AgricHub Presentation - francistown investment forum

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“Models & Strategies of Investing in Agriculture within the
greater Francistown: Possibilities of contract farming by
private sector with the local community for technical and
market support”
Francistown Business Forum
August 2014
Baitshepi Babusi-Hill
THE AGRICULTURAL HUB
1
Overview of Agric Sector in Botswana
• Main stay of livelihoods.
• Food, employment and income.
• Sector is dualistic, consisting
of both
a) traditional farmers and
b) commercial farmers,
(main differences here are land
tenure, use of technology, and
marketing of agricultural outputs)
2
Botswana’s annual Food Security Situation – Metric Tonnes (2012)
Product
National Demand
Domestic
Production
%
Imports
Sorghum/millet
96 000
51 647
54 %
44 353
Maize
221 000
21 560
10 %
199 440
Fruits and Vegetables 75 000
36 138
48 %
95 203
Pork
972
455
47 %
517
Poultry
64 053
63 412
99 %
4 576
Honey
31
14
45 %
17
Mutton and shevron
997
770
77 %
22
Milk
63 million litres
3
6%
60 million
3
4
1. Processing & Value Addition
Challenges
Opportunities
Low levels of agro
processing/value addition
plants to agricultural
produce i.e.
• horticulture
• meat products
• Tannery for hides & skins
• Formation of Agro
Processing Plants for
both horticulture and
livestock products
• Tanneries for both exotic
and non exotic leather
• Manufacture of leather
products
• Collection of Hides and
skins
•Hides production at over 300 000 annually.
•Either exported raw or
discarded.
2. Zambezi Integrated Agro-commercial
Project
Challenges
•
•
•
•
•
Cost of Water extraction
Feasibility Study
Environmental Impact
Assessment
Agricultural Productivity
Business cluster model
Opportunities
• 495 million cubic
metres/year Water
extracted from Zambezi
River
• 110 km Pipeline
construction on PPP,
BOT etc
• 35,000ha AgroInfrastructure
development of selected
Crops
3. Dairy
Challenges
• National demand is 63
million Litres and only met
by 6%
• Inadequate dairy breeds
• Inadequate knowledge
• High cost of feed
• Unavailable Land for dairy
farming.
Opportunities
• Increase in No of dairy
projects.
• Use of Artificial
Insemination and modern
technology of breeding i.e.
sexed semen.
• Technology transfer
• Production of feed from arable
operations
• Setting aside suitable land
for dairy production.
4. Beef Production
Challenges
• Under utilized abattoirs
• Use of Communal farms
(Meraka) vs. Ranches
• Processing of Byproducts
• Diseases out breaks, e.g
FMD
Opportunities
• Cattle ranching.
• Existence of EU listed
abattoirs.
• Well developed Livestock
Identification and trace back
system (LITS)
• Range fed beef.
• Blood & carcass meal for
feeding poultry.
• Utilization of other cattle byproducts like hooves, horns
etc….
8
5. Other Opportunities in Agriculture
Supply and manufacture of farm machinery and implements
•
Farm inputs and fertilizer etc.
Ostrich Farming
•
Remains unexploited
•
High wild ostrich population a sign of good potential (77 000)
•
Existence of an EU listed Multi Species export abattoir.
•
Existence of ostrich multiplication farm to supply farmers.
Apiculture (bee keeping) Projects
• National demand is 40 tons.
• The highest ever produced was 14.2 tons in 2010/11.
• Utilization of by-products.
• Increase in production.
Floriculture –Production of cut flowers
9
Other Opportunities ……cont’d
Investment arrangement
 Leasing out unutilized farms from land owners
 Leasing out municipal abattoirs
 Joint ventures
 Sole or Individual investment
 Foreign Direct Investment (FDI)
Provision of Agricultural Insurance
 No Substantive Agricultural insurance
Creation of Conducive environment
•
•
Credit facilities to Citizens at low interest rates.
Other undeveloped livestock with great potential
 Donkey meat (200,000 -300,000 donkeys)
 Sheep and Goats (200,000 sheep & 800,000 goats)
10
What is Contract farming
Contract farming:
• Involves agricultural production being carried out
on the basis of an agreement between the buyer
and farm producers.
• Linking small-scale producers and buyers through
business model innovation.
• Agricultural production carried out according to a
prior agreement in which the farmer commits to
producing a given product for a pre determined
buyer.
11
Benefits of contract farming
• Provides a “peace of mind” to the farmers.
• It offers the producer 100% guarantee on a minimum price for
the product. In instances where buying prices drop during
harvest season, the farmer’s income is secured.
• It gives the farmer an opportunity to budget and plan their
farming operations well ahead.
• On delivery the farmer is paid promptly (i.e. the contracted
price within 7 days).
• The producer capitalizes on any price rises.
• Improve on data collection & intelligence.
12
Contract farming Opportunities
1. Sale of Cereals to BAMB
• Under this scheme BAMB identifies a market for a particular
crop and contracts farmers to produce and supply BAMB with
crops such as Sorghum, Maize, Cowpeas or Beans at agreed
prices and quantities prior to planting.
• This helps to minimize farmers’ exposure to price risks due
price fluctuations dictated by market conditions, hence
empower local farmers to commercialize their arable farming
operations.
• This facility is open to any farmer who produces locally
provided he can produce 10 Mt or more per crop.
2. Sale of Cereals to Seed Multiplication Unit (SMU)
13
Contract farming …….contd
3. Poultry (Challenges)
• Famers shy away due to
conditions of contract.
• Inconsistency of supply.
• Quality not met.
• Private business not
willing to buy locally.
• Letter of intent not
binding.
Opportunities
• Farmers in contracts
with private
businesses like
Richmark, Star,
Bobby’s for market
access.
• Contract with feed
suppliers like Feed
Botswana.
Contract farming …….contd
4.Horticulture (Challenges)
• Saying No contracts (shy
away)
• Inconsistency in supply
• Low quality of produce
• Low volumes
• Concentration on one value
chain
• Chain stores import.
Opportunities
• Policy support & from
government
• Niche products
(cauliflower, brocolli,
lettuce, herbs)
• Export opportunities
• Specialization
• Processing (Mccain)
• Partnership trader
• Cold storage facilities
What then for Francistown…
1.
2.
3.
4.
The presence of MoA in Francistown
Agricultural Hub facilitation on Investment
The presence of Key stakeholders as the city grows
A conducive environment provided by government being
availed
• Seize the opportunity
• Align yourselves to the opportunities to assist
government in creating the environment for the
investor to come to the city e.g. Richmark will
come if there is a call for that.
4. Location of the city –major transport corridor
• Access to borders, Airport, foreign markets
• Population and market access
16
Day & Night
17
Thank You
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