How small investment of time and money will pay huge dividends
I’m writing this article as a sequel to the article (not authored by me) in PGurus dated 12 August 2022 titled, “India Adopts Smart Farming Strategy To Boost Small Farmers’ Fortunes.”[1]
The world is heading towards a major food crisis, not just in the short term, but also in the medium and long term. Global warming and its after-effects appear to suggest an increasing shortage of food commodities, leading to an increase in their prices worldwide. This is a huge opportunity space.
Africa is likely to be one of the worst-affected continents, plagued already by hunger and poverty. There are challenges like shortage of water but there are many African countries that are suitable for farming and seek investment, technology, and management.[2]
India has the advantages of entrepreneurship, universities engaged in agriculture-centric R&D, recent forays into the use of emerging technologies in agriculture, and a history of a good relationship with African countries.
Yet, unstable political climate and relative lawlessness are some challenges due to which many investors hesitate to invest in Africa, in all realms, including agriculture.
Already there are successful Indian entrepreneurs who are into farming in Africa. Though they have had to face many hardships initially as they had no one to help them, they now believe it’s been worth it as it is very cost-effective to do agriculture in Africa. They continue to face challenges like marketing, in which they need help. So, their growth is limited.
Indo-African ties are quite strong. India has been conducting CII coordinated India – Africa Conclave almost every year for almost 2 decades, in which hundreds of high-level delegates from across Africa, including many at the levels of the President, PM, ministers, and businesspersons participate. India has long been offering loans and grants to many projects in Africa.
The general opinion of Africans about Indian entrepreneurs and managers is positive. Africans believe Indians take good care of the workers and build the skills of the locals vis a vis the Chinese who only dump their products and exploit them.
If the Indian government takes the initiative and offers some form of support and protection to entrepreneurs who are willing to do agriculture in Africa, with the involvement of the local African governments (also engaging with the opposition parties), as ECGC provides to industry, this could develop into a big business opportunity for India, including food for Africa, Europe, China and the rest of the world.
African banks are more than willing to help such entrepreneurs. Income from such agro-projects, whether sold in Africa, India, Europe, or anywhere else, is exactly like export earnings.
Recently, India has been trying to promote export in Rupee payment mode. Agricultural income from Africa can be brought within the ambit of this mode of money transfer. Africa will be willing to cooperate, as they are in desperate need of investment in all sectors, including agriculture. They gain nothing in particular from USD as the currency of exchange.
If we implement this successfully, we may bring some of the food items produced by Indians from Africa into India, either regularly or in times of shortages of specific items in India.
There are also huge arbitraging opportunities for food items in Africa. For example, African RCN (Raw Cashew Nuts) is value for money and is already bartered for food grains in view of the huge shortage of food commodities, like rice, sugar, edible oils, etc., at highly arbitrage prices.
Agro-industries converting food items for long-term storage and sale worldwide is another opportunity that will emerge, once our entrepreneurs start farming in Africa. Lakhs of tons of Cashew Apple (the fruit attached to Cashew from outside) get wasted in Africa as its shelf life is just about a day; it can be used to produce ethanol which can be blended with petrol and its price is on the increase every year.
If the Indian government encourages Indian entrepreneurs to become medium/ large scale farmers and agro-entrepreneurs in Africa, this could open up a new income stream for India.
Since India is a far more stable country than most of the countries in Africa, the risk of flight of capital and entrepreneurs to any of these countries is low; they are more likely to operate in Africa and repatriate their income to India.
Land in Africa is very cheap; our entrepreneurs will also have the option of getting the land on a long lease. In a manner of speaking, we can make Africa an extended land of India without really owning the land or the country, with just income accruing and clout increasing.
Since African manpower is not so well-trained/ experienced in agriculture, it’s possible to employ Indian agricultural experts, farm supervisors, and business managers in Africa, at higher salaries than in India.
Salaries to African farm labour are very low. Also, the cost of transport to export markets is low, and on relatively uncongested and uncontested routes. There are some challenges like the inefficiency of labour and poor infrastructure which can be offset by lower input costs, farming in the right places, and modern agricultural practices.
Agricultural equipments and other inputs can be exported from India, or manufactured in Africa with Indian capital, technology, and management.
In all this process, we will be proving employment and doing capacity building to lots of Africans. All this will bring African countries closer to India, which can be a major benefit politically and in terms of soft power.
The crops that can be considered, can be perishable and non-perishable food crops for humans in Africa, food and cash crops for export, food for animals, etc.
Once Indian entrepreneurs get deeply involved in African agriculture, it will throw up many non-agricultural opportunities, including in education, healthcare, digital technology, etc. All of these will create good job opportunities for Indians in the long term.
If we don’t take advantage of this opportunity, the Chinese may; of course, they may have other intentions too.
At some stage, Africa would become the main driver of the world economy, maybe in 2-3 decades, and India would have gained immensely by that time.
In sum, the Indian government should take the initiative and create an enabling environment for Indian entrepreneurs to invest in farming in Africa, implementing smart farming strategies. The small investment of time and money will pay huge dividends.
Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
Reference:
[1] India adopts smart farming strategy to boost small farmers’ fortunes – Aug 12, 2022, PGurus.com
[2] Nothing to eat: Food crisis issoaring across Africa – May 30, 2022, ICRC
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Indian entrepreneurs have not forgotten the treatment they got from Idi Amin. With the growth of rabid Islamists in Africa, the opportunity may be attractive, but the risks are too high especially for Indians/Hindus.