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Changing economic outlook -Implications for Agriculture in

Africa

Kalyan ChakravarthyYES BANK

Cape TownJune 15, 2009

Agribusiness Forum

2009


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Scope

Global agriculture scenario

Situation in Africa

Key inferences


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Population is on the rise


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Population is on the rise (contd)

Global populationincreases by200,000 people perday

75 mn Chineseurbanise every 15months


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The world isurbanizing

Metropoles are the nodes

of the 21th century networkeconomy

Knowledge and creativityare the crusial assets in thenetwork economy

ICT is key driving factor

Agro production is in transition towardsurban agriculture

The distinction between urbanand rural areas within metropoles isvanishing

Spatial organisation of industrial agroproduction systems is still based ontraditional land dependant forms


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Food consumption pattern ischanging

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

food habits and dietary

preferences

Increased demand for high value

processed foods, meat, fruits and

vegetables

Meat consumption in China hasincreased four fold (from 10kg percapita per annum to 40kg in lessthan a decade)

Dairy, Meat, Fish,Fresh FruitJuices,Beverages

Convenienc

e Foods

Diet/Function

al/Organic

Foods

Snacks/Prepare

d Meals

CarbohydrateStaples

Surviving Mass

Market

Convenience

Food Service

Snacking

Quality

Hygiene

High

Technology

Africa (Sub-

Sahara)

India, China,Latin America

Eastern

Europe

N. America, Japan,W. Europe,Australia


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and there has been a sharp decline in

the availability of key commodities


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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

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)


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Per capita arable land availabilityhas been an issue


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Nutrition security is a cause ofconcern


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Africa is well positioned to meetthese challenges

53 countries with unique valuepropositions

Land mass greater than USA,China and Europe combined

Uncrowded space ofopportunities for water, land

Demographic drivers stronger thanany other nation (including Indiaand China)

Important trading partner for theWest

Africa provides 18% of the USA oilsupply compared with 16% fromthe Middle East

Relatively insulated from globalcredit crisis


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Africa is well positioned to meetthese challenges (contd)


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Unleashing the true potential of AfricaKey imperatives

Optimization of natural resources Traditional farming methods may look sustainable but are often

not

Not just the quantum of production but the nature andquality 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 willbe vital


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Thank you!

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