NABA Summit Summary: Session II – Agribusiness and Aquaculture
Agricultural growth is 3.5 more effective in reducing poverty than other sectors. The demand for agricultural products is rising along with a growing middle class. Despite opportunities to produce these products locally, many African countries rely on imports. In this session Norwegian companies presented their experiences and the opportunities within agribusiness and aquaculture in Africa. Managing Director of Mester Grønn Mr. Erling Ølstad presented the company’s experience from the horticulture sector in East Africa. The horticulture industry in Kenya is now larger in revenue than traditional hard currency earners such as coffee, tea and tourism. The sector generated approximately USD 1 billion in 2012 and employs more than 500 000 Kenyans directly or indirectly.Producing agricultural products such as herbs, beans, chili and roses in Africa is also good for the environment. A survey done by the Norwegian University of Life Sciences shows that emissions of CO2 to the atmosphere is 60 % lower in the production of roses in East Africa including transport to Norway than in traditional Norwegian greenhouse production.Mester Grønn started sourcing roses from East Africa in 1999 and is now buying 19% of its roses from Africa. The company’s vision is to “create joy in every home”, a statement that applies both consumers and suppliers. High ethical standards are important for Mester Grønn and the company requires that all farms are certified MPS-SQ.
The export crops have changed our lives. We have new roofs, better homes and our children can go to school. We need to make sure those people in other countries continue to buy our flowers.
– Jafeth Maina WamwiriMr. Ølstad named customs regulations and implementation, fragmented logistics chain with many participants and poor handling of products as some of the barriers to trade in horticulture in Africa. Still, he sees the farms in Africa as a huge contributor to Mester Grønn’s success. In conclusion, Ølstad gave the audience advice on how to success: keep a hands on approach; use a lot of resources on government (NOR) regulations and control; visit source often; build long-term relationships; have local representation; and work with established certifications on ethical and environmental standards where possible.
Mr. Pål Dale, Manager of the Voxtra East Africa Agribusiness Fund spoke about Voxtra’s investments in capital-constrained agribusinesses that play pivotal roles in improving the livelihoods of smallholder farmers. The Fund focuses on Uganda, Kenya and Tanzania and has offices in Oslo and Nairobi.Voxtra has invested in Biyinzika Poultry, the leading supplier of day-old chicks to Uganda’s chicken farmers. Uganda’s poultry industry is at an early stage of development and there are ample growth opportunities.The growth in demand for eggs, meat, fish, edible oils, dairy products and processed foods can be seen across East Africa. The countries are importing a number of agricultural products, despite strong potential for domestic production. He gave the example of Ethiopia where only 4% of milk production is processed. Similarly Uganda imports 65% of its edible oil consumption, despite good conditions for cultivation of oil seeds. Dale concluded by stating that there is significant potential to exploit competitive advantages in export crops, for instance in Ethiopia, a country with some of the finest coffee origins in the world.Ms. Anne Mugaas, Senior Advisor Aquaculture, shared some of Norges Vel’s experiences from value chain development in Africa. Norges Vel focuses on business development, addressing areas such as industry development, employment creation and food security.According to Ms Mugaas, there is a demand for Norwegian know-how and technology in Africa as many African countries are starting up in aquaculture. In particular there is a need for large-scale operations that can serve as “locomotives”, create local jobs and technical know-how. These operations can engage SMEs and informal actors as well as attract more investments and support. Vocational and practical training in appropriate technologies and methods is needed in order to maximise the potential of the aquaculture sector.
Chocolate is our way to change the world
- Mr. Arjen Boekhold, Chain Director of Tony’s ChocolonelyMr. Arjen Boekhold, Chain Director of Tony’s Chocolonely, spoke about his experience of the chocolate industry in West Africa. There are close to 3 million cocoa farms in West Africa, accounting for more than 70% of world production. But the industry is marred by challenges in the supply chain, with more than 20,000 people working in modern slavery.Tony’s Chocolonely is working to create awareness around these issues. Leading by example, the company is producing its chocolate in an ethical and sustainable manner and encourages the industry to follow. “You can be on the supermarket shelf and still have a decent way of operations”Mr. Arjen Boekhold, gave the following advice to companies considering to establish operations in Africa:
- Visit several several times before making any decisions.
- Learn to know people on the ground with experience and networks.
- Present clearly what’s in it for them, not only what’s in it for yourself.
Mr. Øystein Botillen, Manager Global Initiatives, Yara International presented lessons learned from Yara’s 30 year long presence in Africa. Yara aims to improve smallholder productivity and link smallholders to commercially viable markets. In order to promote Yara concepts and business models solutions, the company works with different partners and through different channels.Today final consumers are setting the trend and the food and agriculture industry is reacting. Consumers are demanding a different agriculture industry and issues such as food quality, traceability and sustainable agriculture is high on the agenda. This has led large corporations to increase their focus on the origins of products.Botillen listed a number of factors that should be in place when establishing smallholder inclusive business models in Africa:
- Easily achievable critical mass
- Sufficient infrastructure
- Reduce risk and secure finance
- Off-taker – start with the market place
- Adding value to all players
- Find the right partners with a long-term focus
- Clearly defined roles and responsibilities
- Dedicated investments in HR
- Positive local perception
- Governmental support/Enabling environment
Summary by Kristin Njølstad Imafidon