Reuters | Thu Sep 17, 2009
By Muchena Zigomo
JOHANNESBURG (Reuters) - Growing demand for farm output is driving African agriculture and the sector could lead the continent's push for investment, an agribusiness manager for South Africa's Absa bank said on Thursday.
Hans Balyamujura, regional agribusiness manager for Absa said Africa was benefiting from renewed interest in agriculture following a surge in agricultural commodity prices over the past two years.
"The commodity price spike between 2007-2008 resulted in more food insecure households and that really put agriculture at the forefront again," he told Reuters on the sidelines of an agriculture conference.
"This affected people all over the world and out of that has come a need to ensure that that situation never arises again...hence the need to invest more (in agriculture)."
The food price crisis drew attention to the chronic underinvestment in farming in developing countries, where governments dealt with the crisis by imposing export bans to keep prices down as poor people struggled to feed themselves.
Investment funds are now increasingly looking to put money in food production and farmland in Africa, where large expanses of arable land, fertile soil and water are abundant.
However, the impetus for farmland investment has brought with it concerns about exploitation with land activists and some international donor agencies calling for the establishment of a code of conduct for the so-called "land grabs."
Balyamujura said investors in African agriculture needed to take the interests of African communities to heart when seeking profit from the continent.
"Africa's agriculture investors need to embed corporate social responsibility as part of their operations...and they need to develop relationships with governments and other strategic partners," he said.
He urged smaller African investors to take advantage of abundant markets for farming output, particularly for basic foodstuffs that could easily be sold to local communities.
"Any investment needs to be market led...and if we look across the continent, there is clearly a huge market for basic commodities," he said.
Hopes are high that increased investment in agriculture will help lift African countries from the global economic downturn.
"I don't think there's any doubt that agriculture is going to be important for investment in Africa. It employs the most people, accounts for between 60-70 percent of consumer expenditure and accounts for about 30-60 percent of GDP," Balyamujura said.
