East Africa’s cereals Crops: Tapping into the investment opportunities.
East African countries fail to exploit the business opportunities in East Africa’s cereal crops market. Failing in Africa and the world, the region has not featured as a major producer of cereal crops for decades. A greater part of the East Africa’s cereal crop production go to alleviate food insecurity.
In march 2017, the East African Grain Council facilitated trade deals in terms of 51 contracts amounting to 275,000 MT estimated at USD, 55,000,000 signed at the Ethiopian capital for export of grains (maize and pulses) from Ethiopia to Eastern and the southern Africa.
East Africa’s cereal crops whose varieties are well over 7 in number. Theses include maize, finger millet, sorghum, rice paddy, pearl millet and wheat. The list makes up the world’s economically importance cereal crops. The CEO CLUB EA calls for a regional realignment of strategies that will bolster investment and business within the cereal crop sector.
A dramatic growth in the demand for cereals, is predicted by the East African Grain Council predicts in the coming decades due to the high rate of urbanization and the climate induced food deficit rural areas.
The Food and Agriculture Organisation (FAO) in the 2016 June publication of the crop prospects and food situation made a similar prediction in demand.
East Africa’s stake in the global cereal market.
We shall investigate why it is a smart business move to venture into the production of cereal crops. Our analysis shall further seeks to find out how the East African region may be able to tap into the investment opportunity for East Africa’s cereal crops while looking at the following topics;
- Global cereal supply demand / projections
- Cereals utilization global projections
- Cereal trade global projections
- Global cereal stocks projection
- East Africa’s cereal crop Utilisation/consumption –production gaps
- Global prices for cereal crops
- East Africa comparative advantage for cereal corps
- Regional initiatives in regard to in East African grain sector.
- Uses and value addition for cereal crops
- Regional and International markets
- Regional Export Capacity and Readiness
- Trade Intelligence
- Expert Views
Global cereal crop production indices/statistics
FAO in there publication Cereal Supply and Demand Brief, forecasts that cereal crop production which includes East Africa’s cereal crops for the year 2017 will remain high and the month by month projection for June 2017 stood at 2 593.7, while for this month of July the projection is at 2 592.6 million tonnes having been trimmed by 1.2 million tonnes, this estimate stands at 0.6 percent below the 2016 record high production level of 2 607.9 million tonnes.
FAO in the Food Outlook; Biannual report on global food markets June 2017, attributes the decrease to deteriorating production prospects for coarse grains (Coarse grains generally refers to cereal grains other than wheat and rice — in the OECD countries, those used primarily for animal feed or brewing, such as millets, jowar, bajra, sorghum etc) and, to a lesser extent, for rice. Compared to the year 2016, much of the reduction is due to expectations of a 2.2 percent contraction in global wheat output, as well as lower barley and sorghum production.
Another offset of more than 1.4 percent expected expansion in global maize output . Driven primarily by strong rebounds in South America and Southern Africa. Plus a 0.7 percent increase in world rice production were reported. see; World cereal market indices by FAO
East Africa’s cereal crop production production .
The major wheat exporters as Argentina, Australia, Canada, the EU, Kazakhstan, Russian Federation, Ukraine and the United States.
Argentina, Australia, Brazil, Canada, the EU, Russian Federation, Ukraine plus United States are major coarse grain (millets, jowar, bajra, sorghum etc) exporters; while India, Pakistan, Thailand, the United States, and Viet Nam are major rice exporters.
Where does the above outlook put East Africa? The AIM Agriculture Market Information System website reflects only three African countries as global cereal producing contenders; these include Egypt, Nigeria and South Africa. Since December 2015, all East African countries except Tanzania but including Southern Sudan and Democratic Republic of Congo (DRC) are categorized as countries in need of external assistance for food.
The above exposition raises pertinent questions to business prospects for the East Africa’s cereal crop market and production abilities, two of which are crucial for CEOs.
- Do the East African countries have a comparative advantage to become the world’s global producers for cereal crops?
- Has the private sector in East Africa aligned itself to the big investment potential in the cereal market sector?