Investors see great potential buried in African soil

Deutsche Welle, 27 April 2013

One of the topics discussed at this year's Africa Business Week in Frankfurt (22-26 April, 2013) was the challenge of modernizing African agriculture so that Africans also benefit.

The number of inhabitants on the African continent is growing rapidly. To date, there are an estimated one billion people living in Africa and that number is expected to double by 2050.

Most of them will be living in urban areas. All of them will need to eat and drink . The demand for food is rising steadily and the African middle class is striving for higher living standards.

Experts attending Africa Business Week agree that Africa's agriculture is facing a daunting challenge. Investors from across the world are actively searching for fertile soil from one end of the continent to the other. But few Africans benefit from these investments as most cereal products and vegetables are exported directly from African farms to the Arab world or Asia.

Technology reverses rural flight

Mpoko Bokanga, from the UN Industrial Development Organization UNIDO, demands that investors should support local farmers so that they generate better harvests and thus achieve higher returns.

Mpoko Bokanga says there should
be more support for local farmers to
generate higher returns

Bokanga warns against trying to set up modern farming production centers using only foreign expertise. The key is to take modern technology out to the fields as a way of curbing rural flight.

"That will make it more attractive for the young people to work on the farm and of course it will increase productivity. So it is a win win situation," Bokanga said.

But modern technology alone cannot be the solution, Bokanga adds. UNIDO watches the entire production process, from the cultivation of the fields and harvesting the crops to the processing and marketing of agricultural products.

Soy and wheat for Zambia

Among those who pursue such a holistic approach is German entrepreneur Carl Heinrich Bruhn, head of Amatheon. The company wants to build up profitable farms in Africa, in order to generate high returns for investors.

It started its first project in Zambia by leasing 30,000 hectares (74,000 acres) for 99 years. The land is located in a long-planned commercial farming area but the owners had no money for such  a huge investment.

Carl Heinrich Bruhn's company
has leased land in Zambia

From the beginning Amatheon took care not to do anything that would lead to accusations of  land grabbing, says Bruhn. Instead, he says, his company has jointly developed a concept with local farmers from which all sides can benefit.

Previously local farmers had no access to fertilizers, seeds or crop protection products. "By building a central farm , we can provide them with all these things so that the smaller farmers can start their own production cycle," Bruhn told DW.

Providing access to markets

Bruhn's company also wants to help the independent farmers market their products. Up till now Amatheon's neighbors had no access to the wholesale markets in the capital Lusaka.

"We can provide this because we buy up the farmers' produce and take it to the capital where it can be resold."

The German company is currently harvesting its first soy. After that, wheat will be sown. Neither is expected to be exported because there is a great demand for both products in Zambia.

The process is not entirely without problems. "Actually, we should have been connected to the public electricity network since January.  But construction of the pipeline is taking time," the German investor complains. But he is optimistic that in a few weeks his team will be able to turn off the generators.

African soil needs care

The environmental organization WWF is watching the growing interest in African soil with skepticism.

Birgit Wilhelm says African soils are
geologically very old and need care

Basically, there is a need to increase food production, says Birgit Wilhelm, who is responsible for sustainable agriculture at WWF's German branch.

She also knows that 60 percent of the world's unused agricultural land lies in Africa.  But  she points out that arable land in Africa is much more depleted than in other parts of the world and is low in nutrients.

"These are geologically very old soils" she explains. Investors also know this but their response is often unimaginative, Wilhelm criticizes. "They say that the soil is poor and need nutrients, that's why it should be fertilized, but they don't csare about the effect this has on the ecosystem."

When it comes to the cultivation of crops for bio-fuels, one has to watch out that investors are not only focusing on quick returns and then leave behind depleted soil, says Wilhelm.

Such investors would always need new arable land. But This vicious circle destroys biodiversity as a whole and also degrade soil fertility permanently.

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