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.

19 July 2012

Mining drives agricultural development in Mozambique

The Government of Mozambique, the British Government, Rio Tinto and AgDevCo have teamed up to assist thousands of small farmers who live in the vicinity of mines in Moatize, central Mozambique, to boost their crop yields for commercial food production.

The first of its kind in Mozambique, the new agreement will bring access to private investment for smallholder farmers who would otherwise struggle to get the investment they need to thrive.

Eric Finlayson (Rio Tinto), Andrew Mitchell (Secretary of State, DFID), Keith Palmer (Chairman, AgDevCo) and Daniel Clemente (PS Agriculture, Govt Mozambique)
 Investment in the mining sector is resulting in new infrastructure links – roads, rail and ports – being built and an increase in the local population. This provides an opportunity for small farmers in terms of a larger local market for their produce and improved transport links opening up new potential markets. However many small farmers lack the access to affordable capital to develop their farms despite being highly suitable for a wide range of crops and livestock.
Andrew Mitchell, Britain’s International Development Secretary, said: “Mozambique is at a crossroads. For the first time, its enormous natural resources could give it the chance to escape poverty for good. Britain will help harness the skills and resources of the private sector to ensure the poorest benefit from the country’s phenomenal potential. This partnership is proving that investing in development is good for business, as well as good for the poor.”

Eric Finlayson, CEO of Rio Tinto Coal Mozambique, said: “This initiative, which is part of our wider commitment to support broad-based economic development in Mozambique, will provide a practical boost to farmers and can help the development of Mozambique’s agricultural sector”.

Chris Isaac, Director of Business Development at AgDevCo said: “By working in partnership with the mining sector, we can invest to help local farmers access rapidly growing domestic markets and, from there, expand their businesses to take advantage of export opportunities in the Middle East and Asia”

The memorandum of understanding signed in Tete today, co-signed by Mozambique’s Ministry of Agriculture, involves initial investments of up to US$500,000 to link local farmers and businesses into the mine’s supply chain by:

• Investing in local businesses and buying local produce: Rio Tinto, AgDevCo and the Ministry of Agriculture will explore how promising small and medium agricultural businesses can supply food to communities living in the Tete mining area. This could result in Rio Tinto offering long-term contracts to local farmers to supply locally grown produce to its mine, helping them to expand and create more jobs. Currently, international firms rely on imported food as very few domestic suppliers are capable of growing enough quality food at a competitive price.

• Irrigating land: Develop sustainable irrigated agriculture and improve livestock and fish farming to increase harvests across Tete province. Support will be targeted towards helping farmers who are resettled as the mine expands.

• Growing new crops: Work with specialist businesses and institutions to create cost-effective and sustainable sources of biodiesel for the mine. As well as providing new sources of income for local farmers, newly irrigated land will boost food production.

Investments will follow the United Nations’ Principles for responsible agricultural investment (PRAI).

9 July 2012

Voxtra invests in Mtanga Farms Limited

The Voxtra East Africa Agribusiness Fund (Voxtra) has completed an investment of US$ 1.5 million in Mtanga Farms Limited (MFL), a commercial farm engaged in seed crops, arable farming and livestock. The investment marks the first of a projected 8 to 10 investments targeting companies with pivotal roles in improving the livelihoods of smallholder farmers. Voxtra’s investment will enable MFL to take its seed potato business to a commercial scale, triple its farmed acreage and significantly ramp up its budding livestock operation.

Mtanga Farms is an integrated agri-business based in Iringa, Tanzania. Its operations extend over 2,600 hectares, previously farmed but long neglected when MFL secured its long-term lease of the land in 2009. MFL has since made significant strides to rehabilitate the land and put in place essential infrastructure to support the further growth of the business. MFL focuses on high value seed crops and the protein value chain. Its seed activities are centred around the establishment of a seed potato operation providing clean seed potatoes to smallholder farmers across Tanzania. The protein business includes the growing of animal feed, a livestock breeding business and downstream processing of meat. The company is run by a dedicated team of farmers and business developers, and is now well-positioned to become the leading integrated farming operation in the Southern Tanzanian Highlands.

Core to the company’s strategy is the provision of improved seed material to local smallholder farmers. In partnership with the Tanzanian government, MFL recently announced the registration of four new potato varieties – the first varieties to be released in Tanzania in 30 years. Whilst potatoes are a major cash and food crop for Tanzanian smallholder farmers, the lack of clean seed material has long been a major impediment to farmers’ productivity. MFL’s clean seed potato will enable a tripling of smallholder farmers’ yields: whereas the national average yield is 5-7 tonnes potatoes per hectare, smallholders have demonstrated yields of 15-20 tonnes per hectare when planting clean seed. By scaling up its production of clean seed potato, MFL could provide a pathway out of poverty for a sector employing an estimated 150,000 smallholder farmers. Voxtra intends to make use of its technical assistance facility – funded by the Norwegian Agency for Development Cooperation (NORAD) – to evaluate, support and increase the social impact made by MFL.

African agriculture needs a green revolution that is powered by an emerging class of sustainable small and medium enterprises (SME). SMEs are best placed to increase local food production and integrate local farmers into value chains and create employment. Through its investment in MFL, Voxtra joins forces with a strong partnership of existing investors comprised of Thirty Degrees East, a Mauritian investment company, UK-based Lion’s Head Global Partners, U.S.-based Calvert Foundation, Nigerian investment firm Heirs Holdings and its philanthropic arm, The Tony Elumelu Foundation, as well as the African Enterprise Challenge Fund.