The agriculture industry is of immense significance on the entire African continent. Of all the economic segments in Africa, agriculture contributes over 15 per cent to Africa’s GDP. Africa has a population where approximately 60 per cent are into farming. Interestingly, most of those are into farming for subsistence – something that will relate to some of what I will discuss later. Zimbabwe is also anchored mainly by the agriculture industry. Most of those employed or generate some form of income are found in that industry – as many as 70 per cent. Over 60 per cent of raw materials used by local industries come from agricultural activities. We also have over 40 per cent of exports being agricultural produce. The biggest challenge is that most of the agricultural produce in Zimbabwe is sold (locally or abroad) raw i.e. without any value addition.
Value Addition – What Is It?
In basic terms, value addition in the processing of something from its original state into something with more value. Just by looking at that, you can see that value addition can refer to many possible scenarios. The irony is in the common occurrence of a certain toxic cycle here in Zimbabwe. For example, one can grow top-quality tomatoes for export. In the importing country, they then end up in the hands of a food processing company. They get processed into the tomato sauce and it is exported to Zimbabwe. The person who initially exported the raw tomatoes might even end up buying the tomato sauce. Such cycles are commonplace in Zimbabwe in agriculture and they should not be so.
Importance Of Research And Development
In value addition this cannot be emphasized – it is the backbone. Unfortunately, we seem to not have much of that in Zimbabwe. There are so many possible value-added products that will never be discovered if research and development are not taken seriously. Some of the products seem unimaginable but you would be amazed at what can be made. For example, making wine from honey, making noodles out of sweet potatoes, or making ethanol out of corn – shows you that anything is possible.
I would encourage you to look up the late Dr George Washington Carver. In his lifetime he created over 300 products from just peanuts alone. The truth is we have barely even scratched the surface when it comes to value-added products that can be made from agricultural produce. However, for that to happen we need to see more effort and resources being invested into research and development. Farmers, learning institutions, and financiers, amongst other key players, need to form strategic alliances in pursuit of this. I wish to see more and more research institutions being established.
Practical Example to Illustrate Value Addition – Cornflakes
I am not going to comprehensively factor in all the variables but I just want to illustrate something. A typical box of cornflakes is comprised of 8 per cent corn i.e. of its weight, 8 per cent is corn. I do not want to bombard you with maths but just know that on average, to make 69 boxes of cornflakes (500 grams each) requires approximately 25 kilograms of corn. In Zimbabwe government indicated that the pre-planting producer price for maize would be ZWL$32 000 per tonne. That translates into ZWL$32 per kilogram – which is ZWL$800 for the 25 kilograms I mentioned earlier.
Cornflakes, 500 grams, are priced at roughly US$2.60 in supermarkets. This means that 69 boxes would cost US$179.40. Costing the production of the cornflakes is somewhat intricate. The core aspects i.e. cost of corn, ingredients, and packaging needed to make one box is roughly US$0.24. Costs are variable but it is said that about US$1 of profit is realized from manufacturing and selling one box of cornflakes. This is for manufacturers who have to purchase the corn from producers. This means the costs would be lower for one who actually produces their own corn.
So, in Zimbabwe, one tonne of maize would sell for approximately US$290. The cost of producing one tonne of maize is about US$150. (Mind you these are conservative figures; they are variable too). This implies a profit of US$140 per tonne – which is US$0.14 profit per kilogram (which is US$3.50 for 25 kilograms). Yet when you use those 25 kilograms to produce cornflakes you end up making a profit of roughly US$69. Remember the 69 boxes of 500-gram cornflakes boxes from 25 kilograms of corn.
Pardon the many figures but I aimed to show you that there is more money to be made from value addition. This is especially so because you can do both wholesale and retail, it is up to you. Whenever you sell agricultural produce raw you will make much less. I would urge you to explore value addition for your agricultural produce. You could unlock amazing economic value and of course remarkable profits for yourself.
I am not oblivious of the initial need to source machinery since it is needed in value addition. This also opens up an avenue for local innovation. I believe there are amazing minds in Zimbabwe that can come up with low-cost homegrown machinery for value addition. Farmers have to shift their mindsets and embrace value addition. I know it takes one moving out of their comfort zone to explore new territories but it can be rewarding. So much of what is imported in Zimbabwe must not be when we look at the many farmers that we have locally. Value addition should be the way to go!