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Agricultural Infrastructure: A Guarantee To Job Creation And Poverty Reduction

The agricultural value chain is actually much more complex than one may think, especially agro processing or food processing By Michael Tichareva When we talk of infrastructure development, agricultural infrastructure is often the least mentioned!

The agricultural value chain is actually much more complex than one may think, especially agro processing or food processing

 

By Michael Tichareva

 

When we talk of infrastructure development, agricultural infrastructure is often the least mentioned! It’s not a surprise as people love to talk about power, roads, rail, airports, ports etc, but forgetting food.

The agricultural industry is often viewed backwardly with most young men and women who often grow up in abject poverty in rural areas preferring to migrate to cities where life is viewed as better but only to find out that it is actually often tougher.

At least we know a few food specialists, chemical engineers, agricultural engineers, agricultural economists, farm managers and commercial farmers and we can attest to the amazing work they are achieving in this industry.

The agricultural value chain is actually much more complex than one may think, especially when it extends to value-adding activities of agro processing or food processing.

It is the backbone of many other secondary industries in many economies, especially the beverages and food sectors, and large companies have been built with agriculture as a base.

Even Aliko Dangote, Africa’s richest man estimated to be worth US$14 billion, has sugar and flour divisions, both derivatives of agricultural products, as key revenue generators within the Dangote Group.

 

 

Even the international conglomerate, Anglo American, was built on the basis of agriculture and mining interests. In most of Europe, North America, Russia, China, Brazil and many other successful countries around the World, the industrial revolution was preceded by agricultural revolution. It had to be in that order.

We can, therefore simply not forget the importance of agriculture.

Africa has large tracts of land, most of it very fertile, under-utilized and with great potential to feed the whole World. What we need is enabling infrastructure to unlock that potential, and to get the infrastructure in place, we need an enabling environment.

Agriculture is already a major employer of many people in Africa, contributing up to 60 % of the labour force in some countries, and between 40% and 80% of the total population reliant on agriculture across various countries.

The problem is that large-scale commercial farming is small in the bigger scheme of things and concentrated in a few areas, surrounded by many small-scale farmers who often engage in subsistence farming, generally not professionalised and achieving very low yields and incomes.

 

 

If agriculture is professionalised, and small-scale farmers are assisted and commercialised so that they make more meaningful and decent earnings, a lot more can be achieved. It means real problems facing the sector can be dissected and investment in appropriate infrastructure to address such problems increased.

It means sustainable cities and economies can be created within agricultural hubs and there won’t be need for migration to large cities.

It means industrial hubs can be created and the service sector can be developed with more supporting infrastructure around agricultural hubs. It means unemployment can be reduced and poverty reduction can be accelerated. We need agricultural infrastructure to do that and someone must take the lead.

 

An innovative approach

We must talk high impact investment in agriculture. Sophisticated institutional investors should not forget the basics as they are the building blocks. Developing models to develop small scale farmers supported by sophisticated agricultural infrastructure is a model that should be considered seriously.

 

 

For success, such a model has to be operated across the whole agricultural value chain, including agro-processing. If successful, the model can be replicated in virtually every country in Africa, including Nigeria, and across the World.

The Jobs Fund in South Africa under the National Treasury is an excellent example that has created an enabling environment by encouraging private sector participation through matched funding support that must be secured through a competitive application process.

The aim is to encourage innovative and sustainable solutions towards enterprise development. In the case of agriculture, this would entail the development of small scale farmers to create sustainable jobs and reduce poverty.

One model that could work would be to develop an initiative that looks at problems facing small scale farmers across the agricultural value chain.

These are widespread, including lack of farming skills, lack of business & financial skills, poor access to cheap inputs, poor access to finance, lack of infrastructure & skills to manage and maintain the infrastructure, and poor access to market among many other factors.

Many African countries can do well in promoting development of agricultural infrastructure beyond large scale commercial farming to small scale farmers. This is a model recommended for counties like Zimbabwe as they create efficiencies in the system for sustainability.

 

Michael Tichareva is the Managing Director of National Standard Finance Africa and the Executive Chairman of its affiliate, Claxon Actuaries. He can be reached on mtichareva@natstandard.co.za or michael.t@claxonactuaries.com

 

 

 

 

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