Notes from the AGRF Summit 2022, Rwanda – 1

In the first week of September, 2022 I traveled to Kigali, Rwanda for the AGRF Summit 2022. It was not too long back that I came across a continent-wide initiative called the Africa Green Revolution Forum (AGRF). This appeared to be a useful forum to participate and gain a sense of national-level issues, debates and initiatives in agriculture in Africa. It turns out that the forum was nudging conversations about a ‘green revolution’ in Africa. Having seen the later years of this agri productivity boom and lived the consequences of the ‘revolution’, the Forum felt like a good opportunity to listen, engage and learn.

The forum saw participation from more than half of the countries on the continent. The country delegations were led by their respective agri ministers and in some cases by the Prime Ministers and Presidents. It was an interesting assembly under a single roof for enthusiasts like me. I have had this urge to hear the leaders on this continent directly. What kind of thinking, what kind of ideas and what kinds of possibilities do they see for themselves and their people in the world of today? International media doesn’t write about it. For the national media in India, they are not really known for looking outside their capitals and its politics.

AGRF Summit 2022 turned out to be a ringside view into farming and agri sector of countries in Africa, set strongly against the backdrop of the Covid-19 pandemic and an ongoing conflict between Russia and Ukraine. The leaders did not mince words about the experience of being left out from timely access to vaccines. Several leaders spoke of food self-sufficiency having become a high priority national target. It seemed to come with this kind of force from having being left to fend for themselves during the pandemic.

There were more references to the African Union (AU) than earlier. The members of AU appear to be vesting hope in the African Continental Free Trade Area (AfCFTA) as an alternative to global dependencies. It seems the idea of regional trade has arrived for Africa. It seemed logical to many policy analysts all these years, but African countries had easier gains to be made from independent, bilateral trade with Europe, US and UK. As long as they could secure trade deals with them, little else mattered. The world of 2022 has brought them to a different possibility altogether.

Over five days of the summit, I sat through sessions on seed systems in Africa, farm mechanization, agri processing, small holder farming practices, crop diversity, financing agriculture, regional trade and intra-continental cooperation. The forum had a mix of corporates and governments funding the event and its annual activities. The supporters include the usual names from seeds, chemicals and fertilizer industries. Since their funding often dwarfs annual budgets of agriculture ministries in the region, it was apparent who was setting the debates and goal posts.

I might have to do a series of posts to share observations from all the sessions over five days.

On scaling mechanization in agriculture in Africa

There are an average of 200 tractors/100 sq. km of arable land globally. Africa has about 8 tractors/100 sq. km. Companies like Namel and EfKen are building equipment financing models in Africa.

The MD of Business Development Fund (BDF), Rwanda observed that the issue of collateral doesn’t concern agriculture alone. It is for all borrowers. BDF’s aim is to see how can finance sector be de-risked. They have started credit guarantee to provide risk coverage to lenders. When the borrower is not able to come up with collateral then BDF provides risk cover to financial institutions. In their approach, the equipment itself is considered as 30% collateral. I could see parallels with the Indian (excluding Punjab) experience in the earlier decades.

John Deere Finance’s MD spoke of the unavailability of farming data in Africa that makes it difficult for financers to service the sector. The problem is compounded by the fact that many deem the land holding size unviable and that skilled labour (like machine operators) are in short supply.

On data availability – there is a lot of data out there by different companies. Most of the SMEs are not even banked. EfKen is collecting data to help financers.

While there is research suggesting a direct link between on-farm machine use and productivity, Ahmed Adekunle of Namel, Nigeria remarked that data shows productivity has remained the same but cost of mechanization has gone up. This needs to be examined. If this is Namel’s research, I would surely be interested in looking at the data.

A tractor-rental company Hello Tractor (dubbed as ‘Uber of agriculture) has been much in news about its innovative rental model for making tractors accessible to small farmers. Its founder Jehiel Oliver insisted that the cost of capital needs to come down. The base rate in the US is 2%, in Kenya it is 12% and in Nigeria it is 14% . It was interesting to see that Hello Tractor expected to grow by urging governments to increase agricultural subsidies.

On seeds

A personal takeaway from the summit was the work and contribution of the Center of Excellence for the Seed Systems in Africa (CESSA). It works in formalising seed systems in Africa from its informal nature to a well-structured and standard system that can be regulated and optimised in the interest of small holder farmers. It also offers advisory services through village level advisors.

The number of entrepreneurs in seed business in African countries is remarkable and something to learn from, especially for India. Information on seed production business is relatively hard to access in India. In contrast, seed production business is a business with very low barrier to enter, for African entrepreneurs. A case in point, this document published in 2009 and developed with BMGF’s support – The African Seed Company Toolbox: 52 Tools Every Seed Company Manager Should Know How to Use. An equivalent manual in India doesn’t exist, as far as I know.

Intra-regional trade in Africa and the Africa Continental Free Trade Area (AfCTA)

Intra-regional trade in Africa remains below 20% of the total volume of trade. In contrast, trade with Asia and Europe is between 60-70%. The key problems that keep intra-regional trade low are inadequate enabling infrastructure, skills, tariffs and the compliance loads that exist between trading partners.

The above numbers were set in contrast to the collective food import in Africa that stands at USD 100 bn.

Trademark Africa is an organisation that works on lowering cost of logistics in food supply. Time taken along food corridors in Africa is high.

An entrepreneur who has started an agri commodity exchange observed that – grain quality standardization is necessary for regional trade. For AfCTA to work there is urgent need for the local markets to work.

Farm to Market Alliance is a venture supported by the Syngenta Foundation. AfCTA’s key promise is in redefining the market from a small domestic one to aa pan-Africa market. This will also need structured demand. A pilot in Kenya with Unilever on finger millet is ongoing.

A counter-view on imports was presented by a USDA official who served as the FRA Deputy Administrator. He suggested that Africa need not be afraid of imports. For example, while the US is one of the largest ag exporters, it also a large ag importer. There’s much that can be done with imports, like value addition.

I think location of a country or region in the value chain matters for this ‘don’t be afraid of imports’ argument. It may not be as simplistic to import, value add and forward it.

Olam’s West Africa business head explained their flour milling operations in Nigeria. This was a fascinating and data loaded view. Olam imports over 2 mn tons of wheat in Nigeria for its milling operations. They are also working on improving wheat production in the country to switch from imported wheat to locally sourced wheat. In the bargain, they may also end up improving farmer profitability up.

There appeared a general consensus among AU member countries about import substitution as an approach. The countries are looking closely at their import bills and contrasting it with their own primary production capability.

An AfCTA official in the room spoke of the secretariat’s work since the implementation of the AfCTA agreement on January 2021.  54 African countries have signed the agreement. 43 countries have ratified the agreement. 46 countries have submitted their initial offerings for tariffs. Origins negotiations have begun. 88% of tariff lines have been agreed. 10% are yet to be agreed upon.

Looking at these conversations it appears that the broad contours of the problem remain the same as other agrarian countries, perhaps in different intensities. There is a lot of work that needs to be done in bringing volume, consistency of supply and quality across all inputs and outputs. These would be the primary and direct agri activity related expectations. Rest of the green revolution builds on it.

2 thoughts on “Notes from the AGRF Summit 2022, Rwanda – 1

  1. When I travel in rural India I find that in some places there may only be one or two tractors in a village. The ratio of tractors per land area is not the same across the country. In these tractor-poor parts of the country, owners rent the tractors to other landowners. It seems to be a workable model with a mixture of ox and tractor. I wonder what it would take to replicate it.

    1. I agree. I am familiar with what you describe. Have two tractors on the farm and their time is rented out by other farmers. Many countries in Africa are seeing similar trends. One of the popular companies there is ‘Hello Tractor’.

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