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Changing economic outlook Implications for Agriculture in Africa

Agribusiness Forum 2009

Kalyan Chakravarthy YES BANK Cape Town


June 15, 2009

Scope
Global agriculture scenario Situation in Africa Key inferences

Population is on the rise

Population is on the rise (contd)

Global population increases by 200,000 people per day 75 mn Chinese urbanise every 15 months

The world is urbanizing


Metropoles are the nodes of the 21th century network economy Knowledge and creativity are the crusial assets in the network economy ICT is key driving factor Agro production is in transition towards urban agriculture

The distinction between urban and rural areas within metropoles is vanishing
Spatial organisation of industrial agro production systems is still based on traditional land dependant forms

Food consumption pattern is changing


Rising global population and rising GDP per capita is pushing up overall food demand Urbanisation and a newly-forming middle class especially in China and India has resulted in shifting
Diet/Function al/Organic Foods Convenienc e Foods
Eastern Europe N. America, Japan, W. Europe, Australia

food habits and dietary


preferences
Increased demand for high value processed foods, meat, fruits and vegetables Meat consumption in China has increased four fold (from 10kg per capita per annum to 40kg in less than a decade)

Snacks/Prepare d Meals Dairy, Meat, Fish, Fresh Fruit Juices, Beverages


India, China, Latin America

Carbohydrate Staples

Africa (SubSahara)

Surviving

Mass Market

Convenience Food Service Snacking

Quality Hygiene

High Technology

and there has been a sharp decline in the availability of key commodities

and commensurate increase in food prices


Global food capacity reduced by explosion in biofuels with oil price increase
Diversion of corn for ethanol production in recent years (the >100$/barrel era) Oil prices have firmed up again (>70 $) Biofuels set to consume 30% of US corn by 2010

Credit crisis
Credit is at a premium and has impact on capital formation in agriculture in the short/medium term
Agri infrastructure projects Project finance SMES in Agriculture Business loans Farmers Crop loans

Not as badly affected as other sectors and long term prospect for investments in agriculture sector looks good

Climate change
Global food productivity reduced as environment changed Water security a major issue Continuous droughts (in Australia, India and Africa)

Per capita arable land availability has been an issue

Nutrition security is a cause of concern

Africa is well positioned to meet these challenges


53 countries with unique value propositions Land mass greater than USA, China and Europe combined Uncrowded space of opportunities for water, land Demographic drivers stronger than any other nation (including India and China) Important trading partner for the West
Africa provides 18% of the USA oil supply compared with 16% from the Middle East

Relatively insulated from global credit crisis

Africa is well positioned to meet these challenges (contd)

Unleashing the true potential of Africa Key imperatives


Optimization of natural resources
Traditional farming methods may look sustainable but are often not

Not just the quantum of production but the nature and quality of production would be important
Integration with the demand side of the food chain Education and training of all key stakeholders in sustainable farming practices

Adaptation to deal with extreme climate conditions will be vital

Thank you!
kalyan.chakravarthy@yesbank.in