Contributions to African agricultural growth by transnational corporations

Brussels, June 26th 2012

Dr. Martin Märkl

Performance of cereal production in Sub-Sahara

0

500

World

1961 1967 1973 1979 1985 1991 2003

South Asia

Sub-Sahara Africa

Source: FAO, 2006

1997

All Developing

1,000

1,500

2,000

2,500

3,000

3,500

Africa is far from being sufficient to match the demand of a growing population (1961–2003)

Page 2 • Dr. Martin Märkl • Brussels• June 26th , 2012

Investments in agriculture to leverage rural development and food security

Increased investment in agriculture in Africa

• Investment in agriculture will be most efficient when it promotes income-generating opportunities for farmers: evolution of ‘agripreneur’

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• Donor spending on agriculture and rural development has increased in recent years

• A large and increasing share is still devoted to short-term food aid interventions

• Eight (out of 45) countries reached target of 10 %of total public expenditure on agriculture in 2009

• Dr. Martin Märkl • Brussels• June 26th , 2012

Sustainable intensification of agriculture requires an holistic approach

Key elements for a sustainable intensification of agriculture

• Rise in agricultural productivity on arable land already in production

• in sub-Saharan Africa only 22 percent ofpotentially arable land is under cultivation*

• Resource efficiency: water, soil, agricultural inputs

• Reduction of pre- and post-harvest losses; need for innovation to address logisticsas well as resistance issues

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* FAO, 2012, 100 days to Rio +20, 100 facts

• Dr. Martin Märkl • Brussels• June 26th , 2012

Sustainable intensification of agriculture requires an holistic approach

Key elements for a sustainable intensification of agriculture

• Investment into the seed sector, promotion of hybrid seed dissemination

• Increase in mechanization to address labor shortage

• Enhanced education in science to ensure talented employees of the future

• Higher investments in agriculture in emerging markets, despite higher volatility of commodity markets

• Better coordination of public and private investments in agriculture

Page 5 • Dr. Martin Märkl • Brussels• June 26th , 2012

Data from FAO 2007

Yie

ld (

t/ha

)

China

IndiaOthers

Indonesia

Egypt

USA

Japan

Vietnam

Bangladesh

Thailand

Myanmar

Philippines

Brazil

Pakistan

Production (in million tonnes)20 40 60 80 100 120 160140 180 200

Investment into the seed market is a key driver for agricultural productivity

55% of acreage in hybrid rice

3% of acreage in hybrid rice

The potential of seed technology towards a sustainable intensification of agriculture: hybrid rice

Production (in million tonnes)

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Rice Average Yield (4.2 t/ha)

• Dr. Martin Märkl • Brussels• June 26th , 2012

• Sustainable Economic Opportunities • Ibrahim Index for Sustainable Economic Opportunities

• Basic Market Characteristics • Agricultural GDP Growth • Maturity of IP Laws and enforcement• Level of domestic agricultural

spending

• Geopolitical factors • level of trade barriers

• Infrastructure, irrigation & soil management

• km of rail road tracks per area in use

• irrigated land per area in use

• Productivity on the farm • fertilizer use intensity

Criteria driving the market attractiveness for private sector investments in agriculture

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Metrics (selection)Market driver

• Dr. Martin Märkl • Brussels• June 26th , 2012

West Central Africa expansion in Ivory Coast, Senegal, Mali and Burkina Faso mainly in cotton, rice and corn

East Africa expansion into Ethiopia and Tanzania, e.g. with cereals and rice, laterwith sugarcane & cotton

Southern African push of innovation also in Malawi and Zambia; further growth potential in Angola, Mozambique and Zimbabwe

Cooperation with GIZ, BMGF, IFC (still in exploration phase)

Bayer has a well established market position to be expanded further into selected markets

MA

ALG

TU

N

Mali

SN

TG

GH

Nigeria

BECI

BF

CMSierra Leone

Egypt

Ethiopia

Kenya

Tansania

Moz

ambi

que

Malaw

iZimbabwe

ZambiaAngola

Liberia

South A

fricaOpportunity

Exploration

Minor Markets

Core Business

Page 8 • Dr. Martin Märkl • Brussels• June 26th , 2012

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Metrics (selection)Market driver

• Dr. Martin Märkl • Brussels• June 26th , 2012

Grow Africa is a partnership platform

that seeks to accelerate investments and transformative change in African agriculture

based on national agricultural priorities and in support of the Comprehensive African Agricultural Development Programme (CAADP)

Grow Africa has a catalytic role:

•Increases private-sector investments

•Enables multi-stakeholder partnerships

•Expands knowledge and awareness of best practices and existing initiatives

Participating countries:

Burkina Faso, Ethiopia, Ghana, Kenya, Mozambique, Rwanda, Tanzania

Page 10 • Dr. Martin Märkl • Brussels• June 26th , 2012

Small scale farmers are the back-bone of African Agriculture

• The public and private sector need to jointly generate business opportunities for small scale farmers and to facilitate a fair distribution of risks and benefits along the value chain

• Moving from a government controlled system financed by donors towards a system which encourages private sector investments

The productivity gap of small scale farmers offers the biggest opportunity for agriculture in Africa

Page 11 • Dr. Martin Märkl • Brussels• June 26th , 2012

Thank you very much for your kind attention