Angola is Ambitious to Increase Wheat Production Capacity

09 November 20177 min reading

West African country Angola has been trying to rebuild its agricultural infrastructure that has been destroyed in the civil war. Angolan government focuses on to increase grain production and food processing capacity, especially wheat. Angola’s goal of strengthening the milling industry makes this country an important market for wheat exporters.

ulke_angolaAngola, located in a strategic part of West Africa, is a country closely monitored by the international community. Angola is one of the countries expected to make a big leap in Africa with the recent political stabilization and economic development. With its approximately 29 million people, per capita income of $ 6,800 (ppp), Angola is an upper middle-income country. It ranks as the fifth largest economy in Africa, and also third in Sub-Saharan Africa. With its fertile soil, rich water resources, favorable climate Angola has an enormous agricultural potential. Before the bloody civil war period between 1975-2002, Angola was a country that could produce all its grain needs except wheat. However, following the gaining independence from Portugal, Angola slid into civil war and that disrupted agricultural production and displaced millions of people. Therefore, agricultural production fell and became inefficient. In the 1960’s and 1970’s, Angola produced about 25,000 tons of wheat grain per year. The civil war halted wheat production and destroyed flour milling capacity.

Although it is a very rich country with its natural resources and agricultural potential, Angola currently imports more than half of its food. The vast majority of food needs come from Portugal, Brazil, South Africa, the US, and India. The country currently only cultivates approximately 10 percent of its 35 million hectares of arable land. The agricultural commodities produced include cassava, bananas, potatoes, maize, citrus, and pineapples.

Agriculture accounts for 12 percent of Angola’s $187.3 billion GDP in 2016. Oil represents about 1/3 of its GDP and over 95% of its exports. But faced with lost oil revenue, Angolan government aims agricultural development to diversify the economy and to build domestic food production capacity that will decrease the country’s dependence on imported food. To achieve this goal, the government focuses on the development of wheat milling. According to US Agriculture Department’s Foreign Agriculture Service (USDA FAS) report published on May 2017, Angola is just beginning a transition from its reliance on imported wheat flour to local milling of imported wheat as part of a broader economic diversification effort. The Angolan government is encouraging domestic wheat production to replace relatively expensive flour imports. With the introduction of low-priced fertilizers to farmers, the improvement of fertilizers and the increasing availability of agricultural machines, a large increase in production of wheat, corn, soya beans and rice is aimed in the coming years.

IMPORT DEPENDENT FOR WHEAT AND RICE Among the cereals grown in the country, corn is on the forefront. Angola, which produced 1 million 500 thousand tons of corn in the 2016/2017 season, is expected to grow 1 million 600 thousand tons of corn in the new season, according to USDA FAS October report. In the same period, corn consumption amounted to 1 million 600 thousand tons in Angola, which exported 50 thousand tons of corn last season. Corn consumption is expected to increase to 1 million 800 thousand tons this year.

Rice production is also on the rise. In the 2015/2016 season, rice production was 27 thousand tons and last season that was increased to 38 thousand tons. USDA forecasts this figure could be 40 thousand tons in the next season. Angola, which is inadequate to meet the need for rice production, had to import 400 thousand tons of rice in the 2015/2016 season and 560 thousand tons of rice in the season we left behind.

In the grain production, Angola’s biggest shortage is wheat. Because of the very low production, wheat imported in significant quantities. In the last three years, the production of wheat remained around 3 thousand tons. In 2015/2016 season 726 thousand tons of wheat were imported, and this amount rose 1 million 23 thousand tons in the last season. And the consumption of wheat was 900 thousand tons in the 2016/2017 season. USDA expects a 75-ton increase for the 2017/2018 season.

800,000 TONS OF WHEAT FLOUR IMPORTED Angola currently imports an estimated 800,000 MT of processed wheat flour to produce popular baguettes and Portuguese style bread. According to the UN Food and Agriculture Organization statistics, the country paid $ 276 million to flour imports in 2013. Angola currently imports about 500 thousand tons of wheat flour per year from Turkey and the European Union, at a value of $177 million in 2015. By replacing flour imports with wheat imports, Angola wants to reduce its dependence on foreign exchange as well as boost value-added local production. The government plans to bolster the milling industry make the country an important market for wheat exports.

PROJECTS IN THE MILLING INDUSTRY Two important steps were taken this year in the milling industry in Angola. In May 2017 a new wheat mill in Luanda, called the Grandes Moagens de Angola (GMA), was inaugurated. Located in the Port of Luanda near the city center, the mill’s capacity is approximately 1,200 tons of processed wheat per day. Cerangola , another player in the sector, invested $250,000 to reopen a mill in Lobito with a capacity to produce 100 tons per day of wheat flour and 30 tons per day of wheat bran.

USDA lists other new projects for Angola’s milling industry as follows: -The owners of the new GMA mill in Luanda plan to build an identical wheat mill in the port of Lobito, on Angola’s southern coast, within the next two years. -The Kikolo wheat mill on the outskirts of Luanda is set to open this year, beginning with a capacity of 500 tons per day and reaching 1000 tons per day in 2018. -The Cerangola wheat mill in Lobito, with an estimated current capacity of 130 tons per day, plans to increase production to 650 tons per day in 2018

Importers in Luanda have reported a glut of inexpensive wheat flour on the Angolan market—due in part to Turkish wheat flour subsidies of USD 60/ton—as one challenge facing wheat exports to Angola, USDA states. However, the government of Angola is expected to release an updated tariff schedule within the coming months and potential wheat importers are lobbying for protective tariffs against wheat flour and in favor of wheat grain.

NEED FOR SILOS There is a high level of agriculture production loss due to the lack of access to market and proper food handling capacity. Angolan companies are requiring equipment and input solutions, including seeds, fertilizers, pesticides, irrigation equipment and other types of production and processing equipment, such as silos, and dryers. With the increased focus on agricultural production in Angola, many landowners are seeking to establish production, but lack necessary agricultural background. Therefore demand exists for international consultants and turn-key solutions from international suppliers. Angolan companies already active in agriculture often express concern about the lack of spare parts and services available in Angola for agricultural equipment maintenance. Companies that can provide quality post-sales value-added services and support can be very competitive in Angola, US International Trade Administration says.

CONCLUSION Angola has great potential for investment and trade in agriculture and food sectors. Efforts to increase domestic production capacity will take many years, and the country will need to outsource infrastructure, manufacturing and agricultural development.

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