Agriterra the Pan-African Agricultural Company has pronounced its 2012/2013 outlook as “extremely encouraging.”
The company announced “Increase in Group revenue to US$13.8 million and creation of three revenue streams – beef herding, cocoa buying and trading, and maize buying and processing,” and an“Investment programme accelerated to create foundation for sustainable growth and profitability – focussing on expansion of beef operations in Mozambique and cocoa operations in Sierra Leone.”
On its Cocoa operations in Sierra Leone the Company said“Agriterra’s cocoa division has rapidly expanded during the period. Following TFL’s acquisition by Agriterra in July 2011, when the business operated four buying points, considerable investment has been made into the business’s infrastructure and TFL now has three main hub stores and 41 satellite stores with a direct buying register of more than 3,500 farmers across the country. This rapid ramp up of buying infrastructure has enabled TFL to double its pre-acquisition annual trading volume during the period. this increase is expected to continue, with total trading volumes for the current financial year forecasted to double the volume of the 2011/2012 financial year. TFL continues to develop relationships with blue chip groups as off takers for its cocoa sales, in addition to initial coffee sales from its recently established coffee operation. Although coffee volumes are currently small, the Company expects sales to increase during the 2012/2013 financial year as TFL focuses on diversifying its product range and expanding its trading operations.
Whilst cocoa trading and sales have proved lucrative for the Company during the period, the longer term goal for TFL is to develop independent plantations in order to capitalise on the compelling economics for cocoa growing. Cocoa prices currently stand at approximately US$2,300/tonne, and with plantation costs being estimated at around US$800/tonne, the high margin nature of the business is clearly evident.
In order to establish independent cocoa farms, the Group is currently in negotiations to acquire a 4,400 acre former cocoa and coffee plantation for rehabilitation; however the Board will remain proactive in evaluating and leasing significantly more land in the longer term. In tandem with this, the Group continues to invest in supporting infrastructure, including the construction of a 2,000m2 processing facility in Kenema, which is anticipated to be completed before the cocoa buying season in August 2013. Development of a larger collateral management warehousing facility, located on the 15 acre site acquired by TFL in Freetown, will commence thereafter, effectively linking up-country cocoa growing and buying infrastructure at Kenema with the export markets through the port at Freetown.”
Phil Edmonds Chairman said “Our focus during the year has been on the consolidation, expansion and diversification of our businesses in order to create the platform to become a leading African based agricultural company.”
“Africa is a dynamic and rapidly developing continent, with unique requirements for food production over the coming decades. With a current population of over 1 billion and forecasts indicating an increase of more than 20% over the next ten years, and seven out of the world’s ten fastest growing economies, food volumes and dietary requirements throughout Africa are expected to continue to change quickly.”
“This is a defining period in Agriterra’s development and we remain concentrated on further expanding our operations, particularly our beef ranching and cocoa plantations, in order to achieve critical mass and sustainable profitability. With this in mind, our attention during the year has been on the development of the necessary infrastructure to support continued growth across our asset portfolio. Significant investment has been made during the period, including the construction of the abattoir and the 48 billion litre dam at the Mavonde Stud Ranch, the rapid expansion of our beef breeding herd and the considerable increase in cocoa buying infrastructure in Sierra Leone.”
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