Agriculture in South Africa
South Africa's agricultural sector is one of Africa's largest and among the most diversified in the world. In 2019, the sector contributed approximately €8.98 billion to South Africa's export earnings. This represents approximately 10% of total export earnings.
Goods produced in the agriculture sector include all major cereals (except rice), oilseeds, deciduous and subtropical fruits, sugar, citrus, wine and most vegetables. Livestock production includes cattle, dairy cattle, pigs, sheep and a well-developed poultry and egg industry.
South Africa also imported €6,38 billion worth of agricultural products in 2019. The most imported products were rice (€376 million), wheat (€353 million), chicken parts and offal ((€316 million), palm oil (€316 million), whiskey (€148 million), cane sugar (€125 million) and soybean meal (€110 million).
Value addition within the sector includes slaughtering, processing and preserving meat, processing and preserving fruits and vegetables, manufacturing dairy products, milling grains, crushing oilseeds, preparing animal feed, and refining sugar and cocoa, chocolate and sugar confectionery, among others.
The agriculture sector remains strong even during the Covid-19 crisis. In 2020, the sector grew by 15.1% per quarter, while the rest of the economy contracted.
Opportunities for European companies
To add value to agriculture, South Africa imports machinery. With an overall import value of €7,6 billion, the machinery sector takes second place among the most imported products in 2020. Although the import volume decreased in 2020 due to the Covid-19 crisis, the country is still dependent on imported machinery. Particularly in agriculture, machinery continues to be imported to take advantage of the potential of the growing sector.
Opportunities are mainly in the export of tractors, combines, balers, planters, precision agriculture equipment and technologies, sprayers, soil testing equipment and spare parts, as well as in irrigation, fertiliser technology, storage, and maintenance.
Agriculture in Africa
Agriculture is one of the largest economic sectors in most African countries and contributes about 23% to Sub-Saharan Africa's GDP.
However, the potential of agriculture is much higher. According to an analysis by McKinsey, the continent could even produce twice to three times as much grain and cereals as it currently does. Similar growth can also be expected from horticultural products and livestock breeding.
According to McKinsey, in order to realise the potential, about eight times more fertiliser, six times more high-quality seed, at least 8 million US dollars of investment in storage and up to 65 million US dollars of investment in irrigation facilities are needed.
This demand presents opportunities for European companies that can export fertiliser, seeds, machinery and technology to Africa.
The growth potential differs greatly from country to country in some cases. Approximately 30% of sub-Saharan Africa's growth potential is distributed among the countries of Ethiopia, Nigeria and Tanzania. Other important growth markets are South Africa, Kenya, Angola, Uganda and Côte d'Ivoire.
Agriculture in Nigeria
Agriculture is the basis of the Nigerian economy. It contributed an average of 24% to GDP from 2013 to 2019 and employs about 36% of the population. This makes agriculture the largest source of employment in the country.
Although a lot is produced, the agricultural sector imports even more. From 2016 to 2019, Nigeria's agricultural imports were four times higher than exports during the same period.
Major imports include wheat, sugar, fish and milk, while major agricultural exports include sesame seeds, cashew nuts, cocoa beans, ginger, frozen shrimp and cotton.
The sector is still beset by several challenges such as lack of access to finance, outdated systems, lack of value addition and supply chain linkages, and resource scarcity.
To address these challenges, the government has initiated some measures. These include, among others, the promotion of intra-African trade, diversification of agriculture and various economic incentives for investors in Nigeria's agriculture, such as income tax relief, no import duty on equipment, VAT exemption, etc.
European companies can score with the supply of solutions such as irrigation and fertiliser systems and value-adding technologies and machinery.
Agriculture in Ethiopia
Ethiopia's agriculture is responsible for about 47% of the country's GDP. About 80% of the population works in agriculture. Nevertheless, there is a part of the population that does not have enough food. In addition, urbanisation is progressing rapidly - cities with less than 8 million inhabitants in 1995 now number about 25 million.
The value addition of the agricultural sector is currently lagging behind somewhat, which is why the urban middle class often spends more money on imported food.
Therefore, the Ethiopian government has been trying to identify areas of intervention in agriculture for several years. For example, they want to increase the productivity of smaller farms and further expand large farms. The most important projects include the development of small and large irrigation schemes, the financing of agricultural inputs, increasing the productivity of crop and livestock production, improving agricultural production methods through mechanisation, reducing post-harvest losses, developing a research-based food security system and natural resource management.
European companies can benefit from the Ethiopian government's plans by investing and using their technologies. Through the planned interventions, the market will grow and products will increase in quality through new value addition.
Conclusion
Agriculture is the basis of many African economies. However, due to various challenges and obstacles, the great potential is far from being realised.
Most African countries have great potential for growth in agriculture. Governments are actively working on initiatives to strengthen the sector within their countries.