Amatheon Agri Zimbabwe Ltd

Strategy

Amatheon Agri aims to become a major player in Sub-Saharan Africa’s food production. This is one of the most attractive and promising markets in agriculture today, characterized by tremendous growth in GDPs and population which leads to increased food demand and changing dietary habits.

Many countries in Sub-Sahara Africa still rely on food imports, despite large availability of arable land. Investing in the agricultural value chain and substituting unnecessary food imports offers enormous growth potential. Amatheon’s long-term strategy is vertical integration of grain and livestock into the food value chain, starting with primary production on farms and transferring produce to urban areas to end with consumer products. Our approach integrates small-scale farmers into our primary production of staple crops as well as sourcing livestock from communities for our feedlots. This model enables inclusive growth, economic participation and improves rural livelihoods whilst creating rural-urban linkages.

Processing, packaging, distribution and final sale businesses is the second component of our integrated value chain strategy. This has been realized through the acquisition of five leading Zambian meat businesses to form the Real Meat Group, which currently holds the number two position in the Zambian meat market.

When expanding, Amatheon focuses on countries with proven potential in agriculture and food production. The company looks for opportunities that promise a sizeable entry into the value chain, as well as the prospect to align the entry with strategic pillars. Alongside the unique sustainable approach, Amatheon gains competitive advantage in replicating best practices of lessons learned from other country experiences.

Farming

Amatheon Farming is comprised of three components: large-scale irrigated and rain-fed farming operations, trading partnerships with smallscale farmers, and cattle ranching. Currently, these activities are active in Uganda, Zambia and Zimbabwe.

Large-scale irrigated and rain-fed farming

Amatheon’s large-scale farming operations are characterized by strong yields, high efficiency, state-of-the-art technology in cultivating, planting, cropping and harvesting equipment, as well as post-harvest storage and handling facilities. Major crops are maize, soya beans, rice and groundnuts, and all activities are undertaken by a committed team of managers and trained operators. Before commencing operations, we undertake in-depth Social and Environmental Impact Assessments, Environmental Monitoring Plans, and develop close ties with the surrounding communities. We are committed to responsible investment in agriculture and follow the IFC Performance Standards, UN Principles for Responsible Investment in Farmland and the UN Guiding Principles on Business and Human Rights. In 2015, Amatheon Agri was accepted as a member of the UN Global Compact and is guided by its ten principles.

Outgrower Programme

Using our farms as a nucleus, Amatheon supports small-scale farmers and creates fruitful partnerships that boost economic participation in the surrounding areas. With a no-contract approach, Amatheon establishes rural depots that allow farmers easier access to quality inputs and act as a trading platform for those who wish to sell their produce to Amatheon. Farmers also receive free training in Conservation Farming, Farming as a Business, and financial literacy which helps improve their production and marketing and fosters an entrepreneurial mindset. Carefully selected farmers are linked with financial institutions so they can access credit and take their businesses to the next level. These partnerships are part of Amatheon’s inclusive-growth strategy that strives to create shared value for both the company and surrounding communities.

Cattle Ranching

Amatheon’s cattle ranching activities include more than 1,300 heads of cattle grazing on 2,000 hectares of land. The breeding herd is closely managed to maintain the highest quality possible while feedlotting operations continuously grow and supply domestic markets. In 2015, Amatheon introduced a livestock component into its Outgrower Programme to buy cattle from smallholder farmers and fatten them through the feedlot. Cattle operations are part of an integrated value chain approach which contributes to Amatheon’s food processing businesses in urban areas

Trading and Milling

There is currently not enough storage capacity for agricultural commodities in Sub-Saharan Africa. Post-harvest losses affect around 20% of production – tenfold higher than in developed markets – and improper handling is the cause of most losses.

Milling is a crucial step for many agricultural commodities. Wheat and corn are milled into flour, which is used for bread making and meal preparation. Currently, the domestic milling sectors in many Sub-Saharan countries are fragmented and consist of many small businesses. This makes it difficult to unlock production efficiencies. Amatheon sees profitable opportunities in the business of trading and milling and will focus on expanding into this sector.

Amatheon’s goal is to establish local storage capacities to bundle volume and will invest in state-of-the-art milling facilities to remove current market deficiencies and create synergies. Skilled crop trading will leverage seasonal and regional price differences to maximise profit. Smallholding farmers will also benefit from an easier collection, cleaning, and handling of their harvest, as well as better market access.

Food Processing

Agricultural and food value chains in Africa often lack scale, efficiency and suffer from operational bottlenecks. Amatheon aims to overcome these bottlenecks by connecting different stages of the value chain. The integration includes a primary production of livestock feed, cattle rearing and subsequent supply to Amatheon’s food processing businesses.

Since 2000, consumer spending in Sub-Saharan Africa has grown by 4% annually, and the total consumer spending is expected to reach nearly USD 1 trillion by 2020. In addition, population growth in the region is likely to remain among the highest in the world; 2 billion people by 2050 and accounting for 20% of the global total. A 50% reduction in poverty 2020 is also expected, which means that 130 million additional households with an annual spending of USD 1.4 trillion will be entering the market, from around USD 860 billion in 2008.

In 2013, Amatheon Food was established to develop the third pillar of Amatheon’s business strategy. Through its Mergers and Acquisitions department, Amatheon intensified research and due diligence on businesses in the food processing sector, resulting in the acquisition of five meat processing companies in Zambia.

Economic Empowerment

Alongside its large-scale farming operations, Amatheon uses its commercial farms as a nucleus to support and trade with thousands of small-scale farmers. Leveraging the platform, infrastructure and communication channels that Amatheon has established, the Outgrower Programme provides structured access to a network of smallholders – in turn allowing Amatheon to significantly increase its trading volumes while simultaneously achieving significant social impact. By incorporating smallholder farmers into the rural value chain, Amatheon helps build vibrant outgrower networks, fosters entrepreneurship, stimulates local productivity and diversifies sources of income.

The Outgrower Programme provides free trainings on conservation farming and business skills, establishes rural depots to sell inputs and buy grain, and links farmers with credit institutions. Since its inception in Zambia and Uganda, more than 6,000 farmers have been registered, 34 depots have been established, and 298 loans have been issued out to emerging farmers. The payback rate for loans was 100% and farmers were able to take their businesses to the next level. Importantly, more than US$1 million has been injected into the local economies through grain purchases from smallholders.

Recently, a livestock component was introduced to the Outgrower Programme whereby a veterinary firm provides vaccinations and animal health training, and Amatheon provides a reliable output market. This new addition to Amatheon’s buying basket helps farmers see the opportunities of investing in their livestock and reduces their dependency on cropping.

Social Improvements

More than 80% of Amatheon’s workforce comes from its areas of operations, and as an anchor investor, Amatheon is committed to boosting nearby social and economic infrastructure. Engaging in projects which support local health and educational facilities provides a happier, healthier and more productive workforce. To bolster these efforts, Amatheon established Community Sustainability Committees which bring together local leaders, community members, local government representatives and Amatheon staff in an open and participatory manner. This platform enables Amatheon to be constantly engaged with communities, tailoring support precisely to the needs of the company’s catchment area.

In Zambia, employees and seasonal workers have daily access to free counselling with regards to drug abuse, domestic violence, sexual abuse and HIV. Since Amatheon Agri’s inception, Zambian social infrastructure was boosted by the construction of teachers houses, the extension of classrooms, initiation of school gardens, and wiring schools for future electrification and evening literacy classes. The company also organizes regular football tournaments, bringing together communities and national talent scouts while selected staff members compete with community teams.

In Uganda, Amatheon provided school furniture to teachers and children of Wii-Anaka Primary School where 300 children were sitting on the floor during study time. This furniture established a more supportive and motivating learning environment for children. Furthermore, Amatheon partners with local NGOs to provide HIV counselling and testing and Hepatitis B screening for employees as well as local community members. In Uganda, around 500 people community members were tested, screened and sensitized on HIV/AIDS and Hepatitis B.

Environmental Enhancement

Amatheon is committed to improving and protecting critical natural resources and operates using sound environmental practices – all of which are vital to the sustainability of agricultural businesses. Prior to any developments taking place, Amatheon hires external environmental experts to conduct in-depth Environmental Impact Assessments (EIA). These assessments include desk research, site visits, public consultations, scientific studies and are bound to the approval of the respective country’s national environmental management authority. As part of the EIA, an Environmental Management Plan is developed to mitigate any risks through monitoring key indicators such as water, soil, air and noise. In each of Amatheon’s operating countries, a Sustainable Development Manager is responsible for the environmental compliance of the company. Close coordination with the relevant Managing Director ensures executive support of findings and adjustment of operations where necessary. Furthermore, Amatheon’s employees are obliged to adhere to our environmental policy.

Amatheon strives to protect the soil and biodiversity, uses low-tillage cultivation methods, protects water sources with appropriate signage, and measures the company’s environmental impact using indicators such as water, soil, air and noise levels. To continuously learn and improve performance, Amatheon attends workshops and seminars focusing on environmental matters, such as the United Nations Climate Change Conference in Paris in December 2015.

As part of the Outgrower Programme, Amatheon partners with NGOs to teach Conservation Farming methods to smallholder farmer. Conservation Farming aims to replace the Slash-and-Burn farming approach which is still widely used among rural areas in Sub-Saharan Africa. Training smallholding farmers helps to protect the soil’s organic matter and water holding capacity, thus improving overall soil structure and fertility. Thousands of farmers have been trained to date, contributing to climate change resilience and sustainable rural livelihoods.

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