Africa: Growth And Challenges In The Animal Feed Sector
People often say that Africa has great potential to increase agricultural productivity and productivity. This is also needed because the continent’s demand for animal protein is rising. Here, we will understand the current situation and investment opportunities in some African countries.
Africa is considered a continent that needs to be paid attention to in the 21st century. There are currently 1.2 billion inhabitants and it will reach 2 billion people when it’s estimated by 2050 it, but people questioned where the emphasis will be placed. Housing, Infrastructure, Mobile Technology, Food Production?
Feed and food production in Africa
Let us focus on efforts to strengthen feed and food production in Africa. African countries are considered to be oasis for the purchase of various agricultural products such as cocoa, cashews, coffee, cotton, rubber, tropical fruits or recent flowers (roses). For example, the eastern part of the African continent is known for its cashew nut production (Tanzania) and the rose business (Kenya and Ethiopia). We have seen investments in these products almost made by investment companies outside Africa. Also investments are made in grain processing for example.
This company based in , Sedima,Senegal is established in 1976 with only 120 chicks,,but it has seen many improvements and investments over the years. Photo by Xavier Cadiou
Rise of food chains and supermarkets
Africa is often referred to as a great potential continent as a result of the central part with Sunshine, the green and wet parts and the huge land space. However, animal husbandry and agricultural production still lag far behind Western countries. Meanwhile, the demand for global food is rising, and demand in developing regions such as Africa has also increased. In Africa, the number of people belonging to the so-called "middle class" is increasing, which means that this group of consumers has more money for food (mainly meat and eggs) on average. This has been reflected in the number of livestock farms established over the years and the arrival of Western fast food chains such as KFC (KFC) in Ghana, Ivory Coast and Senegal (soon). Chain supermarkets like Carrefour have also entered Africa (opening branches in eight countries in West Africa and Kenya).
Investment in steel mills and poultry farms
But not only restaurant chains and supermarkets sprout in Africa. In West Africa and East Africa, investment in animal feed mills, poultry houses (for broilers and egg products) and slaughterhouses is currently booming. We also saw an increase in the output of poultry feed, cattle feed (Table 1) and aquafeeds. The investments in Africa are done by either local people, international agribusiness firms that are already involved in business in Africa, international agribusiness firms or funds looking for new opportunities or African countries (such as Morocco or South Africa) that are investing in neighbouring countries. An interesting example is Sedima, an integrated poultry producer in Senegal. Sedima, created by Babacar Ngom, can be considered a giant of French-speaking countries in West Africa. Founded in 1976, Sedima has only 120 chickens and has seen many improvements and investments over the years. Last year, new feed mills which could produce 40 tons feed every hour were opened . Besides,the company has its own slaughterhouse with Stork equipment and can produce 4000 to 6,000 chicks per hour. The company now also offers broiler meat with KFC. The first restaurant of them is about to open. Today, Sedima is a leader in the Senegal market with a chicken market share of 35% a day and an animal feed market share of 29%. This is a perfect example of a small local company in Africa and has grown into a very successful large company, partly fuelled by investment money from different sources. Now because the company has become so successful, it has begun investing in Mali (a hatchery and a feed mill) and two other Central African countries.
Large plans for US and Singapore companies
What's next? Will there be more examples like Sedima in the near future? Or is this still the only success in Africa? Many countries are eager to start operations in Africa or sell their existing products (such as feed additives), so it is expected that more agricultural companies will flourish in the coming years. Agricultural companies can share this share by investing locally, buying existing feed mills, premixing companies, distributors, or building new farms or feed mills from scratch. It is very likely that Africa will see more of this in the near future. In February 2018, the United States Seaboard invested 357 million U.S. dollars in Côte d'Ivoire and Senegal and acquired 2 factories of the Mimran Group to increase its influence in the grain trade field in West Africa. The purchased factory mainly produces flour and animal feed. Through this acquisition, Seaboard currently operates food-related businesses in 41 regions in 22 countries in Africa, South America and the Caribbean. Another example is Olam, which is headquartered in Singapore and has close links with Africa. Oran’s story began in Nigeria in the late 1980s. In 2017-2018, the group opened two state-of-the-art feed mills with a capacity of 40 tons per hour and commissioned two large-scale investments ($150 million) for fish and poultry farms, hatchery and Storage facilities. Orland is expected to soon reach a feed production of approximately 600,000 tons (fowl and fish) each year. Olam is actively involved in the development of aquaculture in Africa (mainly in Nigeria). Production of fish is one of Orlan’s plans to target Africa’s growing middle class.
In Africa, the number of people belonging to the so-called "middle class" is increasing, which means an increase in the consumption of eggs.Photo by:Xavier Cadiou
There are many opportunities for feed additives
The examples mentioned in this article give the hope that Africa's potential in food and feed production can actually translate into real business. At the same time, the African continent faces many challenges. Bird flu is one of these major problems. Some countries, such as Senegal, have started to inoculate poultry vaccines. Some other countries, such as Cameroon, are still in recovery mode after a large-scale outbreak in 2016-2017. However, despite the challenges, the overall trend is growth. The consumption of broilers and eggs is still very low (2 to 5 kg per household, depending on the country), which means that it is possible to increase the consumption rate of poultry products. In addition, the egg industry does not need a cold chain approach, which is very beneficial to African countries. International participants still have a lot of room for activity in the African agricultural sector. Investment in Africa comes is mainly from the United States, Singapore, Israel, Lebanon, India, the Netherlands, France, Germany and many other countries. In the area of premixes, there are still many opportunities for the distribution of concentrates, feed additives and animal health products. There are many animal health product distributors in Africa that sell products from Europe, the United States, or India. However, these resellers started to use feed additives to diversify their businesses. As they learn more about feed additives as an effective solution to reduce livestock antibiotics, we will see that these distributors will not only sell veterinary drugs. These feed additives are sometimes sold directly to farmers, so training and investment in knowledge of how these ingredients work and how they are used are also important. It can be concluded that Africa will have a strong growth path in the next 20-30 years. With Africa's population growth and economic improvement, and partly from African countries as a driving force for investment, Africa may have the greatest potential.