The ever-growing population globally and with the projection of food shortages, Africa is expected to lead the path of food security to the rest of the world. The continent is blessed with vast lands that are very rich for farming.
Over the years foreign investment and governments have acquired vast sums of land to farm on, as they save guard their nations against the expected food crisis. Saudi Arabian investors have acquired thousands of acres in Ethiopia leased to them by the government.
On the other hand, China has invested $800M in Mozambique to produce rice. The government of Sudan has leased many hectares to Jordan to use for farming in livestock and crop growing.
Not wanting to be undone by others Tanzania and South Korea are in talks over to develop over 100,000 hectares of farmland in the country. Most of the products will be on grains and others used to process food such as oil etc.
India has more than $2.4B invested in leasing or buying expanse plantations in Kenya, Senegal, and Madagascar (maybe that is why Madagascar discovered COVID-Organics to fight against Coronavirus).
Though many of these investments are in Africa, the investors will gain a lot as their home nation will be assured food security while the Continent might still not be ready to play a major role in the food security business. As different government prioritize other sectors above agriculture. Africa has about 60 per cent of the world’s unused cropland that can be used for farming and can create close to 8 million new jobs.
Unfortunately, while the rest of the world see the huge value in the vast unused land in Africa and its potentials. Some African countries such as Zimbabwe used its vast land for political points and have been paying very dearly for that move; it was a move by late president Robert Mugabe in year 2000. Mugabe decided to return the over 70% of arable farming lands to black Zimbabweans, a move that has since seen the nation slide deeper into recession and poverty.
Despite this issue, successive African nations are encouraging both local and foreign investment in agriculture. As some leaders are now seeing the sector as a major foreign exchange earner and job provider.
Few reasons why Africa is now the new bride for farming to the world;
Land ownership in Sub-Saharan Africa most times belong to families and communities, this most times lead to hindrances to development especially when major infrastructural projects are to be implemented. At times land disputes are very common leading in some cases to blood clashes between feuding communities and families.
Despite the challenges noted, land in Sub-Saharan Africa is very affordable to big-money investors, most lands are also easy to cultivate. A potential investor just needs to take a tour around some African nation and see its lush green grass and forest-rich for farming and rich in natural minerals.
So Africa holds the advantage in having affordable farming land not forgetting the abundance labour on the continent.
Most investors have already started different fund management to make the sector popular and reap huge returns for themselves and investors, Malawi is a classic example. There is a retail-oriented fund management in Malawi having an initial deposit of $2M in 2000 hectares of farmland. The fund is accessed by an initial $7000 and sells land for $1,600 per hectare. It’s relatively easy to access; large farmlands can be upgraded with new technology, and better production methods. An annual return on capital is expected to exceed 30 to 40 per cent.
A larger version is already being managed by hedge fund expert Fund Emergent. Targeting investors 400% return on investment in five years period. The Roi (Return on Investment) is based on increasing land value, better investment in farming technology helping to improve production. There is also a new form of farming called ‘No-Till Agriculture’.
Farming in Africa
Though there are various reasons driving the outsourcing of food production in Africa. There are government subsidies offered by various government including incentives such as land lease over a lengthy period of years, tax incentives are another reason.
Access to water bodies and regular rainfalls are also factors that make the continent attractive to farming investors. For now, most African leaders are primarily not concerned with green revolution which is an expensive system of agriculture, so investors coming into the continent will spend less and reap more.
The cost of farming and producing in Africa is low compared to elsewhere, though fertilizers are used but not as much compared to Europe and some Asian countries.
Why Africa is the Preferred Choice
The choice in acquiring farmland in Africa is based on obvious reasons. The answers are many – the primary being the sudden rise in foodstuff, particularly the soaring cost of food grain and edible oil. With so much uncertainty, several food-exporting countries, are making a concrete effort to prevent inflation in food prices which sparks public unrest (‘A hungry man is an angry man’,) imposed bans on food exports. These bans took large amounts of grain and edible oil off the global market, worsening the food insecurity of food-importing nations dependent on such staples and also damaging the business models of agri-business companies and intermediaries that are active in agro-commodities trading.
Today, while prices are seen to have stabilized, (at higher levels), food costs are still high and commodities markets remain unpredictable.
Developing countries also face other factors such as topsoil loss, water shortages, new crop diseases and pests brought on by climate change. That’s why, in order to avoid the high costs, supply shortages and general volatility that plagues global food imports, countries and their agri-business proxies are bypassing world food markets and instead seeking land overseas to use for agriculture. According to the plan, crops harvested on this land will be sent home for consumption, or processed and re-exported to other countries