It’s a great honour to be part of the team of researchers that contributed to the 2021 Africa Agriculture Status Report – “A Decade of Action: Building Sustainable and Resilient Food Systems in Africa.”
The full report is available here.
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I’ve co-authored a piece on this subject with my old teacher and friend, Lulama Ndibongo Traub of Stellenbosch University and Thom Jayne of Michigan State University. It is published in The Conversation, and you can read it by clicking here (no paywall).
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South African agribusinesses aiming to expand their operations into the rest of the continent in the coming years will face different environments compared to realities in South Africa. This includes the commonly cited factor of poor infrastructure, and also a much less talked about the problem, which is low levels of agricultural productivity. With respect to the latter, a recent study by agricultural economists Thomas Jayne and Pedro Sanchez argued that sub-Saharan Africa’s agricultural output growth in the recent past has been through area expansion rather than improvement in productivity or yield per hectare. A case in point is maize, which shows a striking difference in yield levels between South Africa and the rest of sub-Saharan Africa. Consider maize yields between 2015 and 2020 in Zimbabwe, Nigeria, Kenya, Malawi and Tanzania, which averaged 2 tonnes per hectares for most of these countries with the exception of Zimbabwe, where the yields averaged one tonne per hectare over the observed period. By contrast, South Africa’s maize yields averaged 5 tonnes per hectare over the observed period.
One of the reasons for this difference in yield levels is the difference in input use between South Africa and most countries in the content. South Africa has an advanced and highly mechanized large scale commercial farming sector, which has ready access to fertilizers, improved seed varieties, agrochemicals. By contrast, most sub-Saharan African countries are dominated by micro, small and medium-scale farmers – a majority of whom are resource poor and lack access to fertilizers and hybrid seeds. Intensive maize production systems typically require relatively higher input costs, which, with a lack of access to credit and finance, limits small-scale farmers’ uptake of these technologies is limited. Another point to consider is that in countries such as Zimbabwe, smallholder farmers tend to limit the area planted to food crops in favour of tobacco and other lucrative crops in various seasons. Still, the point of lower productivity in food crops in sub-Saharan Africa remains. A 2019 study by McKinsey researchers made a similar point that Africa’s potential lies in improving the crop yields, and not land expansion, which has been the dominant practice in the recent past.
Improving productivity should not be the only focus for sustained improvement in Africa’s agriculture. When farmers have improved their productivity, there must be a place to safely store their maize crop and reach the markets to ensure a decent return on investment. This once again is a dominant feature of the South African agricultural sector, where the value chains are mature and well-integrated, with access to markets that operated within a liberalized environment. Meanwhile, in much of the sub-Saharan African countries, the agricultural value chains are fragmented, and maize markets are subject to ad-hoc government interventions that distort market signals. Poor storage infrastructure has seen high post-harvest losses (ranging anywhere between 17% and 30% of total national maize output). Under conditions of such systemic market flaws, improved yields would not make a significant impact on markets. To some extent, Zimbabwean farmers tend to substitute maize for tobacco in certain seasons because the latter has a well-functioning marketing system than maize.
In essence, sub-Saharan Africa’s agriculture sector remains underdeveloped and has various challenges. But these could also be viewed as opportunities for expansion by agribusinesses in countries that have fairly developed the agricultural sector, notwithstanding the infrastructure constraints already mentioned. If South African agribusiness intends to expand their activities beyond the border in the continent, their strategies and approaches has to be markedly different. Productivity improving techniques are one part of the solution, but this will need “ground-up” approach. This means working with farmers to understanding value chains region by region within each country because of their fragmentation. This will enable various agro-dealers to be closer to their customers – farmers – and also aware of the off-takers or large buyers of the produce so that farming could be sustainable.
Importantly, there is a need to lobby sub-Saharan African governments to prioritize network industries investments such as roads, electricity, water, and investment on agriculture infrastructure such as silos. With that said, this is unlikely in the near term because of fiscal constraints in a number of countries. Perhaps, a workable approach would be for African governments to be open to partnerships with private sector players. An important pre-requisite for creating public-private partnerships is strict adherence to the rule of law so that private sector firms can be assured that their investment is protected and that corruption is reduced. Notably, the African governments will also have to relax regulations that hinder the adoption of improved seed varieties which are crucial for productivity enhancement.
In sum, the sub-Saharan Africa region holds potential for expansion for South African agribusinesses, but the approach to doing business will have to adapt to country-specific practices at the start. The South African model can not be copied as is because of differences in farming and market structures, seed and food regulations, and network industries underdevelopment. This also means that the returns to investments in agriculture in the continent will likely be long term, and at the start, lower than what could be achieved in well-functioning agriculture markets. With that said, given the expected increase in population in the coming decade, rising urbanization, large, underutilised land in sub-Saharan Africa, and the increased connectedness through the African Continental Free Trade Area, collaboration and long-term investment in the continent will be key. The African governments should also improve infrastructure and land governance and the aforementioned regulatory matters to attract private sector investments into the content’s agricultural sector.
The article was written for and first published on News24/Fin24.
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Last night I wrote a Twitter thread about Zimbabwe’s maize production recovery. The central message of it is that Zimbabwe will not be a basket case this year, thanks to an expansion in agricultural plantings and favourable rainfall.
In a recent report, the United States Department of Agriculture reaffirmed its view that Zimbabwe’s 2020/21 maize crop could amount to 2,7 million tonnes, almost 200% from the 907,628 tonnes produced in the previous season. Notably, this is the largest harvest since 1984/85. With Zimbabwe’s annual maize needs at roughly 2,0 million tonnes, there will be enough, and the country could even export if needs be, something that would be the first since 2001, when the country last exported maize.
These expectations of a good harvest last month prompted the Zimbabwean Agricultural Marketing Authority to stop issuing import permits for maize and maize meal to local grain millers.
As encouraging this news is – from a Zimbabwean perspective – a closer look into the data reveals essential insights. For example, Zimbabwe is poised to attain 2,7 million tonnes of maize harvest in a record area planting of 1,9 million hectares. This means that the yields are still meagre, estimated at 1,4 tonnes per hectare.
For comparison, if one drives across the borders of Zimbabwe into South Africa, the area plantings for maize in the same season is 2,8 million hectares. This is 47% larger than the area planted in Zimbabwe. Importantly, official estimates from South Africa suggest that maize production in the 2020/21 production year could amount to 16,2 million tonnes. This means the national average yield is roughly 5,8 tonnes per hectare — 307% higher than Zimbabwe’s average yield.
Of course, one of the important differentiators in yields between the two countries is the seed varieties that are used. As I have recently pointed out in an article on Project Syndicate, South Africa utilizes genetically engineered maize seeds (GE) while Zimbabwe uses non-genetically engineered seeds. This is a crucial matter contributing to yield differences, although not the only one.
For background, South Africa started planting GE maize seeds widely in the 2001-02 season. Prior to that, average maize yields were around 2.4 tonnes per hectare; in the 2019/20 production season, that figure was 5.9 tonnes per hectare. As a result, South Africa managed to produce nearly 20% of sub-Saharan Africa’s maize on only about 2.5 million hectares of land.
So, the point of this blog post is to say; Zimbabwe will be self-sufficient in maize this year, and that should be celebrated in a country that has plunged into starvation for so long. Still, Zimbabwe has a lot of work to improve its yields and some lessons for that lie across the border – in South Africa – for seeds and farming practices.
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The COVID-19 pandemic has put the global food system under sustained pressure and has triggered various policy responses to manage supply and demand.
I’ve co-authored a paper with Tinashe Kapuya and Gracelin Baskaran exploring this theme from a Sub-Saharan Africa perspective. The article is published by the South African Institute of International Affairs (SAIIA) and accessible by clicking here.
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Maize was South Africa’s fifth-largest exported agricultural product in value terms in 2020. It trailed citrus, grapes, wine and apples, which were the top four products in the overall US$10,2 billion worth of South Africa’s agricultural products exported last year. The total agricultural export earnings in 2020 were the second largest on record in value terms. The export markets were quite diverse, nearly half spread across the African continent, and third, in the European Union and the rest spread across Asia and the Americas regions.
For maize, Zimbabwe was the most dominant export market for South Africa. In the 2,6 million tonnes of maize that South Africa exported within the 2020/21 marketing year, which started in May 2020 and ended in April 2021, about 20% of the volume went to Zimbabwe. This made Zimbabwe the single largest maize export market for South Africa in the 2020/21 marketing year. Other notable export markets were Taiwan, South Korea, Botswana, Vietnam and Japan, amongst others.
It is this significance of Zimbabwe as a market for South Africa’s maize exports that makes last week’s announcement by Zimbabwean authorities to suspend all maize and maize meal imports with immediate effect consequential. This suspension of imports comes as the country approaches its maize harvest period. According to data from the United States Department of Agriculture (USDA), the domestic crop could reach 2,7 million tonnes, the largest harvest since 1984. The views from local analysts generally concur with the USDA’s forecast that Zimbabwe is likely to have good maize and a strong overall agricultural season. The expected large maize output is primarily supported by the expansion in the area planted, coupled with favourable rainfall since the start of the season. Importantly, Zimbabwe will have the largest maize surplus in nearly three decades, as its annual maize consumption is between 1,8 and 2,0 million tonnes, against the aforementioned crop of 2,7 million tonnes.
South Africa, which benefited from the Zimbabwean maize demand in the recent past, could have 2,8 million tonnes of maize surplus available for export markets. This would be the largest volume since 1994/95, when South Africa exported 4,7 million tonnes of maize, according to data from the South African Grain Information Services (SAGIS). These available maize export volumes are on the back of a large forecast harvest, which we at Agbiz currently forecast to be 16,7 million tonnes. This would be the second-largest maize harvest on record. With Zimbabwe as a potential export market out of the picture, and various regional maize producing and consuming countries in the Southern Africa region, such as Malawi, Zambia, Tanzania, and Mozambique, expecting large harvests, regional demand for maize will be weaker than usual. The consistent markets that South Africa will likely have are the Far East markets, including Taiwan, South Korea, and Japan.
You can read the full article by clicking here (paywall). The article was written for and first published on Fin24
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I have a new piece on The Conversation focusing on Sub-Saharan Africa’s food security conditions amid the Covid-19 pandemic. You can read the essay by clicking here (no paywall).
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
The favourable agricultural season for most African countries has not reached the corners of Kenya sufficiently. Kenya is one of the few African countries that will likely remain significant maize importers in the 2021/22 marketing year. Several countries such as Malawi, Tanzania, Zambia, Zimbabwe, Mozambique, and Ethiopia expect a large domestic harvest, which should reduce the import needs compared to the previous season and place some at the net exporting position.
A report released by the United States Department of Agriculture (USDA) on April 12, 2021, indicates that Kenya’s 2020/21 maize production would likely increase marginally from the previous season to 4,0 million tonnes (this production year corresponds with the 2021/22 marketing year). Such a harvest falls short of Kenya’s annual maize consumption of 4,5 million tonnes. Hence, imports are set to increase by 25% y/y to about 500 000 tonnes. This will primarily be white maize, which exporting countries such as South Africa will have in abundance for the 2021/22 marketing year.
Nevertheless, South Africa will not play a meaningful role in Kenya’s maize market despite the expected supplies of white maize for export markets of 1,2 million tonnes in 2021/22. This is part of the expected total available maize supplies for exports of 2,8 million tonnes, with 1,6 million tonnes being yellow maize, which will likely be exported to Japan, South Korea and Taiwan.
Kenya still prohibits the importation and growing of genetically modified maize. This is a significant hindrance for South Africa as roughly 80% of maize grown in the country is genetically modified.
South Africa’s maize export market will remain the domestic, neighbouring countries and the Far East market – mainly Japan, South Korea, and Taiwan. However, the neighbouring countries’ maize imports demand will likely soften notably in the likes of Zimbabwe because of large domestic harvests and growing competition from Zambia.
To illustrate the improvement in domestic maize production in a few African countries this year, consider these estimates from the USDA; Zambia’s 2020/21 maize production could reach 3,4 million tonnes (up 69% y/y). In comparison, Malawi’s maize harvest is estimated at 3,8 million tonnes (up 25% y/y), Mozambique’s maize crop is estimated at 2,1 million tonnes (up 8% y/y), Kenya’s maize is forecast at 4,0 million tonnes (up 5% y/y). Tanzania’s maize harvest is estimated at 6,3 million tonnes (up 8% y/y).
Given these available maize supplies for various African countries, Kenya will receive maize for the 2021/22 marketing year maize from the Common Market for Eastern and Southern Africa (COMESA) and East African Community (EAC). The primary incentive will not be so much a price decision. Rather a regulatory matter as the regions mentioned above produce non-genetically modified maize (an opposite of the South Africa situation). Importantly, Zambia and Tanzania will likely dominate Kenya’s maize import list, as has been the case over the past decade.
In sum, the talk of growing maize import needs in Kenya will be of little value to the South African maize exporters. However, there will be ample supplies on the back of an expected second-largest maize harvest on a record of 16,7 million tonnes. The ban on importing genetically modified crops remains a significant barrier for South African maize exporters to Kenya and several African countries. Only Zimbabwe has recently reversed this ban and opened a way for maize trade between the two countries. Such regulatory barriers are an example of issues that will likely persist regarding agricultural commodities, irrespective of the countries uniting under the African Continental Free Trade Area.
South African maize exporters should focus on the Far East markets, especially in the 2021/22 marketing year where available maize for exports could amount to 2,8 million tonnes, the largest volume since 1994/95. The African continent will not be a favourable maize export market for now.
The article was written for and first published on Fin24.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and the author of two books, “A Country of Two Agricultures: The Disparities, The Challenges, The Solutions” and “Finding Common Ground: Land, Equity and Agriculture“.
He is a Senior Lecturer Extraordinary at the Department of Agricultural Economics at Stellenbosch University.
Sihlobo is also a Visiting Research Fellow at the Wits School of Governance, University of the Witwatersrand, and a Research Associate at the Institute of Social and Economic Research (ISER) at Rhodes University.
Sihlobo was appointed as a member of President Cyril Ramaphosa’s Presidential Economic Advisory Council in 2019 (and re-appointed in 2022), having served on the Presidential Expert Advisory Panel on Land Reform and Agriculture from 2018.
He is also a member of the Council of Statistics of South Africa (Stats SA) and a Commissioner at the International Trade Administration Commission of South Africa (ITAC).
Sihlobo is a columnist for Business Day, The Herald and Farmers Weekly magazine.
His weekly podcast, “Agricultural Market Viewpoint with Wandile Sihlobo“, is available on all podcast platforms.
He holds a Bachelor of Science degree in Agricultural Economics from the University of Fort Hare and a Master of Science degree in Agricultural Economics from Stellenbosch University.