IN AIMING to expand their operations into the rest of Africa, South African agribusinesses in the coming months would face a different environment compared to that in South Africa, the Agricultural Business Chamber (Agbiz) said yesterday.
Sub-Saharan Africa possessed the potential for expansion for South African agribusinesses, but their approach to doing business would have to adapt to country-specific practices, because the local model could not be copied because of the differences in farming and market structures.
Agbiz chief economist Wandile Sihlobo said this included poor infrastructure and low levels of agricultural productivity.
“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,” said Sihlobo.
He said that between 2015 and last year, maize yields in Nigeria, Kenya, Malawi and Tanzania averaged two tons per hectare, while in Zimbabwe the yields averaged one ton per hectare. By contrast, South Africa’s maize yields averaged five tons per hectare over the same period.
Agbiz attributed the difference in yields to the difference in input use between South Africa and most countries on the continent.
Sihlobo said South Africa had a highly mechanised large-scale commercial farming sector, which had easy access to fertilisers, improved seed varieties and agrochemicals. By contrast, agriculture in most sub-Saharan African countries was dominated by micro, small and medium-scale farmers, most of whom lacked resources and access to fertilisers and hybrid seeds.
A 2019 study by McKinsey researchers made a similar point that Africa’s potential lay in improving crop yields, not land expansion.
Sihlobo said improving productivity should not be the only focus for sustained improvement in Africa’s agriculture. When farmers had improved their productivity, there must be a place to store their maize crop safely and they must be able to reach markets to ensure a decent return on their investment. This was, once again, a dominant feature of the South African agricultural sector, where the value chains were mature and well integrated, with access to markets that operated within a liberalised environment, he said.
In many sub-Saharan African countries, the agricultural value chains were fragmented, and maize markets were subject to ad-hoc government interventions that distorted market signals.
BUSINESS REPORT