Somali agriculture, investment opportunity

Somali Agriculture Investment Opportunity

Agriculture in Figures

Somalia’s agricultural sector contributes 60% of the country’s GDP, 80% of its employment, and 90% of its exports. The Federal Government of Somalia acknowledges its importance as a means of ‘stimulating’ economic growth. The country’s agricultural sector comprises three subsectors: nomadic pastoralism; rain-fed subsistence farming; and irrigated agriculture. Although irrigated agriculture accounts for only 10% of cultivated land, the Shabelle and Juba rivers in the southern part of the country, and rivers in the northwest, provide a swathe of underutilized productive land. Primary crops being grown include fruit (banana, grapefruit, mango, orange, lemon, lime, guava, papaya and melon), vegetables (tomatoes, lettuce, onions, peppers, and cabbage) maize, rice, sesame and date palm.

10%

Land

Cultivated

80%

Employed in Agriculture

90%

Source: FAO/WFP

Despite two decades of conflict and several years of famine, Somalia’s agricultural sector has remained resilient and for some commodities, production is growing year on year. Exports too are seeing similar growth patterns. In 2014, livestock exports to the gulf states were conservatively estimated at US$ 360 million. Sesame production has grown an estimated 40% in the past five years to reach 90,000 tons, making Somalia Africa’s 8th largest producer. A recent study estimates dried lemon exports at nearly 30,000 tons with a market value of $57 million. Currently, only 10% of Mogadishu milk needs are served by dairy animals on commercial farms in and around the city; with milk powder imports making up the balance.

Cattle herder and his livestock in Mogadishu.

Exports Earnigs

Bountiful banana harvest in Somalia.

Why Invest in Somalia?

• Sustainable Management and Regulation: Somalia became an active member of the Indian Ocean Tuna Commission in 2014 and a member of Fish-i-Africa in 2016, providing an environment that can protect legitimate investors and assist with long term sustainability. Increased domestic demand: Demand for fish in Somalia’s major urban centers is now outstripping supply. Difficulties in cold chain infrastructure and transport has seen a large price differential develop in fresh fish prices between fish landing sites and urban markets, creating a substantial opportunity for investors • International Demand: International demand for seafood products continues to increase, when most of the world’s fisheries are either over-exploited or fully exploited. Somalia is uniquely situated to meet rapidly rising demand for fish products, particularly in Ethiopia and the Gulf States.

• Variety of Fish Available: As can be expected in such a large EEZ, a huge variety of species can be found, many of which are completely untapped. Considerable potential exists for niche fisheries, exploiting high value fish species for export markets, that have yet to be exploited in Somalia. Somali lobster was exported worldwide in the 1980’s, and was one of the most valuable in the world. Shrimp, octopus, crab, a wide variety of tuna species are all known to exist in Somalia but are yet to be exploited.

• The Piracy Legacy: Somalia’s reputation as a haven for piracy is well known: what is less known is the impact this has had on fisheries, which have been largely untouched by international industrial investors for over a decade seeing fish stocks rebound. The Somali EEZ is probably the most underfished EEZ in the world.

Piracy activity ceased in 2013, although few foreign industrial vessels have returned to take advantage of the virgin fish stocks available.

• Labor costs: Labor costs, particularly in remote coastal communities, remain extremely low. The potential for profitable value added processing to low cost fish species, for international export markets, is considerable.

• Priority Sector: The Federal Government of Somalia, in their recent 2017-2019 National Development have listed fisheries as a priority sector; a driver of economic growth.

What are the Opportunities?

• Landing facility rehabilitation, including major fishing harbor infrastructure, with long term income streams for investors developing and operating this infrastructure.

• Cold chain infrastructure development, to unlock the large price differential seen between fish prices in remote coastal communities where abundant fish stocks are found, and urban areas where demand outstrips supply.

• Supply of renewable energy infrastructure and equipment, against a backdrop of extremely high energy prices.

• Boat building, engine sales and agencies, particularly the supply of semi-industrial fishing vessels, urgently needed to increase Somalia’s fishing capacity.

• Investment in industrial fishing vessels, particularly in the offshore sector, either landing into Somalia for processing and value addition, or directly to foreign markets.

• Fish meal production, at both niche and industrial levels; significant markets exist already within Somalia for fish meal, as a protein source within animal feed.

• Development of new niche fisheries for high value export markets such as cuttlefish and shrimp, including significant value addition.

• Exploitation of fish species for which there is no domestic demand in Somalia; species such as sardine are in high demand worldwide, but have no domestic market and have not been exploited for over two decades.

Freshly harvested guava in Somaliland.