Podcast: Fixing Africa’s food production

Every week, Harm Edens of BNR radio interviews internal and external experts on why a bank is aiming to build a better world. In this week’s podcast, he speaks to Marianne Schoemaker, CEO of Rabo Partnerships, about the future of agriculture in Africa.

Listen to the podcast now (in Dutch) or read on for our synopsis in English.

Africa, with its population of 1 billion, is currently a net importer of food. Marianne Schoemaker, CEO of Rabo Partnerships, explains how the bank and its African partners are helping to make supply chains more efficient, sustainable – and fair.

“My first assignment as a new recruit for Rabobank was to research the coffee market. My career has subsequently wound its way through the entire organization before bringing me back to where I lost my heart: developing and emerging markets. As CEO of Rabo Partnerships I can leverage my experience and expertise to help tackle food security there. It’s an issue that has always resonated with me.

Providing access to financial services

“What we’re doing in Africa is giving farmers access to financial services that they lacked. The Dutch banking cooperatives that formed the foundation of Rabobank 120 years ago are a model that is still relevant. In Africa, we partner with local banks to improve access to finance and further prosperity . Our slogan is ‘Growing a better world together’, and the emphasis is very much on that last word: together. Going it alone won’t get you far.

“Our slogan is ‘Growing a better world. Together.”

- Marianne Schoemaker, Rabo Partnerships

“Most individual farmers are ‘unbankable’ by traditional standards. They live in remote areas and they don’t have a bank account. What they do have these days is a mobile phone. That has put digital banking services within their reach, and Rabobank supports programs to educate groups of farmers in this respect. Once they start making bank transfers and depositing into a savings account, they produce data. They gradually build up a credit record, and by doing so they become bankable.

Population explosion

“Africa’s food challenge at macro level is enormous. By 2050 the population will have quadrupled to 4 billion. Meanwhile, people’s diets are likely to shift away from staple crops to meat and dairy, which require more land. So production per hectare will have to grow significantly faster than the population to keep up.

“The solution is twofold. First, the problem of food loss needs to be addressed. 60% of food is lost in Africa on its way from harvest to consumer. So there’s a lot of room for efficiency wins. Second, production needs to be stepped up. Smallholders account for 70% of farms in Africa. If they form groups to make joint investments in machinery, for instance, they can grow bigger and better-quality crops. As a group, they can also wield more influence and get more favorable deals with traders. Smallholders now earn only a very modest share of the profit compared to other players in the supply chain.

“Many African smallholders are farmers by default”

- Marianne Schoemaker, Rabo Partnerships

“A related problem is that many African smallholders are ’farmers by default’, because there are not enough other jobs. As agriculture upscales, the sector will be less labor-intensive, and more and more of these farmers will need alternative employment. In South-East Asia, such people could easily move into manufacturing jobs, but not in Africa, which is unlikely to follow the same path of development with high industrialisation.

Rabobank’s role

“We play an active role in creating cooperatives of smallholders. We share our expertise, both financial and agricultural, with our banking partners. And we use our network to involve food multinationals that trade with Africa in our efforts. An increasing number have a sustainable agenda and are keen to join us in making the supply chain fairer and more transparent.

“To give an example, our partner bank DFCU in Uganda is running a Women in Business (WiB) program, offering training and zero-interest loans to help women grow their SMEs. Another example is how we are working with partners to encourage cocoa farmers to stop burning down rainforest for new plantations and replant their existing ones instead. With a loan, they can tide over a low-income period while they replace their old cocoa trees with new ones. They pay the loan back when they start harvesting again.

A good investment

“Naturally, what we do in Africa makes good business sense for Rabobank, too. We are offered shareholdings in our partner banks. Unlike private equity funds, we have a long investment horizon and don’t need to cash in within a few years. In the long term, these investments generate positive returns and, what’s at least as important, they create social impact. Our investments go hand in hand with technical assistance to our partner banks.

“We also send our own employees on postings, lasting a few weeks to a few months or years. This really gives them a global perspective and puts them in the ‘banking-for-food mindset’. When they return to their regular jobs, they share what they have learned with their colleagues.

Looking ahead

“I expect African banks and governments alike will embrace agrifood as a pillar of their economies by 2030. Major steps in agricultural innovation will counterbalance population growth, so that Africa’s import-to-export ratio for food doesn’t get any worse. The rollout of digital banking will benefit farmers in remote regions.

“I see a profound will to change”

- Marianne Schoemaker, Rabo Partnerships

“By 2040, I’m hoping Africa will have rediscovered its huge agricultural production potential, and that countries like Zambia, Zimbabwe and Uganda will be the food basket of the continent again. The wildcard, however, is governments. They have a key role in enabling this transition, but come election time, they often forget their ambitions in favor of populist measures – like allowing imports of cheap sugar, to the detriment of the budding sugar industry. But increasing transparency is a reason for hope. And I see in many Africans a profound will to change – matching my own!”

Rabobank’s ‘Banking for Food’ podcasts are available in Dutch via various podcast apps for iPhone and Android, SoundCloud and Stitcher.