The Un-valuable Chain
Aerial View of America
By Sarah Mintz (MA’14)
Flying over Africa, vast expanses of open land cradle small stenciled shapes, as if scrawled out sporadically by a child on a dry brown canvas. In contrast, the aerial view of the U.S. pops out like a proud modern painting, a rich composition of large, planned movement.
Yes, the pictures are extremes and American agriculture is riddled with its own set of problems. But in the context of African agriculture and development, Africa’s aerial landscape is haunting.
According to the World Bank, agriculture employs 65 percent of Africa’s labor force and accounts for 32 percent of GDP. Additionally, GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth originating outside of agriculture.
Yet the brown canvas miles below tells another story.
Poverty infects African agriculture across multiple dimensions. In this sector, we find the collision of gender-related issues, health and other social problems, weak land rights, lack of technological advancement, failing education systems, public sector underinvestment, infrastructure issues, limited access to finance, and fragmented markets with underdeveloped, and unvaluable [value] chains. The agriculture sector stands at the confluence of development challenges and has the bruises to show for it.
A March 2013 World Bank report, Growing Africa: Unlocking the Potential of Agribusiness, takes a hard look at these issues but concludes with an optimistic outlook. Part of the optimism is driven by the fact that Africa has more than half of the world’s agriculturally suitable yet unused land, and water resources that have scarcely been tapped.
Optimism in the Growing Africa report is also contingent on public and private sector participation. The African Union’s Comprehensive Africa Agriculture Development Programme (CAADP) was an agreement among African governments to increase public investment in agriculture to a minimum of 10 percent of national budgets and raise productivity by at least 6 percent, though follow-through has been slow. And while private sector investment in African agriculture is finally picking-up, commercial agricultural businesses across Africa are few and far between.
In some cases, commercial businesses have beaten the odds. A recent Economist article tracked the success of Zambeef, a growing agribusiness that originated in Zambia and is now expanding into Ghana and Nigeria. Zambeef’s growth accelerated after partnering with the South African super-market chain, Shopright. Interestingly the business also boasts a supply chain strategy that reaches lower-income populations as well as Africa’s growing middle class, a characteristic that the Growing Africa report refers to as a “dualistic supply chain.” Last but not least, Zambeef also achieved diversification and vertical integration, processing its own high-quality raw materials, taking them through the value chain all the way to market. Ownership of production, processing, distribution and retailing of beef, chicken, pork, milk, dairy products, eggs, edible oils, stock feed, flour and bread has positioned the agribusiness as a major industry player.
Ultimately, it’s smart businesses like Zambeef, coupled with public and private sector participation, that have the potential to drive value across African agriculture — and ultimately reduce poverty and inequality in ways that no other sector or industry can.