Monday, February 23, 2009

Of Bentleys, Soil, Seeds and Marram Roads

Experts in African agriculture disagree over the most critical limiting factor on agricultural performance. Most believe that improvements in agricultural inputs are essential. Increase productivity – the argument goes – and resulting production surpluses will create an environment in which agricultural markets will become larger and more sustainable. A few believe that well-functioning markets are the key: markets, they argue, provide confidence to farmers to invest in improving production efficiency.

Within the inputs camp, there is a further division. Better planting material or better soil health – which is the critical factor? One of AAC’s directors, Walter Vandepitte, likened the use of highly engineered hybrid seeds on impoverished soils to “driving a Ferrari along a marram road”. The seed advocate will argue in response that adoption of improved seeds will lead farmers to increase their use of fertilizers, irrigation and crop protection products to safeguard their crops, increase yields and, indirectly, improve soil health.

I am not qualified to provide an opinion on these arguments, but it does seem to me to be self-evident that even the best and most robust planting material is useless if grown in unsuitable soil conditions. Gardeners and farmers have always known this – indeed, before the dawn of manufactured fertilisers and crop protection products, they used to practice systems of crop rotation: on the logic that the nutrients taken out of soil by crops need to be replaced.

East African soils are fragile and vulnerable. A great deal of land is given over to monoculture, especially maize. The sun is strong, baking exposed soil and depleting nutrients. Rainfall is frequently heavy and can wash away topsoil. Few farmers compost organic material or have access to sufficient animal manure for fertilizer. All these factors combine to cause rapid depletion in soil nutrients and, if unchecked, result in soil acidification and ultimate infertility. This is a very serious problem.

One of AAC’s investees is a company called Lachlan Kenya ( Based in Nairobi, this company distributes and markets a wide range of crop protection products throughout East Africa. Recognizing the importance of effective soil management products, the business also distributes a range of micro-nutrient fertilizers (especially important in horticulture), humic acid (which accelerates the decomposition of organic material in the soil and facilitates the uptake of nutrients) and, most interesting of all, a nitrogen-fixing biological fertilizer marketed under the brand name Twin-N. These products, and others, all have potential to improve soil health, something which is urgently required in much of East Africa.

Returning to the analogy of the absurdity of driving a Ferrari on a marram road, anyone who has visited Kampala recently will know that the city’s roads are afflicted by potholes and that a 4WD vehicle is almost a necessity in certain areas. Picture my surprise, then, when I saw an extremely handsome Bentley (registration number JH) cruising the city streets a few days ago. Subsequent research revealed that the Bentley’s owner is a young lady called Judith Heard (picture above). Kampala residents are no strangers to exotic vehicles – Hummers and Lexuses are frequently sighted – but most at least pay lip service to the necessity of having a high clearance vehicle. For sheer chutzpah, there is something wonderfully impractical about a Bentley which takes it straight to the top of the show-off chart. Bravo Ms Heard!

Tuesday, February 17, 2009

Schloss Kifufu

The Kifufu estate lies on the foothills of Mt Kilimanjaro. Originally developed by a German settler in Tanganyika, the estate was developed as a coffee plantation, and the condition of the basic estate infrastructure bears witness to the quality of German engineering. The estate was recently leased by one of AAC's investees (the well-named Africado) and is being replanted to avocado trees. Here's a picture of the General Manager's castle with the stunning backdrop of Kilimanjaro.
A few years ago, when it was under CDC's ownership and management, I periodically used to visit the Rwenzori Highlands Tea company in Western Uganda. From the main estate, there was an equally fabulous view of the snow-capped Rwenzori mountains. Everyone who visited the estate marvelled at the view, much to the irritation of one estate manager's wife who would acknowledge its beauty but also observe, a little sadly, that "You can't live on a view". True enough, but it certainly helps assuage the loneliness of life on a plantation.
Avocado trees grow very well in parts of East Africa. Africado is planting the much-in-demand Hass variety at Kifufu and plans to distribute seedling trees from its nursery to smallholder farmers in the vicinity. By aggregating smallholder-grown avocados with its own estate production and shipping to high value European markets, the business has solid prospects - and will provide smallholders with another option (apart from coffee production) for a high value tree crop.

Africa for sale

There has been a spate of announcements and news items in recent weeks about the acquisition of African land by foreign governments and investors for the purpose of food production. While not quite on the scale of the colonial era, this trend raises numerous questions over the role of government, over food security, over land ownership and over the rights of African smallholders and pastoralists (who, one fears, will be displaced from customary land to make way for large-scale agriculture).

Many economists seem to think that this is a good thing. They point to employment creation, infrastructure investment and increased agricultural efficiency. To be sure, in an environment where population growth remains rapid, where inadequate infrastructure hampers communication and distribution and where agriculture is, in general, extremely inefficient, the potential benefits are substantial.

And that's the key word - potential. Historically, I am sorry to say, Africa is littered with investment failures in large scale agricultural projects. Most famous among these is the Tanganyika groundnut scheme. This plan, to cultivate a large area of modern-day Tanzania with groundnuts, was a catastrophe in every way (see Wikipedia for the full story - which is almost comical in its catalogue of disaster). It is, however, by no means unique.

The latest investment fad has centred around the production of biofuels and, in particular, a plant called jatropha curcas. This plant, it is claimed, will yield four times as much fuel as soya, and will thrive in semi-arid conditions unsuitable for almost any other commercial crop. To go back to a theme running through this blog, just remember, if it sounds too good to be true, it probably is.

What can the new investors learn from past and present mistakes? Three things stand out: the importance of research; experimentation and pilot programmes; and the need to invest in management and training. Simple, really.

Leaving aside these long term issues, let's hope that the details of these transactions are made public and that the proceeds are used first to compensate smallholders and pastoralists who have been or will be affect by the proposed developments, and second to invest in long term improvements to infrastructure. Sometimes it's good to be an optimist: in the words of David Landes "...pessimism offers little more than the hollow satisfaction of being proved right"

Wednesday, February 11, 2009

Religion and the decline of magic

"History's back in fashion", according to the FT. It is hard to see this as anything other than a good thing, unless of course, in trying to avoid perceived mistakes in the past, we make even worse mistakes in the present..... I have been giving this line of thought some consideration when I read statements criticising 1930s-style protectionism or advising that we must avoid the Japanese problems of the 1990s, as it seems to me that we can never know what the consequences would have been of an alternative course of action. Maybe, just maybe, the actions of our forebears spared us a worse fate. In conversation yesterday evening, an eminent investment professional remarked to me that history is the best laboratory for economics. In my view, it is certainly more robust than the curves and assumptions which riddle economic theory, but we should also recognise its limitations in such a rapidly changing world.

Following the brilliantly-written history of the British abolitionist movement - Bury the Chains - by Adam Hochschild, I have now finished reading a more demanding but no less interesting work: Religion and the Decline of Magic, by Sir Keith Thomas (pictured above). This work is a fascinating study of social change in 16th and 17th century England. Its central thesis is that popular belief in superstitition and magic (and ultimately religious belief) will gradually be eroded as scientific advancement provides explanations for natural phenomena.

At first, I began to think about this thesis in the context of East Africa - where belief in both religion and magic remain strong. Indeed, one of the least attractive features of life in East Africa is the extent to which unscrupulous people exploit widespread beliefs in religion and magic. Barely a day goes by without a quack pastor forming a new church offering heady homespun mixtures of salvation and forgiveness, all in exchange for the payment of lavish donations which, more often than not, are diverted into the pastor's pockets. These shameful deceits, however, pale into insignificance in comparison to the creation of myths supporting so-called "traditional medicine". These myths have recently given rise to the following reported abuses: the widespread murder of albinos in Tanzania, in the belief that albino body parts can cure certain diseases; the discovery, in Uganda, of children's heads in the foundations of new buildings, apparently in the belief that this will bring good luck to the owners; the frequent sexual abuse of young girls by HIV+ men across East and Southern Africa, in the belief that sexual intercourse with virgins is a cure for Aids. In today's world, where almost everything has a scientific explanation, how can such vile beliefs exist?

But is East Africa actually any different from anywhere else? It is widely reported that in the USA there is a significant minority who deny the theory of evolution. In China, there is a huge market for animal body parts as medicine. Astrology is popular everywhere. Homeopathy, crystals and the occult have countless aficionados. Global youth is addicted to fantasy entertainment. Far from rejecting magic and superstition, the human race seems to have embraced it even more closely in recent years.

The great anthropologist, Malinowski, observed that “...magic is dominant when control of the environment is weak” and this seems to represent the best explanation for its enduring power. We live in a world where most of us are unable to understand the technology around us. Modern science itself is magical: the astonishing advances in medicine, the ever-increasing power of the semi-conductor, genetic modification, the capacity of modern weaponry, the incalculable power within the atom - all of these lie far beyond our understanding and our control. Society is magical: achievement and wealth often appear to have little connection to effort, hard work and ability. Finance is magical: all the collective brains of regulators, of auditors and of bankers themselves were unable to understand the risks presented by ever-more-complex packages of financial derivatives.

In such an environment, is it really any wonder that people retreat towards superstition and magic? As Keith Thomas concludes - “If magic is to be defined as the employment of ineffective techniques to allay anxiety when effective ones are not available, then we must recognize that no society will ever be free from it.”

Perhaps this is history's fundamental truth: that despite all our scientific advances, we are destined to repeat our mistakes, time and again.

Wednesday, February 4, 2009

Quelea Quelea

Last week I had the pleasure of visiting Dar es Salaam. During my visit, I spent a couple of hours in conversation with the CEO of Kilombero Plantations. This business owns a substantial estate at Mngeta in the Kilombero Valley, Southern Tanzania, and, now that the rains have started, is busy planting rice. Amid our lively discussions, he mentioned the potential threat from the "Kwela Kwela" bird (pictured above). This little creature is generally considered to be the most numerous bird in the world and, due to its habit of descending in vast clouds on arable crops and stripping them bare in a matter of hours, is often called the Locust bird. Needless to say, as part of any risk management strategy for an arable farm, the risk of a Quelea Quelea invasion needs careful consideration.

On my flight back to Uganda, I began to think a lot more about the difficulties of crop protection in an environment like the Kilombero Valley. Sandwiched between the Udzungwa mountains and the Selous Game Reserve, this valley is vast, low-lying, humid and remote. It is an environmental hotspot, filled with migratory routes, wetlands, and rare and endangered species. There are also numerous attendant social issues, including ethnic migration, land ownership, poverty and public health concerns. Under these circumstances, threats to agricultural enterprise are extensive. Large mammals (elephant, buffalo, hippo) can cause huge amounts of damage. Rodents and monkeys present risks. Army worms, thripps and other insect pests are liable to launch attacks. Quelea Quelea can descend, literally, out of the blue. And local human residents may regard edible grain crops as fair game for pilferage.

In a situation like this, an Integrated Pest Management (IPM) approach is critical. Without taking an IPM approach, the only options are (1) to accept significant crop loss or (2) to invest in hugely expensive fencing and access control systems, either of which are normally unacceptable to agriculturalists for financial reasons, or (3) to use chemicals (in practice poisons) which are usually unacceptable to all other stakeholders for environmental, health and safety reasons. Indeed, the normal "solutions" for Quelea Quelea are either napalming nest colonies (!) or the use of highly toxic organophosphate poisons, niether of which are generally considered environmentally acceptable, especially in an environment as fragile and sensitive as the Kilombero Valley.

One of AAC's first investments was in a business called Real IPM. Located in Thika, Kenya, this business was established in 2005 by two entrepreneurs with a vision to bring IPM solutions to the Kenyan horticulture industry. We were attracted by this vision for a number of reasons: first, it presented an opportunity to invest in a business bringing improved technology and know-how to horticulture in the region; second, it offered a solution which promised, if adopted, to reduce the use of potentially harmful chemicals in the horticulture industry; and third it appeared to be a sound business proposition. I had first become aware of IPM as a strategy to reduce chemical usage and cost during my association about four years earlier with a large floriculture business located in Naivasha. This business had employed a young British scientist to develop an IPM programme and, though initially skeptical, I had after visiting been convinced that the system should be scaled up from the pilot phase.

IPM has developed enormously over the past 20 years or more, gathering pace with the growth of the organic movement. Though traditionally focused on insect pests, IPM is practiced over a wide range of crops. In oil palm plantations, for example, where rodents (rats) are a damaging pest, the highly effective IPM technique of siting nesting boxes for barn owls at an appropriate density is the optimal control mechanism. Famously, the Elephant Pepper trust in Zimbabwe has pioneered the cultivation of birds eye chilli peppers as a border - and cash - crop to protect farmers against elephant incursion using the slogan "Elephants hate chilli" And some growers use sun hemp, again as a border crop, to protect against baboons and other monkey species incursions. IPM solutions also include the use of beneficial fungus species (eg trichoderma) to protect against nematode worms, and doubtless research and product development for further crop protection solutions will continue apace.

For the sake of African arable farmers, including Kilombero Plantations, let's hope that a solution for the Quelea Quelea threat presents itself in the near future. All suggestions are gratefully received.