Agriculture Presentation

1

Agenda

Why Invest in Agriculture In Mozambique

Agribusiness Strategy and Corridor Attractiveness

Agribusiness Opportunities in Mozambique

2

Mozambique at a Glance

Source: IMF World Economic Outlook Database, September 2011; World Bank

Tete

Niassa

Gaza

Sofala

Zambezia

Manica

Nampula

Inhambane

Cabo Delgado

Maputo

Demographics (2010)Demographics (2010)

Population: 23.4 million Capital: Maputo National Language: Portuguese Business Languages: Portuguese & English

Population: 23.4 million Capital: Maputo National Language: Portuguese Business Languages: Portuguese & English

Land and ClimateLand and Climate

Area: ~80 million ha Arable Land: 36 million hectares Climate: Tropical to Sub-Tropical

Area: ~80 million ha Arable Land: 36 million hectares Climate: Tropical to Sub-Tropical

Key Economic Indicators (2010)Key Economic Indicators (2010)

Currency: Metical, Abbreviation: MZN GDP: USD 9.59B GDP per Capita: USD 410 Projected Annual GDP Growth: almost 8%

per year average until 2015`(One of the fast growing economy in the World)

Agriculture Contribution to GDP: 23%

Currency: Metical, Abbreviation: MZN GDP: USD 9.59B GDP per Capita: USD 410 Projected Annual GDP Growth: almost 8%

per year average until 2015`(One of the fast growing economy in the World)

Agriculture Contribution to GDP: 23%

Mozambique is a stable, high economic growth country with substantial agricultural potential

3

Mozambique: A Nation of Potential

Significant private sector investments

Major infrastructure investments

Numerous innovative public-private-people partnerships

Agricultural development seen as critical to country’s development, with activities across sectors focused on 6 agriculturally attractive corridors

Government business incentive programs Specific organizations set up to organize and assist investors

36 million ha of arable land, mostly unutilized Tropical to sub-tropical climate with fertile soil and ample

rainfall Tremendous irrigation potential from major rivers

Strong and growing economy

Reliance on imports: Large import substitution opportunity

Coastal position: Access to international and regional markets

The country’s potential can be captured in four key areas

Enabling Environmen

t for Investments

Government

Commitment to Market-

Driven Growth

Strong Market

Dynamics

Excellent Agro-

Ecological Conditions

4

Excellent Conditions for Agriculture

High Agricultural

Potential

EXTENSIVE WATERWAYS

YEAR-ROUND PRODUCTION POTENTIAL

10 DISTINCT AGRO-CLIMATIC ZONES

VAST UNUTILIZED

ARABLE LAND

36.0

Unutilized

30.6

5.4

Arable Land

85.0%

15.0%

Utilized

Land Suitability

Mill

ion

He

cta

res

Suitable for rainfall agriculture

Moderately suitable for rainfall agriculture

Utilization of Arable Land

Major rivers such as Zambezi, Limpopo, Save, and other tertiary rivers offer tremendous irrigation potential

Tropical climates offer potential for year-round, high yield crop production

Mozambique boasts ideal growing conditions – plentiful water supply combined with diverse micro-climates support a broad range of agricultural commodities

5

Strategic Location

Mediterranean

China/ India

Middle East

Neighboring Countries

Mozambique: Proximity to High Opportunity Markets

Natural gateway to the Middle East, Mediterranean, and Asia

Bordering regional markets like South Africa, Zimbabwe, and Malawi

Port upgrades at Nacala and Beira will further trade opportunities

Natural gateway to the Middle East, Mediterranean, and Asia

Bordering regional markets like South Africa, Zimbabwe, and Malawi

Port upgrades at Nacala and Beira will further trade opportunities

Mozambique has an advantageous geographic positioning, providing an ideal gateway to both international and regional markets

6

Innovative Agricultural Partnerships

Beira Agr. Growth Corridor (BAGC) Partnership

– Catalytic Fund of USD 20M in publicly-backed investment for startup agribusinesses

– First African country with a dedicated catalytic fund for agriculture AGRA + Standard Bank

– USD 25M loan guarantee facility GoM + World Bank

– USD 70M irrigation program (“Proirri”) USAID Agrifuturo

– Program to promote agribusiness Pro Savana

– Partnership between GOM, Japan and Brazil to develop agribusiness

Examples of Successful Public-Private Partnerships UnderwayExamples of Successful Public-Private Partnerships Underway

Innovative public-private partnerships to transform Mozambique’s agriculture are being implemented

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Agenda




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• Patient capital

• Skills and training

• Community support & engagement

• Human capital and capacity

• Expertise• Markets• Commercial

Financing

• Enabling environment

• Infrastructure• Research

PublicSector

PrivateSector

Development

PartnersMozambican

People

Aligning Efforts Across Stakeholders

The four stakeholder groups of the Public and Private sectors along with People and development Partners are key to developing Mozambique’s agriculture potential

9

PEDSA: Strategic Plan for Agricultural Development

Source: Ministry of Agriculture

Vision: Vision: An integrated, prosperous, competitive

and sustainable agriculture sector

6 corridors targeted: Align efforts across public, private, and development sectors through:– Agricultural potential– Support services (research centers, educational institutions)– Connection to market (infrastructure)

Agricultural production and productivity to increase ability

to compete

1

Infrastructures and services for

markets and improved marketing

2

Land, water, forest and

wildlife resources used

sustainably

3

Agricultural institutions

strengthened

4

Summary of PEDSA, 2010 to 2019 Strategic Plan

Four Discrete Pillars in Progress to Achieve Agricultural Vision

A ten-year agricultural strategic plan was developed to focus efforts and maximize alignment of activities amongst these stakeholder groups

10

Agriculture Growth Corridors

Provinces within Beira, Nacala, and Zambezi Valley

Corridors*

Niassa

Gaza

Sofala

Zambezia

Manica

Nampula

Inhambane

Cabo Delgado

Maputo

Tete

NacalaNacala

BeiraBeira

Zambezi ValleyZambezi Valley

Pemba LichingaPemba Lichinga

MaputoMaputo

LimpopoLimpopo

Note: * Color coding represents approximate positioning of corridors

River Networks in Mozambique

Six Corridors in Agricultural Strategy

Mozambique has identified six corridors

Mozambique has identified six corridors

Three of which are being highlighted in the

conference

Three of which are being highlighted in the

conference

These corridors hold most of the country’s

water resources

These corridors hold most of the country’s

water resources

Investments in agriculture are organized in corridors. Nacala, Zambezi Valley, and Beira corridors in north and central Mozambique display high agricultural potential

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Nacala Agricultural Growth Corridor

Source: Ministry of Agriculture

Investments MadeInvestments MadeAttractiveness of NacalaAttractiveness of Nacala

Nacala Special

Economic Zone

Nacala Special Economic Zone provides 500 ha industrial free zone with no VAT and customs duties, as well as technical assistance

Nacala Port Potential

Upgrade of the deepest port on East African coast at Nacala

Mining USD 4.4B upgrade to

rail by Vale

Demand from Mining

The mining sector is increasing demand for agricultural products; currently imported from South Africa at high cost

Bananas Matanuska: USD 60M

invested to date focused on bananas

The government has focused significant resources and business-friendly investment programs on the Nacala Corridor

Forestry

Green Resources: USD 2.2B eucalyptus plantation and industrial infrastructure

Soybeans

Rei do Agro: Mozambican company investing USD 5M for soy and maize production

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Zambezi Valley Corridor

Note: 1PROIRRI project is part of both the Beira and Zambezi Valley CorridorsSource: Zambezi Valley Development Agency

Investments MadeInvestments MadeAttractiveness of Zambezi ValleyAttractiveness of Zambezi Valley

Vast Water Reserves

80% of the country’s water reserves are found in the Zambezi Valley corridor

Agro-Processing

Chinese government USD 50M investment for cotton, maize and rice processing facilities

Irrigation1

USD 70M World Bank PROIRRI irrigation project, mainly aimed at irrigation for rice

Port Infrastructure

Estimated USD 1B port investments by Rio Tinto

Zambezi Valley has the greatest agricultural potential, with the highest concentration of the country’s water resources

RiceOlam is investing USD

50M over the next 4 years

Broad Crop Variety

Diverse topography and good rainfall during cropping season provides perfect climate for a variety of crops

Large Local Demand

Local market potential as one of the most densely populated provinces

13

Beira Agricultural Growth Corridor

Note: 1PROIRRI project is part of both the Beira and Zambezi Valley CorridorsSource: BAGC

Investments MadeInvestments MadeAttractiveness of BeiraAttractiveness of Beira

Infrastructure and

Connectivity to Region

Well-developed infrastructure with road and rail network linking Zambia, Malawi, Zimbabwe and Mozambique to the port of Beira

Demand from Mining

Activities

A number of multi-billion dollar mining investments are going ahead, which will improve access to infrastructure in the region and boost local demand

Catalytic Fund

USD 20M for the BAGC Catalytic Fund

First catalytic fund dedicated to agriculture in Africa, which is already leading to a number of investments

Irrigation1

USD 70M World Bank PROIRRI irrigation project, mainly aimed at irrigation for rice

Beira PortUSD 67M from JICA and

EU for upgrades to the Port of Beira

Beira currently has the most developed infrastructure and linkages to neighboring countries

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Agenda




15

Fruit Vegetables

Pulses

Cashew

AquacultureForestry

Maize

Livestock

CottonIII

Oilseeds

Soybeans Banana

For the sixteen prioritized commodities, additional information is included in differing levels of detail to supplement the investment cases distributed during the Forum

I

CassavaSugar Cane

Poultry

II

Commodities Analyzed

Rice

16

Fruit Vegetables

Pulses

Cashew

AquacultureForestry

Maize

Livestock

CottonIII

Oilseeds

For the sixteen prioritized commodities, additional information is included in differing levels of detail to supplement the investment cases distributed during the Forum

CassavaSugar Cane

II

Commodities Analyzed

Soybeans Banana

I

PoultryRice

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There are business opportunities in several parts of the value chain as well as for an integrated producer

One of those opportunities is a medium-size milling facility, which requires investment of ~USD 5M

Would be supported by 3,000-5,000 smallholder farmers

There are business opportunities in several parts of the value chain as well as for an integrated producer

One of those opportunities is a medium-size milling facility, which requires investment of ~USD 5M

Would be supported by 3,000-5,000 smallholder farmers

Major gap exists between domestic production and demand Climate and soil are very well-suited to rice, with

opportunities for year-round production Significant investment is underway, which may dramatically

improve current infrastructure and raise rice yields

Major gap exists between domestic production and demand Climate and soil are very well-suited to rice, with

opportunities for year-round production Significant investment is underway, which may dramatically

improve current infrastructure and raise rice yields

MarketMarket

Investment OpportunitiesInvestment

Opportunities

Executive Summary

Rice

18

Production growth has not been able to overcome demand growth – keeping imports high

Source: IRRI, FAOSTATS, USDA

Growth PotentialGrowth Potential

MarketMarket

Mozambique has the 3rd highest rice consumption in SADC, but is mostly dependent on imported rice– Unlike neighbor countries, the share of

imports has not reduced over time and instead remains around ~60%

– Despite the significant growth potential for rice (Mozambique’s climate and soil are considered very well-suited to rice), domestic production has only grown at the same rate as imports

Without increased local production, this gap will only grow due to a projected 7% domestic demand increase per year

455239

2009

+90%

2000

60%

40%

20%

0%

80%

20112010200920082007200620052004

9%

62%

Consumption of Rice (in ‘000 tonnes)

Share of Imported Rice on Local Consumption

MalawiZambiaMozambique

Gap: Neighbor countries reduced

imports to ~10%

Gap: Neighbor countries reduced

imports to ~10%

Rice consumption has doubled over the past decade, but without significant reductions in rice importations

Rice – Market Analysis (1/2)

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There are business opportunities throughout much of the value chain, as well as for an integrated producer

A ~USD 4.5 M soy extraction & refining center was selected as an example, utilizing 3,500-4,000 hectares of soybean fields as inputs

~1,400 smallholder farmers included into the supply chain

There are business opportunities throughout much of the value chain, as well as for an integrated producer

A ~USD 4.5 M soy extraction & refining center was selected as an example, utilizing 3,500-4,000 hectares of soybean fields as inputs

~1,400 smallholder farmers included into the supply chain

Demand for soybeans is increasing due to the development of poultry and soy oil sectors

Downstream markets are highly dependent on imported inputs

High availability of natural resources may benefit expansion of soybeans crop

Demand for soybeans is increasing due to the development of poultry and soy oil sectors

Downstream markets are highly dependent on imported inputs

High availability of natural resources may benefit expansion of soybeans crop

MarketMarket


Opportunities

Executive Summary

Soybeans

20

Value chain integration is the basis for an attractive investment prospect

Opportunity for an investment of $5–6M in a 300 hectares commercial banana plantation leveraging nearby producers to achieve scale at lower investment levels

Value chain integration is the basis for an attractive investment prospect

Opportunity for an investment of $5–6M in a 300 hectares commercial banana plantation leveraging nearby producers to achieve scale at lower investment levels

Opportunity to meaningfully increase Mozambique’s banana exports– Demand imbalances exist in the Middle East, the

Mediterranean, and to a lesser extent Southern Africa– Year-round, high-yield crop potential within

Mozambique provides additional export opportunities and improved margins

Potential for lower farm costs than other competitors

Opportunity to meaningfully increase Mozambique’s banana exports– Demand imbalances exist in the Middle East, the

Mediterranean, and to a lesser extent Southern Africa– Year-round, high-yield crop potential within

Mozambique provides additional export opportunities and improved margins

Potential for lower farm costs than other competitors

MarketMarket


Opportunities

Executive Summary

Banana

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Significant Potential for Import Substitution Makes Poultry a Strong Investment

Demand for poultry has grown meaningfully across Africa

– Poultry’s consumption has more than doubled in over 10 African countries over the last decade, with high dependence of imports from Brazil, Asia, and US

– Opportunity for local players to supply this demand due to geographic advantages

While domestic demand in Mozambique has grown slightly in past, future demand is expected to more than triple in the next 10 years

– Impact of considerable growth in mining as well as oil and gas sectors on working population will help full domestic demand

Feed costs correspond to ~75% of total costs – with growth in the domestic soy cake industry, potential for reduced input costs could further drive demand

Poultry Consumption in Africa (in ‘000 tonnes)

904

Zimbabwe

5724

Angola

14555

South Africa

1,228

2007

2000

+36% +164% +133%

African countries has reported meaningful growth in demand for poultry meat

Poultry Consumption in Mozambique (in ‘000 tonnes)

2020e

137

2010e

42

2000

35

Poultry consumption has grown less in Mozambique, but future growth is expected

+21%+226%

Note: Djibouti, Comoros, Cape Verde, Ghana, Gabon, Gambia, Angola, Democratic Republic of the Congo, Zimbabwe, Congo, Sao Tome and Principe and Guinea. Source: FAO, USAID, TechnoServe, Monitor Analysis

Poultry – Market Analysis

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Mozambique

Our Challenge is to contribute towards the victory against

poverty.

Our Pride is to increase food

production and generate more

wealth.

Our Destine is to achieve global food

and nutritional security.

Abdul CesarAgricultural Promotion Centre

+258 82 300 [email protected]

Lourenço SamboInvestment Promotion Centre

+258 21 313 [email protected]

Contact Information:

THANK YOU

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