Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

23 June 2014

President of Mozambique visits successful agri-processing venture

On Thurdsay 19th June, President Guebuza of Mozambique visited the Empresa de ComercializaĆ§Ć£o Agricola (ECA) maize mill in Catandica, central Mozambique. ECA is a for-profit company working with over 5,000 smallholder farmers, who receive inputs, technical support and a guaranteed market for their produce.
President Guebuza inspects ECA's maize flour products
The company was founded four years ago with seed capital from AgDevCo, which allowed investment into storage and processing and the development of an organised outgrower farmer network. To date AgDevCo has invested about $2 million as long term debt and equity. You can watch a short film about ECA by clicking on the image below.

Today ECA has commercial relationships with SAB Miller, Cargill and Buhler all of which are helping the company to scale up its operations and expand the number of farmers it is working with.

10 June 2014

Irrigated sugar scheme proves a sweet investment for Malawian farmers

In mid-2013, AgDevCo provided a loan of USD0.5 million to the Phata Sugarcane Cooperative, a smallholder farmers’ cooperative in southern Malawi, as part of a project to install a modern irrigation system on 300 hectares of land.

The Coop members are guaranteed a market for their sugarcane at fair prices under a long-term sales contract with Illovo Malawi, a subsidiary of Associated British Foods (ABF). A Malawian farm management services company, Agricane, has been contracted by the Coop to manage the commercial farming operations.

The irrigation scheme includes 10 ha for food crops, allowing farmers to grow maize, beans and vegetables all-year-round. The community is also experimenting with fish farming and rice paddies. Previously farmers in this part of Malawi had to rely on a single, unpredictable rainy season lasting only 3-4 months.
Phata Coop member tending irrigated food crops

AgDevCo is partnering with the Coop to build strong governance and financial management systems; and to help manage the relationships with Illovo and Agricane. There is potential for a second phase expansion of the scheme by a further 450 ha.

A €2.4m grant from the European Union (EU) helped fund the initial construction of the irrigation system. AgDevCo’s loan was used as working capital for the first growing season. The results of the harvest were impressive, with sugarcane yields of 106 tonnes/ha. The Coop believes it can improve productivity by a further 10% next season.

The project provides a reliable and secured income for the Coop’s 378 members. Total revenue in the first year of production was USD1.27m, which returned a net profit to the Coop of $450,000. Profits will be partly reinvested in the Coop’s activities and partly distributed to members.

Chris Isaac, AgDevCo’s Director responsible for Malawi said:

“The impressive early results of this investment show what can be achieved when farmers have irrigation and are linked to markets. Grant funding was needed to kick-start the project, but now the Phata Coop is a commercially-viable business, which we expect to go from strength to strength”.  

6 June 2014

AgDevCo $1.5m investment in Rungwe Avocado Company, Tanzania

AgDevCo is delighted to announce a USD1.5 million investment into Rungwe Avocado Company (RAC), an avocado growing and export business based in Tukuyu, in the Rungwe region of southwest Tanzania.

RAC is a pioneer in the development of Tanzania’s horticulture industry. In 2009, it was the first ever farming business to trial avocado exports by air freight to European markets. Today RAC is establishing refrigerated sea shipment routes to Europe and beyond – another important breakthrough for the industry.

The business is helping to improve the living standards of local farmers. RAC engages over 3,000 smallholders as part of its outgrower network. Farmers receive inputs and training as well as a fair price for their production. By 2018, over 75% of the avocados sold by RAC are expected to be grown by local farmers, resulting in some USD0.8m being paid annually into the local community.

RAC is set to receive a USD1.2m loan from AgDevCo with another USD0.3m invested in the form of equity. The investment will support the installation of a micro jet irrigation system on the commercial farm to boost yield performance. It will also fund ongoing operations, including management of the outgrower scheme.

AgDevCo is supporting a range of horticulture projects in Sub-Saharan Africa. We believe that by helping socially-responsible businesses like RAC to access international markets we can contribute to the modernisation of the agriculture sector and help deliver better incomes for thousands of smallholder farmers.