Africa is a continent grappling with poverty and food insecurity, necessitating over $50 billion in food imports annually due to the inefficient use of agricultural resources.
Recently, the continent has been recognized as a significant potential source of food production for the global market. For example, Morocco’s recent discovery of substantial natural fertilizer reserves could reduce crop production costs across Africa, given the proximity of these resources.
Why does Africa have the potential to become a global food producer?
Africa is poised to become one of the leading food producers in the world, with projections indicating that its agricultural and food market will reach $1 trillion by 2030, up from approximately $280 billion in 2023.
Supporting factors include:
1) A commitment to developing crop seeds through biotechnology and genetics.
2) An expected increase in yield per hectare due to better access to fertilizer and more effective soil improvement technology.
3) Significant potential to expand arable land due to vast available spaces across the continent. Below are details of each factor:
The first factor: African countries are focused on developing crop seeds using biotechnology and genetics. A recent report from the International Service for the Acquisition of Agri-biotech Applications (ISAAA) highlights the commercial status of biotech crops globally and noted that:
African nations are emerging as aware and active participants in biotech agriculture, with the number of countries adopting biotech seeds increasing from 3 to 6.
In South Africa, for instance, 85% of maize production currently relies on 236 climate-resistant varieties, yielding about 15 million tons annually.
Moreover, data from the African bioseed market suggests robust growth potential. According to Mordor Intelligence, the African bioseed technology market is projected to reach $4.18 billion with a compound annual growth rate (CAGR) of 4.9% from 2024 to 2030, up from $3.12 billion in 2024.
The second factor: Agricultural yields have the potential to increase through better fertilizer usage and improved soil technologies. Data from the UN Food and Agriculture Organization shows that
Historically, yields per hectare of agricultural crops in Africa have lagged behind other continents. For example, grain yield in African nations averages about 1.8 tons/ha, compared to approximately 7.1 tons/ha in North America. Additionally, fertilizer application in Africa remains low.
According to FAO data, countries like Nigeria, Ghana, and Ethiopia use fertilizers at approximately 15-40 kilograms per hectare, whereas China and Brazil apply around 300-320 kilograms per hectare. This discrepancy is a key reason for the lower agricultural yields in Africa compared to countries with better fertilizer access.
The third factor: African countries possess significant opportunities to expand their agricultural land due to vast geographical spaces available for agriculture. Africa is the second largest continent after Asia, covering approximately 30.4 million square kilometers or about 19 billion rai, with 11.3 million square kilometers or 7 billion rai designated for agricultural purposes.
According to the World Economic Forum, African nations currently have around 60% of their land suitable for cultivation, translating to approximately 11 billion rai. The remaining areas include arid deserts covering about 40% or approximately 0.8 million rai.
Additionally, Africa is projected to receive an estimated $65 billion in investments for water management, which could expand arable land by 5-15% into drought-prone regions.
Which Thai agricultural businesses can seize this opportunity?
Krungthai COMPASS believes that the expanding agricultural and food market in Africa presents significant opportunities for Thai entrepreneurs in the seed production and modern agricultural technology sectors. Currently, there are both large and startup Thai businesses with expertise investing in the African seed market, projected to be valued at around $100 billion by 2030, with an annual growth rate of 11.1% CAGR from 2022 to 2030, including service sectors.
The realm of modern agricultural technology encompasses various innovations, such as soil analysis tools to optimize fertilizer use and IoT applications for farm management, as well as automated machinery, which is expected to reach a market value of approximately $3.3 billion by 2030 with a growth rate of 6.4% CAGR (2024-2030). These advancements provide opportunities to expand and develop the market to fulfill the growing global demand, particularly in Africa, which demonstrates potential growth in agriculture but faces technological access challenges.
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Africa’s Agricultural Potential: The Next Global Food Producer
Africa is facing immense challenges of poverty and food insecurity, exacerbated by the inefficient use of agricultural resources, leading to over $50 billion in food imports annually.
Recently, the African continent has emerged as a significant prospect for global food production. Notably, Morocco’s discovery of abundant natural fertilizer sources indicates a move towards cheaper agricultural inputs, offering a promising future for crop production in the region.
Why Africa Holds the Key to Becoming a Global Food Production Hub
Africa’s agricultural and food market is forecasted to reach $1 trillion by 2030, up from approximately $280 billion in 2023. This explosive growth will be fueled by several critical factors:
- Advancements in Biotech and Genetics: African countries are increasingly adopting biotechnology and genetic enhancements in crop development.
- Rising Agricultural Yields: Improved access to fertilizers and innovative soil enhancement technologies are set to boost agricultural productivity.
- Expanding Arable Land: Africa possesses vast geographic potential, with substantial open space for agricultural expansion.
The Role of Biotechnology in African Agriculture
Africa is progressively investing in developing crop seeds through biotechnology. According to a recent report from the International Service for the Acquisition of Agri-biotech Applications (ISAAA), the number of African nations cultivating biotech crops increased from three to six. For instance, in South Africa, 85% of maize production relies on 236 climate-resistant varieties, yielding around 15 million tons annually.
Market dynamics suggest that the African bioseed technology sector could grow to $4.18 billion by 2030, with an annual growth rate of 4.9% from 2024 to 2030 (see chart).
Enhancing Agricultural Yields with Better Practices
Data from the UN Food and Agriculture Organization (FAO) reveals a stark contrast in agricultural yields between African countries and their global counterparts. For example, grain yields in Africa are about 1.8 tons/ha, compared to 7.1 tons/ha in North America. This gap can be attributed to low fertilizer usage, with African countries applying only 15-40 kg/ha, while countries like China and Brazil utilize around 300-320 kg/ha.
By increasing fertilizer use and improving soil management, African farmers can significantly uplift productivity (see infographic).
Geographical Advantages for Agricultural Expansion
Africa, spanning approximately 30.4 million square km, has substantial land available for agricultural practices. Right now, about 11.3 million square km is utilized for farming, but the continent has the capacity to cultivate 60% more feasible land. Investment in water management, projected at $65 billion, could further boost arable land by 5-15% into previously dry areas (see visual).
Opportunities for Thai Agricultural Businesses in Africa
According to Krungthai COMPASS, the burgeoning agricultural sector in Africa represents a prime opportunity for Thai entrepreneurs, especially in the seed market and modern agricultural technologies. This field is projected to grow to around $100 billion by 2030, with a remarkable annual growth rate of 11.1% from 2022 to 2030.
Technological advances—like soil analysis, IoT applications in farm management, and automation—are anticipated to create a market worth approximately $3.3 billion by 2030, growing at 6.4% annually. This presents Thai companies with an opening to meet the rising demand within Africa’s agriculture landscape.
Benefits of Investing in Africa’s Agricultural Sector
- High Return on Investments: The rapid growth and increasing demand within the sector promise substantial returns.
- Market Diversity: Investing in Africa allows businesses to tap into a diverse range of crops and agricultural practices.
- Technological Innovation: Engaging in the African market can drive advancements in sustainable agricultural methods and technology.
Practical Tips for Entrepreneurs
- Conduct thorough market research to understand local agricultural needs.
- Build collaborations with local farmers and agricultural institutions.
- Focus on sustainable practices to enhance productivity while conserving resources.
- Integrate technology to optimize yield and improve efficiency.
Case Studies: Successful Agricultural Ventures in Africa
| Company Name | Project Focus | Impact |
|---|---|---|
| AgroTech | Biotech Seeds | Increased maize yield by 40% in Kenya. |
| GreenFarm | Water Management | Aided irrigation expansion in arid regions of Ethiopia. |
| Seed Innovations | Crop Genetics | Developed drought-resistant crops across West Africa. |
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