Growth Corridors to Agric Profits: Yara, Which Operates in All Seven Continents of the World, Is One of the World's Leading Producers of Mineral Fertilisers. the Norwegian Company, Which Won This Year's African Business Award as the Best Global Business in Africa, Is Dedicated to Not Only Increasing Africa's Agricultural Output, but to Make Farming at All Levels a Profitable Enterprise. Report by Omar Ben Yedder and Anna Rosenberg
Yedder, Omar Ben, Rosenberg, Anna, African Business
Yara traces its history back to the beginning of the last century when the Norwegian conglomerate, Norsk Hydro, was formed by industrialists Sam Eyde, Kristian Birkeland and Marcus Wallenberg. They tapped into Norway's giant hydro-energy resources to produce mineral fertilisers. Norsk Hydro itself has expanded into a vast array of businesses--from fertilisers to oil to metals--and the Yara division, devoted to agricultural-and by-products, was floated on the Oslo Stock Exchange in 2004.
Since then, Yara has been dedicated to making African farming a profitable business, while ensuring that it is carried out in the most sustainable manner. It is assisting farmers to boost their output to produce both a decent livelihood for them and affordable foodstuffs for a rapidly growing population.
"Of all the world's regions, Africa is now the one with the greatest potential to increase yields," Jorgen Haslestad, Yara's chief executive told African Business.
"It certainly has the land area and the manpower to grow crops. Our long-term positive outlook for Africa is also why Yara has a long-standing presence on the continent."
But what exactly needs to be done to achieve this objective? Haslestad says that the key is to align resources in order to make the entire value chain function efficiently. "The farmers need inputs for their production--seeds, fertilisers, etc; at the same time, efficient transport and other infrastructure such as irrigation, storage facilities, knowledge about modern farming techniques, a reliable power supply and so on, must also be in place. The dilemma is that you need it all at once. If one piece is missing or one part of the supply chain doesn't make a profit, then failure is highly likely."
He points out the crucial role that the financial sector plays in Africa's agricultural industry and applauds the work of Equity Bank, Standard Bank, Rabobank and other financial institutions which are all providing vital access to credit for farmers and agricultural entrepreneurs. They are also working with other finance partners to come up with innovative ways to reduce risk--such as introducing weather-based crop micro-insurance for small-scale farmers.
For its part, Yara has been particularly involved in the development of 'agricultural growth corridors' in Africa, working closely with governments and international organisations. The idea is relatively simple.
Haslestad explains: "Yara's approach is to develop agricultural markets in Africa using this value chain perspective. We then identify those regions where the key resources such as sufficient irrigation and transportation are present; and those regions that are strategically located to serve local and overseas markets, such as having access to deep-water harbours."
"The idea underpinning the agricultural growth corridors," he continues, "is to leverage existing infrastructure networks in order to 'crowd-in' agricultural investment, both from local and international players, along those corridors."
In both Mozambique and Tanzania, where this work has been undertaken, he says, an investment blueprint is being developed. It supports the development of agricultural clusters merging both smaller and larger farm development needs in a positive way along the infrastructure corridors. This significantly improves the potential for those areas to scale up while creating increased opportunities for both on-farm and off-farm employment."
This growth corridor concept has developed along the public-private partnership (PPP) model, an example of this increasingly popular development strategy being used within Africa's agricultural sector. Yara has been encouraging governments and international organisations to partner them in developing these growth corridors, sharing both the challenges and also the successes. …