Positive outlook for Zambian and Kenyan agriculture from Absa

storage, grain, harvest, Absa

Absa’s agricultural outlook, presented in Centurion on 27 November, emphasised their predictions for Kenya and Zambia’s agricultural sectors over the next 5 years.

“The purpose of the outlook is to inform producers of changing trends in the short term, so that they can be vigilant of possible changes in the near future and adapt accordingly,” said Jacobus Well, head of Absa AgriBusiness Africa.

KENYA

The agriculture sector is the backbone of Kenya’s economy as it is one of the largest contributors to gross domestic product (GDP). Kenya’s GDP growth for 2017 was down to 5.2% from last year’s 5.9%, however it is expected to grow at an annual average of 5.5% until 2020.

Government financial support to farmers and the widespread use of genetically modified (GM) seed are expected to boost the country’s economic growth in the near future. However, drought conditions and the possibility of El Niño weather conditions in 2018 are expected to have a severe impact on crop yields.

Coffee and tea are Kenya’s most produced and exported product. The country’s climate and geographic location allow for the production of a variety of products, such as coffee, tea, grains, sugar and other crops.

“Financial support from government enables producers to utilise more drought and disease-resistant varieties which can be used to prevent coffee production to be affected by drought in the short term,” said Thapelo Moleleki, manager of agricultural financial solutions RoA, Barclays Africa.

Coffee production is estimated to reach 61.75 million 1 kg-bags in 2017 and is expected to grow by 16% (71.6 million) by 2021. Local coffee consumption currently sits at 6.3 million 1 kg-bags and is expected to increase to 7.61million 1 kg-bags by 2021. This is driven by the increasing affordability of coffee.

Wheat production dropped from 420 000 tons in 2016 to 380 000 tons in 2017 due to the drought. However, an increase of 12% is expected by 2021.

The widespread use of GM seeds could result in an increase of 34% in maize production by 2020/’21. Wheat and local maize consumption is expected to increase as local production and the demand from the livestock industry improves.

ZAMBIA

Agriculture is a main contributor to Zambia’s economic growth, but it remains affected by the inefficient rural infrastructure and drought. The government increased the budget allocation for agriculture with a large part of the funding going to its Farmer Input Support Programme, which is aimed at increasing efficiency of infrastructure.

The mining and agricultural sectors are the main contributors to Zambia’s gross domestic product (GDP). GDP growth currently stands at 4.1% from 3% in 2016, and it is expected to grow at an average of 5.1% over the next 5 years.

Sugar remains the country’s main agricultural export product, but weakened currency and electricity shortages is expected to limit production growth in the short term. The Zambian government has also introduced a fortification policy, which requires vitamin A to be added to sugar sold on local market.

Despite suppressing local consumption with higher prices, Zambia remains a competitive export market for sugar. The industry is set to grow by 11% to 493 000 tons over the next 5 years due to favourable weather conditions, improved yields and increased international demand.

Wheat production has suffered since 2015 due to a lack of steady electricity supply, but it is set to remain stable over the next 5 years, said Ray van Rooyen, head of sales enablement for Barclays Africa Agribusiness.

Maize production is expected to grow by 12% over the next 5 years due to favourable weather and high demand. “Zambia’s agricultural and food outlook for the 5 five years remain positive, with the economy set to recover during 2017 and 2018,” said van Rooyen.

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