Prof. Martin Richenhagen (right), chairman, president and CEO of AGCO, introduced 2015 ACGO Africa Ambassador Jean Kaahwa, a fish producer from Uganda.Bringing together more than 250 farmers, agribusiness leaders, financiers, policymakers, non-governmental organization staffers (NGOs), former heads of state and other innovators with an eye on Africa, AGCO convened its fourth Africa Summit on 19 January in Berlin.
Robert Sichinga, Zambia’s Minister of Commerce, Trade and Industry, summed up the theme of the Summit—Agribusiness in Africa—when he told the group, “We’re not looking for aid. We’re looking for trade.”
Beyond subsistence
As Africa’s farmers look beyond simply nourishing their own bodies and step up to supply growing markets, said Sichinga, issues like profitability and financing become critical.
AGCO has had a long involvement in African agriculture, noted Rob Smith, the company’s senior vice president and general manager for Europe, Africa and the Middle East. As evidence, he displayed an Ethiopian 10 birr banknote portraying a 1970s era Massey Ferguson tractor at work—a hint at the importance of farming to Ethiopia’s economy and self image, and a product placement few companies could hope for.
AGCO will also be opening its first Future Farm—a training and demonstration facility—in Zimbabwe in May. At the Berlin meeting, the company announced its plans to build a second Future Farm in Algeria to serve French-speaking Africa.
Success stories
A long list of speakers illustrated the tremendous potential of African farmers and shared examples of success stories, from public-private partnerships creating vast agricultural parks to individual farms run by entrepreneurs like Ruramiso Mashumba.
Mashumba, a twenty-something pea grower from Zimbabwe who wowed the crowd with her drive and focus, and sobered the group with the realization that even with her education, business plans and demonstrated growth, she can’t secure financing in her local market.
Cash flow
Mashumba’s struggle was a perfect illustration of the challenges facing both farmers and investors in Africa. Again and again, speakers emphasized that it’s vital for policymakers, NGOs and bankers to view Africa’s farmers and food processors as businesses—entrepreneurs that should be evaluated on the basis of their cash flow and their market potential.
Policymakers and investors can smooth the path, encouraging value-added businesses that can create stable demand for crops and regional trade alliances to absorb growing yields, noted Berry Marttin of Rabobank. In turn, contracts from those food processors or other buyers can provide banks with confidence in farm businesses.
“Losses are very low for farmers who are assured a part in the supply chain,” Marttin noted—great news for bankers struggling to get more comfortable with extending credit to farmers, whom they generally consider to be a risky bet. Omondi Kasidhi, head of sustainable agriculture sourcing for spirits company Diageo, pointed out that the rate of repayment for his company’s package of seed, fertilizer and crop insurance in Ethiopia was about 95 percent.
A long day of speeches, panel discussions and networking culminated in a high-energy reception buzzing with chatter. Business cards were flying, ideas were exchanged, and deals were made. Perhaps the world even changed a bit, tipping just a little closer toward a burgeoning agricultural economy in Africa.
For details on the AGCO Africa Summit, click here.
