Sub-Saharan Africa has long been considered an area of opportunity for trading grains due to the widening gap between the booming population and demand and the comparatively low local production and yields. These fundamentals remain the same, but interesting changes have emerged, with new dynamics, challenges, and opportunities on the long-term horizon toward 2035.
A very large market with diverse consumption patterns
ESSA (Eastern Sub-Saharan Africa) encompasses twenty-two different economies with growing populations, increasing urbanization, and dietary changes that are expected to boost overall grain consumption.
By 2035, ESSA’s population is forecast to reach 705 million from the current 520 million.
This will be the major driver for white corn consumption, which we expect to remain the primary staple consumed in the region.
Simultaneously, demand for other key grains will emerge, like wheat across the entire region and rice in Uganda, Tanzania, and Madagascar.
Wheat demand is expected to grow strongly, driven by urbanization, income growth, and dietary changes, all trends that we also observe in large cities like Nairobi, Kampala, Dar es Salaam, and Lusaka.
Trade differs across commodities
ESSA is not self-sufficient in grains, and trade opportunities differ across commodities.
Wheat trade is a global business, and rice trade is interregional (primarily between ESSA and Asia).
In contrast, corn and tapioca are mainly traded locally within ESSA.
Production trends show new developments and opportunities for milling
In a very conservative scenario, we expect an additional 2m to 3m metric tons of wheat imports in the region’s eight largest economies by 2035. This growth will vary among the different countries and depend on the production outlook.
Several countries will continue to have low yields and remain strong net importers.
However, other countries, like Zambia and Zimbabwe, can already produce 7 metric tons of wheat per hectare, the same national average as France, and will be able to improve their self-sufficiency significantly, potentially becoming net exporters by 2035.
Similarly, Ethiopia, the largest wheat consumer and producer, has potential to further improve production, as it did in the last decade, but we do not expect it to become self-sufficient.
Kenya, the largest white corn importer in the region, is working to improve its self-sufficiency in corn. The new government is trying to open production and imports to genetically modified commodities, a potential game changer in the region, and simultaneously improve several farms’ access to irrigation with the construction of dams in the eastern part of the country.
“Wheat demand is booming in ESSA, and we do not expect the region to become self-sufficient by 2035, as several countries still need to boost local production. They should also simultaneously improve access to international markets to source wheat and farm inputs and to neighboring net exporter countries to purchase other raw materials, processed grains, and food products,” says Vito Martielli, Senior Analyst – Grains & Oilseeds at Rabobank.
In this journey, we foresee several key facilitating factors and business opportunities.
Among the facilitating factors, it’s worth mentioning improving transport and logistics infrastructure, enhancing farming businesses, and supporting policies that are viable and sustainable for the long term.
The main business opportunities include grains trade (as demand for food and feed grains will increase), ports and logistics infrastructure (as investments are needed), and the expansion of milling capacity.
Source: https://research.rabobank.com/far/en/sectors/grains-oilseeds/grains-trade-and-milling-in-eastern-sub-saharan-africa.html
Report summary
A very large market with diverse consumption patterns
ESSA (Eastern Sub-Saharan Africa) encompasses twenty-two different economies with growing populations, increasing urbanization, and dietary changes that are expected to boost overall grain consumption.
By 2035, ESSA’s population is forecast to reach 705 million from the current 520 million.
This will be the major driver for white corn consumption, which we expect to remain the primary staple consumed in the region.
Simultaneously, demand for other key grains will emerge, like wheat across the entire region and rice in Uganda, Tanzania, and Madagascar.
Wheat demand is expected to grow strongly, driven by urbanization, income growth, and dietary changes, all trends that we also observe in large cities like Nairobi, Kampala, Dar es Salaam, and Lusaka.
Trade differs across commodities
ESSA is not self-sufficient in grains, and trade opportunities differ across commodities.
Wheat trade is a global business, and rice trade is interregional (primarily between ESSA and Asia).
In contrast, corn and tapioca are mainly traded locally within ESSA.
Production trends show new developments and opportunities for milling
In a very conservative scenario, we expect an additional 2m to 3m metric tons of wheat imports in the region’s eight largest economies by 2035. This growth will vary among the different countries and depend on the production outlook.
Several countries will continue to have low yields and remain strong net importers.
However, other countries, like Zambia and Zimbabwe, can already produce 7 metric tons of wheat per hectare, the same national average as France, and will be able to improve their self-sufficiency significantly, potentially becoming net exporters by 2035.
Similarly, Ethiopia, the largest wheat consumer and producer, has potential to further improve production, as it did in the last decade, but we do not expect it to become self-sufficient.
Kenya, the largest white corn importer in the region, is working to improve its self-sufficiency in corn. The new government is trying to open production and imports to genetically modified commodities, a potential game changer in the region, and simultaneously improve several farms’ access to irrigation with the construction of dams in the eastern part of the country.
“Wheat demand is booming in ESSA, and we do not expect the region to become self-sufficient by 2035, as several countries still need to boost local production. They should also simultaneously improve access to international markets to source wheat and farm inputs and to neighboring net exporter countries to purchase other raw materials, processed grains, and food products,” says Vito Martielli, Senior Analyst – Grains & Oilseeds at Rabobank.
In this journey, we foresee several key facilitating factors and business opportunities.
Among the facilitating factors, it’s worth mentioning improving transport and logistics infrastructure, enhancing farming businesses, and supporting policies that are viable and sustainable for the long term.
The main business opportunities include grains trade (as demand for food and feed grains will increase), ports and logistics infrastructure (as investments are needed), and the expansion of milling capacity.
Source: https://research.rabobank.com/far/en/sectors/grains-oilseeds/grains-trade-and-milling-in-eastern-sub-saharan-africa.html