Climate Conversations - Business backs agricultural growth corridors in Africa

By Sean de Cleene

Zacharia Elises expects to harvest more than five tonnes of maize this season at his 1.5 hectare farm plot in Catandica in Mozambique. This yield level is more than three times the average for the area. Successful investments have been a key support to his accomplishment.

The innovative extension service and marketing company Empresa de Comercialização Agricola (ECA) has provided him with seeds, fertiliser and advice. ECA, one-third owned by local farmers, is one of an economic cluster of related agricultural businesses. These range from seed and feed production to brewing, milling, and pig and poultry farming.

These businesses’ common denominator is financing from the Catalytic Fund. Managed by AgDevCo, the fund was launched in 2010 as part of the Beira Agricultural Growth Corridor. It is backed by international agribusinesses and the governments of Mozambique, Britain, Norway and the Netherlands.

Early-stage agribusinesses are rarely provided with commercial capital, but the Catalytic Fund provides ‘social venture capital’ on attractive terms to local entrepreneurs who have a solid business plan and the capacity to execute it.

CATALYTIC FINANCING

The concept of agricultural growth corridors was launched at the U.N. General Assembly in 2008 by Yara International ASA, a global firm specialising in agricultural products and environmental protection agents. Consequently taken on and adapted locally by Mozambique and Tanzania, the concept adopts a business development perspective to farming, using catalytic financing as a key mechanism to promote growth.

Locating areas suitable for productive farming, which also have backbone infrastructure available, is the starting point for undertaking cluster and value chain analysis within the corridors.

Public-private partnership, coordinated investments and government support aim to tackle bottlenecks and value chain risks, creating viable business opportunities while actively looking at the integration of smallholder farmers into those value chains.  

The two growth corridors - Beira in Mozambique and the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) - have launched investment blueprints to identify specific opportunities while setting out the model underpinning the corridor-based approach. The two corridors aim at catalysing combined investments of $5 billion over a 20-year period, with analysis showing a multi-billion dollar potential for annual farming revenues.

EXPANDING YIELDS AND INCOME

With a projected global population of 9 billion in 2050, and improved income levels fuelling dietary changes, agriculture businesses are set to expand. The increasing demand for food, feed and fuel must be met without compromising sustainability.

Yara is engaged in the multi-stakeholder Green Corridor initiative in Tanzania's SAGCOT. Yara, together with Syngenta, the universities of Sokoine in Tanzania and UMB in Norway, have launched a research project examining the effects of best practice in sustainable farming.

Preliminary field trials have demonstrated a high potential to double yields and farmer income levels without expanding farm acreages, while keeping greenhouse gas emissions at the same level.

GROW AFRICA INITIATIVE

While several African countries have seen impressive economic growth figures over the last decade, food insecurity remains at severe levels. The poor, many of whom themselves are smallholder farmers, are at risk.

Transforming smallholder farmers into emerging farmers, putting an emphasis on entrepreneurship, allowing them to profit from the growing agricultural markets - all this has the potential to bring about fundamental change.

But it requires long-term leadership and commitment from all sectors, working together to build the necessary capacity and appropriate market conditions to enable farmers to thrive as the driving force of sustainable food security.

Bringing the experiences from Mozambique, Tanzania and similar examples to scale is now the key objective of the recently established Grow Africa Initiative, formed as a partnership platform linking the African Union Commission, NEPAD and World Economic Forum, as well as the private sector, farmers’ organisations and development partners.

The objective of Grow Africa is to help expand private-sector investment and mobilise transformative partnerships that can accelerate sustainable agricultural growth in line with country-identified priorities.

Sean de Cleene is the senior vice president for global initiatives, strategy and business development for Yara, and a representative of Farming First, a multi-stakeholder coalition encouraging sustainable agricultural development worldwide. Farming First is co-organising Agriculture and Rural Development Day, on June 18, ahead of the Rio+20 Summit in Rio de Janeiro.

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