Transcript for
Jeremy Brice on "Investment, Power and Protein in sub-Saharan Africa"
Samara 0:06
Welcome to Feed, a food systems podcast presented by TABLE. I’m Samara Brock.
Matthew 0:11
And I’m Matthew Kessler. Today we’re interviewing Jeremy Brice, lecturer at Manchester University, about a report he wrote for TABLE called Protein, Power and Investment in sub-Saharan Africa.
Jeremy 0:23
My name is Jeremy Brice. I'm a lecturer in sustainability and Innovation at Manchester University. I actually wrote this report in my previous job where I was a postdoctoral researcher within the Oxford Martin School working on the futures of meat and dairy.
Samara 0:41
In our conversation with Jeremy Brice we talk about why he focused on protein in sub-Saharan Africa, who was investing in what, and what the different visions of the investors are.
I had to leave the interview shortly after we began so you’ll hear Matthew asking most of the questions.
Matthew 0:51
The topics of investing into food systems, and the future of food in Africa will hopefully be more more at the center of discussions at COP27 this November in Egypt. Jeremy offers a really nuanced understanding of this topic, but if you’d like to learn more - you can check out his incredibly detailed report.which you can read on our website: tabledebates.org/
Samara 1:12
You can share your appreciation of the podcast by rating us or leaving a review on Spotify or Apple Podcast, and send us an email to podcast@TABLEdebates.org if you have comments, questions or guest recommendations.
Matthew 1:27
What did you set out to explore in this piece?
Jeremy 1:29
This piece of research was actually commissioned to support Table’s current work theme on power in the food system, which uses protein as a case study through which to explore debates about power and food and food system transformation. And I guess, because protein is currently quite a contested focal point for debates about what the future of food systems should look like, it seemed to be a really productive empirical case to use to examine how governmental geopolitical and corporate power is exercised and played out within food systems, but also to think about the influence of power’s less tangible manifestations like cultural, moral, or educational norms.
Now investors, and I'm defining investors broadly as sort of organizations which finance food production, processing, retailing, and so on, be they private sector, financial institutions, states or international organizations like the World Bank, or the African Development Bank, they're often described as being very powerful food system actors. And the argument goes that these institutions have the power to grant or deny finance to particular forms of food production, or particular companies, or particular food producers. And as a result, they play a really significant role in bringing food products, markets and value chains into existence. Or alternatively, they might prove instrumental in preventing the emergence of new food value chains, and new food products through deterring investments. So investors’ decisions about where to invest, or which particular types of food production not to invest in arguably play a really important role in enabling and shaping transformations in diets and food systems. And with that in mind, the idea behind the project was to explore what values, visions and expectations about the future of food are influencing investors' decisions about where to put their capital, and in what ways different groups of investors priorities and preoccupations might be shaping the future of protein in sub-Saharan Africa.
Samara 3:44
I found the focus on investment in this report interesting. Would you say that investment is a proxy for power? Is that why you focus so much on investment?
Jeremy 3:56
I'm not sure I would necessarily say that investment is a proxy for power, possibly the capacity to invest or not invest gives particular organizations, particular groups of people and the ideas they carry, and ability to make certain things happen on the ground or to prevent certain things from happening on the ground. So because investors often have that influence on material outcomes, they do wield a particular form of power. But it's also tricky, because investors really just, in most cases, commit money to a particular enterprise and perhaps advise the people who actually run it day to day on certain things they should or shouldn't do. But they're really quite removed from the everyday nitty gritty of agriculture, or food processing, or logistics, or whatever it is, they're actually investing in. So although in this quite abstract sense, they appear to have a lot of power, actually, it's not clear to what extent they can physically make things happen. Often, there's quite a lot that goes on between what the investor is doing, which is essentially putting in some money, and then what comes out the other end. They're an interesting set of actors to think about power with. They complicate some of the ideas that we might have that, “oh, this group of people own something, and therefore they have power over it,” for instance. Often ownership doesn't necessarily translate smoothly into control.
Matthew 5:32
That is interesting. And I'm quite curious to explore how much they're influencing narratives and how people think about these issues. And there's this perception that investors do wield a lot of power, yet they have this disconnect from what's happening on the ground because they aren't an actor in the food system that is specifically linked to a part of the value chain. To set up the context, so we're talking about protein, and we're talking about sub-Saharan Africa. Why are we focusing on sub-Saharan Africa?
Jeremy 6:03
There's actually quite a lot to unpack here. So one answer is that there's a really long history of concern about protein consumption in sub-Saharan Africa and about the notion that the diets of people within the region might be lacking or deficient in protein. So as far back as the mid 20th century, international public health and development organizations like the UN Food and Agriculture Organization, and the World Health Organization, were noting that, on average, citizens of many Asian and African countries were consuming less protein and specifically smaller quantities of animal products than European and North American populations did on average. And at the time, these organizations sort of presumed that this difference meant that African, South Asian and Latin American diets were deficient in protein in comparison to those which prevailed in the global north, and argued that this lack of protein was implicated in a variety of diet related health conditions. So for a lot of the 20th century, sub-Saharan Africa was kind of something of a poster child for the idea that there was this global protein gap and too little protein was being produced to ensure the good health of much of the world's population. Now, those beliefs about a generalized protein deficiency within the region have maybe faded away slightly in more recent decades. But it's probably fair to say that there's a continuing awareness in international development circles about sub-Saharan Africa's average per capita protein and animal product consumption being low by global standards.
Samara 7:53
The history of protein and protein recommendations for our diets is long and complex.
TABLE researcher Tamsin Blaxter has recently published a piece on this called "Primed for power - a short cultural history of protein”, if you’d like to dig deeper.
Jeremy 8:02
In light of predictions of rapid population growth in the region in coming decades, this has created concern in some quarters that protein production per capita might decrease over time, and that this might limit nutritional gains across much of sub-Saharan Africa, unless domestic protein production expands significantly.
At the same time, we're now in a context where there's sort of a new unease perhaps among some policymakers over the unintended environmental consequences of rapid growth in global livestock populations during recent decades ranging from sort of greenhouse gas emissions from ruminant animals like cows and sheep through to deforestation that's being driven in part by the production of soy in South America to produce animal feed. And that's manifesting in a growing ambivalence amongst some actors in global health and international development circles about the desirability of feeding a growing global population through investing in the expansion of livestock agriculture. So given that in sub-Saharan Africa, we've got both a population that's projected to grow rapidly, and an agricultural investment landscape in which international development funders play an unusually important role. For all of those reasons sub-Saharan Africa really emerged as a region that has for a long time been the focus of policymakers’ anxieties of protein, where the specter of a future that's characterized by protein shortages looms especially large, and where the environmental impacts of addressing this predicted need for protein through expanding animal protein production are kind of especially acutely contested. So it's at the sharp end of a variety of debates.
Matthew 10:08
And how has protein consumption changed in the recent decades?
Jeremy 10:12
According to the FAO, the average North American citizen is eating roughly twice as much protein and seven times as much animal protein per day as the average person in sub-Saharan Africa. That said, those region wide averages hide some pretty consequential variation. So, for instance, to take this at a relatively coarse geographical scale, average daily animal protein consumption per capita has remained surprisingly stable at between six and 12 grams per person per day, across East, West, and Central Africa, over at least the past 20 years of FAO data. By contrast in southern Africa, it’s grown from 24 grams per day in 2001 to 34 grams per person per day in 2017. And southern Africa's much higher, although still low by global standards - average daily intake of animal protein seems to be driven largely by higher per capita rates of animal protein consumption in South Africa, which is where most of the region's population lives. And of course, you'd see similar variations between different countries within each sub region and between different groups of people within individual countries. So just because average protein consumption in a country or region is low, doesn't mean that nobody who lives there has a high protein diet, just that those who do are in a small minority.
Samara 11:44
So why did you say that the stability of per capita protein consumption across sub-Saharan Africa is surprising?
Jeremy 11:52
It's surprising for a reason. And that's because animal protein production has increased rapidly across most of sub-Saharan Africa in recent decades. So, whole milk production, beef production, and egg production across the region has roughly doubled between 1990 and 2020. And meanwhile, chicken and pork production roughly tripled over those three decades. But that increase in animal protein production in sub-Saharan Africa has basically been canceled out by a similar rate of population growth over the same time period. So it hasn't led to a significant increase in the volume of animal protein consumed per person across the region with the exception of southern Africa. And that trend’s forecast to continue over the coming decade. Population growth rates in many sub-Saharan African countries are among the highest in the world. And the region's population is projected to grow by 31%, between 2021 and 2030. And meanwhile, the region's also urbanizing rapidly and city dwellers are expected to make up nearly half its population by 2030. So that's the high level overview of protein consumption within the region.
Samara 13:06
I mean, you seem to be troubling the idea that there is a protein deficiency. It made me wonder, is there actually health indicators that would say that there are negative health outcomes as a result of low protein consumption? Or how are people sort of framing that idea?
Jeremy 13:25
So I think this is a question that deserves quite a nuanced answer. So on the one hand, my general sense is that today's global health practitioners would probably be more cautious than some of their predecessors about making blanket claims that sub-Saharan Africa has a protein deficiency problem. And that's in large part because a lot of the health complications that were attributed to protein deficiencies in say, the 1960s, and 70s, and now chalked up either to deficiencies in specific amino acids, or to combined protein energy malnutrition, so the problem would not be so much that people are not getting enough protein is that they're just not getting enough food. So there's been a shift in that community from problematizing protein deficiency towards problematizing, on the one hand, a lack of access to food, and on the other hand, problematizing specific micronutrient deficiencies. So for a lot of actors in this space, there’s certainly still a nutritional rationale for putting money into protein production in sub-Saharan Africa. But it's not necessarily that there is a general consensus that the diets of people within the region are deficient in protein in general right now. That said, what I did find while doing this research was a really high level of agreement across everyone from agricultural research organizations to philanthropic foundations and development banks that said, sub-Saharan Africa was going to need more protein in the future. And one reason for that was the expectation that we've already talked about that there will be more people living in sub-Saharan Africa in the future. And as a result, the region will need to get more protein from somewhere, just in order for consumption per capita to standstill. Logically, that means either producing more protein within the region, or importing more from other parts of the world, and importing more staple foodstuffs would come at a very significant cost to the foreign currency reserves. And thus, the economic stability of a lot of the more economically fragile countries in the region. And I guess, if neither of those things happen, then you could even see a further decline in per capita protein consumption, and then you really might see serious malnutrition problems.
The other side of the coin is that because the region's home to a lot of countries with growing economies, in which are seeing their populations migrate from rural areas, into the cities, nutritional researchers tend to highlight that where these conditions have occurred in the past, whether that's Europe and North America in the 19th century, or more recently in other parts of the Global South, like Latin America and Southeast Asia, people's diets tend to change in some important ways. These include an increase in total calorie intake, an increase in the proportion of dietary calories derived from fats, and most significantly for us today, an increase in the proportion of dietary protein derived from animal products and an increase in the consumption of processed foodstuffs. So basically, people start to consume more meat and dairy products. And this tends to be called the nutritional transition.
Matthew 17:15
Quick aside: Helen Breewood of TABLE wrote an explainer on the nutrition transition back in 2018, check it out if you’d like to learn more. In short, it’s a model used to describe the shifts in diets and lifestyle that accompany the changes in economic development and urbanisation away from “traditional” diets and towards more “Western” diets. We asked Jeremy if the nutrition transition is real, as much as any concept or theory can be real?
Jeremy 13:25
I think what was really interesting about the role that the nutritional transition played in this project is that when I did interviews with people ranging from directors of philanthropic foundations to development, finance, institution employees and private equity fund managers, they expected pretty much without exception, that you would see the same dietary changes which had happened in the past in other parts of the world, in sub-Saharan Africa over the coming decades. So, as economies grew as populations became more urbanized, many sub-Saharan African countries would see protein rich foodstuffs assume an increasingly prominent place in the diets of their citizens. And in some cases, they justified those expectations by referring directly to academic research that forecast based on nutritional transition models, that demand for protein was going to at least double across the continent of Africa by 2050. And these interviewees tended to present this correlation between GDP growth, urbanization, and increasing protein consumption as a kind of cast iron unalterable fact. This meant that for a lot of investors nutritional transition models seem to have kind of transformed from being a description of past economic and dietary changes in other parts of the world into really almost a predetermined pathway that sub-Saharan Africa would follow in the future. Or, at the very least, into a set of predictions about the future of food in sub-Saharan Africa, which they considered credible enough to use as a basis for making investment decisions.So if you'll permit me one tiny bit of social science jargon in this podcast, this suggests that nutritional transition models have possibly become performative within the world of agricultural investment. And what I mean by that is that they no longer just serve as a description of things that have happened in the past in other parts of the world. But they may actively be helping to bring about the food futures that they describe for sub-Saharan Africa, by mobilizing the financial resources required to make a shift towards diets that are higher in protein and animal products specifically possible. And certainly for me as a researcher that provides a really interesting illustration of the ways in which narratives and models that are derived from research can go out into the world, take on a life of their own, and have unexpected effects. So to come back to the original question and give you a one sentence summary. Nutritional transition models are based on things that really happened in particular parts of the world in the past, and actually the way that people within various investment and international development circles, take them up, may arguably be helping to make their predictions about the future, concretely, materially real in the here and now.
Matthew 20:35
I want to turn to the research that you conducted. Financial information is pretty difficult to come by. These companies and investors aren't exactly disclosing all their information, because they generally don't have to. How did you manage to do this research on the various actors making these types of investments?
Jeremy 20:56
So a scarcity of publicly available financial data was definitely a major challenge during this research, and there were a couple of reasons for that. First of all, sub-Saharan Africa's agricultural and food sectors are dominated by privately owned companies and informal enterprises. So if they're keeping formal accounts at all, these firms are subject to much more limited financial disclosure requirements than shareholder owned corporations that are listed on stock exchanges would be, so it's very hard to get access to data on who's investing in specific companies within the region. Second, while there's better quality data on government investment in food and agriculture, and especially on agricultural investment via overseas development assistance, and that's out in the public domain, nobody really collects data on investment in protein production specifically. Instead, agricultural investment tends to get recorded, just as having been allocated either to crop livestock or fish production. And that makes it pretty much impossible actually, to disentangle investments in protein crops like legumes from funding that's allocated to the production of crops like fruit and vegetables.
Samara 22:17
So data is especially hard to come by because private companies don’t have to disclose their financial information and because ‘protein’ is not a typically separated category. So Jeremy dove into the limited amount of publicly available data that he could find, mostly from the UN’s FAO, the Africa Development Bank and OECD. And what did he find?
Jeremy 22:40
What that first fairly crude round of analysis seemed to show was that sub-Saharan Africa's agriculture food and fisheries sector just receives far less investment overall than agricultural sectors in other regions do. The FAO estimates that total investment into the sector was about $22 billion in 2019, which sounds like a lot of money but in global agricultural investment terms is really chicken feed.
Matthew 23:09
Jeremy goes into a lot of detail here about the numbers of who is investing in what. We won’t dive too deeply here, but you can read all about this in the report.
Jeremy 23:17
So headline figures, private sector financial institutions seem to play a less prominent role in sub-Saharan Africa's agricultural finance landscape than they do elsewhere. But overseas development assistance and the development finance institutions that provide it, seem to represent a much more important source of agricultural investment within the region than they do elsewhere. Now that initial phase of desk research had some important limitations. It told us who were the major investors in agriculture in sub-Saharan Africa, but not whether the big agricultural investors were also the biggest investors in protein production. It didn't tell us what kinds of protein value chains they were investing in. So were they investing in meat, milk, eggs, and fish, were they investing in plant proteins, were they building value chains around alternative protein products derived from plants fungi, or cells cultured in vitro in a lab. This didn't tell us. Were they invested in building value chains around smallholder farmers and pastoralists or were they investing in large intensive production and processing operations owned by a single company, we had no idea. So to address some of those knowledge gaps, and to get some sense of why different groups of investors were putting money into some places, some protein sources and some protein value chains, but not others, I decided to go and ask the investors directly. So I carried out 19 interviews with people who either worked for organizations that we'd identified as prominent agricultural investors in sub-Saharan Africa, or who were able to provide insight into broader differences and similarities between the motivations of different groups of investors in African protein production because they had long standing professional links with multiple agricultural investors within the region.
Samara 25:17
Jeremy spoke to employees of financial institutions like development banks, private equity funds and impact investment firms. He also talked to several philanthropic organizations and agricultural research organizations.
Jeremy 25:31
By identifying and grouping together clusters of interviewees who offered similar accounts of why their organizations were investing in protein production in sub-Saharan Africa, what they were aiming to achieve by doing so, and which places forms of protein and stages of the value chain they were investing in. I ended up identifying three distinct investor visions for the future of protein in sub-Saharan Africa.
Matthew 25:57
Can you talk about these visions? We can just take them one at a time.
Jeremy 30:01
So the first investor vision that we found, we called smallholder intensification. And this is a vision that tends to be held by development finance institutions, philanthropic organizations, and impact investors. And those three groups of institutions very often work together to provide funding packages to particular companies, or rural development projects. Their investments tend to be intended to reduce rural poverty, to combat malnutrition, and to facilitate sustainable development. And that group of investors tends to be attracted to protein production because they're aware that for a lot of rural households within the region, poultry, cattle and small ruminants like goats already serve as a store of wealth for small producers, which they can draw upon by selling animals during periods of economic stress. So investing in livestock production seemed to be a really effective means of increasing both the household incomes and the economic resilience of the rural poor. And second, because smallholder farmers and pastoralists are often among the poorest and most socially, socio economically marginalized populations within a lot of sub-Saharan African countries. And therefore, they often suffer disproportionately from malnutrition. So these investors expected that investing in increasing their production to produce animal protein would reduce rates of malnutrition, either by giving these people more money with which to buy food, or by enabling them to eat more animal products that they had produced themselves.
Matthew 27:48
Another area that these institutions used to invest in was cattle. This was to support the many pastoralists in sub-Saharan Africa and how important cattle is to their livelihoods. But in recent years, they have growing concerns that this support might conflict with their sustainable development objectives because of the high intensity of carbon emissions that come with raising cattle.
Jeremy 28:10
In a lot of cases, they're actually now quite reluctant to invest in beef projects, and their investments now focus more on poultry, egg and dairy value chains and to a lesser extent on aquaculture. One big area of investment for this group of institutions was in companies that supplied feed, medicines, and also breeding stock to small scale poultry and egg producers, dairy producer cooperatives. And by investing in making high quality agricultural inputs more affordable and available, this group of investors hoped that small scale livestock producers would become more productive. So they'd be able to produce more food without needing to keep more animals and therefore produce a larger environmental impact. Because they sought to finance projects, which would benefit poor and marginalized producers, they often invested in locations where purely commercial investors might consider excessively risky, including much of eastern and southern Africa, as well as larger West African markets, like Nigeria, and Ghana. So it's about securing and improving the position of small producers within the protein value chain.
Samara 29:34
The second vision was responding to the trend of an increasing and urbanizing population across sub-Saharan Africa. The investors saw a market opportunity and a less risky option for protein investment.
Jeremy 29:45
A second vision which we called protein for profit was held primarily by private equity funds and commercial banks, which had a really simple aim. I mean, they were basically just trying to produce a competitive rate of financial return on their clients’ investments. They just wanted their clients to get more money out of the companies that they were investing in than they had originally put in. And these investors were motivated to put money into protein production within the region by an expectation that markets for animal products in sub-Saharan Africa were going to grow rapidly over time, for reasons I talked about earlier: growing population, urbanization, and increasing GDP per capita. So in this environment, they expected that the profitability of animal protein production within the region would also grow over time. That said, these investors considered most countries in sub-Saharan Africa to be very risky places to invest and as a result, they were only willing to invest in the least financially risky enterprises.
Matthew 30:58
So what does a less financially risky investment look like?
Jeremy 31:02
It means that they invest primarily in poultry and egg value chains within sub-Saharan Africa because chickens have relatively short life cycles. And as a result, these businesses are less exposed to political and economic shocks during the animal production cycle than other forms of animal protein production would be. And they also tended to invest only in those countries which they perceived to have the strongest legal protections for private investors, and the most stable economies and political systems. And as a result of that, this group of investors were financing intensive, vertically integrated poultry and egg farms in a few of the region's most economically developed and politically stable countries, notably South Africa, but not really anywhere else. Elsewhere in Eastern and Southern Africa, they were starting to finance agricultural input suppliers serving smallholder poultry farmers because they saw these businesses as being particularly low risk. So they've just got a toe in the water in case the market for poultry and egg products grows and becomes more lucrative in future. And as a result, this group of investors was sometimes buying agricultural input supply companies, established by investors adhering to the smallholder intensification vision. So the future that they envision is probably integrated supply chains for poultry and eggs in the hands of a relatively small number of companies owned by private investors, and serving urban populations and increasingly affluent urban populations
Matthew 32:47
And the third vision Jeremy identified was called protein diversification, which focused on a group of venture capital investors in the alternative-protein sector. It’s worth noting that this group of investors was significantly smaller than the other two.
Jeremy 33:00
These were very unusual venture capitalists because venture capitalists are usually motivated entirely by financial returns. That wasn't what was happening here. This group of venture capital funds were motivated primarily by concerns over the environmental and ethical desirability of meeting expected future growth in demand for protein in sub-Saharan Africa through expanding livestock agriculture within the region. Often their concerns about this might be environmental, or it might be based on a principled opposition to animal agriculture. So one interviewee referred to this group of investors as vegan venture capitalists, and essentially suggested that they saw a future of plant based protein consumption as being more ethically desirable than expanding livestock populations in the global south. As a result of those ethical commitments, these investors were not financing conventional meat and dairy production at all. Instead, they sought to address expansion in demand for protein in sub-Saharan Africa through financing manufacturers of alternative protein products like plant based meats and milks.
Samara 34:23
Jeremy also noted that this group of investors was only investing in the alternative protein manufacturers and not in the wider ecosystem that would help to develop the sector.
Jeremy 34:33
And this gave their investments a very distinctive geography. So the companies they were investing in were very heavily concentrated in South Africa, where more than half of all of Africa's alternative protein producers are located. Though we did find evidence of investment in individual companies in Kenya, Nigeria, and Ghana. And essentially, these investors were hoping that if alternative protein products could be produced at a cost, similar to that of animal products, then they would become a mainstream part of diets across sub-Saharan Africa. And the reasoning was that because much of the region's population doesn't have a huge amount of money to spend, and is therefore very price sensitive, then if these products could be made, and put on the market at the same, or a lower price, than conventional, meat, dairy or eggs, then people would buy them, and people would eat them.
Matthew 35:35
Jeremy points out that this group of venture capital funds was really small and had a very limited amount of money to invest. And African alternative protein producers also didn’t seem to have much access to other investment sources. Mostly because African banks and private equity firms found them to be especially risky investments without a proven market for these products.
Jeremy 35:57
And at the same time, most of the European and North American venture capital and private equity funds that were financing alternative protein startups in their own markets weren't investing in them either, because they saw sub-Saharan Africa as an unacceptably risky place to invest. And as a result, these companies were operating on a very small scale, and their ability to expand and scale up production was quite constrained.
Samara 36:26
So the three visions are 1) smallholder intensification - which seeks to increase the productivity of smallholders and pastoralists to combat poverty and malnutrition, 2) protein for profit, which aims to meet the increasing demand of animal protein production by investing in vertically integrated poultry production, and 3) protein diversification, where venture capitalists were motivated to offer a low-cost alternative to animal protein by investing in manufacturers of alternative-meats and milks.
Matthew 36:59
There seems to be a distinction in the investors who see their job as predicting the future and putting their money where they see there will be growth, and those who see their job as creating a desirable future, using their money to encourage growth. So what are your thoughts on these two ways of seeing the world and what do you think each of them assumes about its own power as an investor?
Jeremy 37:22
So that is a really interesting question. I think you're right that all investment and financial activity is future orientated by definition, because people don't usually commit money to any activity, unless they're confident that this is going to produce some sort of payoff in the future. Now, that payoff might be about achieving a normative or ethical outcome. So for instance, reducing poverty or preventing environmental damage, or it might be about achieving a financial outcome - getting back more money than they put in. But in either case, their investments intended to help them to achieve some sort of goal in the future. Now, funnily enough, the easiest group of investors to explain are probably the ones who are motivated by the goal of creating a desirable future. So institutions like development finance institutions, like philanthropic foundations, even like the vegan venture capital funds that I talked about earlier, because they're motivated by goals, like poverty alleviation or environmental sustainability. So they typically start from a particular vision of the future, or a specific change in the world that they want to bring about. And they work backwards to identify what investments they'll need to make to achieve it.
Most mainstream commercial investors are very different, because they tend to start from a belief that financial markets are these vast distributed decision making systems made up of huge numbers of people all thinking about how they can best pursue their own financial interests. And to their mind, the aggregate result of all those decisions is that inevitably, somebody within the market is going to hit on the lowest cost way of producing a particular product, or the combination of investments that produces the biggest financial return or whatever it might be. And then other market participants will either copy them, or they'll get out competed. And as a result, all things being equal, the market as a whole tends to find the most efficient way of distributing resources, or realizing a particular goal. Now, that way of thinking about markets implies that it's very difficult to beat the market and arrive at a more efficient solution than the aggregate of all of your peers can find. So the assumption is that if you as an investor don't make a profitable investment, well, somebody else will make it. And so whatever effects it creates, are probably going to happen anyway. So in their view, it's sort of inevitable that the most economically efficient future will be the one that comes about. And that means that all you as an investor can really do is try to anticipate where the market is going to go next. And maybe try and get a little bit ahead of it by, for instance, investing in poultry production in sub-Saharan Africa a little bit before it becomes seriously profitable. And everyone else jumps on that bandwagon, which will mean that you're already invested by that point, then you can reap the rewards of lots more investment going into that sector in the future. So commercial investors put lots of effort into trying to predict future market movements and you can argue that in lots of important ways, as a group, they actually do end up shaping the future because their investments make particular things happen. But individual commercial investors wouldn't think that they personally had shaped the future or even be aiming to try and change the future because they'd assumed that if they hadn't made a world changing investment, then someone else would do it instead.
Matthew 41:04
When we look at the landscape of who's investing in sub-Saharan Africa, what maybe is the most striking thing is how little investment there is, compared to other regions? Can you maybe say a little bit about that? Are we missing the big picture by talking so much about what these particular visions are?
Jeremy 41:21
Thank you for asking me that question. Matthew. There's definitely something to your point that the quantity of agricultural investment that Sub Saharan Africa attracts is absolutely tiny by global standards, and that investments that are being made elsewhere are really important in shaping the global trade, particularly in animal products, but also in animal feed. And as a result, they also play a really crucial role in shaping the development of the region's food system. Samara 41:49
Jeremy told us that if sub-Saharan Africa received as much government investment in agriculture per capita as the rest of the world, it would get three and a half times more than it currently does. And If it received as much agricultural credit as the rest of the world, it would receive fourteen times as much as it currently does.
Jeremy 42:06
Several of my interviewees highlight and really came back repeatedly to the role of government subsidies to meat, milk and animal feed producers elsewhere in the world, in shaping the global trade in meat and dairy products. They felt that these investments in particular really mattered to the operation and the shape of sub-Saharan Africa's food systems. And that's partly because these subsidies are really massive right.
Matthew 42:33
Jeremy describes how government subsidies to meat and dairy producers in wealthy countries dwarf all sources of investment in agriculture in sub-Saharan Africa.
Jeremy 42:42
Several interviewees suggested that these subsidies were enabling animal products produced in Europe, North America, and increasingly in middle income countries like Brazil and China, to be imported into sub-Saharan African markets at prices that were below their real unsubsidised cost of production. And they made this claim that local producers were, in some cases, unable to match the prices that imported products could be sold at and this was essentially enabling producers elsewhere in the world to outcompete sub-Saharan African farmers and pastoralists. So some of the interviewees suggested that financial institutions like commercial banks and private equity funds are looking at meat and dairy producers who face this competition from imported animal products. And they're thinking, well, actually, why would I invest in that company, because if they can't sell their product at a price point that's competitive with imports, they're going to lose money, and they won't be able to produce a profit for my clients. So it's not that investment in protein production in sub-Saharan Africa is unimportant. But I think there are probably good grounds for arguing that whether or not that investment is able to achieve its goals and to realize the visions that it's that investors hold. It’s shaped in really important ways by much bigger flows of agricultural investment in other parts of the world
Matthew 44:04
So I want to wrap up with the question of how have your views or understanding of this topic changed from where you started this research to where you are now.
Jeremy 44:16
So I think one big thing that really changed my understanding of what's going on in the world of protein production in sub-Saharan Africa and challenged some of my expectations was actually what we didn't find. When I started this project, we thought that I might find evidence of multinational meat and dairy companies purchasing local firms with the objective of getting a dominant position within the region's newly emerging but growing markets for animal protein products. Or we thought we might find investors linked to state owned enterprises based in other parts of the world, say East Asia, or the Gulf states, buying up land and agricultural companies in order to secure their home country's domestic food supplies for the future. So the kind of investment activity that sometimes gets described as land grabbing or meat grabbing. But we just didn't find that much evidence of purely commercially motivated investment in protein value chains across most of the region. In that sense, it's a really different picture from many other parts of the Global South, such as Southeast Asia or Latin America.
We also didn't find much evidence of efforts to kind of enclosed food production and provisioning in the hands of overseas state or private investors, which often go along with that sort of activity. Now, this is perhaps not purely a good thing, right, in that relative absence of mainstream commercial investment across much of the region is probably one of the reasons why sub-Saharan Africa's protein sector is so under financed. But it does mean that prevailing patterns of food system development across much of the region seem to be more motivated by an ambition to improve the economic and nutritional well being of small producers, and more accommodating of environmental sustainability to concerns than I initially expected.
And I suppose that means that my basic understanding of what's at stake in investment in protein production in the region has shifted a bit over the course of the research. So I personally perhaps started out with this worry that current patterns of investment in protein production might be asserting overseas investors’ priorities and interests over those of other stakeholders. And as a result, they might be driving for instance, marginalization of small farmers and pastoralists or a loss of local control over the region's food system. Whereas I think I've gradually become more concerned with thinking through how the things that seem to be relatively positive about today's investment landscape, like the concern of many of the region's more prominent agricultural investors with the nutrition and economic well being of small producers and the growing space that seems to be available to engage with environmental issues. How those things might be preserved in the future, while also addressing a couple of key challenges. So namely: a) the challenge of scaling up investment in protein production in Sub Saharan Africa, because finance within the region does remain very scarce. And b) the challenge of responding to the changing exigencies of a global food system, in which alternative proteins may start to play a more important role in the future. In which access to development finance is increasingly constrained, and also a context that's characterized by the escalating impacts of climate change on agriculture in Sub Saharan Africa. Basically, while confronting all of those challenges and trying to get more finance into sub Saharan Africa's food system, how do you maintain space to continue thinking about the interests of small producers and also continue to make space for environmental concerns? I mean, I don't have the answers to that. But I think those are really kind of the core questions and concerns that have come to the fore throughout this project.
Matthew 48:16
Thank you very much for speaking with us, Jeremy.
Jeremy 48:19
Thanks very much. It's been an absolute pleasure.
Matthew 48:23
A big thank you to Jeremy Brice and to you for listening. The full report and the executive summary are available to read on our website.
Samara 48:32
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Matthew 48:40
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Samara 48:49
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Matthew 48:57
This episode was edited and mixed by Matthew Kessler, with incredibly, helpful support and feedback from TABLE staff Jackie Turner and Tamsin Blaxter. Music in this episode by Blue dot Sessions. Stay tuned for a new episode on power in a couple weeks.
