Investment in Africa’s Agriculture to Drive Seed Coatings Market

Africa’s seed coatings materials market, although representing a small portion of the more than $900 million global share, could be in for more growth as governments in the continent invest more in agriculture and embrace new production methods to enhance food security and reduce poverty levels.

Analysts predict a healthy growth in the seed coatings materials market driven mainly by the increasing demand for agricultural products globally, including Africa where the population is projected to increase from the current one billion people to two billion people by 2050.

Although Africa’s consumption of seed coatings materials such as binder, polymers, colorants and other additives, is still considered low compared to markets such as North America, the surge in demand for quality cereals and grains, oil seeds, fruits and vegetables has created opportunities for coating of these crops’ seeds with fertilizers, nutritional elements, moisture attractive and repulsive agents and plant regulators according to market analysts.

Seed production among sixteen African countries that are active in the market also grew from 2,346 metric tons in 2007 to 80,606 metric tons, an indication of increasing demand for quality farm-inputs in the region.

According to the African Development Bank (AfDB) “Africa’s agriculture given a favorable environment, holds great promise and potential for lifting the vast majority of the continent’s population, which is predominantly rural, out of poverty and for stimulating long-term growth and development.”

Governments in Africa have pledged to increase investments in agriculture by allocating at least 10 percent of their public expenditure to the sector. Currently, the continent’s expenditures have risen by over 7 percent annually across the continent, with some low income countries reporting expenditures of 12 percent.

“The future demand for agriculture production will be immensely larger than it is at present considering the expected consumption change and income growth,” said the bank.

It is estimated that agriculture supports 90 percent of the continent’s population, providing employment to 60 percent of the economically active population and 70 percent of the region’s poorest communities according to AfDB.

Africa, one of the worst hit regions by climate change, is of course grappling with new crop pests and diseases which have made the availability of high quality planting seeds and effective crop protection strategies even more urgent. Farmers, especially smallholder producers are shifting from relying on seed saved from previous harvest season to certified and treated seed.

Emergence of new pests and diseases has attracted big names in crop chemical and seed making industries into the region with some coming up with specific innovations targeting certain major threats to farm crops.

BASF SE, the world’s largest chemical producer, Syngenta AG, global agrochemical and seed manufacturer and publicly traded American agrochemical and agricultural biotechnology corporation Monsanto Company are some of the big names driving Africa’s seed coatings materials market in partnership with other organizations keen on securing the continent’s food security.

Syngenta is behind insecticide seed coating material Cruiser, which is distributed in the South African market. The company says the Neonicotinoid seed treatment insecticide “is based on thiamethoxam, for use against soil-dwelling and early-season pests in a broad range of crops such as corn, sunflower, oilseed rape, sugar beets, soybeans, potatoes and rice.

The company, which is listed as the third seedmaker after Monsanto and DuPont, has been promoting the application of chemicals directly to seeds before they are sown to protect them against pests and diseases and boost the crop’s chances of survival after germination.

Apart from the initiatives of global chemical and seed making companies in expanding Africa’s seed coatings materials market, several not-for-profit organizations have teamed up with African governments and smallholder farmers to promote healthy crop production through use of coated crop seeds.

For example, Bill & Melinda Gates Foundation (BMGF) has continued to explore opportunities to help African farmers embrace better production models, improve market conditions and entrench modern technologies in crop production for the benefit of smallholder farmers.

One of the foundation’s initiatives is to ensure availability and well distribution network for coated seeds in selected African region.

Not-for-profit organization Meridian Institute said in a past report that the BMGF investment in provision of “effective and affordable coated seeds to smallholder farmers could have substantial impact on their widespread adoption and quality.”

The Institute calls for partnership between companies in the manufacture of crop chemicals and seeds and BMGF to expand the use of coated seeds in addressing pests and diseases and gives the example of BASF’s StrigAway, which has been touted as solution in the battle against striga, commonly known as witchweed, now a major threat especially among maize farmers in East Africa.

BASF also offers other seed coatings brands such as Flo Rite, Sepiret, Color Coat, Custom Color although no statistics are available on their distribution in the African market.

Additional opportunities for organizations such as BMGF include investing in “advanced technology for seed coating to allow for multiple layers of coating to create one seed that would address multiple problems to improve crop yields than single coatings targeted to single problems.”

“Currently, seed coating technology in sub-Saharan Africa is at a very basic level (“low tech”), whereby the seeds are stirred or mixed with the coating material (and occasionally an adhesive) and then immediately planted,”

Going forward the Institute calls for investment by governments and private sector in business models that “mass production, distribution, and sales of coated seeds”, which it says will have “significant impact for the smallholder farmer.”

At the global level, a recent report said the seed coating materials market “is growing at a healthy rate and the market is expected to grow in the future due to the increasing demand for agricultural products around the globe.”

“The growing environmental and health concerns have also led to the increase in the adoption of coated seeds rather than synthetic crop protection chemicals for plant growth and development,” said the report by U.S.-based global research and consultancy firm MarketsandMarkets.

The report says North America and Europe are the top-two consumers of seed coating materials and accounted for more than 55% in 2013.

“Growth is particularly high in emerging countries, such as China, India and Brazil because of the major contribution of agriculture in the economy and the increase in demand for agriculture production,” it said.

According to MarketsandMarkets: “The higher efficiency of coated seeds as compared to normal seeds, less impact on the environment, and protecting crops along with promoting growth all collectively drive the demand for the seed coating materials market. The potential of this market attracts leading companies.”

The market analyst says firms in crop chemical and seed manufacture business “are focusing on expansion across regions and setting up new plants for increasing production capacity as well as strengthening the product line. The companies are also putting efforts for innovating new products which are eco-friendly, to overcome the restraints.”

Although Africa has not experienced the intensity of the debate on the dangers and benefits of embracing herbicide seed coatings for example, in the U.S. and other markets, it is getting louder as critics call for a review of their use. Those resisting the use of some seed coatings material claim for example that insecticide seed coatings or neonicotinoids are harmful. They have been linked to colony collapse disorder among bees, although the claim remains controversial.

Despite the concerns raised over the use of insecticide seed coatings, MarketsandMarkets said companies are eager to ”capitalize on the growth trend in the global seed coating materials market and are taking initiative in the development and manufacturing of seed coating materials. The growing demand for seed coating is forcing the global players to add new innovative products to their product offerings.”