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U.S. Agriculture Companies Set Millions for Africa

May 18, 2012

By Carey Gillam


A group of U.S. seed, chemical and equipment companies will invest at least $150 million over the next few years into African agricultural projects and products, the companies said on Friday.

The investments pledged by DuPont (DD.N), Monsanto (MON.N), Cargill CARG.UL and others are part of an overall $3 billion effort by companies around the world announced by President Barack Obama. 

Along with companies from India, Israel, Switzerland, Norway and the United Kingdom, and 20 companies from Africa, the corporations have committed some $3 billion for projects to help farmers in the developing world build local markets and improve productivity.

The United Nations has said that by 2030, the world will need at least 50 percent more food, 45 percent more energy and 30 percent more water. Absent these resources, it said, up to 3 billion people would probably be condemned into poverty.

Capitalizing on food demand in Africa also holds strong profit potential, corporate leaders said.

"It has been a bit chaotic. There are all sorts of issues around the countries in Africa. But the population, the economic growth, the quality of many of the soils is there," DuPont Executive Vice President Jim Borel told Reuters in an interview. "The need is there, the potential is there."

"We're convinced we can take the base we have now, and accelerate that progress," said Borel, who oversees DuPont's food and nutrition businesses. Among DuPont's units is its Pioneer Hi-Bred International seed company, which has operated in Africa for decades.

India and China are more stable and growing faster, but Africa is "not far behind," according to Borel.

DuPont said it will spend more than $3 million over the next three years focused on Ethiopia, where the company is investing in seed production and storage facilities. It is also developing weed control for wheat farmers there, and creating a soil information system to address soil limitations and boost crop yields.

DuPont's growth plans on the continent are aimed at growing revenue from African business to more than $1 billion within 10 years.

DuPont is also sponsoring development of a food security index, a ranking of 105 countries that analyzes the food security status of each. That index will be rolled out in mid-July.

Monsanto, the world's largest seed company, said it also was committing millions to Africa. Monsanto will invest about $50 million over the next 10 years in several countries to support African agricultural development and growth, officials said.

Monsanto's plans include work in Tanzania on development of corn that uses water more efficiently, and support for development of a network of agro-dealers.

Cargill is investing in two projects in Mozambique focused on increasing grain yields for small farmers and on training and education in farm communities.

AGCO (AGCO.N), a U.S.-based farm equipment company, plans to invest $100 million over the next three years to improve farm operations in Ethiopia, Ghana, Kenya and other African countries. 

Among the international players, Norway's Yara International (YAR.OL) is planning a $2 billion fertilizer production facility in Africa and is spending $20 million to build a port in Tanzania that will help expand its fertilizer delivery network throughout southern Africa.

The Swiss company Syngenta AG (SYNN.VX) said it would invest more than $500 million in Africa. Over the next 10 years, Syngenta expects to build a $1 billion business in Africa.

The push by global corporations to spend more money and develop new markets across Africa comes as an expanding world population and growing demand for quality food threaten to exceed existing limits of agricultural production.

Investors have been buying up farmland in Africa, hoping to make it more productive using modern agricultural technologies. That, combined with the rising interest of international agricultural corporations, has brought criticism.

Advocates for African farmers fear they will lose control over their food supply and markets. They say African farmers are being displaced and unsustainable farm practices are being introduced.

"The problem is all this is based on large-scale commercial agriculture," said Anuradha Mittal, executive director of the Oakland Institute, a policy think tank. "Who does it benefit? All of these things are supporting the formation of large-scale commercial agriculture, which will hurt small farmers. They could spend far less but focus on providing credit facilities, ensuring open markets and ensuring the rights of small holder farmers."