Tag Archives: alternative
Africa To Establish Free Trade Area By 2015: Zuma
JOHANNESBURG, (Xinhua) — African countries are expected to establish a free trade area by 2015, combining the markets of 26 countries with a population of nearly 600 million people and a combined GDP of 1 trillion U.S. dollars, South African President Jacob Zuma said on Tuesday. “Importantly, this will form the basis for an Africa-wide Free Trade Area, which could create a single market of 2.6 trillion U.S. dollars,” Zuma told delegates attending the first meeting of the BRICS Business Council in Johannesburg. This will enable African countries to further promote intra- African trade, Zuma said, adding that under the auspices of the African Union, African countries are launching an ambitious Tripartite free trade area, bringing together countries of Eastern and Southern Africa. “Africa is becoming a remarkable success story which augurs well for the BRICS partnership,” Zuma said. BRICS is an acronym for the powerful grouping of the world’s leading emerging markets, namely Brazil, Russia, India, China and South Africa. At the 5 th BRICS Durban summit in March, special focus was put on BRICS’ cooperation with Africa. The BRICS-Africa engagement and dialogue signals a new departure and a new avenue to take forward the continent’s development agenda. The ongoing meeting of the BRICS Business Council, which was set up at the Durban summit, will address three key issues—investment opportunities, value-added trade and the BRICS Development Bank. Zuma devoted much of his speech to the potentials of Africa. Africa’s output, he said, is expected to expand by 50 percent by 2015, resulting in a 30 percent rise in the continent’s spending power. “It is becoming well-known as well that the rate of return on foreign investment in Africa is higher than in any other region in the world. This is not surprising given the competitive edge of the continent,” Zuma noted. Africa’s advantages include its extraordinary mineral wealth and agricultural potential. South Africa’s own mineral wealth is estimated at 2.5 trillion U.S. dollars. In addition, the continent has a young working population and a growing middle class with considerable and growing purchasing power. In moves to promote intra-African trade, South Africa will play its own part to promoting investments within the continent, Zuma said. Over the last few years, the South African Reserve Bank approved nearly 1,000 large investments into 36 African countries. These mutually beneficial investments generate tax revenue, dividends and jobs between countries. “While we appreciate that our intra-African trade is still marginal, real barriers are not tariffs, but include other factors such as under-developed production structures and inadequate infrastructure,” Zuma said. He said Africa is poised to make further progress given the focus on improving systems and policies. JOHANNESBURG, (Xinhua) — African countries are expected to establish a free trade area by 2015, combining the markets of 26 countries with a population of nearly 600 million people and a combined GDP of 1 trillion U.S. dollars, South African President Jacob Zuma said on Tuesday. “Importantly, this will form the basis for an Africa-wide Free Trade Area, which could create a single market of 2.6 trillion U.S. dollars,” Zuma told delegates attending the first meeting of the BRICS Business Council in Johannesburg. This will enable African countries to further promote intra- African trade, Zuma said, adding that under the auspices of the African Union, African countries are launching an ambitious Tripartite free trade area, bringing together countries of Eastern and Southern Africa. “Africa is becoming a remarkable success story which augurs well for the BRICS partnership,” Zuma said. BRICS is an acronym for the powerful grouping of the world’s leading emerging markets, namely Brazil, Russia, India, China and South Africa. At the 5 th BRICS Durban summit in March, special focus was put on BRICS’ cooperation with Africa. The BRICS-Africa engagement and dialogue signals a new departure and a new avenue to take forward the continent’s development agenda. The ongoing meeting of the BRICS Business Council, which was set up at the Durban summit, will address three key issues—investment opportunities, value-added trade and the BRICS Development Bank. Zuma devoted much of his speech to the potentials of Africa. Africa’s output, he said, is expected to expand by 50 percent by 2015, resulting in a 30 percent rise in the continent’s spending power. “It is becoming well-known as well that the rate of return on foreign investment in Africa is higher than in any other region in the world. This is not surprising given the competitive edge of the continent,” Zuma noted. Africa’s advantages include its extraordinary mineral wealth and agricultural potential. South Africa’s own mineral wealth is estimated at 2.5 trillion U.S. dollars. In addition, the continent has a young working population and a growing middle class with considerable and growing purchasing power. In moves to promote intra-African trade, South Africa will play its own part to promoting investments within the continent, Zuma said. Over the last few years, the South African Reserve Bank approved nearly 1,000 large investments into 36 African countries. These mutually beneficial investments generate tax revenue, dividends and jobs between countries. “While we appreciate that our intra-African trade is still marginal, real barriers are not tariffs, but include other factors such as under-developed production structures and inadequate infrastructure,” Zuma said. He said Africa is poised to make further progress given the focus on improving systems and policies. Continue reading
China, Africa to Strengthen Agriculture Cooperation
2013-08-29 12:09:54 Xinhua Web Editor: Liu Ranran China and Africa see broad prospects for future agricultural cooperation and the two sides will work to establish a mechanism to advance cooperation in the sector, said an official white paper released Thursday. “The Chinese government attaches great importance to its mutually beneficial agricultural cooperation with Africa, and works hard to help African countries turn resource advantages into developmental ones,” says the paper on Sino-Africa Economic and Trade Cooperation published by the Information Office of the State Council. In recent years, Sino-African trade in agricultural products has grown quickly. From 2009 to 2012, China’s agricultural exports to Africa grew from 1.58 billion U.S. dollars to 2.49 billion U.S. dollars, an increase of 57.6 percent. During the same period, China’s agricultural imports from Africa, mainly non-food items such as cotton, hemp, silk and oilseeds, saw a 146-percent surge. The paper attributes the robust growth partly to China’s zero-tariff policy adopted in 2005 for some African products, as well as Chinese enterprises’ growing investments in Africa. From 2009 to 2012, China’s direct investment in African agriculture grew from 30 million U.S. dollars to 82.47 million U.S. dollars, an increase of 175 percent. Those investment has increased grain supplies in the countries concerned and enhanced the comprehensive agricultural productivity of those countries, the paper says, citing Mozambique as an example, where 300 hectares of experimental paddy fields supported by Chinese investment yielded 9 tonnes to 10 tonnes per hectare for three successive years. The paper says the Chinese government has tried to enhance Africa’s self-reliance capacity to develop its agriculture by setting up technology demonstration centers, and sending experts to share experience in agricultural production. Since 2006, China has helped set up 15 agricultural demonstration centers in Rwanda, the Republic of Congo, Mozambique and some other countries, and is planning to establish another seven. “In the future, China will advance agricultural cooperation with Africa in all respects while ensuring that this cooperation puts both parties on an equal footing, is mutually beneficial, and advances common development,” the paper says. It will work to establish and improve a mechanism for bilateral agricultural cooperation, and strengthen Sino-African cooperation in the sharing of agricultural technologies, resource varieties and agricultural information, the processing and trade of agricultural products, agricultural infrastructure construction, and human resource training, says the white paper. China will also work to deepen Sino-African cooperation within the frameworks of the United Nations Food and Agriculture Organization (UNFAO) and the International Fund for Agricultural Development, according to the paper. Continue reading
Investing In Aussie Agriculture
28 AUG 2013 Matt Woodington It may have been a pretty dull spectacle in general but for those in the business of agriculture, the first election debate between Kevin Rudd and Tony Abbott was exciting for the mere mention of their industry. For Australian agribusinesses, Asia’s rising middle classes and their growing appetite for better, or simply different, foods is a tantalising opportunity but investment in the sector is needed. Indonesia is currently the biggest importer of Australian agricultural products, with Japan, South Korea and parts of the Middle East not far behind, but demand is on the increase throughout Asia, as more wealth leads to a taste for the kind of grains and proteins Australia produces in droves. Meanwhile, as the mining boom subsides, plenty of questions linger around how the hole it leaves behind in the Australian economy will be filled. Just like Australia can’t feed Asia by itself, agriculture won’t replace mining but it could certainly play its part. “It’s coming back into focus, I think the fact that it even gets a mention in the first debate between the leader of the opposition and the prime minister, shows the rejuvenation and increasing interest in agriculture and agribusinesses generally,” says Tim Burrow, a director at the Agribusiness Association of Australia. Australia’s export pedigree Although it’s a relatively small food producer on a global scale, Australia punches above its weight as an exporter, because it only uses roughly a third of its produce. “We export a lot of protein, whether it be animal protein in the form of beef or vegetable protein in the form of good quality wheat,” says Burrow. “There will be particular types of grain, meat or sugar that Asian people wish to have, just like we import quite a lot of food because it’s what we want and other countries or farmers are better at producing it.” Chinese demand for wheat and dairy products is growing fastest, as its middle class expands and mistrust of local food sources remains an issue. According to CBA analysts, China has contributed 33% to the growth of global fresh milk consumption since 2010 and 80% to whole milk powder growth, often used for infant formula. However, Chinese dairy demand still lags that of comparable developed-Asian countries. “For example, Chinese per capita cheese consumption grows as incomes grow. If China’s rate of per capita dairy consumption matched the developed-Asia average, Chinese cheese consumption would surge 8.4 times to 3 million tonnes, equivalent to a 16% uplift in global demand,” according to a CBA analyst note. “Despite Chinese investment in dairy genetics and infrastructure, recent local feed shortages – evidenced by swelling imports for corn, wheat and soybeans – supports CBA Commodities’ view that future growth in Chinese dairy consumption will be largely satisfied by imports. “The New Zealand and Australian dairy sectors have an opportunity to satisfy Chinese demand.” Agricultural consolidation New Zealand has stepped ahead of Australia with its free trade agreement with China, but CBA believes demand will continue to outstrip supply. New Zealand is the lowest cost dairy producer in the world, with Victoria in second place. Costs are much higher even in places like North America where farmers rely more on grain fed cattle yards, rather than good old fashioned grass. The world’s biggest dairy exporter, Fonterra of New Zealand, was recently forced to assure China and other importers over the safety of its milk following a botulism scare after bacteria was found in whey powder used in its infant formula. One of Australia’s biggest infant formula producers is Bega Cheese, which derives around half its earnings from exports. Bega, whose earnings increased 13% in the 2013 financial year, also owns around 18% of Warrnambool Cheese and Butter Factory, in which Murray Goulburn also has a 14.5% stake. Reports suggest the two shareholders could be positioning themselves for a takeover approach and while another domestic tie-up could stem from Ruralco’s interest in Elders, what’s causing more of a stir at the moment is the continuing trend of overseas buyers picking off Australia’s biggest agribusinesses. ABB Grain was bought by Canada’s Viterra in 2009, which is now part of Glencore, while AWB was sold to another Canadian company Agrium a year later. The major deal currently on the table is a $3.4bn offer for GrainCorp from US company Archer Daniels Midlands, which would see another of Australia’s biggest grain companies fall into foreign hands. The proposed deal, which is due to be resolved by November, has caused controversy and frustration among those that fear Australia is losing control of too much of its agricultural real estate. “What we haven’t really seen in the agricultural sector unfortunately is a merger of two big Australian companies to become a global player,” said Burrow. “We simply don’t have enough investors in Australia to grow the agricultural sector fast enough to meet the opportunity demand out there. So we need international investors, whether it comes from the UK, US, China, the Middle East or wherever it might be. “At a corporate level they are very open to international investment, at an individual personal level, we all get a bit concerned about who’s going to own our own food chain.” Understanding the investment challenges One of the big challenges for individual investors is getting to grips with the short-term volatility of agribusiness, which is considered a highly cyclical sector due to its pronounced ups and downs. Weather plays an important part and not just the weather in Australia either. Dairy farmers were hit hard by the periods of drought between 2001 and 2009, particularly in Northern Victoria. The struggles of Australian farmers may have helped their northern hemisphere counterparts, however, as demand for their goods would have gone up due to the fall in global supply. Likewise, if conditions for growing wheat are perfect everywhere in the world at any given time, then the lavish supply would cause prices and therefore the earnings of producers to fall. With those variations at play, keeping costs to a minimum is a priority for agribusinesses, which is why some have moved to mechanical harvesting, used for grapes for example, and more dairy farmers are employing robots in the milking shed. Agribusinesses will have been relieved to see the value of the Australian dollar fall, which should have a broadly positive impact on the industry. A lower dollar makes Australian goods cheaper for overseas buyers and gives the companies a chance to increase margins. Tasmanian Salmon farmer Tassal is one company to have put its export business on hold until the dollar reached a more palatable level, although it has done rather well from its domestic operations. Burrow believes that agribusinesses are best suited to long term investors, while the possibility of more takeover activity in the sector could be an attraction. The offer for GrainCorp represented a 49% mark up on its closing share price the previous day. The broader industry faces plenty of other challenges; the need for more investment in infrastructure to access remote regions and facilitate more export traffic, and fixing the shortage of qualified agricultural people coming through Australia’s universities are among them. “Agriculture needs focus, it needs a political statement on it because it requires the space to develop rapidly to meet the demands,” said Burrow. “I just think it’s good that the political platform at the moment is recognising the importance of agriculture.” Continue reading
