Earlier this month, the German agribusiness giant Amatheon Agri Group announced a joint venture with Toyota Tsusho to invest $10 million in a Zambian agriculture project. Carl Heinrich Bruhn, founder and chief executive of the group, talks about the company’s experiences on the ground in sub-Saharan Africa and why the market there is so attractive.
Why did Amatheon Agri choose sub-Saharan Africa as the focus region?
Amatheon Agri Holdings is developing sustainable operations in sub-Saharan Africa. We work in three countries – Amatheon Agri Zambia was founded in early 2012, Amatheon Agri Uganda was founded at the end of 2013 and Amatheon Agri Zimbawe was founded in 2015.
Sub-Saharan Africa is a highly attractive market, characterised by tremendous growth in terms of population and GDP, leading to increased food demand. Rising income levels and a growing middle class open up promising market gaps.
Another key factor is the availability of arable land in sub-Saharan Africa. Only one-sixth has been cultivated, and it therefore offers enormous growing potential. Many countries across sub-Saharan Africa still are heavily dependent on food imports. This illustrates that agricultural markets are still undermanaged and therefore exposes tremendous business opportunities.
What’s the competition like in this field? How do you differentiate yourself?
There are a number of agribusinesses with varying scales and product portfolios active in sub-Saharan Africa. Our specific approach and long term objective is the vertical integration of arable land and livestock into the food value chain, beginning with primary production on its farms and ending with readily-made available products for the end consumer.
Our operations do not only aim for large-scale farm-based operations but also establish partnerships with local smallholders to create mutual benefit.
How has Amatheon developed?
The Amatheon Agri Group is currently active in Zambia, Zimbabwe and Uganda. In Zambia, Amatheon has 38,000 hectares contracted for operations. Infrastructure improvements we have made include power and roads. Permissions for large-scale irrigation projects have been acquired, so we can start to expand our existing farming operations.
Two years after our launch in Zambia, we initiated Amatheon Agri Uganda. Our experiences in Zambia meant we could quickly and successfully replicate our model in new countries. Uganda’s operational phase started in 2013 and our first harvest was successfully carried out in late 2014. There are 3,700 hectares contracted and 50 staff members. This year we also entered Zimbabwe, where we planted 900 hectares.
Can you talk more about the Amatheon Foundation?
The Amatheon Foundation concentrates on three key areas to tackle persistent challenges in rural communities. First of all, the foundation aims to increase rural farmers’ productivity through the promotion of effective and lasting agronomic practices like Conservation Farming – a minimum tillage system that incorporates other key practices such as early planting, mulching, crop rotation and stringent weed control.
We provide training to improve farmers’ understanding of agricultural business, changing their mindset from subsistence farming to farming for a profit.
To maximise our work, we facilitate access to market and capital by linking farming co-operatives to financial institutions.
We also deploy farm shops throughout the region. The shops serve two purposes: first, the selling of genuine farming inputs to the community and secondly the purchase of smallholders’ produce.
We believe triggering economic activity is more sustainable than charity-based aid projects only. For remote areas it is often difficult to gain access to genuine inputs and market, which results in demoralisation and desperation. We aim to tackle this bottleneck.