Strengths, Potentials, Opportunities and Challenges of Afghanistan’s Agriculture December 2 ,2013 Washington, D.C., USA By: Abdul Ghafoor Chairman, Rana Agribusiness Company and Oil Crops Growers Association of Afghanistan. 1
I. Introduction •
Afghanistan agriculture is the largest production sector of the Afghan economy and is characterized by a diversified Farming System, a number of Sub-sectors, and with enormous Production and agro-industry development potentials, both in the Crops and livestock Sub-sectors. In my assessment, about 70 percent of that potential remains to be untapped for lack of investment in the key components of the sector [irrigation development, marketing, credit, processing and farmer empowerment] as well as the use of traditional farming practices, rather than a business/economic ways of doing farming.
• Efficient and economic tapping of these potentials, requires adequate domestic and foreign investments through mutually beneficial joint ventures. Rules and regulations for such joint ventures needs to be put in place. 2
• Afghanistan as an agricultural country with agrarian economy, where about 80% of Afghans are occupied with agricultural activities and 31% of GDP is generated from agribusiness. • Hence, the sector needs to and can become a major producer/exporter rather than consumer/importer of most agricultural commodities, as is unfortunately the case at the present time is that the country is importing commodities such as wheat, rice, edible oil, animal feed, poultry, dairy and fish products which can be produced domestically. • This situation must and can be changed by supporting domestic production as successfully experienced by other countries in the region. • There is the need to enforce policies that any commodity which can be domestically produced should not be imported. • If the sector was able to speak up, it will call on the Afghan people that is has the potential to feed the growing population, but also require the raw materials for domestic industries and to supporting the economy through increased exports.
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The basic resources to meet the need and challenges are there , we have plenty of arable land, adequate water (surfaces , ground) favorable climate, and hard working farmers . • At the present time, Afghanistan is using about 30% of its total water and arable land resources for lack of investment and developing the required irrigation infrastructures and of the labor force [farmers] due to lack of technologies and working capital, access to adequate and affordable credit and farm inputs, as well as market and marketing uncertainties. • Under such farming uncertainty, the Afghan farmers tend to hesitate to invest in farm production. The success of countries in the region, such as India, in addressing this issue can be valuable. • In terms of credit requirement, for an estimated 1.5 million farmers, and an average credit need of $1,000 per farmer, there is a total need of $1.5 billion for institutional and sustainable credit on an annual basis •
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ď‚— Having such agricultural and related natural
resources potential, and rich mineral resources, how can anyone justify that Afghanistan is a poor country? It is rather the people of Afghanistan that have remained poor for not being able to invest in the utilization and management of these resources.
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• What we need to do is to make the most efficient and economic utilization of these resource by enforcing responsive investment polices to promote investment by the public and private sectors ( both domestic and external ) supported by incentives to investors in the form of leasing land , easy terms credit, accessible and less costly energy 6
II. The Vast Magnitude of Afghan Agriculture I believe, it will be unfair for me and I would be doing injustice to the
paramount importance, multiple strength and vast span of Afghan agriculture sector, to most condensely cover it all in a 10 minute presentation at this importance conference For this reason, I should rather try to focus on a least-developed subsector: the oil seed or industrial crop sub-sector, in association with chemical fertilizer production and adapted farm mechanization. A more elaborated PowerPoint presentation on investment opportunities in Afghan Agri-business was presented at the New Delhi Conference of “Doing Business with Afghanistan, November 18-19, 2013”. Which in my assessment was well received and has generated interest with Indian businesses. Copies of that presentation can be emailed to those interested.
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III. Justifiable reasons for investment in this sub – sector : - Oil Seeds are the major source of quality edible oil production for human consumption. - Presently, of it’s estimated annual need of 500,000 tons, Afghanistan imports about 450,000 tons of edible oil of uncertain quality. With adequate investment in domestic production of oil Seeds, as well as in the related processing facilities, this large gap can be drastically but gradually reduced. Cooperation of edible oil and animal feed importing companies will be essential to meet this national challenge, as it was done by Cotton processing companies during the mid 1960’s-1970’s that boosted cotton production to a record 170,000 tons per year.
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**Protein – rich Oil Seeds such as sesame, flax, soybean, canola, are the major sources of animal feed for commercial development of livestock (Poultry , dairy , fishery) **The present estimated need for commercial animal feed is about 625,000 tons and such need is growing and the needed amount is imported from neighboring countries also with uncertain quality. Animal feed has a 60% role in commercial livestock development ** Amongst the major oil seeds, cotton has the largest production and area of coverage . Moreover, cotton also produces fiber for export and domestic textile industries and household needs. Twelve Provinces of Afghanistan possess excellent cotton growing conditions. The peak production reached 170,000 tons per year during the mid 1960’s-1970’s but has now declined to the current 60,000 tons. The potential exists to increase cotton production to at least 300,000 tons per year . ** The development of oil seed industry , will create jobs and improve the country’s GDP and balance of trade. 9
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III. Production and Industrial Development potential of oil seeds sub-sector, investment opportunities and challenges ahead The oil seed sub-sector is presented in order of importance and size of
production: Cotton
Sesame Flax Sharsham (local mustard Ground nut Sunflower Safflower Olive plantations, The New Introduction of soybean—a protein rich oil seed, with 40% protein content Canola (also an oil and protein-rich seed) 11
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IV. Increased production potentials and investment Opportunities. ( solutions ) ─ Upgrading of yields of both irrigated and rain-fed oil seed farming through better seed, better farming practices and for irrigated farming, also through adequate irrigation and fertilizer use. ─ Expanding area of production through development and improving of irrigation, (improved irrigation practices, Innovative irrigation systems such as solar pumps, drip irrigation, leasing of land to private sector, Credit facilities, affordable power supply , tax concessions.
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- Promoting and building up on the successful, Innovative experience of post-wheat and post-canola harvesting for the production of soybean and cotton in warmer areas of the country. Once fully supported by production incentives ( irrigation , land preparation, farming technology , credit and processing facilities ) , this program has the potential to trigger a second green revolution in Afghanistan. ─ Irrigation development is a key factor ─ Presently of the total of 8 million hectares of arable land, only 2.6 million hectare or less than half of the 9 million hectare of total arable land . The potential is to double this area by adequate investment. ─ Improving the competing position of domestic oil seed processing factories. Presently, there are an estimated number of 245 small community based and large processing plants, all of which are running part – time ( 3 months of the year ) for lack of oil seeds, poor management and lack of working capital.
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V. The magnitude of the investment opportunities 1.To meeting the total annual need of edible oil estimated at 500,000 tons which is growing , the domestic production of oil seed will have to increase 25 times ( from 60,000 tons to 1.5 mil. Tons ) and the domestic processing capacity by 15 times ( from about 100,000 tons per year to 1.5 mil tons per year ) . 2.Depending on the availability of investment , the total edible oil need can be achieved in feasible phases.
VI. Supporting Successes • Implementation of a pilot post – wheat harvest soybean farming promotion project in Nangarhar province. • Preparation of three white papers on (i) the status of edible oil production, need, import; (ii) the status of animal feed need, production and import. • The status of research done on oil seed in Afghanistan • A strategic plan for the key tools of development of oil seed industry in Afghanistan. 16
• The use of multi-purpose (irrigation , fruit and vegetable drying, community uses) solar system in Kabul province which can be replicated elsewhere. • A joint conference of OCGAA (Oil crops Grower Association of Afghanistan) with MAIL (Ministry of Agriculture, Irrigation and Livestock) on the development of Oil Seed industries in Afghanistan. • For improving the expanded access of Farmers to certified Seeds through the cooperation and support of MAIL, a National Seed organization of Afghanistan (ANSOR) has been recently established, represented by over 100 Seeds companies. This organization as well as individual Seeds companies, need working capital, management and operational support to operate on expanded and sustainable basis. .
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VII. Production of urea fertilizer • Afghan farmers need urea fertilizer for increasing the production of various crops and the bulk of the required amount is being imported. • For the present estimated irrigated farm area of 2.6 million ha, Afghan farmers would need about 390,000 tons . Added to this the double cropping need, this amount will be increased to about 500,000 tons annually. With the doubling of the irrigation area to 5 million ha which is potentially possible with adequate investment in irrigation development, the annual requirement of urea fertilizer will be increased to about one million tons per year which provides for greater investment opportunity. • The Northern provinces of Afghanistan in view of adequate natural gas resources, have adequate potential for the production of urea fertilizer. Such opportunity was partially utilized by the establishment of a 105,000 ton capacity of urea plant in late 1950’s. This production capacity has been later reduced to less than 30,000 due to older technology as well as poor management and maintenance. 19
Addressing Farmers Need for DAP ď‚— In addition to urea, Afghan farmers need to use phosphate containing
fertilizer to increase the production and quality of their crops, especially oil seeds. The production of this fertilizer, at the present time, is concentrated in USA, North African countries, Jordan Australia, Russia and China, where phosphate rocks are available in abundance ď‚— Afghanistan is not one of these countries, and hence depends on import through Pakistan and the Pakistan traders have developed a monopoly on DAP trade in Afghanistan ď‚— By changing multiple hands, Afghan farmers have to pay excessive price to purchase it, still with uncertain quality, resulting in higher cost of production and poor competing position of the Afghan farmers and oil seed industries 20
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VIII. Adapted/ Selected Small farming Mechanization By using traditional farming equipment, Afghan
farmers are losing in the productivity of their farming as well as suffering from the loss & waste of costly farm inputs such as irrigation water, and improved seeds and chemical fertilizers. These losses can be greatly reduced by using more efficient farm equipment as successfully experienced by other Asian countries. There is an obvious need of investment and developing such adapted farm equipment. The sooner this is done, the greater the economic benefits to Afghan Agriculture. 22
Thank You! 23