Tag Archives: South Africa

Zambia’s push for more protein

Investments in meat and animal feed production reflect changing diet in this African country.

With the exception of a few conflict-torn pockets, since the turn of the century sub-Saharan Africa has achieved much greater availability of carbohydrates despite the world’s highest rates of population growth. Gains in production of cereals, mainly corn, and root crops, principally cassava, are a big part of the positive caloric equation. Another is importation of low-cost rice and wheat to feed burgeoning urban areas. Under-nutrition rates above 30% in many countries across the vast region, per FAO data, are still high but have been coming down.

The next stage, greater intake of protein foods, particularly animal-sourced ones, is well underway in many countries due to investments in feed milling, oil-seed crushing, layer and broiler farms, aquaculture, improved dairy and beef cattle herds, pasteurization plants, feedlots and slaughterhouses.

Aller Aqua’s fish feed plant in Siavonga, Zambia. Photo courtesy of Famsun Group.

A recently published report uses Zambia as a case study of the pan-African trend toward greater availability of commercially produced, affordable, protein-rich foods. U.K.’s CDC Group, an international development bank, commissioned SAIPAR, a Zambian research institute, to carry out a comprehensive analysis of key value chains.

One major conclusion is that though Zambians overall have benefited from greater food production, as evidenced by reduced rates of childhood stunting that is partly due to insufficient dietary protein, much could still be done to make commercially-produced, animal-sourced foods (ASF) more accessible to the rural poor who still make up over half the country’s population of 16 million.

“Low income consumers spend less per household, but still account for a large proportion (43%) of the overall market,” the study said.

Total spending on food by these households, mainly composed of smallholder farmers in villages, amounts to around $500 million per year, according to data from Zambia’s 2015 Living Cost Monitoring Survey. Since the majority of these households grow their own corn and cassava, most of their spending is on animal proteins like dried fish, live chickens and milk from village cows.

FEED INPUTS

Zambia’s relatively modern agriculture and food sectors are well-positioned to respond to demand for more accessible and affordable ASFs. Self-sufficiency in both soybeans and corn underlies a thriving feed milling industry. The USDA estimates that 600,000 tonnes, over one quarter of total corn production, now goes to domestic feed consumption. Commercial producers of compound feed still take less than half, with most non-food corn used by the thousands of small and medium broiler farming enterprises.

Government purchase, transport and storage of smallholder corn and allocations to industrial roller mills amounts to an indirect subsidy for those companies that produce feed as well.

Soybean production peaked at 351,000 tonnes in 2017 and dropped to 321,000 tonnes in 2018, per the USDA. Its growth directly parallels the rise in demand for compound feed for the commercial production of protein foods. In 2002, soybean production was only 2,000 tonnes.

Large commercial farmers with pivot irrigation accounted for the initial surge in soybeans, often cutting back on wheat acreage. But when prices soared, many smallholders also began planting soybeans in place of corn.

Soybean farmers face major challenges. One is severe price volatility. From 2017 to 2018, farmgate soybean prices fell from over $400 per tonne to less than $150 per tonne but have partially recovered. The glut in soybeans resulted in part because Zambia as a landlocked country has no easy export markets. Plantings were reduced following the bumper harvest and price collapse.

Strict non-GMO laws also mean lower soybean as well as corn yields, resulting in higher overall feed costs in comparison to South Africa, which has no such restrictions and where soybean production has doubled. The GMO restrictions also mean that soybeans or soybean meal cannot be imported from South Africa when prices spike. Only India is an alternative source of non-GMO corn.

SOYBEAN CRUSHING

The presence of several soybean crushing companies is a competitive advantage for feed production. After South Africa, where soybean production has taken off, Zambia has the most soybean crushing capacity of any country in sub-Saharan Africa.

Newcomer Global Industries Limited is now the country’s largest oilseed crusher with a 1,000-tonne per-day capacity plant in Ndola in the Copperbelt. It started up only in 2017 with investment from India, but, according to industry informants, has won a large share of the market for the high-protein soybean meal demanded by expanding aquafeed production.

Illegal imports of cheap palm oil from southeast Asia in addition to competition for the smaller 2018 crop have squeezed soybean crushers’ profitability. In late 2018, Cargill shuttered and began mothballing its 500-tonne-per-day capacity crushing and vegetable oil refining plant in Lusaka, which it had acquired in 2015 from Zambeef and upgraded.

FEED MILLING

Both large and small animal protein producers benefit from a sophisticated feed milling sector that consisted of eight companies whose output of a range of compound feed products reached 300,000 tonnes in 2017, according to Alltech’s 2018 global feed survey.

About 45% of feed production is for poultry, which includes 90% for broilers. Large layer farm operators mostly mix loose feed themselves, grinding corn in hammer mills on site and buying soybean meal and vitamin and mineral premixes.

The two new dedicated aquafeed producers that started up in late 2017 will increase national compound feed output by at least one-third within a year or two and greatly enlarge the aqua feed share, as farmed fish production continues its double-digit growth. Danish multinational Aller Aqua partnered with local company Yalelo to build a fish feed plant, commissioned in 2017, with capacity of 50,000 tonnes per year in Siavonga on the shore of Lake Kariba. It is now undergoing an expansion to add a second 14-tonne-per-hour line supplied by Famsum Group.

Norway-based Skretting, a subsidiary of Nutreco of the Netherlands and the top global fish feed producer, has partnered with Lake Harvest, a subsidiary of African Century Foods, to build a smaller, competing aqua feed plant in Siavonga, also made by Famsum.

As in the rising aquaculture sector, some of the poultry feed millers are parts of fully integrated operations that include day-old chicks, broiler farms and slaughtering lines. These include Ross Breeders and Nutrifeed, which are subsidiaries of Country Bird Holdings Ltd. of South Africa and Zambeef, Zambia’s largest agribusiness company, which produces Novatek brand feed.

FISH, POULTRY AND BEEF

The SAIPAR study reveals that consumption of farmed fish, predominantly tilapia, increased rapidly in the last decade to surpass poultry as the most important ASF in Zambia. This development reflects the efficiency of global aquaculture value chains with their improving aquafeed conversion rations. The initial surge in consumption resulted from the increase of frozen fish imports from 8,000 tonnes in 2011 to 127,000 tonnes in 2016.

The second stage was the rapid expansion of large-scale, caged fish farming in Zambia, concentrated in Lake Kariba, the world’s largest reservoir by volume, separating Zambia and
Zimbabwe. Domestically farmed fish volumes are likely to triple from 31,000 tonnes in 2016 to 100,000 tonnes in the coming year or two. Production in 2011 was 9,000 tonnes.

The poultry sector is highly developed but still in need of expansion in order to reach more under-served consumers in rural areas, according to SAIPAR.

Commercial egg production is an earlier Zambian success story with competition and investment lowering production costs and market prices, enabling a rapid increase in consumption. A handful of both locally and internationally invested layer farm companies, mostly in Copperbelt province, account for over two-thirds of egg production. The largest of these, Golden Lay, has over a half-million hens in lay.

Zambia now has annual output exceeding 1 billion eggs with at least 10% exported via informal cross-border trade to neighboring Katanga province of the DRC. Zambians consume over 60 eggs per capita per year, much higher than the average for sub-Saharan Africa, but still well below many developing countries elsewhere.

Efficient distribution by layer farms and traders directly to township markets means that retail egg prices hover around 10′ per piece, which is low by international standards.

Abundant soybean meal, corn and bran help keep layer feed prices in check. Globally feed is usually twothirds of both broiler meat and egg production costs. Raw material prices can be volatile due to currency devaluations and production swings.

CONCLUSION

In sub-Saharan Africa, production and consumption of animal source foods like eggs, chicken, fish, beef and milk has been on the rise as a result of the strong economic growth of the last decade and greater disposable income.

Across the continent, investment in protein food production has surged to meet demand, mostly coming from the relatively well-off and burgeoning urban population. In Zambia, the commercial production and supply of ASFs is largely limited to a corridor from Lusaka in the center northward to the Copperbelt province bordering DRC where the urban population is concentrated and percentage of population below the poverty line is much less.

By focusing on easier to reach city dwellers, are commercial processors missing an opportunity to profitably meet the protein needs of smallholder farm households that are typically under-served by the food industry?

Zambia, which as a lower middle-income country is a step higher up the development ladder than most other sub-Saharan countries, would seem to show that there is much room for corporate players to extend their marketing and distribution strategies to encompass more of the rural poor.

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IAOM MEA celebrates 25th anniversary

Middle East and Africa District attracts more than 600 delegates from 45 countries to its annual conference  in Cape Town, South Africa.

The International Association of Operative Millers’ Mideast and Africa Conference (IAOM MEA) returned to Cape Town, South Africa to celebrate its 25th year Dec. 3-6, 2014. Over 600 delegates, exhibitors, and speakers came together from 45 countries during the three days to renew old ties, establish new relationships and to exchange the latest  information on technical developments in milling as well as data and trends in wheat markets.

South Africa’s National Chamber of Milling (NCM) hosted the event for the second time in just over four years. The first IAOM MEA in South Africa took place in 2010 shortly after the first World Cup in that country.

In his welcoming speech, NCM Chairman Peter Cook made particular note of the progress of flour fortification in Africa with 19 countries now mandating the public health intervention compared to just two countries, South Africa and Nigeria, 10 years ago.

25th Anniversary

The Middle East and Africa region continues to account for nearly half of the world’s trade in wheat at 73 million tonnes in 2013-14, according to the International Grains Council, and much of the global increase in milling capacity. On this basis, the IAOM MEA has not only proved sustainable but has grown substantially over the last quarter century.

Melinda Farris, IAOM executive director, presented plaques of recognition to four long-time members of the IAOM MEA Leadership Council who have led the transformation of their annual conference from a modest gathering of 25 or so millers and grain industry representatives 25 years ago in Cairo into one of the global wheat industry’s premier events. The four included District Director Ali Habaj of Oman Flour Mills; District Chairman Merzad Jamshidi; Essa Al Ghurair, Chairman of Al Ghurair Resources LLC; and Martin Schlauri of Bühler AG, Switzerland.

Jamshidi, who has played a vital role in the important participation of Iranian millers in the district over the years, identified as a major accomplishment “just the fact we have been able to consistently keep the events attractive for both the millers and suppliers. After all, 25 years is a quarter of a century. As for the future, we are trying to get more of the mills’ key personnel coming to the show with custom-made papers to serve their needs.”

Furthermore, the  event will “go to countries where traveling would be a bit easier and could act as a hub.”

The event’s formula for success includes its benefit to and support from major wheat exporters as expressed by Sean Cowman, regional manager – Middle East and Africa of CBH Group, a cooperative owned by 4,200 Western Australian grain growers. He noted that the conference “is a unique and invaluable link to industry stakeholders.” He said it provides the connection of “Australian grain from our growers to the end users in the Middle East and Africa. We enjoy seeing customers and industry colleagues at this unique and well organized event.”

Bühler’s Martin Schlauri offered his own vision for the future, saying the event “will remain a fixed date in the agenda of the milling executive. Building up sub-regions in MEA will bring the IAOM values and contribution even closer to the markets. This would allow to further focus on topics of specific regional interest, such as processing of maize or other grains.”

Schlauri predicts that as has happened in developed countries already, in the Middle East and Africa the grain processing industry will be challenged by changing consumer expectations and trends, such as food safety or GMO issues in the raw material. “These topics and more shall be on the agenda of the future IAOM MEA conferences,” he said.

Food Security

U.S. Wheat Associates (USW) President Alan Tracy used his opening day address before key industry players from the world’s major wheat importing region to announce the launch of a major new food security initiative based on a proposed full liberalization of the world’s wheat trade. Such a measure would be the most effective way to provide “genuine food security to the world’s wheat importers.”

He pointed out that as the most important global food grain, wheat “provides 20% of the calories consumed every day on earth and 20% of the protein for the poorest half of human population. Demand is growing, but not every country that consumes wheat can produce wheat.”

The USW concept would be based on government-to-government sectoral agreements under the auspices of the World Trade Organization. “In exchange for eliminating tariffs, licenses and other trade barriers, the world’s wheat buyers would have guaranteed access to exportable wheat supplies even when world supplies are down.”

Trading Session

The emergence of the Black Sea and Baltic Sea regions as origins for wheat to the region has been one of the biggest shifts in Middle East and Africa grain trade in the last quarter century. Indrek Aigro of Copenhagen Merchants, Denmark, pointed out that the eight countries of the Baltic Sea region have seen wheat exports rise from 9 million tonnes four years ago to an estimated 17 million tonnes in the current marketing year, accounting for much of the near doubling in net European Union wheat exports to 40 million tonnes in recent years.

Total Baltic Sea region wheat harvest will be 52 million tonnes, exceeding the previous record by 15%. Saudi Arabia and Iran have become the main destination of Germany and Poland’s milling wheat. The two countries now have exportable surpluses of about 11 million tonnes.

“Germany’s wheat is reaching many new markets because of the surplus,” said Aigro. That amount will be 7.5 million to 8 million tonnes. Eleven years ago, the three Baltic countries of Estonia, Latvia and Lithuania had no exportable surpluses, but now they are shipping out two-thirds of their production.

Andrew Vorland of Glencore Grain BV, Netherlands, surveyed the supply situation from the Black Sea, noting that the 35 million tonnes of wheat exports from Russia, Ukraine and Kazakhstan this year will constitute 24% of world wheat exports.

“Black Sea wheat is moving to 100 countries these days,” he stated. Russia’s 6.2 million tonnes of wheat exports to Egypt and 3.6 million tonnes sent to Turkey account for 60% and 86%, respectively, of the wheat imports of the two countries.

Even South Africa, once dependent on the U.S. and Argentina, has become a major outlet for Russian wheat.

Jean-Pierre Langlois-Berthelot of France Export Cereales reminded the audience in his presentation that nearly 100% of his country’s wheat exports go to North African and West African countries, with Algeria, Morocco and Tunisia as the largest markets but growing volumes heading to the francophone countries of West Africa.

After Asia, the Middle East and Africa are the most important destinations for wheat exports from Australia, taking 40% of nearly 20 million tonnes in exports in the 2013-14 crop year with the trend lower this year. Nick Poutney, regional manager for Graincorp, Australia’s largest wheat exporter, explained that among the seven ports operated in the east of Australia by Graincorp, “each port zone has a specific supply and demand dynamic and quality parameters.” But this year all test weights are quite strong, he said.

Dan Basse, president of AgResource, Chicago, Illinois, U.S., in addition to moderating the trading session, provided his own animated and insightful prognostication for global grain markets in the coming years with statements such as: “We think the super cycle in agricultural commodities is kind of dead,” and that with the price of protein going up, “this is the year of species, not of grain.”

Exhibition

Ninety exhibitors from five continents and 20 countries were present at the trade show held jointly with the conference at the Cape Town International Convention Center. Turkey’s contingent of 23 exhibitors was the largest. Italy followed with 11 companies present.

A handful of firms have been present at nearly every IAOM. Ihsan Mustafa Aybakar commented, “As Aybakar, it is our 24th conference. It is not about business alone anymore. We all look forward to catch up with members of the industry. It is the biggest sectoral networking opportunity for the region. You get to meet mill owners, grain traders, equipment and service suppliers. We will be attending in the future.”

The largest groups of exhibitors were mill manufacturers, steel silo companies, and suppliers of flour additives such as enzymes and vitamin and mineral premixes for fortification.

Management Forum and Technical Sessions

During the first day’s session a series of world-class speakers challenged conventional management thinking and encouraged listeners to doubt their standard perceptions, explore the unknown and push for innovation in their approach to business.

The Technical & What’s New Session, taking up the entire second full day, provided a platform for 16 speakers to present the latest technological developments in all aspects of wheat milling. Jeff Gwirtz, president of JAG Services, Manhattan, Kansas, U.S., offered one of the three keynote speeches of the day, pointing out that in milling operations “problems may exist without you knowing it.” He described an approach relying on “the importance of checking and knowing your flour sheet to solve problems.”

Feed Milling

For the first time the conference featured a Feed Milling Technology and Trends Seminar, held on the third day. Diets in many of the countries of the region are improving to include more animal protein as economies develop and incomes rise. Many large wheat millers, most notably in Nigeria, have moved into the feed sector or are at least exploring opportunities.

African Milling School

Bühler’s Martin Schlauri as moderator of the management forum took the occasion to present Bühler’s own initiative to develop management skills in Africa by inaugurating its African Milling School in Nairobi after three years of planning and the construction of a building for that purpose at its milling service center. The first two courses are fully subscribed.

Schlauri has been named director of the school but will continue to  manage key account relationships. Noting the big increases in mill investment activity in the sub-Saharan region in recent years, Schlauri commented, “Africa is definitely on the move.”

FFI Workshop

The Flour Fortification Initiative (FFI) continued its long-running affiliation with IAOM MEA by holding a separate one-day workshop on Dec. 2 attended by about 60 public health officials, millers and NGO representatives.

FFI Director Scott Montgomery presented an FFI award recognizing the contribution of Abubakar Bakhresa, CEO of Said Salim Bakhresa & Co. Ltd., the largest milling company in Tanazania and East Africa, through its support since 2013 of national level mandatory vitamin and mineral fortification in Tanzania of all industrially produced wheat flour. Magdy Shehata of World Food Programme in Egypt received an FFI award as well in recognition of his six years of tireless work to institutionalize fortification of government-subsidized baladi bread.

IAOM MEA Dubai 2015

At the closing ceremony, Essa Al Ghurair, chairman of Al Ghurair Resources, Dubai, UAE, received the handover of the IAOM MEA District flag from Peter Cook. Organizers hope for a record turnout in late 2015 at the ever popular, thriving and business friendly air transportation hub where the event will be held for the fourth time.

Original PDF article as appeared in the World Grain magazine.