Promoting an African Green Revolution

Luanda, Angola 26th November 2009

Sean de CleeneVice President – Yara International

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1 Trinidad 2 JV in Libya 3 JV in Qatar 4 Porsgrunn 5 Sluiskil

Yara global supply network

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Yara presence in Africa

Yara officesYara plants

Yara sells about 1.7 million tonnesof fertilizer to 30 countries each year

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Key global challenge - more people needing more food from less land

It is a global challenge

to feed people when arable land per person decreases.

2000

2200

2400

2600

2800

2000 2015 2030

5,5

6,5

7,5

8,5

Arable land in m2 per person (left axis)

World Population in billions (right axis)

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Sub-Saharan Africa has huge untapped potential

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Yara initiatives to support African agricultural growth and food security

Provide anchor investment to support the development of agricultural growth corridors in key coastal hub locations

Promoting a green revolution

Develop value chainpartnerships

Agricultural growth corridors

Develop balanced fertilization programs adapted to local growing conditions

Success of the Oslo Green Revolution Conference series and Yara Prize - leading to African Green Revolution Forum in Africa in 2010

Develop agricultural value-chain partnerships to help promote African agriculture and achieve food security.

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9

Based on a value chain approach to solving food insecurity and achieving sustainable agricultural growth …

DRAFT

Farmers Markets

Subsidies & gov’t interventions

Fiscal Policy & Legislative Reform

Support for facilitating & catalyst institutions

Infrastructure and port facilities

Trade Reform and Cutting Red Tape

Training &Technical Assistance

Research ,Extension &

Accreditation

Business Planning &

Capacity Building

Financial Services & Warehouse Receipting

Market Development & Brokerage

Value addition

Input Suppliers

Creating an enabling environment

Creating value chain efficiency

Developing Business Services

Strengthen investment into

entire value chain

OBJECTIVE: To promote sustainable agricultural growth

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Addressing specific value-chain challenges through partnership

Challenge

While farm productivity improvements are essential to improving overall agricultural growth. In many markets key elements of the agricultural value chain are weak leading to significant market inefficiencies making small holder farmers uncompetitive in the market place. This includes: raw material inputs, distribution systems, transportation and storage services, agronomic advisory services, financing facilities, market outlets etc Initiatives

Develop working partnerships, with different companies, NGOs , donors and government departments where each has a vested interest in coming together and contributing core knowledge and expertise to address specific gaps along the agricultural value-chain.

Examples are: Ghana Grain Partnership (Masara N’Arziki), Tanzanian Agricultural Partnership (MAP) Malawi Agricultural Partnership (MAP) Beira and Dar es Salaam

Agricultural Growth Corridors

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Management

Risk sharing

Innovative

financing

Access to affordable infrastructure

Agriculture related infrastructure - a critical missing piece of the puzzle?

•Irrigation cost per Kg (diesel): $0.60-$0.90

•Irrigation cost per Kg (electricity): $0.10

Slide supplied by InfraCo

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Beira Agricultural Growth CorridorBusiness as unusual

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A major transport route for the South-Eastern Africa region . . .

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Like Angola , Beira has significant and proven agricultural potential . . .

. . . but there are major constraints on profitable agriculture

• Enormous potential to increase yields of farmers through access to knowledge, improved seed varieties and balanced & appropriate use of fertilisers and greater access to irrigation

• Critical need to develop innovative financing approaches and business models to include small holder farmers into overall regional market development approach

• Inadequate agriculture related hard infrastructure (e.g. feeder roads, electricity, dams) and critical soft infrastructure constraints (customs, red tape, port handling) are driving up costs of production & transport, making African agriculture less competitive.

• A lack of access to medium and long-term finance, preventing most farmers, especially smallholders, from being able to invest into increased production.

• Need for more focus on disentangling currently complex agricultural value chains in a way that support small holder farmer increased production & market access

• Limited opportunities for value-addition through storage or processing.

• Lack of coordination between role players that play a critical role in catalysing agriculture including: electrification, transport, infrastructure and finance

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Value chain

development

Risk sharing

Access to

affordable

infrastru

cture

Innovative Financing Mechanisms

Agricultural corridors provide an opportunity to bring the pieces together?

• Community of experienced African farmers in Southern Africa

• Interest from international companies to get involved across the value chain

• Key links into govt, civil society and business networks (CAADP, CEPAGRI, Technoserve, NBF, AICC etc)

• Potential scope for cross border regional value chain initiatives

• New “social impact investors” emerging e.g. TransFarm, Africa Agriculture Fund

• G8 $20bn for food security

• New guarantee facilities announced, e.g. AGRA/ Standard Bank

• Critical need for catalytic funding to fast track growth and corridor innovation

• Pilot models (e.g. InfraCo irrigation project in Zambia) proven to work and can be replicated

• Interest from donors and multilaterals to support new approaches, e.g. “patient capital”

Slide adapted from InfraCo

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The BAGC initiative aims to stimulate a major revival of agriculture along the corridor

Jan ‘09 Mar‘09 Jun ‘09 Aug‘09 Dec‘09Oct ‘09

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Jan ‘10

• High-level review of agricultural potential of the Beira corridor

• Interviews with farmers and private investors involved in agriculture

• Analysis of donor programmes to support infrastructure and agriculture

• Detailed mapping and forecasting of agricultural potential

• Develop proposals for a BAGC Partnership

• Identify 5-6 “priority” investment opportunities in agriculture and infrastructure

• Propose new financing/ project development mechanisms

$0.6

m m

obilis

ed

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Can the Value Chain and Agriculture Corridor model be replicated elsewhere?

• There needs to be strong commitment and leadership from all levels of government to promote agriculture in line with CAADP

• There needs to be catalytic funding from donors and government and a willingness to work actively with private sector partners

• A number of companies see a critical need to engage in developing new models to promote agricultural growth that supports both small and larger commercial farming enterprise development

• Pre-competitive nature of the corridor allows companies to engage in addressing key constraints such as infrastructure which were traditionally beyond their sphere of influence as individual companies

Bottom line is there is a critical need to be able to show fast and real agricultural progress on the ground in Africa => and that means $$$ into projects and development of new and innovative financing mechanisms that leverage in private sector investment into agriculture

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