AgDevCo invests $1.8m in Malawi poultry producer

The debt investment by the UK fund will enable Kapani, a Malawian meat processor, to expand its poultry operations fivefold.

Africa Agriculture Development Company, a UK-backed impact fund focused exclusively on agriculture, has agreed to invest $1.8 million in Food and Feeds Wholesalers, a meat processing company trading as Kapani.

The funds will enable the business to expand its poultry production and processing capacity by building a modern processing facility and expanding its cold chain infrastructure.

“Currently, we have the ability to process 15,000 birds per week. The unit will be able to support 15,000 birds per day,” Kapani’s general manager Clayton Swart told Agri Investor. The facility is expected to be Halal, allowing the company to increase its market presence in the region.

In addition to increasing capacity, Kapani will establish a buying program with local farmers – it will work with up to 1,000 small-scale chicken producers under contract – as well as provide training.

“At this stage, the incentive we are providing the local farmer is mostly financial,” Swart explained. “We will offer a set price per kilogram for the birds that will enable the smallholder to produce chickens at a profit. We will also have poultry experts visiting local farmers on a regular basis to ensure we are dealing with farmers and not middlemen.”

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“These experts will also have training manuals for the farmers, be able to advise on any disease or growth issues the farmer has, as well as helping the farmer to work out how much the chickens are costing him/her to grow.”

While Kapani has bought chickens from third parties before – the company also raises its own – this is the first time it is engaging with smallholder poultry farmers. The company already deals with smallholder farmers in the pork industry, currently outsourcing all of its pork to around 200 entrepreneurs.

“Given our experience with smallholders in the pork industry, we believe we can make this work, but there will be challenges,” Swart said.

According to the nonprofit, around 84 percent of people in Malawi live in rural areas, 57 percent of whom live in poverty and are largely dependent on agriculture for their livelihoods.

Consequently, the sector is considered to be a top priority in the fight against poverty. Asked in a Word Bank survey last year what would contribute most to reducing poverty, 46 percent of respondents cited ‘agricultural development.’ Education ranked second with 37 percent, followed by public sector governance/reform at 31 percent.

To date, AgDevCo has invested approximately $10 million in Malawi, and more than $100 million in 53 sub-Saharan African agribusinesses in total. This latest deal marks its fifth investment in the country.