Towards a green revolution

For the past three months or so, we have been bombarded with traumatic footage of starving, grossly emaciated children and adults, some on the brink of death, on our television screens. This footage is almost always followed by appeals from various charities and aid agencies for monetary donations to help those afflicted in the Horn of Africa. That such famines have been a recurring phenomenon in many parts of Africa, a continent that boasts millions of acres of some of the most fertile farmlands in the world, is a damning indictment on the region’s leaders.

Many factors have been attributed to the constant food insecurity in Africa. Transporting agricultural goods is costly because of poor infrastructure, while most farmers cannot afford expensive machinery, high-yield seed and fertilisers, because of inadequate finance systems. Another factor is the increasing sale of fertile farmland, largely at rock bottom prices, to foreign investors who use them mainly to grow crops for biofuels to feed the rising demand in Europe.

Despite these factors, Africa has great potential to raise the volume and value of its agricultural production and to expand ancillary business activities. An African agricultural revolution could boost agricultural production significantly through the use of new technology and infrastructure. The challenges notwithstanding, some analysts see changes on the horizon. Agriculture accounts for roughly 15 per cent of the continent’s GDP and is still by far the biggest source of employment.

According to the McKinsey Global Institute, with a green revolution, Africa could increase the value of its agricultural output from $280 billion a year now to about $500 billion by 2020 and to $880 billion by 2030. Growth of this magnitude would also increase demand for upstream products such as fertilisers, seed, pesticides, and machinery, while spurring downstream activities such as grain refining, other types of food processing, and biofuels. The Institute estimates that the total value of these adjacent markets could reach $275 billion a year by 2030.

Many people and institutions have extensively studied how to drive such an African green revolution. The continent’s yields of major crops are well below world averages. Sub-Saharan Africa’s annual average yield of these crops was 2.6 tonnes per hectare from 2002 through 2007, for example—less than half that of other regions. If Africa could raise yields on key crops to 80 per cent of the world average (like other areas that experienced green revolutions), the value of its agricultural production would rise by $235 billion a year over the next two decades.

Africa must also continue to increase the area under cultivation. The continent has millions of hectares of unused arable land—about 60 per cent of the world’s total. Over the past decade, many African countries have begun to expand their cultivated lands, but more can be done. From 1987 to 1996, Brazil, for instance, added one million hectares annually to its land under cultivation. If Africa could achieve half that rate, production would rise by $225 billion annually no later than 2030. The big challenge to this increase in cultivated land is that it must be done in an environmentally and socially responsible manner. The World Bank and others have created thoughtful guidelines on how to do this. In addition to increasing food production, African farmers could boost their revenues by investing more in higher-value crops, such as fruits and vegetables. Kenya, for example, has tripled its horticulture exports to $700 million annually through such efforts. Assuming that higher-value products such as horticulture or sustainably produced biofuels could replace 20 percent of Africa’s low-value crops (such as cereal grains), agricultural production could rise by $140 billion annually by 2030. If Africa achieves these goals, the value of the continent’s agricultural production could grow twice as fast over the next 20 years as it has over the past decade.

A green revolution on this scale would, in turn, fuel the growth of many other businesses. Analysts suggest that upstream input markets would increase from about $8 billion a year today to $35 billion a year by 2030. The largest of these opportunities would be fertilisers. Africa’s use of them, at 24 kilograms per hectare, is only one-quarter of the world average. Increased fertilizer use—an essential component of an African green revolution—would present suppliers with $14 billion a year in potential revenues and, depending on margins, about $3 billion in profits.

Downstream markets may grow even faster, from about $40 billion a year today to $240 billion a year by 2030. The largest of the downstream opportunities is vegetable and food processing. But biofuels, now the fastest-growing opportunity, could become a more than $20 billion a year market by 2030 if global oil prices remain above $70 a barrel. Ethanol production could be particularly attractive for Africa’s inland oil-importing countries, where high transportation costs raise consumer fuel prices. Africa also could become a major supplier of biofuels to Europe, assuming that they do not threaten food security and are produced in an environmentally sustainable way.

With the political will, right investment and proper implementation, the footage of emaciated and dying children on our television screens will be consigned to the archives.

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