Sub-Saharan success stories

by Erica Shaffer
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There are countries in Sub-Saharan Africa with thriving grains sectors. Nigeria has the wealth, through its oil exports, to be one of the world’s biggest importers and keep its 150 million people fed. Malawi responded to food shortages by reforming agriculture in a way that’s revolutionized its food supply situation. And South Africa has built a farm sector, which has avoided overreliance on subsistence farming.

Malawi, which for the last few years has managed to be a grain exporter, is held up of an example of how an African government can make its agriculture more successful by ignoring international advice.

Opponents of a fully free trade approach, with no government subsidies, hold up Malawi as an example of how putting government money into farming can get the right result. In 2005, after a poor harvest, President Bingu wa Mutharika decided to reinstate fertilizer subsidies. "As long as I’m president, I don’t want to be going to other capitals begging for food," he said, according to an article published by the New York Times in 2007.

Its achievement has been recognized by international bodies. "Along with favorable weather, the government’s fertilizer subsidy has contributed to surplus maize harvests in 2006, 2007 and 2008," the World Food Programme (WFP) said on its website. "These surpluses have allowed WFP to procure over 100,000 tonnes of food during the past three years within Malawi for use in its operations in the country and around southern Africa."

The 2009-10 second crop estimates of the Ministry of Agriculture and Food Security indicated a total corn (maize) production of 3.66 million tonnes, WFP said in a note on its operations in Malawi published in June. "This result represents a maize surplus of 1.2 million tonnes. This surplus prediction would imply four successive years of bumper cereal harvest in Malawi."

OIL PAYS FOR NIGERIA’S IMPORTS

Nigeria’s agriculture depends on subsistence farming, but it’s the country’s oil reserves which make it rich and enable it to import enough grain to feed its population.

When Didier Hazoume, chief operating officer of Crown Flour Mills, one of Nigeria’s biggest milling companies, spoke at the International Grains Council’s (IGC) conference in London in June, he explained that the country’s two rainfall seasons give it two crops of corn and other grains a year. It’s the world’s largest producer of cassava, growing 40 million tonnes a year, but the lack of wintry weather makes most of the country unsuitable for wheat production, although a small amount is grown in the north.

The lack of wheat means the Nigerian milling industry has to get most of its raw material from the U.S., making it the second biggest importer of U.S. wheat in the world, after Japan, and the biggest importer of HRW wheat. He put annual Nigerian HRW imports at around 3.15 million tonnes.

Annual bread consumption remains low, with the average Nigerian consuming about 20 kilograms of flour or about 56 loaves of bread.

A report published by the U.S. Department of Agriculture (USDA) earlier this year painted an optimistic picture of Nigeria’s grains sector. "Nigeria’s grain production is steadily increasing," it said. "The increase is attributed to the steady availability of inputs at affordable prices and favorable weather conditions."

Grain production in 2009-10 is expected to increase due to the reported early arrival of rains in the grain belt and the prevailing attractive grower prices. At present, grain prices are high because of increased demand and low carryover stocks from last year. It forecast a 5% increase in total grain production, based on increased area, because of attractive prices, the implementation of zero tariffs on imported agrochemicals and the timely arrival of rain in the growing areas. "In addition, the perennial scarcity and high prices of fertilizer is expected to ease following the resumption of domestic fertilizer production at the Notore Chemical Industries," it said. "This plant has reopened following more than eight years closure, and the company plans to produce three million tonnes of fertilizer by 2010.

"After falling in MY 2007-08 due to very high import prices, Nigeria’s wheat imports in 2008-09 have returned the path of steady growth, and this is expected to continue into MY 2009-10. The combination of lower international wheat prices and lower freight rates has dropped the import price of wheat into Lagos, encouraging millers to bring more of the existing excess milling capacity into use."

Hazoume said that Nigerian millers were looking at other origins to reduce their dependence on U.S. HRW wheat. "Top in consideration will be origins from Argentina, Germany, France, Canada and possibly some of the FSU states," he said. "Wheat blending may also create the opportunity to present flour for different bread types to our customers in Nigeria and probably make a significant impact on the menu choices."

He was optimistic about the future of Nigerian milling. "A vista of opportunities now presents itself to the Nigerian millers," he said. "Milling profitability in Nigeria will improve with anticipated wheat blending successes. Milling volume will improve with better economic performance and increasing per capita income."

According to Hazoume, there are five large milling companies in Nigeria: Flour Mills of Nigeria Plc (daily capacity 10,600 tonnes), Dangote Industries Ltd., which has a daily capacity of 4,000 tonnes a day) Crown Flour Mills Ltd. (1,260 tonnes per day), Honeywell Flour Mills Ltd. (1,600 tonnes per day), and BUA Flour Mills, for which he did not give a daily capacity. Four other milling companies — Standard Flour Mills Ltd., Bendel Feed and Flour Mills Ltd., Life Flour Mills Ltd., and Lister Flour Mills (Nigeria) Ltd. — form a second tier of mills, and there are at least seven other small mills operating in Nigeria.

SOUTH AFRICA: AN EXCEPTION TO THE RULE

South Africa presents a completely different picture to the rest of Africa. It does have some subsistence farming, but most of its agriculture is commercial, making it a net food exporter. Its market for agricultural products is deregulated.

According to a USDA report published in May, its 2009-10 commercial corn crop is estimated at 11.2 million tonnes on 2.4 million hectares. "The corn crop yield is estimated at 4.62 tonnes per hectare, which will be the highest corn yield per hectare ever recorded in South Africa," the report said. "After the initial dry spell at the beginning of the season, most regions of the corn-producing area received above-average rainfall which contributed to the historic crop."

One reason for the big crop has been the adoption of new technology, according to the USDA report. "This not only illustrates the favorable weather conditions corn producers received during the latter part of the season, but also the impact of their vast adaption of biotechnology," it said.

South Africa exported more than 2.1 million tonnes of corn in 2008-09, 90% of it to destinations in Africa, notably Zimbabwe, Kenya, Mozambique and Botswana. It is expected to have about 1.8 million tonnes for export in 2009-10.

Human consumption of corn increased by 19.3% in 2008-09, compared to 2007-08, while the amount used for animal feed fell by 3%. "This is attributable to the current economic situation which has forced many South Africans to once again buy cheaper basic foods," it said. "For the 2009-10 marketing season, corn consumption is estimated at 9.31 million tonnes, an increase of 1.9 percent over the 2008-09 marketing season. It is estimated that human and animal consumption of corn will increase by a small margin, mainly because of relatively lower corn prices."

South Africa is also set to produce 2 million tonnes of wheat this year, according to the IGC, compared with 2.1 million in 2008. "With the decline in the wheat price, prospects for profitable wheat production in South Africa are uncertain," the attaché said in an earlier report. Increased wheat and, therefore, bread prices had cut consumption.

South Africa’s International Trade Administration Commission set the import tariff on wheat at zero in January, rejecting farmers’ calls for a duty. "Farmers argue that they cannot continue to produce wheat in South Africa profitably anymore," the attaché said. "The decreasing trend in the area planted with wheat in South Africa over the past 20 years is proof of this.

"Wheat farmers also argue that an increase in the price of bread caused by higher tariffs would be well worth the effect a revival of wheat production in South Africa would have on rural economic development and improvement in food security," the report said. "However, the farmers’ arguments were considered weak when compared to the low-income status of the majority of South Africans for whom bread is a staple food."

The number of wheat millers in South Africa is on a downward trend. According to the South African Grain Information Service, 65 wheat mills are registered in South Africa. The number of corn millers, in contrast, has increased since deregulation and is continuing on the upward trek, with 245 now registered. Four major companies — Premier, Tiger, Sasko and Ruto Mills — play a key role in the milling industry. There are also more small operators involved.

The market share of the informal cornmilling sector has increased from 15% in the 1980s to 40% currently.

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.

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