-
Current Status of the African Food and Agricultural Machinery Industry
Currently, agriculture and agricultural enterprises in Africa are performing poorly. The total food export volume of sub-Saharan African countries is not as high as that of individual developing countries like Brazil, Indonesia, and Thailand. However, the report suggests that with appropriate policies, consistent investment, and close public-private cooperation, this unfavorable trend can be reversed.
Moreover, Africa possesses more than half of the world’s uncultivated fertile land, utilizing only 2% of water resources (compared to the world average of 5%). Additionally, outdated warehouses and other agricultural infrastructure contribute to grain processing and storage losses ranging from 15% to 20%, with even higher losses for perishable products. Addressing these issues is crucial for the future(sources from resopp-sn.org).
The current indigenous food industry in Africa faces various challenges, including loose shelves, narrow aisles, inadequate refrigeration, and deficient conditions in electricity, sanitation, and water supply. Furthermore, food safety is a significant concern.
These problems stem from the fact that the majority of food suppliers in Africa still operate on a small scale, often without proper registration or compliance. Particularly in rural areas, grain processing remains at a primitive stage, involving manual methods such as the use of wooden sticks and stone mortars.
-
Main Factors Hindering the Mechanization of African Food Production
From a business perspective, it is well known that although small-scale farming dominates African agriculture, there is insufficient effort in the commercial market to help small farmers purchase large agricultural machinery (such as tractors, harvesters, threshers, and milling equipment) at affordable prices. This is due to the lack of business models that promote effective competition in the agricultural machinery service market.
Research also indicates that there are few machinery manufacturers in the market designing agricultural machinery specifically tailored to farmers’ production needs. Another critical issue is the lack of an effective funding mechanism, preventing farmers from renting or purchasing agricultural equipment at affordable prices.
From a socio-economic perspective, the development of agricultural mechanization is constrained by a lack of viable strategies and policies to attract young people to the agricultural industry. The younger generation, seeking efficient agricultural production, is more inclined towards accepting mechanization. However, with the aging rural population, the younger generation perceives agriculture as arduous and uninteresting work, making them reluctant to participate. The older generation, facing aging, may also resist agricultural mechanization.
Another factor affecting the widespread adoption of agricultural mechanization is the lack of policies in some African countries to promote it. Strong policies supporting research and development and investment in agricultural mechanization are essential.
III. Investment Advantages in the African Food Machinery Industry
Huge Market Potential
It is understood that over 60% of the world’s uncultivated arable land is in Africa. Currently, only 17% of arable land in Africa is cultivated, presenting enormous investment potential for Chinese enterprises in the African agricultural sector. With global food and agricultural product prices continually rising, Chinese companies have significant opportunities in Africa.
According to reports, the agricultural output value in Africa is expected to increase from the current $280 billion to nearly $900 billion by 2030. The World Bank’s latest report predicts that the economic growth rate in sub-Saharan Africa will exceed 5% in the next three years, attracting an annual average of $54 billion in foreign direct investment(quotes from resopp-sn.org).
Multiple Policy Incentives for China-Africa Cooperation
The Chinese government encourages food processing companies to “go global.” As early as February 2012, the National Development and Reform Commission and the Ministry of Industry and Information Technology issued the “Twelfth Five-Year Plan for the Development of the Food Industry,” which advocates international grain cooperation and encourages domestic enterprises to “go global” by establishing rice, corn, and soybean processing enterprises overseas.
African countries are also actively promoting the development of the agro-processing industry, formulating relevant development plans and incentive policies. China and Africa have formulated a comprehensive plan for the development of the agro-processing industry, focusing on the cultivation and processing of agricultural products. For grain processing enterprises, entering Africa is timely.
Strong Competitiveness of Chinese Food Machinery
Due to a lack of sufficient processing capacity, much of Africa’s coffee relies on developed countries’ demand for raw materials. Constrained by fluctuations in international raw material prices, economic control remains in the hands of others. This provides a new platform for China’s food machinery industry.
Experts believe that this is a rare opportunity for China’s food machinery exports. Africa’s manufacturing industry is weak, and mechanical equipment is mainly imported from Western countries. China’s mechanical equipment is comparable in performance to the West but competitive in price. Especially in the field of food machinery, exports are increasing year by year.
Furthermore, China’s domestic grain processing level is relatively high, and processing capacity is surplus. In some grain processing technologies, China has a certain advantage. For example, in recent years, China’s corn processing and conversion capacity has grown rapidly, with an annual growth rate of around 20%. Especially in major corn-producing areas such as Jilin, Heilongjiang, Liaoning, and Shandong, the corn deep processing industry is developing rapidly.
China has a detailed classification of food processing machinery, including baking equipment, drying equipment, conveying equipment, sterilization equipment, etc. In the future, it will also involve packaging machinery such as sealing machines and packaging machines.
With the development of the Chinese economy and increasing awareness of China among Africans, their perception of Chinese products is gradually changing, and the demand for Chinese machinery products is increasing. In the face of such lucrative returns, coffee-producing countries in Africa have expressed their determination not to serve as a mere source of raw materials for others. For example, the Ivorian government proposed that after 2015, the majority of Ivorian coffee should be processed locally, with raw material exports accounting for only 5-10%.
-
Market Opportunities for Food Packaging Machinery in Africa
It is reported that agriculture is the main industry for economic development in West African countries. To overcome the problem of crop preservation and improve the current backward distribution of agricultural products, West Africa is vigorously developing the food processing industry, indicating significant potential demand for preservation machinery locally.
Chinese companies seeking to expand into the West African market can focus on strengthening sales efforts in food preservation machinery, such as drying, dehydration preservation machinery, vacuum packaging equipment, dough mixers, candy machinery, noodle machines, food processing machinery, and other packaging equipment.
Reasons for the Large Demand for Packaging Machinery in Africa
From Nigeria to various African countries, there is a noticeable demand for packaging machinery. Firstly, this reliance is due to the unique geographical and environmental resources of African countries. While agriculture is relatively developed in some African countries, local product packaging cannot meet the production output of the manufacturing industry.
Secondly, African countries lack enterprises capable of producing high-quality steel. Consequently, they cannot manufacture qualified food packaging machinery according to demand. Therefore, the demand for packaging machinery in the African market is considerable, whether for large packaging machinery or small to medium-sized food packaging machinery. As African countries vigorously develop the manufacturing industry, the prospects for food packaging machinery and packaging technology are optimistic.
-
China’s Food Machinery Ventures into Africa
As the middle-income population in Africa continues to grow, and urban populations increase, there are limitless business opportunities in Africa. In search of new markets and profits, more and more international retail chains are entering the African continent. Among numerous business opportunities, the opportunities in the food market are particularly noteworthy.
Recently, Carrefour and the international commodity distribution company CFAO, focusing on the African market, cooperated to establish a joint venture, expressing their intention to enter Africa. CFAO has a vast distribution network in the African market, making Carrefour’s entry into the African market much smoother through this collaboration. In addition, the London-based securities firm Actis revealed a $500 million investment in real estate development in Ghana and Nigeria, mainly Western-style shopping malls. Most of these malls will include supermarkets.
As international food retailers enter Africa and try to replicate their success here, local entrepreneurs and small and medium-sized enterprises in Africa feel threatened.
Currently, the indigenous food industry in Africa faces various problems: loose shelves, narrow aisles, insufficient refrigeration, and inadequate conditions in electricity, sanitation, and water supply. Not only that, but food safety is also a significant concern.
These problems are based on a fact: the majority of food suppliers in Africa still operate on a small scale, often without proper registration or compliance, especially in rural areas. Grain processing in these areas still involves primitive methods such as using wooden sticks and stone mortars.
Because of this, they lack the funds to improve and correct their business conditions. For example, few food suppliers can obtain financing and use it to improve processing and preservation techniques. This informal production method is also a means of tax evasion. Operating formally would mean paying more taxes, which means food producers have no incentive to invest more resources in improving the infrastructure of the food industry.
As international retail giants enter Africa one after another, dealing with this series of challenges becomes a crucial issue for the indigenous food industry in Africa.
Agricultural resources in Africa have not been efficiently utilized. For example, many African countries produce tropical fruits, and locally grown mangoes, bananas, oranges, papayas, etc., are abundant throughout the year, falling to the ground unattended. The selling price of imported canned fruits and jams from Western countries in local supermarkets is almost the price of one tree’s fruit. The entry of foreign food companies, utilizing local resources to process food, and selling it to the local market often yields substantial profits(quotes from resopp-sn)
The basic economy of African countries is primarily based on agriculture, with the development of agriculture listed as the government’s top priority. With preferential agricultural investment policies and extensive investment opportunities, it is an ideal place for Chinese agricultural enterprises to explore the African market. Forward-thinking Chinese agricultural enterprises can make money by selling goods to Africa, investing in agricultural projects, or even renting land for vegetable cultivation. For the food machinery industry, the African food processing market is growing, customer demand is gradually increasing, and technical requirements are also rising. This is an excellent opportunity for China’s food machinery to enter Africa. Coffee machinery has been welcomed by African countries, including roasting equipment, drying equipment, conveying equipment, sterilization equipment, etc. In the future, it will also involve packaging machinery such as sealing machines and packaging machines. The rapid growth of the African food packaging market has driven the development of the packaging industry. The use of various machine models in Africa: the type of packaging machine depends on the type of commodity, liquid packaging uses plastic bottles or wide-mouth bottles, powder uses polypropylene bags, plastic containers, metal containers, or paper boxes, solids use paper boxes, and granular materials use plastic bags or paper boxes. Wholesale commodity packaging uses cardboard boxes, barrels, or polypropylene bags, while retail commodities use glass, plastic, foil, tetrahedral paperboard boxes, or paper bags.
