Agri09-Overview-Kalyan Chakravarthy yes bank
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Changing economic outlook -
Implications for Agriculture in
Africa
Agribusiness Forum – 2009
Kalyan ChakravarthyYES BANK
Cape TownJune 15, 2009
Agribusiness Forum – 2009
Population is on the rise… (cont’d)
• 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
Convenienc
e Foods
Diet/Function
al/Organic
Foods
Eastern Europe
N. America, Japan, W. Europe, Australia
and India has resulted in shifting
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)
Dairy, Meat, Fish, Fresh Fruit Juices, Beverages
Snacks/Prepare
d Meals
Carbohydrate Staples
Surviving Mass
Market
Convenience
Food Service
Snacking
Quality
Hygiene
High
Technology
Africa (Sub-
Sahara)
India, China, Latin America
…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 – 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)
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 • 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
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 • 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
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