Why Agricultural Support Is Highly Needed For Economic Growth
There is no doubt that agriculture can unlock a country’s potential and transform its economy to growth and sustainability.
The development of all agricultural value chains can enhance efforts towards a stable economy as has been the case with a number of countries globally. This includes supporting and investing in innovative start-ups run by young entrepreneurs.
History shows that agriculture, particularly agribusiness and agro-industry sub-sectors, are drivers of economic growth.
Agribusiness, also known as agripreneurship, has a huge potential to bridge the existing employment gap in developing economies as unemployment remains a major concern for many young people – both educated and uneducated. Further, agriculture guarantees food security.
Records show that overall, food and agribusiness is a $5 trillion industry representing about 10 percent of global consumer spending.
Small and medium enterprises (SMEs) employ the largest numbers of people globally with evidence suggesting that this is particularly true in the food industries of both developed and developing countries.
Over the years, the United States has been keen on the sector, investing heavily in the agribusiness industry resulting in one of the largest and most diverse industries within the US economy.
It includes agricultural producers and wholesalers, food manufacturers and wholesalers, and supplementary activities, such as crop and livestock support services, agricultural machinery manufacturing and scientific consultants.
In broader terms, the industry involves producing agricultural products, transforming them into consumable goods and moving them to market.
Generally, sizable improvements have been undertaken in recent years and have enabled an abundant supply of food in many parts of the world.
Nevertheless, feeding the global population remains a critical issue. According to reports, if current trends continue, caloric demand will have increased by 70 per cent by 2050 while crop demand for human consumption and animal feed at least double.
At the same time, more resource constraints will emerge. For instance, 40 per cent of water demand in 2030 is unlikely to be met.
Approximately 75 per cent of Africans rely on agriculture for their livelihoods with production being the most important economic sectors for the majority of countries.
Agribusiness and agro-industries account for more than 30 per cent of national incomes as well as the bulk of export revenues and employment. Scaling up agribusiness could be the next growth frontier.
Several key opportunities are within reach in agribusiness with underlying factors represented by the diversification of sources of growth to curb the pattern of overreliance on primary commodities to generate export revenues.
Africa’s population growth has to be turned into an asset. Overreliance on employment cannot be the way out but actually, the huge population can be a great factor in production.
Technology adoption and investment will be vital in enhancing agribusiness.
In essence, the digital revolution has reached every part of the world, every aspect of society and commerce. The agriculture and food system is also ripe for a transformation.
Opportunities from investment in infrastructure will also help overcome the current challenges associated with poor linkages between farm-level production and downstream activities, such as processing and marketing.
Robust and enabling policies are very essential if any good strides are to be realised. It will help remove existing constraints on agro-industrialisation and encourage investments.
Coupled with a conducive business environment and strategic support from governments, agribusiness can reach its full potential.
Digitisation is an emerging opportunity offering a combination of digital payments for the procurement of crops from smallholder farmers, digital farmer records, information and track and trace services.
Digital tools can enable agribusinesses to improve control and monitoring of operations, transparency of transactions and the establishment of effective communication channels, both internally as well as with smallholder suppliers.
The East African region is majorly agricultural-based with the industry being a vital element in economic growth and provision of jobs for citizens. Governments can rely on agribusiness because it can serve as a base on which the region’s industries are anchored on.
Most of the region’s countries have an ideal climatic condition for agriculture. With more focus on agribusiness and good support to make it big, the region can realise its full potential.
Public-private partnerships should also be employed in the agribusiness sector.
Mr Diaz is a director at EABC and Brand Africa Trustee.