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Time to disturb agriculture’s silent markets

In the middle of the 2016 recession, the Nigeria agricultural industry witnessed the emergence of some truly innovative Start-ups. Digital Agriculture went mainstream. And companies launched products to facilitate widespread participation in the sector through micro-investments.

The impact has been huge. Agricultural extension has improved. Never before have the potential for an agricultural revolution to usurp the tyranny of oil in the economy looked more plausible in the last decades. More importantly, the persistent challenge of smallholder farmers’ inaccessibility to credit were tackled through commercialised crowdfunding platforms from companies such as FarmCrowdy, ThriveAgric, and Farmforte.

As the second-half of 2020 unravels, the economic landscape has so far taken a similar shape from four years ago. For the first time in history, oil prices went negative. Forex reserve is declining.

The Naira is falling. Inflation rate is peaking. Technically, the country is in a recession, again. The situation has catalysed interest in the Nigeria agriculture sector, but because of the unreliability of the Naira, there is a caveat against capital-intensive local investments.

Perhaps it is time to draw attention to the silent but lucrative markets investors and motivated entrepreneurs can exploit in this sector with the possibility for global relevance. These high-growth niche markets are sitting ducks, waiting to be disturbed. And with the right momentum, investors and entrepreneurs can compound their initial outlay and protect against devaluation by leveraging customised local solutions to service a global clientele.

Agricultural inoculants

Inoculation is the introduction of beneficial microorganisms to the soil or plant seeds before planting. The microbes establish successful symbiosis that enhances soil fertility, high crop yield, and improved resistance to diseases. Agricultural inoculants contain these microbes (bacteria, fungi, protozoa, virus, algae) and their strains.

 The global market is growing as fast as interests towards organic low-input agriculture produce goes. But despite the success of the N2Africa project that has proved the viability of the market in Nigeria, commercialisation has remained poor.

The International Institute of Tropical Agriculture (IITA) in Nigeria found that Inoculation resulted in an additional 150,000 ton per year of soybeans (alone!) worth $93 million per year to farmers. Consumers are becoming health conscious of their food; government policies are favouring biofertilizers and awareness for regenerative agriculture practices among farmers is increasing.

There is a gap to be filled for agricultural inoculants adapted to the local environment. Therefore, the global relevance of a local solution will scale if they meet the ongoing challenge to develop alternatives that may help to solve major environmental and human health problems associated with the use of chemicals in agriculture. This is a lucrative opportunity Agtech start-up here must not miss.

Agricultural pheromones

Just as the demand for organic agriculture grows, integrated pest management practices are also gaining popularity. Pheromones are chemical signals that have evolved for communication between members of the same species.

Particularly, Insect (and recently, Nematode) pheromones are manipulated to control insect pests of agriculture and horticulture as a sustainable alternative to conventional pesticides. Because Each pheromone is designed for a specific target, they are efficient at managing destructive pests immune to conventional pesticides while allowing the beneficial ones to continue to support plant growth. Serious side effects from the conventional use of traditional chemical pesticides is avoided.

In 2016, on recommendation of The National Horticulture Research Institute, the Nigerian government introduced a containment programme in its 2016 budget to tackle tomato pest infestation. A UK company, Russell IPM, was contracted to help.

There is a market here. Traditional agrochemical companies neglect the insect pheromone market due to the limited volume of active ingredients, but the growth of precision farming shows its promise. However, the real opportunity lies in cornering a local market in Africa, and setting up a distribution channel that international player seeking to strengthen their global market position can acquire

Blockchain in agriculture

The diffusion of Blockchain technology beyond its initial fintech application is moving at lightning pace. Adoption is being driven by the palpability of its potential and long-term value as a trusted way for data management.

The applications of blockchain technology ranges from optimised food supply chains, agricultural insurance, smart farming, agricultural product traceability and improved transaction efficiency.

In fact, blockchain in the agriculture market has the highest known estimated compound annual growth rate (CAGR) of about 50 percent. Data collection and utility is expensive in Nigeria, and the need for multiple intermediaries makes the agricultural value chain extremely costly.

But blockchain shows promise to transform the sector if smallholder farmers can be successfully trained and integrated into an ecosystem where their transactions are honestly recorded.

The demand for blockchain in agriculture is being pushed by the need for global supply chain transparency; increasing cases of food fraud estimated to cost about $15 billion per year; and food wastage & theft estimated at an annual cost of $2.5 trillion. Success at providing a scalable solution provides unlimited possibilities for global expansion.

Food waste management

Africa loses about $48 billion to high post-harvest losses and spends about $35 billion annually on food importation.

Only about 30 percent of food produce arrive at the tables of Nigerian homes from the farm, while Nigerians spend a total of N334.3 billion to import prepared foodstuffs.

The need for food waste management systems cannot be overemphasised. The advantage here is two-fold. Designing solutions to reduce food waste from production to processing, storage to distribution; also provides the opportunity to utilise the waste as renewable energy sources.

Food waste consisting of organic and biomass waste serve as a great source of biofuel for electricity generation, biofertilizer for soil remediation and plant growth, and animal feed. Government efforts towards promoting environmental sustainability, rising cost of living, lack of resources and rise in raw material costs are pushing the growth of this market. And Venture Capital firms are waiting to spend their money!

Plant genomics

The market of Plant genomics constantly evolves with technological advancement. As a field aimed at describing, sequencing, and studying the genetic compositions, functions, structures, and interactions of plant genomes, it is in perpetual growth. But plant genomics in Africa is largely led by non-profit research organisations.

However, agricultural research has become a truly profitable enterprise where results are strategically commercialised.

On this premise, key players in the global plant genomics market have thrived with little competition.

For instance, increasing application of genomics in plant breeding have led to the creation of plant-based alternatives to meat and egg for consumers – a truly unique offering. The opportunity in Nigeria lies in the demand for improved plant varieties, crop seeds with disease resistant and herbicide-tolerant traits. These seeds will increase farmers’ access to crop diversity while they focus on meeting the demands of a rising population at lower costs.

Molecular and genetic engineering tools or techniques that will increase crop performances will create access to collaborations, advanced technology through strategic partnerships with legacy players and funding from governments and international bodies.

Also, Start-ups in this segment will gain first mover advantage, attracting top talents to pioneer their concepts in the wide array of application in plant breeding and genetic resource preservation.

Providing custom solutions to local farmers will not only impact greatly on the agriculture sector. The results are far-reaching. Moreover, it will provide precedence for pragmatic and practical approach to development, away from theory for revolutionising agriculture in the African continent. One cannot predict what the future holds for any of the markets explored given the rapid development of technology.

But staying informed of the newest developments in agricultural processes is necessary to dictate the course the continent’s agricultural journey will take. The world economy is a global competition with political capital as reward. And it will be an interesting ride for African companies to follow fast, disturb now… Because, in truth, Agriculture is still decades away from disruption in Africa.

It is easy to see why. Even though the industry boasts of the oldest form of organised research, the private sector has largely left its R&D to government and institutional bodies.

In response, the industry developed one of the longest lag times (the time delay between a new idea being proposed and its adoption) for innovation. Speed is of the essence to disrupt a mature industry. But this is not to blame the efforts of the private sector here. It is, in fact, incredibly difficult to conduct any form of fundamental research without public funds.

Agtech companies (indeed anyone in the food business) are hardly tech companies. At least, not by this definition. They leverage technology. Talents see through this, and are reminded that farming still requires physical effort, so it loses its “cool” factor quickly.

Managing farms will always require physical presence until the robots come. There is a lack of convergence in Agriculture which discourages product range expansion in favour of product line.

Operation is also infrastructure-intensive. And the uniqueness of the crowdfunding platforms: the old idea of osusu reimplemented in new context, is waning and losing credibility with fraudulent behaviours from new entrants. Established players are already divesting by productising their initial concept (see Crowdyvest and Agropartnerships).

But the reason not to do, is the same as to do, there is no try. Modernising Africa’s agriculture is vital towards unlocking its full potential. It can be Africa’s best export after human capital. And the best effort to gain relevance in the global economy, exactly why it should not be neglected. These niche markets provide a lesser barrier to dominance, exactly why they should not be neglected.

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