What’s Needed in African Agriculture Before Technology

by Louisa Burwood-Taylor (AgFunderNews) “A lot of what’s needed in African agriculture is quite low-tech if tech at all,” says Gary Vaughan-Smith, chief investment officer at SilverStreet Capital, the agribusiness private equity firm.

SilverStreet has been investing in African agriculture since 2011 when it held the first close of its first $320 million fund. The firm finished investing out of that fund in 2015 and is now raising its second with $60 million closed so far of a $300 million target.

SilverStreet invests across the agricultural value chain in inputs companies, crop production, protein production, processing, and food manufacturing, and many of its investments use a lot of technology, said Vaughan-Smith, referencing irrigation tech and satellite imagery as examples. Zambia’s agriculture industry is particularly successful, where large-scale farmers use many of the same techniques and technologies as US farmers.

But, for much of the African continent, agriculture industries are made up of small-scale farmers with just a few hectares under management. This fragmentation has meant growth in crop yields far lags other parts of the developed and developing worlds and means many of these new high tech tools are irrelevant; far simpler technologies and tools are needed to improve performance, says Vaughan-Smith.

The ability to use higher quality seed and fertilizer is a key area of potential improvement and alone can to improve yields by two to three times, according to Vaughan-Smith.

Techniques that can bring yields even higher include educating on the benefits of mulch, not plowing the land, crop rotation and other conservation farming techniques to maintain soil health and fertility.

But the problem with rotation is the lack of access to a market for legume crops such as soy. There is inadequate infrastructure and processing capacity for these and other crops in many African countries. Lack of adequate storage leads to 30% of small-scale crop losses and also forces farmers to sell their crops at harvest time at lower prices, instead of being able to wait until prices rise again.

The need for these relatively simple solutions makes African agriculture a “perfect developmental target” and an area of increasing interest to impact investors, according to Vaughan-Smith.