analysisBy David Hughes
Africa's food imports are increasing and food self-sufficiency is declining. This should create substantial local and regional marketing opportunities for African farmers and this will include smallholders, but only if certain conditions are met.
Over the next 40 years, the global population will increase by 2 billion but that will not be evenly spread - Africa will double from 1 billion to 2 billion people and the jury is out on whether this will offer an exceptional food marketing opportunity for African farmers or translate into massive social problems in the overgrown cities and rural areas abandoned by younger adults.
Cities in Africa will mushroom in size and the hope is that the burgeoning urban populace will have paid employment and plenty of it. If not, shanty town social unrest will inevitably result which could be exacerbated if, as pundits and indeed FAO predict, global food prices will be both increasingly volatile and higher in the future.
Accelerated urbanisation suits supermarket companies. Walmart's arrival in South Africa with its purchase of Massmart is a statement of intent to expand rapidly across the sub-Sahara region. It will experience competition from regional mass retailers who have in-depth knowledge of the purchasing preferences of local shoppers. This is good news for consumers who should see keener grocery prices but will be tough for duka (small store) owners who will lobby government to keep the big global retailers out (as has been attempted in India).
But rapid population growth and urbanisation in Africa will place enormous strain on food security across the continent. Africa's food imports are increasing and food self-sufficiency is declining.
Clearly, this should create substantial local and regional marketing opportunities for African farmers and this will include smallholders but only if certain conditions are met: roads, transport and post-harvest infrastructure are improved; regional trade agreements within Africa are forged and trade between African countries is encouraged not constrained (it's easier to ship produce to Europe or the Gulf than it is to move it within the continent or, indeed, the next door country); slowly and painfully, the structure of farming and wholesaling will rationalise as in all other parts of the globe, with or without government facilitation.
Supermarkets will accelerate the transformation of supply chains for, in particular, fresh food as they seek greater quantities of consistent quality produce. Can smallholder farmers survive in a modern food marketing era? Some will, some won't. Those heading for the cities will be pleased to leave the land.
Smallholders remaining will expand but will require help in terms of access to credit, technology and so on. They must work together and with modern wholesalers to meet big buyer requirements. Smallholder farmers are disadvantaged but not doomed and will find opportunities where they can maximise their intrinsic advantages, such as use of family labour, attention to detail on finicky crops, and close proximity to markets as towns and cities expand rapidly.
Traditional markets have decades of life in them and will continue to offer wholesale and retail market opportunities for the smaller producer. Within Africa, the processed food industry will grow quickly and prove a reliable market outlet for large- and small-scale producers.
Extra-regional markets will continue to offer good prospects for African farmers.
Fresh fruit and vegetables destined for developed countries and, increasingly, the fast-growing middle classes of emerging countries will be most likely captured by larger-scale farming enterprises with opportunities for "outgrowers" supplementing nucleus estate production. But tea, coffee and cocoa (the principal raw ingredient for chocolate) are grown largely on smallholder farms across Africa and elsewhere.
Worrisomely, not is all well on these farms - incomes are low and unstable reflecting poor on-farm productivity, volatile prices and inefficient supply chains; and farmers are ageing and their children seek jobs in town not on the land. But, there is a silver lining - major companies such as Nestlé, Unilever, Mars, Kraft and Barry Callebaut recognise that continuing poor productivity at the farm level presents a clear threat to the long-term sustainability of their own big branded businesses.
These global companies share common commercial interest with small-scale farmers in working together to improve quality, quantity and farm level prices to ensure that the raw materials for mega-brands such as Mars bars, Magnum ice cream, Kit-Kat and Cadbury's and Milka chocolate are available in years to come. Global food and beverage companies forging closer partnerships with small-scale African farmers may seem most unlikely but, in fact, it is the emerging model for the coming decades.
Professor David Hughes is Emeritus Professor of Food Marketing at Imperial College London