“Agriculture is Africa’s lifeline. It holds the key to the future and yet is not performing as well as it should”, said moderator Shada Islam, Director of Policy at Friends of Europe, at the Development Policy Forum (DPF) High Level Dinner Debate, held in Brussels on the eve of the European Union (EU) – Africa Summit. Less than 4% of African agriculture land is irrigated and cCrop yields are still lagging below 3 ton/Ha due to several factors that the African farmer cannot solve but the main problem remains the lack of access to agriculture fiance that would enable correct modern irrigation and enough agriculture inputs (fertilizers, pesticides, etc). With yield potentials of 11-12 ton/Ha (cereal case), there is a large room for advising a business model based on "FERTIRRIGATION" as a service delivered to farmers by private investors, with the land and the crop becoming long term collaterals of the investment. It is evident that more studies are needed for the technical feasibility on a localized level, and as well for other complementary risk coverage solutions such as the recouse mechanism when the farmer sells the crop to a competitor.
Irrigation is one essential factor counting for high and predictable crop yields. Nevertheless irrigation needs power to drive pumps and other irrigation devices, which is not readily available in Africa. But Africa in one of the best sun blesses spots in the world! And ultimately solar energy is a free, quasi-pertutual and sustainable power source. We have identified and developed relationships with solar energy service providers basing their interventions in Africa on Power Purchase Agreements, on equipment leasing and on classic rental schemes (some information at www.energyforafrica.ga). Incorporating such players in the business set up will give out an efficient winning scenario.
Irrigation water may be mixed with fertilizers and other inputs to further solve farmer's limitations, reducing its work just to soil preparation for planting, plant care during the growth period, and physical security if irrigation equipment.
The harvested crop will be shared between the farmer and the investor at let's say 60% for the investor and 40% for the farmer. To complete the set up, a storage facility will be established as a transit storage of creal grains collected from farmers and sold later on (with an extra storage transaction fee and at increased market price), to market players such as the East Africa Grain Exchange. Because the investor is the exclusive buyer for its contractual farmers, the farmer will have a sure crop outlet paying a correct current market price. The farmer will be making a good transaction where the gain will be around 100% compared to its production before the investor intervention, because the yield will have increased from 3 to 11-12 ton/Ha. The investor will also make a great ROI after paying off all operational costs.
Any input enabling to ameliorate this easy to duplicate and impact agriculture business concept that I wish to become a daily reality in Africa is welcome. I personally see this approach as a business bing bank in African agriculture. For more information please contact me at email@example.com