Zondo had just walked into the home of a strategic partner towards the empowerment of emerging farmers and achieving food security in Africa
JOHANNESBURG, South Africa, June, 2019 – Six months ago, founder and chairman of the Bahle Zondo Foundation, philanthropist and entrepreneur Dr. Bahle Zondo walked into the AGCO Africa office announcing that he would like to set up a successful agribusiness in his community of Msinga. He was quick to add, that he knew nothing about farming. AGCO, Your Agriculture Company (NYSE: AGCO), is positioned to be the driving force in the development of a sustainable and prosperous agricultural industry across the continent. Zondo had just walked into the home of a strategic partner towards the empowerment of emerging farmers and achieving food security in Africa.
On Wednesday 29 May, 2019 the Foundation marked a milestone in scaling up operations through mechanisation during a handover ceremony of the Massey Ferguson MF 5710 tractor on one of its farming sites in Mkhuzeni, Msinga. For Zondo, it all began with a protest of about 50 women outside the local primary school.
“The women were pleading for more job opportunities with the school’s feeding scheme,” explains Zondo who is always keen to find solutions for his community. “It was impossible for all these women to be employed by the school.”
He had to find an alternative that would utilise their skills to restore their dignity and empower them with the means to sustain themselves and families. With a seed fund of R1.2 million, Zondo established the uMsinga Farming Project by merging 3 informal cooperatives on communal land with sites varying from 2 to 50 hectares in size. Zondo was certain that he could uncover economic opportunities for these women if only he could access the right guidance, equipment and training.
Based on soil analysis and site visits by the AGCO team together with Drakensburg Agricultural Services (DAS) – a Massey Ferguson dealer in the region, Zondo was advised to purchase the MF 5710, known for its ease to operate and dependability. The MF 5700 series comes in 3 models -5708, 5709, 5710; 92 hp to 102 hp (61 – 76 kW). Powered by 4 cylinder engines, the series is available in 2WD and 4WD axles.
“No farmer, no nation!” assured by Nuradin Osman, AGCO Vice President & GM, Africa, at the tractor handover ceremony. “AGCO understands that the future of farming in Africa rests heavily on small scale farmers and the emerging middle class. Our mission is a development strategy: Empowering African Farmers.”
The tractor was handed over by Leon Rohrs, Managing Director of DAS. Being a farmer himself, Leon knows the challenges and needs of local farmers first hand and has been key to AGCO’s 28.2% market share in the region of northern KwaZulu Natal, in just under a decade.
The handover ceremony was attended by iNduna Zuma and iNduna Ntuli representing the local chief, iNkosi Majozi. Other AGCO businesses GSI – responsible for grain storage facility; Sparrex, suppliers of approved AGCO replacement parts & accessories as well as AGCO’s distributor in Southern Africa, BHBW – A Barloworld BayWa Company were represented at the event.
Word spread fast in the community and soon the event turned into a Massey Ferguson tractor convention as local owners of vintage models pulled in, to showcase their prized possessions and the AGCO team and partners were at hand to assist with advice on spare parts, implements and modifications.
“Having both the Managing Director of DAS and the AGCO Vice President & GM of Africa come all the way to our village of Msinga to hand over this tractor, truly indicates their passionate dedication to the success of the farmer – be it an emerging or an established one,” concluded Zondo as he thanked all who had attended the ceremony.
AGCO together with DAS have taken this project under their wing and will provide advisory and mentoring on Agronomy practices, technical support, on-going product aftercare as well as link uMsinga Farming Project to support services within the industry.
Climate change report shines spotlight on Africa’s agriculture potential
It seems almost incongruous to talk about the opportunity that exists in ensuring the world’s food security by bolstering Africa’s agricultural output when the very pressing and public crisis of climate change could be its undoing.
Particularly in the run up to COP26 and the “reality check” that came with this week’s release of the Intergovernmental Panel on Climate Change (IPCC) Six Assessment Report, it is clear the entire African continent is “highly exposed” to climate extremes, at a relatively “high level of vulnerability”.
With over two thirds of Africans deriving their livelihood off agriculture, climate change-led crises like droughts, floods and cyclones continue to threaten the continent’s economic growth, employment, and food security. And yet, ensuring Africa’s agricultural resilience would not just help Africa. It’s essential for ensuring global food security.
What’s more, these climate-led natural disasters have the greatest and most disproportionate impact on small- to medium-scale farmers, comprising as much as 80% of Africa’s agricultural output, from maize and wheat to rice, cassava, and sorghum.
“The UN Report confirmed that climate change is intensifying the water cycle and affecting rainfall patterns, bringing more intense rainfall and associated flooding, as well as more intense drought in many regions,” says Malvern Chirume, African Risk Capacity Limited Chief Underwriting Officer.
“These African farmers are the heart of the continent’s agriculture and are at the mercy of climate change events completely out of their control,” Chirume adds.
Established in 2014, ARC Limited provides natural disaster insurance relief to African countries which have joined the sovereign risk pool.
Along with its partners, which provide premium support, the insurer has already paid over US$65m to seven African countries to provide drought relief and address the economic concerns these countries’ most vulnerable citizens face.
Responding to the climate crisis
Traditionally, countries have responded to climate change-led disasters such as droughts or floods by raising funds for emergency relief. This approach is time-consuming and inefficient.
“It takes far too long for African countries to mobilise the immediate resources they need for relief efforts, to save lives and livelihoods. Our role at ARC Limited is to work with countries to prepare them for the risk exposure they have and how to respond swiftly to climate-related food security emergencies. This includes helping them to establish a rainy-day fund which pays out swiftly, before the problem has become worse, and more funding is needed.”
The ARC Limited model, built on parametric insurance (pre-specified pay-outs based upon a trigger event), has been highly successful, says Chirume.
“We have to date paid out close to $65 million dollars in claims. When one considers that every dollar in insurance pay-outs saves US$4 dollars, this makes the cumulative economic impact around US$240 million. With those funds, we’ve helped more than 5.9 million people whose livelihoods have been affected by climate change impacts,” Chirume explains.
While parametric insurance against natural disasters has enormous potential for the agricultural sector, it has a further economic impact. Because agriculture makes up such a significant portion of the continent’s economy, a downturn caused by a climate shock will echo through the broader economy of any nation affected.
This can bring an economic downturn, a lack of funding for key infrastructure and services at government level, and a loss of jobs as farmers struggle to recover. There is also evidence of migration away from areas experiencing drought, which can have a long-term impact on the regional economy.
Organisations such as ARC Limited have an essential role to play in this way in protecting agricultural value chains and the economies of and employment in Africa. “Our role is to help mitigate and manage the risk, building resilience and ensuring the African country is able to bounce back sooner after a natural disaster,” says Chirume.
With the negative impacts of climate change increasing and their potential to devastate the agricultural sectors and food security of African countries, it has become more important than ever to put sustainability at the heart of interventions.
“Creating an environment that limits the impact of climate shocks on the agricultural sector is about more than just securing economic transformation. At the heart of this investment is the need to ensure basic food security for the continent and the world,” says Chirume.
In its Sustainable Development Series, the World Bank says the African continent could play a leading role in ensuring food security for the earth’s estimated 9 billion people by 2050.
According to McKinsey, Africa’s full agricultural potential remains untapped. It determines that Africa could produce two to three times more cereals and grains, which would add 20% more cereals and grains to the world’s current output of 2.6 billion tons.
Given Africa’s productive potential, the continent could be a key contributor to feeding the world in the future. But to fully realise that potential will require overcoming many obstacles, including how it deals with the impact of climate change on agriculture and food security.
“We need broader collaboration between private and public sector to solve the climate change disaster response problem our continent faces. The problem is so big, that all of us have a role to play,” says Lesley Ndlovu, ARC Limited CEO.
With the support of the United Kingdom and German Government, ARC Limited has been equipped to help the member states of the African Union reduce the risk of loss and damage caused by extreme weather events affecting African populations.
“But there’s so much more work that still needs to go into reaching as many people as possible to help build the resilience of local communities and ensure they have the means to bounce back whenever they are impacted by a natural disaster,” concludes Ndlovu.
World Poultry Foundation (WPF) launches video series to help Africa’s farmers improve poultry production
With poultry increasingly a focus for emerging farmers across Africa, the US-based World Poultry Foundation (WPF) has released a series of training videos to help farmers reduce waste and optimise profits.
Feed accounts for up to 70% of the costs of raising poultry, so proper feeding techniques enable farmers to reduce waste, cut production costs and raise healthier birds, says WPF. Water is equally important in poultry farming, with proper water management crucial for healthy birds.
WPF’s training series, with four videos dedicated to production, explains how farmers should store feed, proper feeding of poultry and how to prepare and manage zones of comfort to encourage proper brooding for chicks. The videos also explain the importance of litter in helping to prevent common diseases to improve production and returns.
World Poultry Foundation CEO Randall Ennis says the video series has been developed to address the most common challenges faced by emerging poultry farmers across Africa. “By applying best practice poultry farming methods, farmers can significantly increase their production, their incomes, and the nutrition available to their families and communities,” he says.
The training videos, as well as free checklists and worksheets, are available here
AFEX Raises $50Million for Agri-SMEs, Africa’s First Warehouse Receipt Backed Commercial Paper
AFEX CEO, Ayodeji Balogun (Source: AFEX)
AFEX Commodities Exchange Limited (AFEX), Nigeria’s leading private commodities exchange company, has announced the first Warehouse Receipt Backed Commercial Paper in Africa, with tech-enabled operations and a 24-hour fast cash turnaround for borrowers. With over $50 million raised for Agri-SMEs, this bridges the funding gap between lenders and borrowers in the Nigerian agricultural sector with a commodity-backed instrument – for the first time.
The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the Food and Beverage, Trading Poultry and Animal Feed segments in Nigeria. The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices.
“With our vision to reach a cumulative total of over $5 Billion in investment to the agriculture sector over the next five years, this financing deal is right on track to achieve this goal’’ – said Ayodeji Balogun, CEO, AFEX Commodities Exchange. “As we move towards building a derivatives market in Africa, we want to be able to reduce exposure to price risk for stakeholders, by enabling them to hedge their positions and trade in commodity derivatives.”
The warehouse receipts, which can then be transferred from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a sustainable funding structure and address underfunding in the Nigerian agricultural sector. With the warehouse receipt system linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.
“Our mission is to provide low-risk working capital facility for stakeholders in the Agro sector, in a way that is transparent and has a very high viable investment return’’ – said Akinyinka Akintunde, VP Financial Markets at AFEX. “As a licensed commodities exchange and warehouse receipt system operator, we deploy a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrower.”With AFEX’s goal to support Africa’s food security while promoting a fair exchange of value among players in commodity value chains, this deal’s social impact is delivered through market access for farmers and reduced post-harvest losses. AFEX continues to contribute to the United Nations Sustainable Development Goals 1, 2, 5 and 8; no
poverty, zero hunger, gender equality, decent work, and economic growth.