Ghana agriculture/agri-business sector briefing

Transcription

1 Ghana agriculture/agri-business sector briefing

2 Part of the MASDAR Group of Companies

3 About us Over 35 years experience of providing agricultural consultancy, project management and farm operating services Expertise in Africa, Asia, UK and Eastern Europe For both public and private sector clients In Ghana since 1977 office significant project

4 The MCF Team

5 Examples of MCF Global Experience UK Numerous large scale arable, potato and livestock operations Poland/Czech Republic Privatisation of State Farms Russia Fresh Produce & Animal Feedstuff Production and Marketing Study - Ekaterinburg Philippines Managing 40,000 ha oil palm development Nigeria Development and management of Afcott Cotton Estate with outgrowers 60000ha Cambodia Feasibility studies for oil palm, sweet sorghum, rubber and jatropha plantations on behalf of investment fund Ghana Oil Palm Master Plan Study Nation Agro-industries study Malaysia & Thailand Performance Improvement Project for Unilever Palm Oil Plantations: 25,000ha Zambia Planning and establishment of Chanyanya Ranch: Irrigated soya, wheat, maize, potatoes, tobacco, dairy and beef Swaziland Planning and establishment of Irrigated Rice Estate ha Indonesia Management Training Programme for PT Astro Agro Lestari Lbk: 263,000ha Papua New Guinea Performance Improvement Project for New Britain Palm Oil: 40,000ha

6 The Ghanaian Economy Strong growth in recent years: GDP per capita tripling over the past decade. Government debt reduced, although the current account deficit remains high Chief exports are gold, cocoa and petroleum products, Key imports are capital equipment and foodstuffs. The country s agriculture potential is significant An oilfield with over 3bn bbl of light oil was discovered in 2007, and production began in December The risk of resource curse or Dutch Disease has to be monitored, given the experience of African countries such as Angola and Nigeria.

7 The Ghanaian Agricultural Sector 35% GDP 65% pop. Principal crops: yams, cassava, plantains & cocoa Principal exports: cocoa, palm oil & sugar (reexports) Principal imports: rice, sugar, palm oil & wheat Ghana agricultural production growth 2.6% -1.5% 4.3% 8.8% 4.8% 1960s 1970s 1980s 1990s 2000s Ghana agricultural exports and imports (US$m) 1,600 1,400 1,200 1, Agricultural imports Agricultural exports

8 Social Changes Affecting Ag. Sector Urban population will more than triple by % of the population will live in cities Already shortage of labour in rural areas as young men are the first to leave New consumer trends in food consumption Urbanisation rate by region (2010) 40% 24% 43% 51% Africa Eastern Africa Central Africa Northern Africa 59% Southern Africa 45% Western Africa Population of African cities in 2010 and 2025 (mn)

9 Challenges in the Ghana Ag Sector 1. Land title expensive & time consuming to get clear title Compensation 2. No supporting sector - need to be totally self sufficient CAPEX and expertise 3. Limited access to expensive credit 4. The costs of doing business in Ghana improving but still expensive & tedious 5. Limited transport, power & water infrastructure

10 Compared to UK 1. Clear, open and free market no government intervention 2. Complete supply chain and marketing chains in place 3. Easy access to cheap credit land is best collateral 4. Low costs, but more regulation & red tape 5. Fully developed transport, power & water infrastructure

11 Established: Siat (Belgium) oil palm Olam (Singapore) oil palm SAPH (Ivory Coast) Rubber Blue Skies (Ghana) Pineapples Gov of Ghana cereals, sugar, livestock New arrivals Main Players GADCO (Ghana/Brazil) rice & protein crops Africa Atlantic (USA) cereals & oilseeds

12 Innovations Large scale mechanised farms Large scale biofuel plantations Outgrowers organised and supported by the above Conservation agriculture Application of agricultural lime to acid soils When these innovations are established and delivering quality in volume agro-industry innovations will follow They will not work before

13 Opportunities for the Diaspora Job Seekers Farm managers (practical hands-on) Engineers Entrepreneurs In the innovations previously mentioned Establish an investment fund to provide long term equity start-up capital for the above Investors Back the innovators with long term equity

14 Disclaimers The information contained in this document is being provided for illustrative purposes only and has not been independently verified. A full feasibility study should be undertaken before any decisions are taken as to whether to proceed with any projects set out in this presentation. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither MASDAR Corporate Farming nor any of its employees, representatives or advisers shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information set out in this document may be subject to updating, completion, revision, verification and amendment and such information may change materially. Past performance is not a guide to the future. The value of farming businesses and of their holdings of property and the income from them, can fall as well as rise and any person undertaking such businesses may not get back the original amount invested.

15 Opportunity Case study: Large Scale Mechanised Cereals & Oilseeds 12,000 ha of land under cultivation Double crop, with rice in the wet season and sunflower in the dry season Complemented by an outgrower operation, to the extent of 20% of our own harvest Rationale is to increase productivity of under utilised fertile land to produce rice and sunflower oil to replace imports and to export to other Ecowas countries such as Nigeria

16 Summary data Yr 1 Yr 6 Hectares in Production 1,000 12,000 Production - Rice (mt) 2,300 39,000 Production - Sunflower (mt) 1,600 28,080 US$M Yr 1 Yr 6 Sales PBIT (1.93) EBITDA (1.17) CAPEX (8.60) (3.89)

17 Returns Mechanised Cultivation Total investment $40m Investor IRR 37% 30% - $4m Sensitive to: 1. Yields 2. Prices Key Success Factor MANAGEMENT A Medium Size Rice Mill

18 Risk Risks Mitigation Strategies Short term fluctuations in prices Range of crops Low financial gearing Annual fluctuations in crop yields Preventative programmes to control pests and diseases Number of units in different areas Irrigation Own applied R&D Political Strong local partners Out-growers Economic Local contracts priced in US$ Hold funds in US$ Food is a basic necessity Do not rush IPO

19 Summary 1. Farming opportunities in Ghana are many & varied 2. Simple system which can be quickly scaled up 3. High local prices can de-risk start up 4. Technical execution must be excellent 5. Risks must be managed 6. If 2-5 in place excellent returns for investors 7. When farms are producing volume excellent opportunities in agro-industry NOT BEFORE

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