‘Farm to fork’ never looked this good

The term “disruption” is often associated with high-technology industries, but the agriculture sector in Africa is going through its own revolution, which makes it one of the most exciting parts of the economy in 2022.

As one of the largest funders of agriculture projects in Sub-Saharan Africa, we are fortunate to have access to some of the most sophisticated farmers and agri-processing professionals on the continent. Couple this with the fact that we are one of the largest card issuers and acquirers in SA and have access to data-rich consumer insights, and we believe we are uniquely positioned to track the journey of agriculture projects from the farm to the consumer’s fork.

Conscious consumerism

A key trend that is gathering momentum is the disintermediation of the retailer channel between farmers and consumers. While large-scale farmers will continue to prioritise export routes and major retailers, midscale farmers are using technology to get closer to their consumers, with many now selling directly. This is being driven by a number of factors, including consumers who are becoming increasingly conscious over the source of their food and want products that are ethically farmed and organic in nature.

Conscious consumerism is on the rise across the world, and when you as a continent are a leading producer of primary agriculture products, you are well positioned to capitalise on this trend. While the department of trade, industry & competition (DTIC) has come in for some criticism for its approach to localisation, there is a distinction between the industrial policies that are being proposed and the opportunities presented by the agri sector, which contributes to food security on the continent.

Unlike their industrial counterparts, the agriculture sector in SA is globally competitive on both a skills and technology basis, and in many segments is a market-leader. With both the Covid-19 lockdowns and recent events in Ukraine and Eastern Europe affecting supply chains, retailers are looking to have their suppliers close at hand, which represents a real opportunity for small and mid-size farmers and agro-processing businesses.

SA enjoys some of the world’s most skilled farmers, researchers and agri-entrepreneurs. Unlike their counterparts in the US and Europe, South African farmers don’t have government subsidies and protectionist policies to fall back on, and the their skills base is the envy of the world.

When we deal with US farmers, they are often amazed at how technically skilled and efficient our local operations are. Where we fall short is the ancillary and support services required to take our services to a new level. Investment in food safety and veterinary controls are an obvious win — foot and mouth disease is an absolute shambles in SA and we have shortages of animal vaccinations. This means we cannot export many meat products to Europe. Contrast this to the likes of Botswana and Namibia, which have invested in this segment and are enjoying strong export successes.

Lastly, our logistics channels are in dire need of an overhaul. Our port operations are poor and we are in a situation where our fruit exporters are not even worried about the value of the export value of their commodities — they are worried about the quality of the finished product when it arrives at its final destination.  

The African Continental Free Trade Area (AfCFTA) is expected to be a game-changer for intra-African trade by providing mutually beneficial trade agreements among member states. A look across the continent shows that African governments recognise this opportunity — in Tanzania, the government invested in a bridge to connect sugar producers and milling operations, ultimately saving a 160km round-trip. 

Tanzania has a specific sugar strategy over the next three to five years, while the Ivory Coast has developed a beneficiation strategy around cashew nuts with an investment in tax breaks and logistics. In Kenya, there has been a significant investment in the Tea Development Agency (KTDA) connecting 550,000 producers and consumers. This is an example of how you develop low-cost value chains.   

To highlight the opportunity associated with the food and agriculture sector, we only need to look at the card data, which shows that 80% of consumers’ monthly spend — excluding bond and car repayments — is going towards food purchases. Recent events around the world have given us an opportunity to develop a modern, productive and diverse agricultural economy for the consumer of tomorrow.

By watering our own trees, we will enhance African food security, create meaningful employment and be able to compete in an international marketplace on an even footing.  

Cordier is consumer sector head at Absa Corporate & Investment Banking, and Wildenboer sector head for agriculture at Absa Investment Banking.