As the world population surges to 9 billion people by 2050 and demands on the global food supply soar, the greatest opportunity for profits in agriculture may be in Africa.
Seventy percent of the world’s uncultivated arable land is on the continent, according to Sara Menker, the founder of Gro Intelligence, an agricultural data company with offices in New York City and Kenya.
And if there is any one country that is taking advantage of the opportunity, it’s China. The People’s Republic has bought up about 12 million acres of land to grow grains that get shipped back to China, Menker told a packed tent of 425 entrepreneurs, investors and agriculture executives at the Forbes Reinventing America AgTech Summit in Salinas, California on Thursday. “The world doesn’t know about it because these are really quiet deals,” she added. “These are large-scale farming operations in sesame, wheat, corn for export to China. It doesn’t really interact with the African farmer. It doesn’t get traded locally. It is purely for Chinese export.”
The Chinese investments are not bearing fruit just yet. There may be plenty of land in Africa, but much of the rural landscape isn’t connected to ports by adequate infrastructure. That means new investors on the continent, which also include governments like Saudi Arabia, Qatar, and the United Arab Emirates, have to spend billions of dollars clearing land and building roads before they can even start farming.
Private Indian agriculture companies have had even more trouble getting started, Menker said, because they don’t have huge government budgets to fund infrastructure improvements. “They have been less successful because the economics are really hard to deal with in the early stages,” Menker said. “You have to deploy billions of dollars from the get-go.”
But the investments don’t appear to be slowing down. Menker predicts that much of the world’s food will eventually come from Africa. “It’s really about where opportunities are for new farmland exist,” she said. “You’ll see a lot more commercial production shift to different parts of the world.”
Culled from Forbes.com | Written by Dan Alexander