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Thought Leadership Series:
African Agricultural Mechanisation
August 2018
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 2
Agricultural mechanisation plays a significant role to promote farming and rural
development in Africa
• Farm machines have revolutionised agriculture and
continue to do so today.
• Some of the single biggest increases ever observed
in Total Factor Productivity (TFP) in farming have
been achieved thanks to the introduction of
agricultural machines.
• Agricultural mechanisation (AM) is a central
indispensable pillar for making farm operations efficient
and productive in so far as it determines much of the
efficiency and productivity of all the other inputs used in
crop production such as seeds, fertiliser, water, labour,
and time.
• In short, modern agriculture would be impossible
without advanced machinery solutions.
• However, the use of machinery in farming still differs
hugely across the globe.
• The United Nations Industrial Development Office
(UNIDO) has defined 12 different levels of Agricultural
mechanisation
o The highest levels of mechanisation (levels 9–12) can
typically be found in the USA and Western European
countries.
o By contrast, exceptionally low levels of mechanisation
persist in many developing countries, particularly in
Africa, which remains the most challenging region for
mechanisation. Here, average mechanisation levels
range from 5 (Morocco), 4 (Botswana) to merely 1 in
Cameroon.
Sources: FAO, CEMA
Thought Leadership Series:
African Agricultural Mechanisation
Key Take-Away:
In Sub-Saharan Africa (SSA), land productivity is among
the lowest in the world, and Agricultural mechanisation
has either stagnated or retrogressed in recent years.
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 3
Africa still relies mostly on human muscle to power farming operations in contrast
to other developing regions
• Farm power in African agriculture, especially SSA,
relies to an overwhelming extent on human muscle
power, based on operations that depend on the hoe
and other hand tools.
• Such tools have implicit limitations in terms of energy
and operational output in a tropical environment
• The relationship between hand, animal and engine
power sources in Africa compared with other
developing regions is illustrated above.
• In general, animal and tractor power have both
declined in African agriculture in the past few years,
making agriculture yet more reliant on manual
methods in a continent where constraints such as
severe health problems and demographic shifts make
manual labour a scarce and weak resource.
• These methods place severe limitations on the
amount of land that can be cultivated per family.
• They reduce the timeliness of farm operations and
limit the efficacy of essential operations such as
cultivation and weeding, thereby reducing crop yields.
Sources: FAO, CEMA
Thought Leadership Series:
African Agricultural Mechanisation
SSA has the
lowest
mechanisation
rate of all
developing
areas
20 30 25
6520
30
25
25
60
40 50
10
0
20
40
60
80
100
North Africa Asia Latin America SSA
Farm Power Sources Across Regions (%)
Human Animal Mechanical
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 4
Africa has an opportunity to catch up to other regions’ mechanisation rates even
though it missed out on the Green Revolution
Region Increase %
Asia 500
Latin America and Caribbean 469
North Africa & Near East 1 350
Sub-Saharan Africa 28
Growth in tractor numbers between 1961 and 2000:
• In the 1970s, Asia advanced in prosperity tied to
increasing commercialisation of agriculture by
supporting massive investments in irrigation,
fertiliser and high-yielding varieties (the green
revolution).
• This went hand in hand with increasing power inputs,
mainly in the form of tractors for land preparation
and diesel engines for irrigation.
• In mostly semi-arid Africa, where farming systems
were more complex across variable agro-ecological
zones, quality seed and fertiliser were not backed by
irrigation support or mechanisation inputs.
• Therefore, Africa missed out on the green revolution.
Indicator Africa 1
Ave of 9
Selected
Countries 2
Cereal yield (kg/ha) 1 040 3 348
Fertiliser use (kg/ha) 13 208
Irrigation as % of arable land 5 38
Tractors per 1 000 ha 28 241
How Africa compares with other developing regions:
Sources: FAO, World Bank
1 Africa less Egypt and Mauritius.
2 Bangladesh, Brazil, China, India, Pakistan, Philippines, Republic of Korea, Thailand, Viet Nam.
• The table on the left suggests that other developing
countries have about ten times as many tractors per
unit of farmland as those in SSA.
• Current statistics indicate that there are about
470,000 tractors in Africa, but little is known about
their age or working condition.
• The total number of working tractors would have to be
about 3.5 million (7 times more) to put Africa on a par
with other regions.
• The Table on the right illustrates the greater advances
in mechanisation in other regions compared with SSA.
• This suggests a major opportunity for Africa to catch
up with other regions.
Thought Leadership Series:
African Agricultural Mechanisation
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 5
0
10
20
30
40
No potential Little
potential
Average
potential
Great
potential
Very strong
potential
World Bank: Future potential of the agriculture
machinery market in SSA (%)
Next 5 years Next 5 - 15 years
Thought Leadership Series:
African Agricultural Mechanisation
Africa will require new models to unlock its agricultural potential through
mechanisation including ownership and rental strategies
• A World Bank survey on the importance of the
agricultural machinery market in SSA for suppliers
worldwide provided the following results:
(i) The future market for agricultural machinery in
SSA over the next five years shows very strong
potential for 49% of respondents, and
(ii) Belief of a very strong potential market over the
next 5-15 years rises to 74%.
• Improvement is however needed in all areas for
industry to engage and invest more.
• The sectors include: government; finance and market;
industry, and farmers and skills.
• Public-private partnerships (PPPs) will be very
important for developing Specialised Agricultural
Mechanisation (SAM) in SSA.
• The key areas for PPP practices are:
(i) Finance (access to credit, risk sharing)
(ii) Education/ skills (technology centres and
demonstration farms)
(iii)Communication (exhibitions and knowledge
sharing), and
(iv) Local manufacturing (clusters and assembly lines)
• Sheahan and Barrett (2014) report that the
“ownership of agricultural machinery remains rare
among African farmers, but much remains to be
learned about rental and sharing arrangement that
might enhance access for those who do not own
equipment.”
• Thus, the traditional dealership business model alone
cannot be efficient in the context of a nascent
mechanisation market in SSA
• Rental and hire-service models would form part of
the mechanisation strategy of small-holders,
individual medium sized and larger commercial
farmers, dealers, etc.
Sources: FAO, World Bank
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 6
Who is Afrilogic?
Collaborative growth...
A Boutique
Agri-Business
Consulting Firm
Remaining objective,
independent and professional
Employing a holistic
approach based
on our involvement
in the agricultural
value chain
Applying strong
internal review
processes to
ensure work of the
highest quality
Developing unique
solutions for clients’
unique reality
Sharing years of experience as
senior managers in agriculture
and agri-businesses
Providing services
to blue chip clients
and large
audit/consulting
firms
Afrilogic is a team of dedicated and highly skilled professionals that provide
consulting, financial advisory and risk management services to selected clients
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 7
Our team has first hand experience across Africa and understand the complexities
of doing business on the continent
Why Afrilogic?
Into Africa Solution Services (PTY) LTD (trading as Afrilogic)
was established to bring together the specialist service
offerings of advisory professionals operating in the African Agri-
business sector.
Our professionals have extensive experience in commercial and
developmental agriculture and related projects on the
continent. We also specialize in the financing of different
projects in the agriculture value chain.
Our team has assisted various Agri-businesses in entering or
expanding their operations into Africa. Sectors include inter
alia: animal feed, agro-chemicals, fertilisers, poultry, livestock,
commodity traders and finance.
Afrilogic also has a vast network of associates which can be
utilised to fulfil project specific requirements due to the highly
technical and specialised expertise required. These include:
• Agricultural Economists
• GIS Specialists
• Agronomists
• Horticulturalists
• Animal Nutritionists
• Marine Biologists
• Corporate Finance Professionals
• International Taxation and Financial Advisory Professionals
• Fixed and Moveable Asset Valuation Professionals
• Etc.
Our first hand experience in African Agriculture has helped us to develop not only innovative but also practical
solutions for our clients. This ability to develop implementable solutions sets Afrilogic apart from other service
providers who sometimes follow a very academic and theoretical approach.
Recent Project experience
August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 8

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Afrilogic Thought leadership on agricultural mechanisation

  • 1. Thought Leadership Series: African Agricultural Mechanisation August 2018
  • 2. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 2 Agricultural mechanisation plays a significant role to promote farming and rural development in Africa • Farm machines have revolutionised agriculture and continue to do so today. • Some of the single biggest increases ever observed in Total Factor Productivity (TFP) in farming have been achieved thanks to the introduction of agricultural machines. • Agricultural mechanisation (AM) is a central indispensable pillar for making farm operations efficient and productive in so far as it determines much of the efficiency and productivity of all the other inputs used in crop production such as seeds, fertiliser, water, labour, and time. • In short, modern agriculture would be impossible without advanced machinery solutions. • However, the use of machinery in farming still differs hugely across the globe. • The United Nations Industrial Development Office (UNIDO) has defined 12 different levels of Agricultural mechanisation o The highest levels of mechanisation (levels 9–12) can typically be found in the USA and Western European countries. o By contrast, exceptionally low levels of mechanisation persist in many developing countries, particularly in Africa, which remains the most challenging region for mechanisation. Here, average mechanisation levels range from 5 (Morocco), 4 (Botswana) to merely 1 in Cameroon. Sources: FAO, CEMA Thought Leadership Series: African Agricultural Mechanisation Key Take-Away: In Sub-Saharan Africa (SSA), land productivity is among the lowest in the world, and Agricultural mechanisation has either stagnated or retrogressed in recent years.
  • 3. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 3 Africa still relies mostly on human muscle to power farming operations in contrast to other developing regions • Farm power in African agriculture, especially SSA, relies to an overwhelming extent on human muscle power, based on operations that depend on the hoe and other hand tools. • Such tools have implicit limitations in terms of energy and operational output in a tropical environment • The relationship between hand, animal and engine power sources in Africa compared with other developing regions is illustrated above. • In general, animal and tractor power have both declined in African agriculture in the past few years, making agriculture yet more reliant on manual methods in a continent where constraints such as severe health problems and demographic shifts make manual labour a scarce and weak resource. • These methods place severe limitations on the amount of land that can be cultivated per family. • They reduce the timeliness of farm operations and limit the efficacy of essential operations such as cultivation and weeding, thereby reducing crop yields. Sources: FAO, CEMA Thought Leadership Series: African Agricultural Mechanisation SSA has the lowest mechanisation rate of all developing areas 20 30 25 6520 30 25 25 60 40 50 10 0 20 40 60 80 100 North Africa Asia Latin America SSA Farm Power Sources Across Regions (%) Human Animal Mechanical
  • 4. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 4 Africa has an opportunity to catch up to other regions’ mechanisation rates even though it missed out on the Green Revolution Region Increase % Asia 500 Latin America and Caribbean 469 North Africa & Near East 1 350 Sub-Saharan Africa 28 Growth in tractor numbers between 1961 and 2000: • In the 1970s, Asia advanced in prosperity tied to increasing commercialisation of agriculture by supporting massive investments in irrigation, fertiliser and high-yielding varieties (the green revolution). • This went hand in hand with increasing power inputs, mainly in the form of tractors for land preparation and diesel engines for irrigation. • In mostly semi-arid Africa, where farming systems were more complex across variable agro-ecological zones, quality seed and fertiliser were not backed by irrigation support or mechanisation inputs. • Therefore, Africa missed out on the green revolution. Indicator Africa 1 Ave of 9 Selected Countries 2 Cereal yield (kg/ha) 1 040 3 348 Fertiliser use (kg/ha) 13 208 Irrigation as % of arable land 5 38 Tractors per 1 000 ha 28 241 How Africa compares with other developing regions: Sources: FAO, World Bank 1 Africa less Egypt and Mauritius. 2 Bangladesh, Brazil, China, India, Pakistan, Philippines, Republic of Korea, Thailand, Viet Nam. • The table on the left suggests that other developing countries have about ten times as many tractors per unit of farmland as those in SSA. • Current statistics indicate that there are about 470,000 tractors in Africa, but little is known about their age or working condition. • The total number of working tractors would have to be about 3.5 million (7 times more) to put Africa on a par with other regions. • The Table on the right illustrates the greater advances in mechanisation in other regions compared with SSA. • This suggests a major opportunity for Africa to catch up with other regions. Thought Leadership Series: African Agricultural Mechanisation
  • 5. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 5 0 10 20 30 40 No potential Little potential Average potential Great potential Very strong potential World Bank: Future potential of the agriculture machinery market in SSA (%) Next 5 years Next 5 - 15 years Thought Leadership Series: African Agricultural Mechanisation Africa will require new models to unlock its agricultural potential through mechanisation including ownership and rental strategies • A World Bank survey on the importance of the agricultural machinery market in SSA for suppliers worldwide provided the following results: (i) The future market for agricultural machinery in SSA over the next five years shows very strong potential for 49% of respondents, and (ii) Belief of a very strong potential market over the next 5-15 years rises to 74%. • Improvement is however needed in all areas for industry to engage and invest more. • The sectors include: government; finance and market; industry, and farmers and skills. • Public-private partnerships (PPPs) will be very important for developing Specialised Agricultural Mechanisation (SAM) in SSA. • The key areas for PPP practices are: (i) Finance (access to credit, risk sharing) (ii) Education/ skills (technology centres and demonstration farms) (iii)Communication (exhibitions and knowledge sharing), and (iv) Local manufacturing (clusters and assembly lines) • Sheahan and Barrett (2014) report that the “ownership of agricultural machinery remains rare among African farmers, but much remains to be learned about rental and sharing arrangement that might enhance access for those who do not own equipment.” • Thus, the traditional dealership business model alone cannot be efficient in the context of a nascent mechanisation market in SSA • Rental and hire-service models would form part of the mechanisation strategy of small-holders, individual medium sized and larger commercial farmers, dealers, etc. Sources: FAO, World Bank
  • 6. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 6 Who is Afrilogic? Collaborative growth... A Boutique Agri-Business Consulting Firm Remaining objective, independent and professional Employing a holistic approach based on our involvement in the agricultural value chain Applying strong internal review processes to ensure work of the highest quality Developing unique solutions for clients’ unique reality Sharing years of experience as senior managers in agriculture and agri-businesses Providing services to blue chip clients and large audit/consulting firms Afrilogic is a team of dedicated and highly skilled professionals that provide consulting, financial advisory and risk management services to selected clients
  • 7. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 7 Our team has first hand experience across Africa and understand the complexities of doing business on the continent Why Afrilogic? Into Africa Solution Services (PTY) LTD (trading as Afrilogic) was established to bring together the specialist service offerings of advisory professionals operating in the African Agri- business sector. Our professionals have extensive experience in commercial and developmental agriculture and related projects on the continent. We also specialize in the financing of different projects in the agriculture value chain. Our team has assisted various Agri-businesses in entering or expanding their operations into Africa. Sectors include inter alia: animal feed, agro-chemicals, fertilisers, poultry, livestock, commodity traders and finance. Afrilogic also has a vast network of associates which can be utilised to fulfil project specific requirements due to the highly technical and specialised expertise required. These include: • Agricultural Economists • GIS Specialists • Agronomists • Horticulturalists • Animal Nutritionists • Marine Biologists • Corporate Finance Professionals • International Taxation and Financial Advisory Professionals • Fixed and Moveable Asset Valuation Professionals • Etc. Our first hand experience in African Agriculture has helped us to develop not only innovative but also practical solutions for our clients. This ability to develop implementable solutions sets Afrilogic apart from other service providers who sometimes follow a very academic and theoretical approach. Recent Project experience
  • 8. August 2018© 2018 Into Africa Solution Services (Pty) Ltd. All rights reserved 8