Norwegian fertiliser company Yara International has bought Greenbelt Fertilizers, a distributor in Zambia, Malawi and Mozambique, for $51 million. The company also opened a $30 million terminal in Tanzania, from which it serves the Rwandan market.
The purchase of Greenbelt is still awaiting approval by the Common Market for Eastern and Southern Africa.
Yara converts energy, natural minerals and nitrogen into crop nutrition and industrial application products, and says it is the leading global provider. Expansion in Africa comes several years after a bribery scandal saw some of Yara’s top managers sentenced to prison, although Yara confirmed the former executives were appealing.
It added: “Yara does not engage in any kind of non-compliant business and we have trained all our staff all over Africa and have hired a compliance officer to make sure that it is clear we have zero tolerance and that our business is a clean business and remains a clean business.”
Yara chief executive officer for Africa, Bernhard Fonseka, told Agri Investor that Yara will rebrand Greenbelt under its own name: “Once we have gone through the competitive approvals, we will immediately switch to Yara. The name will disappear, even the chemical business and grain trading business of Greenbelt will not be able to operate under that name after July 2016.”
He said that the company believed sub-Saharan agriculture was developing, and that smallholder farmers in the region are increasingly interested in buying fertiliser.
“Zambia and the Zambian cluster, which is Zimbabwe, Mozambique and Malawi is, apart from South Africa, the second largest producer of agricultural product, and that is the reason that we went for the acquisition,” Fonseka said in a phone interview.
Yara had already founded its own company in Zambia, but purchasing private company Greenbelt, he said, was a “shortcut”.
“We found a lot of parallel thinking and that both companies would fit very well and that Yara could grow the business much faster than Greenbelt could do it. In a bulk business with expensive bulk material, that requires a lot of capital, and as a private company it can be difficult to finance these growth steps,” said Fonseka.
He said added that acquisitions on this scale were more usual for listed companies like Yara, but that Yara would keep current management in place for the next three years.
“Of course we will support that team with people from Yara on the financial side, on the product management side and also on the business development side, especially to grow our market share in Mozambique and Malawi, as well as in the smallholder sector in Zambia,” said Fonseka.
Yara employs 80 agronomists to educate farming communities on using fertiliser in 10 African countries, he said. Yara will distribute fertilisers made in Europe.
“The biggest challenge is to make the transition from self-sufficient subsistence farmers to commercial farmers. Africa is a net importer and not self-sufficient in the production of food. There needs to be a huge push for the agricultural agenda in those countries where you have the chance to grow agricultural product.”
Yara is also engaged in programmes to incentivise the use of nitrate fertilisers in the region, and will work with farmers to ensure they know how to use different fertilisers for various soils and crops.
Yara partnered with The Masara N’Arziki Farmers Association in Ghana to guarantee 10,000 farmers who used the partners’ fertilisers and seeds an offtake price for their produce. Fonseka said the fertilisers and seeds were provided for free at first, adding that results could show financial institutions providing debt, as well as the smallholders themselves, that local farmers can be more productive.