Agribusiness: The technological innovation stimulating productivity and growth

Technological innovation in agriculture is in progress. African  agro-industrials are aware of the strategic challenges they face and are sensitive to this new ecosystem that develops gradually. Demonstrate major food trends in Africa, is the target of the 2016 PwC auditing firm  investigation . Focus on these key trends.

 « Now the second green revolution is on. There is an urgent need for food security and, therefore, better crop yields without compromising the resources, « says Frans Weilbach, head of agribusiness for PwC Africa. However, to enable the green revolution to develop, it will, inevitably , adopt technological innovations in the field of agribusiness. Thus, yields can be improved and better security can be ensured in the food industry, worldwide. « The advances in technology and innovation are critical to the future of agriculture as agro-industry is struggling to feed a growing population in a context of climate change, scarcity of water resources and many environmental concerns. Innovative technologies and advances in productivity become increasingly important because of the increasing pressure on food systems« adds Frans Weilbach.

Adjusting  to new needs

Since the world’s population increases rapidly and significantly, but also because of a changing climate, agro-industries are making significant efforts to adopt advanced technologies. « Drones collecting data for agricultural  artificial intelligence technology enable the agricultural sector to be more specific and more effective while agribusiness pushed for an increase in profits » says Frans Weilbach. Agriculture has a great economic potential in Africa. Thus, the report of PwC auditing firm reveals that it should become a sector weighing 1 000 billion US dollars in sub-Saharan Africa by 2030. 58.8% of respondents consider investment in Africa as an opportunity for the development of their activities. The four main countries in which the agro-industrial groups plan to invest are: Zambia, Botswana, Tanzania and South Africa. It is interesting to note that this survey was conducted among agribusiness whose principal activity is the supply of agricultural and related services to major producers. Furthermore, respondents appear somewhat optimistic in terms of revenue growth for the next twelve months, compared with their expectations, a year ago. 46.2% of food businesses expect an increase in revenues from 0% to 5%, and 26.9% consider it between 6% and 10%.

Various fields to exploit

The biggest challenges for business growth that leaders have cited are: access to technology, natural resource scarcity and procurement uncertainties. The African Agribusiness claim for  more support from governments in this sector. Indeed, companies think, for example, in tax matters, governments do not provide sufficient benefits to ensure international competitiveness. They point, moreover, the lack of initiatives to encourage the training of workers in this field. « Kenya depends heavily on agriculture which is the mainstay of its economy, agriculture contributing with 29% to GDP. Kenya is the largest exporter of tea in sub-Saharan Africa and one of the first producers of black tea in the world. The increase in the number of private tea factories, independent KTDA or large multinationals in the country, is one of the significant developments in the agricultural sector. The contribution of the tea industry to the Kenyan economy should continue to grow and profits will be increased with the adoption by certain factories of renewable and less expensive energy, such as hydropower, « said Edward Kerich , director of PwC Kenya. For its part, Rasheed Rahji, PwC partner in Nigeria, said that « agriculture has contributed  with 24.18% to real GDP of Nigeria, in the fourth quarter 2015. This is primarily due to mechanized farming and other activities of the agricultural value chain. This is fueled by the government focused on agribusiness as a vector of the fight against poverty, and partly by ongoing investments by commercial farmers. Given the decline in international crude oil prices over the past 18 months, the government has encouraged agricultural exports as an alternative source of foreign exchange. A number of challenges remain to be overcome in the agricultural sector. These include inadequate infrastructure, access to credit and training for small farmers to modern farming techniques. Granting special attention to these areas would certainly enhance food security in Nigeria and increasing its GDP and its foreign income.  »

Develop health and safety

The African Agribusiness appears to have focused on risk management. 95.2% of those who responded to the survey, periodically, conducted formal risk assessments. Furthermore, 53.8% are preparing an integrated evaluation report. Processes and modeling of human resources (HR) start to evolve with greater emphasis on technology to improve networks and data. Agribusiness companies expect their HR teams they provide not only basic services and transactional activities, but also a strategic vision and a collective intelligence. The companies said that the internal HR capacity, conflicts at work, employee rotation and communication between employees and management were the most important issues in human resources.

Coping with climate change

Global warming is an international reality but agriculture seems to be very impacted. For some  agro-entrepreneurs, climate change will have a significant impact on agriculture in sub-Saharan Africa. 41.2% indicated that there will be a significant impact in the short term and 35.3% that this impact will be seen in the next twenty years. Furthermore, 33.5% of the sector leaders said consider investing in renewable energy, while 29.4% have already done. Are mainly concerned with investment, the areas of solar energy and biogas. The objectives of profitability of farms and agricultural activities are forcing the industry to adopt, early, new technologies. The drones, for example, are real tools for green technology. Global research also shows that artificial intelligence (AI) in agriculture will be the key factor in the increase in global production capacity to meet the demand of a growing population. It is the same for precision farming, for example. 76.5% of respondents agree that artificial intelligence in agriculture contribute, significantly, to increase capacity in Africa, in the coming decade. Only 47% of companies have already invested or plan to invest in the development of agricultural resources for primary production through artificial intelligence. 64.7% of respondents believe that the costs related to the implementation of these technologies are obstacles to use of AI. « Technological innovation will certainly be a catalyst to enable the African agribusiness to move to the next level. Food companies who seize the opportunity to create new opportunities through technology will win: they will be able to achieve their strategic goals faster and more efficiently « assures Frans Weilbach.

All the surveyed agribusinesses  are sensitive to food safety. They ensure monitoring by the availability and accessibility. The study also reported that their agribusiness contributes to socially responsible investment (SRI).


By Darine Habchi

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