditions of sale
59PART II:
The content of the contract
Description of the machines and technical
characteristics
Agreement on the price and terms of payment
Transport and Incoterms
Legal/contractual warranties and after-sale
services
60PART III:
Litigation and warranties
Applicable law
Competent jurisdiction
Mediation – Arbitration
Property retention clause
Pledge
61FDA
SOCIÉTÉ D’AVOCATS
Thank you for your attention
Antoine DELABRIERE
622 - Enablers of mechanisation in the African
agriculture sector
Matthieu Brun
Consultant, Club Demeter / Sciences Po Bordeaux
Josef Kienzle
Food and Agriculture Organization of the United Nations
#SIMA#SIMA
Matthieu Brun
Club Demeter consultant and researcher at
Sciences Po Bordeaux in the « Les Afriques
dans le monde » (Africas in the world) lab
Africa agri-economic mapping to identify areas
with high potential for development#SIMA
Josef Kienzle
Leader of the Mechanization task team,
agricultural Engineer / Plant Production and
Protection Division, Food and Agriculture
Organization of the United Nations
What roles should both the private sector and
governments play in driving and enabling the adoption
of new farming technologies in African countries?Roles of Private Sector and Governments in
driving and enabling the adoption of new
farming technologies in African countries
Josef Kienzle
Agricultural Engineer
Plant Production and Protection Division, FAOSub-Saharan Africa
The rate of use of agricultural
machinery is still below that
which is considered necessary to
meet the rising food demand
Consequently:
• poor productivity
• sector unattractive to youth
• incompatible with the
continent’s Zero Hunger goal
African farmers should be able to
use modern agricultural
technology, both digital and
mechanical, to boost the
agricultural sector sustainablySustainable agricultural mechanization Involves the application of different forms of power sources used in conjunction with appropriate tools, implements and machines to do useful work in agricultural production and along the value chain. It reduces drudgery, improves productivity and contributes to the development of the equipment and food supply chains
Agricultural Mechanization Value Chain
It is all part of a bigger picture
International environment
Raw Local manufacturers Domestic
materials Distributors Agricultural demand &
Retailers system exports
Government policies and
Institutional supportSustainable mechanization: A choice? • It’s about access and demand • Many possibilities and technologies for farmers to choose from • This choice is crucial for farmers to achieve optimum profitability from their businesses and to improve quality of life, and consider environmental issues • The challenge is for all those involved in mechanization: planners, advisors, manufacturers, service providers, practitioners and farmers
Governments: institutional support • Identify the correct strategies for increasing mechanization • Provide basic conditions for agricultural mechanization development to be largely self sustaining within a policy of minimum direct intervention • Develop integrated and inter-linked education, training and extension programmes • Vocational training to enable youth to take an active role in emerging competitive agricultural and value addition actions
Private sector: supply side
• All must be able to make a
livelihood from their business
• need to create conditions so
that importers, distributors and
small retail outlets can develop
• need a stable, competitive,
commercial environment in
which to develop their
businesses (including finance
support)
• Link research efforts with what is
being done elsewhere
• Need to be responsive to real
farmers’ needs (smallholder
inclusive)FAO’s work • One of FAO’s mandate is to assist member states to make their input supply and food production chains more effective and efficient and at the same time provide farmers with improved livelihoods • FAO works with private sector partners, governments and farmers to create and promote sustainable mechanization opportunities (AUC, CEMA, Agrievolution, ACT, CIMMYT) • Support for public and private sector collaboration • The goal is to increase sustainable food production
Conservation Agriculture (CA) Principles The present paradigm of intensive crop production cannot meet the challenges of the new millennium. Need to transition to more sustainable practices. Continuous minimum mechanical soil disturbance Permanent organic soil cover Diversification of crop species grown in sequences or associations
FAO/AU framework for Africa – SAMA • Identify and prioritize relevant and interrelated elements to help countries develop strategies and practical development plans • It notes that cross-border initiatives – for dealers, supply networks and tractor based services– allows for upscaling and greater utilization • Its implementation will require significant contributions from all stakeholders, including public institutions and private actors
Selected elements of SAMA Framework • Boost farm power through appropriate technologies and innovative business models • Build sustainable systems for manufacture and distribution of mechanization inputs • Build innovative systems for sustainable technology development and transfer • Transform the conventional tillage and crop husbandry techniques (CA) • Empower more youths to embrace farming • Capacity building
Training hire service providers • Sharing the capital assets can be leveraged to achieve greater scale and access to modern tools • Machinery is available through the “uberization” of hiring services, using digital technologies which are proving popular around Africa • Mechanization services should be both environmentally friendly and productivity-enhancing • Appropriately-trained and equipped mechanization service providers can meet this critical need
…this is where we want to be!
Round table
Establishing a thriving agro-
processing sector in Africa
Discussion by panellists:
Josef Kienzle; Matthieu Brun and Dr Langa Simela
#SIMAConclusion
Mireille M’Bayia
Ministry Chief of staff, Ministry of Agriculture of Côte d’Ivoire
Denene Erasmus
Journalist / Columnist, Farmers Weekly South Africa
Philippe Girard
Vice President, AXEMA and Managing Director, JCB France
#SIMA#SIMA
Mireille M’Bayia
Ministry Chief of staff,
Ministry of Agriculture of Côte d’Ivoire#SIMA
Denene Erasmus
Journalist / Columnist,
Farmers Weekly South Africa
The future of modern farming in Africa from an African
perspective#SIMA
Philippe Girard
Vice President, AXEMA
and Managing Director, JCB France
Responsible for North and West Africa
Territories
The future of modern farming in Africa from a manufacturers and
importers perspective.Thank you
See you now at the
International Business Club (hall 6)
for the SIMA African Summit Cocktail
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