Africa ripe for agrochemicals growth

Africa’s underdeveloped agrochemicals market has presented AECI’s agrochemical solution business, Nulandis, with a double-digit growth opportunity to cement its place in the agriculture sector, particularly within the smallholder farmer industry.
 

This emerged at AECI’s investor day, held in Woodmead, on Tuesday, where executive Edwin Ludick outlined the attractiveness of Nulandis’ expansion in the market.
 

The group, which supplied propriety and third-party products to farmers, believed the prospects for expansion in Africa were “very good” on the back of the increasing need for food security within a ballooning population and greater demand from a rising middle class for food variety.
 

The current agrochemicals market in Africa was valued at between R15-billion and R20-billion, with South Africa accounting for 33%.
 

Ghana and Morocco contributed 10% each, while Kenya, Egypt and Côte d’Ivoire accounted for 8% each. Nigeria, Africa’s most populous country, only held 5% of the market.
 

South Africa’s use of agrochemicals and fertilisers for agricultural requirements far outpaced that of Nigeria, Tanzania, Ghana, Zambia and Kenya, besides others, and the country produced more than double the yield – 3.7 t/ha of crops – of other African countries.
 

However, South Africa still fell behind current global standards in terms of output per hectare of land available.
 

This indicted a need for mass education on the correct use of chemicals and fertiliser for smallholder farmers in Africa to enhance their yields, feed the demand and compete effectively, Ludick commented.
 

“The farmers do not realise how much yield they are losing on their crops,” he said, explaining that educating farmers on the correct dosages and “right” timing could translate into growth for companies and provide an opportunity for chemical and fertiliser companies to make their mark through education and supply.
 

Nulandis also aimed to grow its plant protection market share in South Africa from 28% to about 35% over the next few years by “plugging the identified gaps”.
 

The group expected the South African market to grow by between 8% and 9% a year, with the rest of Africa delivering “much higher” returns as it sought speciality acquisitions to fast-track its Africa ambitions.
 

Nulandis, which was “very busy” in terms of acquisition activity, planned to boost revenue from a current indexed base revenue of 1 200 to 2 500 by 2017 through acquisitions in Africa and organic growth. In 2001, the group had an indexed base revenue of 100.
 

Ludick declined to outline the exact revenue values or percentages.
 

The group had inked three memorandums of understanding, with indications of more on the way, which the company would announce in due course.