Globalization as a reality in world grain industry

by Morton Sosland
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In the constant search for new frontiers where the grain and grain processing industry has any chance of flourishing, it is probably correct to observe that little attention has been paid to sub-Sahara Africa. Flour mills have been built in a few countries, such as oil-rich Nigeria, but their records have been rarely successful. Venturesome entrepreneurs have offered ideas that have not done well or failed. Yet, recent developments raise new hopes for Africa below the Sahara Desert, hinting that this vast area has a chance of improving its agriculture to the point that its current standing as a minor grain producer may be significantly improved. It seems no longer foolish to believe sub-Sahara Africa could become a force in global grain.

Based on population alone, sub-Sahara Africa, except for its lack of infrastructure and resources, ought to be a market for grain significantly larger than is the case. With a population of nearly 800 million people, the region consumes currently a little more than 17 million tonnes of wheat annually, contrasted with the 48 million tonnes used by half as many people in North America. Sub-Sahara Africa’s population is projected to more than double between now and 2050, whereas the developed areas of the world are expected to show little or no growth.

The hope that this condition is likely to undergo significant change stems from decisions made by the World Bank and major international foundations promising massive help for crop production. This is a sharp reversal from the aid pattern adopted in the 1970s when the World Bank halted agricultural assistance to focus on improving rural health and education. As a result, helping agriculture has been relegated to a low priority for decades, even though most people in Africa earn their living trying to produce food. A scathing report coming from within the bank blames this neglect on faulty assumptions such as reliance on markets that had none of the infrastructure or governance needed to make them work.

Robert Zoellick, the new president of the World Bank, has declared, "We need a 21st century Green Revolution designed for the special and diverse needs of Africa, sparked by greater investment in technological research and dissemination, sustainable management, agricultural supply chains and policies that strengthen market opportunities." That is a totally fresh agenda, and it is one taken up by such a powerful group as the

world’s largest foundation, the Bill & Melinda Gates Foundation. Mr. Gates, appearing at the World Economic Forum in Davos, Switzerland, announced agricultural development grants totaling $306 million. "If we are serious about ending extreme hunger and poverty, we must be serious about transforming agriculture for small farmers," he said.

The largest of the Gates grants goes to the Alliance for a Green Revolution in Africa (AGRA), of which Kofi A. Annan, former director-general of the United Nations, is chairman. Annan revealed the focus will be on revitalizing severely depleted soils to increase fertility and sustainability of small farms. Important to the global grain industry is the way Gates emphasizes functioning markets to help farmers sell their expected surplus production. "We believe this is the only way to get long-term, sustainable results, to focus on the entire agricultural value chain," he added.

It is ironic that this awakening to the urgent need to help expand African crop production coincides with terrible tribal and political chaos in Kenya. Just as the new focus on improving agricultural productivity raises the promise that a corner is being turned, the violent outbreaks in that nation demolish much hope. Hugely important is recognizing that boosting food production addresses the issue that previous investor euphoria overlooked. Investing in infrastructure makes little sense when millions do not have food. Eliminating the vulnerability caused by a failed crop system promises not just the realization of Africa’s dream, but opens considerable promise for the globe-circling grain industry.