As Africa moves through a structural transformation driven by agricultural innovation, several companies are capitalizing on the shift. Technology upgrades will allow African farmers to farm more land in less time, helping to feed the continent’s booming population. Improved yields, labor productivity, and economies of scale will reshape the African continent.
Sub-Saharan Africa has considerable room for improvement in cereal production. It has 2 million square kilometers (770,000 sq. miles) of arable land, compared with 1.6 million kilometers (~620,000 sq. miles) in the US. It dedicates nearly 50% of its land to cereal production, compared to less than one-third in the United States. Yet, as shown below, its cereal yield is only 31% of that on US farms, or 1.3 hundred million metric tons compared to 4.2.
Labor productivity is the primary reason for the difference in yields between Sub-Saharan Africa and the United States. As shown below, 75% of Africa’s 382 million workers are employed in agriculture, compared with 2% in the US.
The agricultural yield produced American farmers is almost 400 times greater than their African counterparts, as is illustrated below. In sub-Saharan Africa, the average worker farms 0.7 hectares (1.7 acres) of land, producing 0.5 metric tons (1,100 lbs.) of cereal while the average U.S. farmer works 100 times more land (67 hectares or 165 acres), and produces 380 times the output (173 metric tons or 381,400 lbs.). Clearly Africa has tremendous potential to improve its productivity.
Were African farmers to improve their yields to just 20% of the US average, they would enjoy a 75 fold increase in cereal supply. Africa’s population is predicted to more than double from 1.1 billion in 2014 to 2.4 billion in 2040, so higher agriculture yields are becoming imperative.
Better machinery and genetically modified seeds should enable Africans to farm more land in less time. Currently, sub-Saharan Africa farms 8.6% of its total land mass. If technology could increase the total land farmed to 10.8%, the global average according to the World Bank, its farmed land would expand by roughly 500,000 square kilometers (193,000 sq. miles) of farmland, more than the total farmland of Canada. If it could jump to farming 17.7% of its total landmass, the US percentage, Sub-Saharan Africa would add 2.15 million square kilometers (830,000 sq. miles) of farmed land, more than all of the farmed land in the United States, as shown below.
Many companies, including John Deere DE, Agco Corp. AGCO, and CNH Global CNHI, have made major investments in Africa in an attempt to capitalize on the incredible potential to increase agricultural productivity. Agco is completing a $100 million investment, and John Deere is investing to become Africa’s premiere tractor brand. Dupont DD, Monsanto MON and Syngenta SYT are investing heavily in fertilizer, seeds, and precision agriculture technology to turn fallow land into fertile land in what could be the largest agricultural transformation of the 21st century.
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