The Last Africans

This painting hangs on my sitting room wall. The image does not do it justice. It is beautiful: an untitled impressionistic oil painting of a nomadic group of people in Northern Kenya. I bought it about 14 years ago at a small exhibition in Nairobi entitled "The Last Africans".

My main memory of the Last Africans exhibition is a brief and impromptu introductory speech delivered by my friend and and former colleague, Matthias Schmale. Matthias was a compelling speaker, not least due to his sincerity, and he took this occasion to speak eloquently about his sadness that the era of the pastoralist and nomadic life practiced across most of the African continent was coming to an end: that the traditions and modus vivendi of the Turkana, the Karamajong, the Rendille, the Samburu and, most iconic of all African pastoralists, the Maasai, were dwindling into scattered tourist exhibits amid the farms, settlements and towns created through population growth, the march of technology and urban development. His lament was not romantic: it was for the impoverishment to us all brought about by the reduction of cultural diversity.

My reading matter over the past week has been a collection of papers selected by Nigel Halford of the Rothamsted Institute in UK, entitled Plant Biotechnology. For a non-scientist, much of this book has been extremely difficult to understand, but I was keen to try to improve my understanding of transgenics/genetic modification and its impact. Included in the anthology is a short paper published by researchers from the University of Cape Town on the potential for inserting a "water-efficiency" gene into maize, the staple crop for most of East and Southern Africa. The authors are in no doubt that this would be a positive move, as it would allow the cultivation of maize to spread into areas hitherto too dry for farming.

In this connection, recent press publications in Kenya have reported that considerable applied research in WEMA (Water Efficient Maize for Africa) is underway - with the potential to open up new low rainfall areas in Kenya for the cultivation of maize. Kenya needs it: the Prime Minister, Raila Odinga, recently forecast a shortfall of about 1 million tonnes (30% of Kenya's annual consumption requirements) due to patchy rainfall. This is nothing new: 8 years out of 10 Kenya struggles to grow enough maize for its burgeoning population - mainly due to reliance on rainfall for water requirements, depleted soils, and the widespread use of poor quality planting material.

Advances in agricultural technology over the last 100 years have supported massive population growth. Through effective selection and breeding programmes, plant breeders have produced ever more productive crop varieties. The Haber-Bosch process for utilising atmospheric nitrogen has provided the necessary source of nutrition for these varieties. And now, transgenic technologies offer the potential to accelerate conventional plant breeding through the production of uber-crops capable of resistance to herbicides, drought, soil salinity and who knows what sort of adverse conditions. But these advances carry a cost. One wonders what the consequences of WEMA's introduction will be for Kenya's pastoralists and biodiversity as the area under cultivation of maize expands.

Clinging on in ever more marginal areas, the pastoralist way of life appears to be an inevitable casualty of the modern world. As Einstein, in his wonderful 1949 essay entitled "Why Socialism" observed "The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient."

The Africa Seed Investment Fund

It has been a while since my previous post. Apart from a considerable amount of travel, my energies have been fully focused on preparing for the launch of the Africa Seed Investment Fund, a $12 million investment facility to be managed by African Agricultural Capital. The facility is the brainchild of the Alliance for a Green Revolution in Africa and will offer medium to long term capital to seed businesses in eight countries in East & Southern Africa.

The African seed industry has (alongside most other agricultural sectors) been starved of investment capital. As a result, there is a significant deficit in high quality certified seed available to farmers across the region. This deficit, along with the questionable quality of this most essential of all farming inputs, is a substantial contributor to the poor agricultural productivity and efficiency endemic to the region. The Africa Seed Investment Fund offers the opportunity to seed businesses to access the capital they require in order to increase seed production volumes, seed quality and take advantage of the opportunity to commercialise new improved seed varieties - the fruits of research and development work carried out by both national and international plant breeding programmes.

The launch was held on April 2nd in Kampala. Now the hard work of identifying, researching, evaluating and negotiating investment agreements will start.

Pan Paper and the role of agribusiness in rural Africa

Over the past 10 days, I have made visits to two AAC seed company investees in Uganda and Kenya. NASECO (an acronym for the Nalweyo Seed Company) is located near Hoima in Western Uganda and Western Seed Company is in the Kenyan town of Kitale, close to Mt Elgon. Visiting investees is usually an enjoyable experience: the great privilege of my work is to meet and spend time with business owners and managers who are committed to building successful businesses. I was also very happy to have been able to drive to both destinations. Travel writer and novelist Paul Theroux considers driving the least enjoyable and interesting way to see a country, but to me it is infinitely preferable to the endless hanging-around of air travel.

On the way to Kitale, I passed through the small town of Webuye, home to a long established and large business called Pan African Paper Mills, usually abbreviated to Pan Paper. By coincidence, the next day an excellent article appeared in the Daily Nation by Jaindi Kisero, urging action to be taken to save Pan Paper from closure. It came as no surprise to me that Pan Paper is once again in a state of impending closure – it seems to have been struggling for most of the last 15 years. Its problems stem from many causes, the most serious of which is the lack of plantation timber in its immediate vicinity, but which also include high transaction costs, and little protection against paper imports.

Kisero’s argument was based on the critical importance that rural-based agribusiness plays in sustaining rural communities. “If you close down Pan Paper, you hurt the lives of hundreds of thousands”. And he’s right. The social impact of closure would be enormous. My appreciation of agribusiness’s developmental role dates from my experience as the Financial Controller of Tanganyika Wattle Company in the town of Njombe in Tanzania’s southern highlands. Tanwat, as the company was fondly known, had been in operation for almost 50 years. At that time, the business had more than 2,000 employees across its four divisions – the eponymous 10,000 hectare wattle estate and factory, the 600 hectare tea estate and factory, a sawmill, timber treatment plant and 5,000 hectare pine and eucalyptus plantation, and a 2.5 MW dendrothermal (wood-fired) power station. It was a fine example of an integrated rural agribusiness.

As an investment, it is fair to say, Tanwat had not been a great financial success for its shareholder. Though profitable, overall return on capital was low. However, it is no exaggeration to say that its social impact was huge. To put this in context, Njombe was little more than a village when the business was founded in the early 1950s. Since then, it has grown into a busy town with more than 60,000 inhabitants. Njombe’s growth was not entirely due to Tanwat, but the company’s impact – specifically, the $30-40 million in wages and salaries funneled into the local economy over the best part of 50 years; the substantial value of purchases of Tanzanian goods and services; the huge contribution in direct and indirect taxes paid; the delivery of electricity to Njombe and its environs; the foreign exchange earnings over decades of operation; health services delivered through Tanwat’s hospital; and, less quantifiable but no less significant, the transferable skills developed in the workforce – construction skills, engineering knowhow, motor mechanics, office administration, accountancy and, latterly, computer literacy – is undeniable.

So this is the dilemma facing the Government of Kenya. Keep Pan Paper open, subsidise it and allow it to continue to provide livelihoods and opportunities for the town of Webuye and its rural population, or accept market forces and let it go under, with a saving to the exchequer but a big social cost.

There is no easy answer.

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 (http://www.griculture.co.ke/) 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!

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 http://en.wikipedia.org/wiki/Tanganyika_groundnut_scheme 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"

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.

Hybrid Maize and the legacy of George Shull

White maize is by far the most important crop in East & Southern Africa. The grain is palatable; crop yields are high in comparison to alternative grain crops; labour demand is low. Well over 200 million people in sub-Saharan Africa rely on maize as their principal staple crop.

Remarkably, for a crop so critical to food security across half the African continent, maize is a relatively recent introduction. The Portuguese brought it to Africa early in the 16th century, since when it has spread throughout the continent. Its popularity owes much to its productivity : under the right conditions, commercial farmers in Southern Africa have achieved yields in excess of 10 MT/hectare for hybrid maize. Indeed, I remember during one visit to the Mpongwe farms in the Zambian copperbelt, the General Manager, Patrick Tobin, proclaiming his delight that he would soon be eligible to join the “ten tonne” club of Zimbabwean commercial farmers (though I never knew if such a club really existed).

But yields like this are only possible where farmers are using hybrid maize seed. Exactly 100 years ago, an American plant scientist, George Shull, published research into the phenomenon of hybrid vigour in maize (enhanced yields through hybridization). Within 20 years, hybrid seed maize offering significant yield improvements was on sale in the USA, and the technology quickly spread across the world. Everywhere, that is, except Africa, where hybrid maize still makes up only about 25% of the total area planted to maize – despite its manifest yield benefits. To put this statement in context, smallholder farmers using traditional open-pollinated varieties of maize, probably average yields of about 1 MT per hectare in comparison to Mpongwe’s 10 MT target – a factor of ten. This colossal inefficiency is a major contributor to the continuing food insecurity on the continent and, in light of the ever increasing population, a major risk to the future.

This is a simple example of why it is so important to invest in Africa’s seed industry, from breeder to multiplier through production, distribution and retail. Access to and utilization of improved maize seed has the potential to transform African agriculture. African Agricultural Capital (AAC) has already invested in four seed companies in the region and it is both my hope and my intention that AAC will continue to look actively for opportunities to invest in the seed sector in the future.

For more information on this and other important crops in sub-Saharan Africa, it is well worth reading Securing the Harvest, by Joe de Vries and Gary Toennissen. Both work for the Rockefeller Foundation and both were instrumental in the foundation and initial capitalisation of AAC. I owe them a debt of gratitude.

Amaranth and the history of crops

AAC has recently made an investment in a Kenyan business called Amaranth International. This business buys grain amaranth from small farmers in Kenya and Uganda, processes it into flour and popped cereal and markets it under the “Ama” brand throughout Kenya.

Amaranth is a grain that didn’t feature on my childhood dinner table, but it’s becoming more and more popular. In Europe, it is being used increasingly as an ingredient in breads and breakfast cereals. Known as “Terere” in Kenya, it is gaining market share due to its nutritional qualities. It’s gluten-free, a significant source of protein, and has high levels of lysine (an amino acid rare in other grains). It’s also high in iron, with a 1/4 cup containing 60% of an adult’s recommended daily allowance.

Here’s a picture of the plant.

Quite apart from its nutritional qualities, it is also relatively easy to cultivate. In Kenya, farmers can produce three or even four crops annually. It is drought-resistant and currently sells at the farm gate for prices much higher than for maize (the principal staple food). Perhaps most importantly, from a business perspective, it also tastes good!

There are numerous different varieties of Amaranth around the world, many of which have been historically important as staple crops. Most famously, it was grown by the Aztecs in central America, where it formed a staple part of the Aztec diet. As a key part of Aztec religious ceremonies, it was banned by the Conquistadores, but luckily survived in the wild. It is now making a comeback in Latin America. At this point, I have a confession to make. Ever since I read a wonderful book called “Seeds of Change” by Henry Hobhouse, I have found the history of food crops incredibly interesting. This book, which sadly I think is now out of print, discusses five crops which changed the world: cotton, potatoes, tea, quinine and sugar. Each history is fascinating. Maybe some day, a scholar will tell the story of amaranth.

Trees and Honey

Very few days go by in this job wthout learning something new and interesting. A few years ago, when I was working for CDC, I learnt a lot about the cultivation and export of fresh vegetables. Subsequently, my colleagues found my extensive knowledge of vegetables a source of great amusement, though I could never see the joke.....

Over the past two months, two more areas have caught my interest and attention. Trees and honey. Trees - and more specifically the lack of them - is a fairly obvious one. Here are a few facts: East Africa's trees produce about 80% of the population's energy requirements (who ever said biofuels were something new?); population growth - and land pressure - is rising at about 4% per annum. To put this in context, that means the population of Uganda, Kenya and Tanzania will double within 20 years! Forest cover is diminishing: in Kenya, forests now cover less than 2% of the area. Tanzania and Uganda are slightly better, but the trend is sharply down... Timber prices are increasing all the time....

Now, I knew all this before. What I didn't know, until attending an excellent presentation by Eric Bettelheim of Sustainable Forestry Management last week in Kigali, was that Africa had been unable to benefit from the official market in carbon trading established under the Kyoto Protocol a few years ago. If, therefore, a government or a private individual or business plants trees in Africa, s/he is ineligible for carbon credits - which are available to European and North American growers! The result - deforestation continues apace in the developing world but afforestation is on the increase in Europe and the USA. And I thought it was a global problem....... Fortunately, however, the business case for planting forests in East Africa is becoming very persuasive, even without the carrot of carbon trading opportunities, and, if Mr Bettelheim gets his way, the economics may look even better in the near future. Buy land and plant some trees - in today's fragile economic environment, that advice could be a great long term pension investment, besides doing something small to save the planet.

And if you plant some trees, why not invest in some beehives? The bees do all the work and you collect the income. Furthermore, the global honey price is increasing, due mostly to the impact of bee disease in USA & Europe and the consequent reduction in bee colonies. Beeswax, propolis and royal jelly, alongside the honey, and cross-pollination for your tree crops to boot.

If you want to learn some more, visit http://www.sfm.bm/. Think about it.

AAC enters the blogosphere

My name is Tom Adlam and I am lucky enough to be managing African Agricultural Capital: an Investment Fund for - as the name suggests - agriculture-related businesses in East Africa. My team and I are based in Kampala, Uganda, and you can find more information at http://www.aac.co.ke/.

I want to use this blog to share personal experiences and information about business, working and living in East Africa with all of you out there who are interested. It is important for me, at this point, to stress that the views and opinions expressed in this blog are my own and in no way represent the views and opinions of African Agricultural Capital as an organisation. I will probably try to post a weekly update.

The inspiration for this blog comes from one of our investee companies, Sandstorm Africa (see http://www.sandstormkenya.com/) whose CEO Mark Stephenson has recently started his own blog. It's a fascinating read which you can find at http://www.sandbagman.blogspot.com/.

And, at least for today, that's about it. More news to follow soon.