Africa’s agricultural exports drive demand for better cold chain infrastructure

Africa has long relied on its rich landscapes, fertile soils, and relatively predictable weather to drive agricultural productivity, which contributes significantly to the continent's income. According to a report by the Organization for Economic Cooperation and Development and the United Nations Food and Agriculture Organization, agriculture, forestry, and fisheries account for at least 17% of the continent's GDP.

Agriculture, for example, remains the biggest sector in Kenya, East Africa's largest economy, accounting for approximately 24% of GDP and employing approximately 40% of the workforce in 2022. Agriculture and agricultural products accounted for 60% of Kenya's exports in the same year, demonstrating the importance of agriculture in driving economic growth and resilience in the country.

More than 40% of total agricultural exports required cold chain treatment. Kenyan flower exports account for roughly 40% of the European Union's (EU) imports. Moreover, in 2022, fresh foods accounted for 20% of Kenya's agricultural exports, with approximately 200 exporters stations in the country exclusively sourcing fruits and vegetables for the export market. Stimulated investment in agriculture will drive agriculture’s growth.

African Food exports

Across Africa, the story is the same: growing investment in agriculture by multinational corporations, governments, and private firms all vying for a piece of the pie. Again, using Kenya as an example, the government is undertaking a nine-component agricultural stimulation plan as part of the country's Vision 2030 development program. The efforts aim to promote research and innovation, collaborate with the business sector, strengthen agri-organizations, improve produce quality, and even reorient policies to encourage the sector.

Furthermore, international investors are putting much-needed money into expanding the country's agricultural exports. The European Union, for example, announced a $25 million investment in TradeMark Africa for the Business Environment and Export Enhancement Programme, which is anticipated to boost Kenya's exports.

Demand for cold chain logistics in Africa is growing

Investors want to capitalize on and drive Africa's agricultural productivity potential. With the correct investments in yield improvement and post-harvest loss reduction measures, agricultural productivity would increase by 2-3 times in Eastern and Southern Africa.

With a possible increase of 800% in the value of food, and 90% growth in the trade of processed agricultural products by 2050 in Eastern and Southern Africa alone, there is a strong rationale to upgrade the infrastructure that supports agri-food trade in Africa.

The demand for agricultural products is increasing not only on the continent but also in international markets. January and February this year, ports in Shanghai, China received more than USD 100 million worth of agricultural products from Africa, a significant increase over the same period the previous year.

Africa's agricultural exports are focused on four major markets: Western Europe, South and East Asia, the Middle East, and North America. Each of these regions has strict sanitary standards, particularly when it comes to handling perishable items that require traceability from farms to the end of the value chain.

Although African agricultural products have historically experienced difficulties in entering international markets due to considerable tariff and non-tariff obstacles, the continent has great potential to gain from its expanding agriculture sector. Initiatives such as the Business Environment and Export Enhancement Programme, which is funded by the EU and managed by TradeMark Africa, assist traders in building bridges to international markets by adhering to essential standards and laws.

According to Carl Lorenz, Maersk's Managing Director of the Eastern Africa Area, as demand for African agricultural products grows, so does the need for infrastructure to support the trade. Cold chain logistics, which begins immediately after harvest and includes all phases of the product's supply chain journey to the consumer, will go a long way toward assisting Africa in breaking into new markets and growing in existing ones.