18 March 2022 - Sub-Saharan Africa remains a strategic growth market for animal nutrition businesses. As GDP grows in the region and the middle-class expands, consumers want to improve the quality of their diets by consuming more meat, milk and eggs.
Growth figures differ considerably between markets in the region but in general there is a growth trend in animal and feed production, albeit somewhat hard to pinpoint in the short-term. In the long-term, however, the confidence in the growth potential of this market is unflinching.
Feedinfo recently discussed the Sub-Saharan Africa market potential with Prof. Adugna Tolera, an animal scientist specialised in animal feeds and nutrition, who currently serves as a professor of Animal Nutrition at the School of Animal and Range Sciences, Hawassa University, in Ethiopia. His research and development work experience focuses on animal feeds and nutrition, livestock production systems, feedlot design and management, feeding and management of meat and dairy animals, nutrition-health interaction, sustainable intensification of mixed crop-livestock production, rangeland management and climate change. He provides consultancy services to different international and national organisations.
The conversation below between Prof. Tolera and Feedinfo editor in chief, Simon Duke, has been edited and condensed.
[Simon] Adugna, by 2030, it is anticipated that the middle-class population in developed markets will have declined. China will have overtaken Western Europe + United States. At the same time, the number of people entering the middle-class consumer market in emerging markets is forecasted at 1 billion. South Asia and Sub-Saharan Africa will be vying for the title of the ‘world’s most populous region’, Sub-Saharan Africa’s middle-class will have grown exponentially, and companies in any type of industry will seek to cater to market trends in these regions. Given the correlation between increased middle-class consumer spending and animal protein consumption, what do you expect for animal protein consumption in the region?
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[Adugna] I think the trend observed in Sub-Saharan Africa not only applies to the growing middle-class population, but to the overall population in the region. The region has a rich cropland. However, there is only a small amount of grazing land that is used for animal feed. As a result, there is a shortage of traditional sources of animal feed in this part of the world, and subsequently animal protein. At the same time, due to the increasing middle-class population and urbanised population, demand for animal protein is increasing. The shortage is even more significant for low-income groups, because they do not have access to animal protein at all. The increasing demand for animal protein will lead to demand for a good quality feed supply, which in turn will help boost the productivity of farm animals. |
Prof. Adugna Tolera However, local commercial feed production is, in general, underdeveloped. And in some places, it is even at very early stages of development. Feed supply is a real constraint for increasing animal productivity. As a result, there is a shortage of animal protein at all levels.
[Simon] According to Alltech’s 2022 Feed Survey (published in late-January), industrial compound feed production in Africa grew 2.4% last year despite challenges caused by high raw material prices, foot and mouth disease and geopolitical tensions. Feed consumption in Africa is still much lower than in any other part of the world, which indicates the potential for growth. How has the industrial Sub-Saharan Africa compound feed sector evolved in recent years compared to small-scale, on-farm feed production?
[Adugna] With a few exceptions such as South Africa, Morocco, and other countries with larger scale production units, industrial compound feed production is non-existent in some countries, and at very low stages of development in others. Many farmers mix their feeds on-site as it is cheaper for them to do it that way, but such practices do put a question mark on feed quality. Quality assurance is becoming a more important issue in the region.
The challenges are the supply of raw materials, their availability, as well as high prices, which are discouraging the feed processing plants from using some ingredients because that will increase the overall cost of the feed. Unless there is a linkage between the feed industry and the commercial livestock sector, feed industries aren’t incentivised to invest if the market simply isn’t there. The development of the commercial livestock sector and the development of the feed industry must go hand-in-hand.
As the sector develops, there is a possibility for working with different industries to expand sources of raw materials. For example, there is scope for the expansion of agro-industry by-products as industries like the brewery business are growing. By doing this, there is a possibility of reducing costs, which in turn will likely encourage the development of the feed sector and demand for commercial compound feed by livestock producers if made more affordable.
[Simon] Animal production becomes more sustainable via better nutrition of the animals and use of nutrient-rich feed ingredients and feed additives. But these are mainly imported at a high cost and cash-strapped farmers can choose to not use them. To what extent do you think the supply of these products ought to be more local?
[Adugna] If we expand the feed industry and make the main feed ingredients like corn or soybeans available locally, the less you will need to import. I think that should be the main focus of the region. There is a potential to produce these different resources at the regional level, rather than in each country at much lower costs much than importing from long distances. If we think regionally, I believe we can develop the industry to a certain extent. We should start with the main feed ingredients, make sure that they are available, and gradually weave in feed additives and premixes. If we identify what's locally available and what can be produced locally, I think that will reduce the costs significantly.
[Simon] To help accelerate Sub-Saharan Africa’s animal agriculture revolution and to make the industry less reliant on imports or on lesser raw materials, can we expect that, not only that livestock and poultry farms continue to modernise, but also new set-ups will be launched by animal nutrition companies wanting to establish manufacturing bases more locally?
[Adugna] I think both African companies and non-African companies have a role to play by teaming up. Feed industries in some African countries which are relatively well developed can widen their market presence and expertise to neighbouring countries and expand horizontally.
[Simon] Why do you think we are moving at a snail’s pace? Why aren’t feed companies investing in significant ways?
[Adugna] I think there are companies who want a quick return on investment. As mentioned, the development of the commercial feed sector is linked with the development of the commercial livestock sector, which is faced with many restrictions, market barriers and challenges. If feed lot activities are low, demand for feed is hampered. When we venture into feed industry development, I think we also need to address the overall livestock development issues in each country so that livestock development goes hand in hand with feed industry development.
There must be an urge to increase animal protein production in each country. And only if a country is going in that direction aggressively, then there will be a huge demand for manufactured feed. We need to move from subsistence-oriented production or maintenance level production to improved productivity levels.
[Simon] Which countries in sub-Saharan Africa hold the most promise?
[Adugna] You can see a development of the feed industry, but it is gradual, and in some of the places it is very slow. Traditionally, livestock production is based on grazing and not on commercial feed, so that approach has to change. Moreover, the use of commercial feeds and the improving productivity needs to be demonstrated in terms of improving financial viability and so on. The largest potential lies with those countries with huge livestock resources as well as high populations where you have high demand and increasing urbanisation. Those are the areas where you are likely to make more impact.
[Simon] What is your advice to foreign animal nutrition firms who may be wanting to invest more in Sub-Saharan Africa but hold back due to the geopolitical concerns or the fear of military coups? Does the potential for investment remain high despite these concerns?
[Adugna] There is a potential. But I think to realise this potential, companies should work across various sectors and maybe there should be more linkage between the ruminant, poultry and feed sectors, as well as the raw materials producers. Together, they can look at the potential for sourcing of raw materials.
Together, companies can also assess potential local partners who can assist in local business development, bring together the technical knowhow and some financial input, as well as local knowledge of local sectors. I think that is how they can be more effective and more successful.
