The Indicator

Low Agricultural Production Limits Caloric Consumption in East Africa

In this monthly column called “The Indicator”, we take a economic or financial statistic from East Africa and break it down into bite-sized nuggets of knowledge for investors.

This month’s indicator figure is 2,008

2,008 of what?

An overwhelming majority of people’s livelihoods in Sub-Saharan Africa depend on agriculture, or the industry of food production. The other side of food production is food consumption.

This month’s indicator is focused on nutrition and is 2,008, or the average number of calories consumed per day by an average person living in the East Africa Community (EAC).

If we include the total number of calories consumed across the whole of EAC this results in 316 billion calories per day or over 115 trillion calories per year.

What do you mean by calories consumed?

Calories measure the energy we get from our food to run our bodies. Scientifically speaking, a calorie is a unit of energy defined as the amount of energy needed to heat one kilogram of water by one degree Celsius.

The Big Mac Index in the Economist Magazine is another economic indicator which shows the price of a Big Mac hamburger from McDonald’s restaurants. Each Big Mac has 560 calories or 28% of the total number of calories consumed per day per person in EAC countries.

What’s the minimum amount of arable land to feed East African citizens?

Thankfully for global health reasons, most people don’t eat Big Macs all day.

So to understand arable land needed to feed the EAC we will use the most basic of crops, long grain white rice at about 1300 calories per kilo. This means that, at a minimum, farmers need to produce 1.54 kilos to feed one person each day or 562 kilos to feed one person for a year, or 88.5 billion kilos to feed the whole population for a year.

Rice takes up a significant amount of space to grow. So to get 88.5 billion kilos a single farmer at above average efficiency and with contiguous land would need 39,021,820 acres of land, a size nearly equivalent to the size of the US State of Florida or less than 9% of the total land mass of East African Community countries.

The reality is farming in the EAC is highly fragmented and less productive than the global average. The EAC farming distribution systems incur a huge amount of spoilage, reportedly as high as 40% for some crops.

How do calories consumed compare to other regions of the world?

Not surprisingly EAC countries consume significantly less calories per person than the wealthy nations of the West.

Eritrean citizens who are the worst off consume on average 1,580 calories, a bit less than those in Burundi, the second lowest globally at 1,680. In comparison, the poorest country in Europe is Moldova which consumes 2,850 calories per day, but still 42% more than the average EAC individual.

Over the same period studied, Americans consumed the most at 3,750 calories per day followed by British citizens at 3,450 or 87% more and 72% more, respectively.

In developed countries, populations consume more calories than people in EAC in part due to consumer preferences as well as institutions that minimize the risks involved with food production, ensuring reliable production and delivery of food.

Is calorie consumption going up or going down in EAC?

In the EAC, food consumption is determined by both population and food availability.

If farmers produce more food and are able to get more food to market then citizens of the EAC will be able to consume more food.

The EAC has a young and growing population. For people to survive and for stability to be maintained, more food is needed.

What does this mean for the agricultural industry?

Simply put, this means that more food is needed to be produced by EAC farmers. Specifically, output per acre of land needs to be increased and food spoilage needs to be decreased.

What’s preventing agricultural industries from improving to meet growth in demand?

While different countries face different constraints, there are a few common themes throughout the EAC:

  • Land disputes discourage investment and the formation of large-scale farming.
  • Challenges in making investments in productivity upgrades in agricultural supply chains and systems.
  • Limited mechanisms to hedge risks like droughts or bad harvest years.
  • Barriers to trade between African countries regarding agricultural goods.

What can be done?

Agriculture in EAC is highly fragmented and making region-wide improvements to farming is incredibly complex.

That said, there are some areas we can look at that would make significant long-term changes for the benefit of EAC citizens:

  • Improvements in policies to make agriculture more available to long-term investors.
  • Design of systems to reduce agricultural waste and spoilage.
  • Encouraging technological innovation to increase farm yields to feed more people healthy food.
  • An increase in transparency of farm output prices through means like the Commodity Exchange in Addis Ababa.
  • Increases in food security through grain storage and seed banks to prevent disasters from unfortunate natural events.

It is a long journey but there are signs of hope as technology and production intensification are improving.

The lives and future of the EAC’s 157 million people depend on it.

How can I learn more?

To learn more about agricultural consumption and output in East Africa you can visit the Food and Agriculture Organization of the United Nations at http://www.fao.org and specifically its OECD FAO Agricultural Outlook 2016-2025 at http://www.fao.org/docrep/005/ac911e/ac911e05.htm

About the authors:

David L. Ross is Managing Director of Statera Capital and US Ambassador to the Open University of Tanzania active in growing companies in Eastern and Southern Africa through primary investment, investment advisory, strategic partnerships, and executive education. Connect on LinkedIn at http://tz.linkedin.com/in/davidlross1 or at david@stateracapital.com.

Catherine Mandler is a Senior Analyst at Statera Capital. Connect on LinkedIn at http://www.linkedin.com/in/CatherineMandler or at catherine@stateracapital.com.

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