Agriculture Presentation


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Presentation given by Minister Pacheco about Agriculture in Mozambique. This presentation was made during a small event organised by Africa Matters Limited (www.africamatters.con) on 7 June 2012.

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Agriculture Presentation

  1. 1. Agenda Why Invest in Agriculture In Mozambique Agribusiness Strategy and Corridor Attractiveness Agribusiness Opportunities in Mozambique MONITORGLOBES_20120214 1
  2. 2. Mozambique at a Glance Mozambique is a stable, high economic growth country with substantial agricultural potential Demographics (2010)  Population: 23.4 million Cabo  Capital: Maputo Niassa Delgado  National Language: Portuguese  Business Languages: Portuguese & English Nampula Tete Land and Climate Zambezia  Area: ~80 million ha Sofala  Arable Land: 36 million hectares Manica  Climate: Tropical to Sub-Tropical Key Economic Indicators (2010) Inhambane  Currency: Metical, Abbreviation: MZN Gaza  GDP: USD 9.59B  GDP per Capita: USD 410  Projected Annual GDP Growth: almost 8% Maputo per year average until 2015`(One of the fast growing economy in the World)Source: IMF World Economic Outlook Database, September 2011; World Bank  Agriculture Contribution to GDP: 23% MONITORGLOBES_20120214 2
  3. 3. Mozambique: A Nation of Potential The country’s potential can be captured in four key areas  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 Excellent Significant private Agro-  Strong and growing sector Ecological economy investments Conditions  Reliance on imports: Major Enabling Strong Large import infrastructure Environmen Market substitution investments t for Dynamics opportunity Numerous Investments innovative public- Governmen  Coastal position: private-people t Access to partnerships Commitmen international and t to Market- regional markets Driven Growth  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 MONITORGLOBES_20120214 3
  4. 4. Excellent Conditions for AgricultureMozambique boasts ideal growing conditions – plentiful water supply combinedwith diverse micro-climates support a broad range of agricultural commodities  Major rivers such as Zambezi, Limpopo, Save, and other tertiary Land Suitability rivers offer tremendous Utilization of Arable Land irrigation potential 36.0 5.4 EXTENSIVE WATERWAYS 15.0% 30.6Million Hectares VAST High 10 DISTINCT UNUTILIZED Agricultural AGRO-CLIMATIC 85.0% ARABLE Potential ZONES LAND YEAR-ROUND PRODUCTION POTENTIAL Arable Utilized Unutilized Suitable for rainfall Land  Tropical climates offer agriculture potential for year-round, Moderately suitable for high yield crop production rainfall agriculture MONITORGLOBES_20120214 4
  5. 5. Strategic LocationMozambique has an advantageous geographic positioning, providing an idealgateway to both international and regional markets Mozambique: Proximity to High Opportunity Markets  Natural gateway to the Middle East, Mediterranean, and Asia Mediterranean  Bordering regional markets like South China/ India Africa, Zimbabwe, and Malawi  Port upgrades at Middle East Nacala and Beira will further trade opportunities Neighboring Countries MONITORGLOBES_20120214 5
  6. 6. Innovative Agricultural PartnershipsInnovative public-private partnerships to transform Mozambique’s agriculture arebeing implemented Examples of Successful Public-Private Partnerships Underway  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 MONITORGLOBES_20120214 6
  7. 7. Agenda Why Invest in Agriculture In Mozambique Agribusiness Strategy and Corridor Attractiveness Agribusiness Opportunities in Mozambique MONITORGLOBES_20120214 7
  8. 8. Aligning Efforts Across StakeholdersThe four stakeholder groups of the Public and Private sectors along with Peopleand development Partners are key to developing Mozambique’s agriculturepotential • Enabling • Expertise environment • Markets • Infrastructure • Commercial • Research Financing Public Private Sector Sector Mozambican Development • Community People Partners • Patient support & capital engagement • Skills and • Human capital training and capacity MONITORGLOBES_20120214 8
  9. 9. PEDSA: Strategic Plan for Agricultural Development A ten-year agricultural strategic plan was developed to focus efforts and maximize alignment of activities amongst these stakeholder groups Summary of PEDSA, 2010 to 2019 Strategic Plan 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) 1 2 3 4 Agricultural Infrastructures Land, water, production and and services for forest and Agricultural productivity to markets and wildlife institutions increase ability improved resources used strengthened to compete marketing sustainably Four Discrete Pillars in Progress to Achieve Agricultural VisionSource: Ministry of Agriculture MONITORGLOBES_20120214 9
  10. 10. Agriculture Growth Corridors Investments in agriculture are organized in corridors. Nacala, Zambezi Valley, and Beira corridors in north and central Mozambique display high agricultural potential Three of which are being These corridors hold Mozambique has highlighted in the most of the country’s identified six corridors conference water resources Six Corridors in Provinces within Beira, River Networks in Agricultural Strategy Nacala, and Zambezi Valley Mozambique Corridors* Nacala Cabo Niassa Delgado Zambezi Valley Nampula Tete Beira Zambezia Pemba Lichinga Manica Sofala Inhambane Limpopo Gaza Maputo MaputoNote: * Color coding represents approximate positioning of corridors MONITORGLOBES_20120214 10
  11. 11. Nacala Agricultural Growth Corridor The government has focused significant resources and business-friendly investment programs on the Nacala Corridor Attractiveness of Nacala Investments Made  Nacala Special Economic  Rei do Agro: Nacala Zone provides 500 ha Mozambican company Special industrial free zone with Soybeans investing USD 5M for Economic no VAT and customs soy and maize Zone duties, as well as production technical assistance  Green Resources: USD 2.2B eucalyptus Forestry  Upgrade of the deepest plantation and industrial Nacala Port Potential port on East African coast infrastructure at Nacala  Matanuska: USD 60M  The mining sector is Bananas invested to date focused increasing demand for on bananas Demand from agricultural products; Mining currently imported from  USD 4.4B upgrade to Mining South Africa at high cost rail by ValeSource: Ministry of Agriculture MONITORGLOBES_20120214 11
  12. 12. Zambezi Valley Corridor Zambezi Valley has the greatest agricultural potential, with the highest concentration of the country’s water resources Attractiveness of Zambezi Valley Investments Made  80% of the country’s  Chinese government USD Vast Water water reserves are found Agro- 50M investment for Reserves in the Zambezi Valley Processing cotton, maize and rice corridor processing facilities  Diverse topography and  USD 70M World Bank good rainfall during PROIRRI irrigation Broad Crop Irrigation1 cropping season provides project, mainly aimed at Variety irrigation for rice perfect climate for a variety of crops  Olam is investing USD Rice 50M over the next 4 years  Local market potential Large Local as one of the most Demand densely populated Port  Estimated USD 1B port provinces Infrastructure investments by Rio TintoNote: 1PROIRRI project is part of both the Beira and Zambezi Valley CorridorsSource: Zambezi Valley Development Agency MONITORGLOBES_20120214 12
  13. 13. Beira Agricultural Growth Corridor Beira currently has the most developed infrastructure and linkages to neighboring countries Attractiveness of Beira Investments Made  Well-developed  USD 20M for the BAGC infrastructure with road Catalytic Fund Infrastructure and rail network linking  First catalytic fund and Catalytic Zambia, Malawi, dedicated to agriculture Connectivity Fund to Region Zimbabwe and in Africa, which is already Mozambique to the port leading to a number of of Beira investments  A number of multi-billion  USD 70M World Bank dollar mining PROIRRI irrigation Irrigation1 investments are going project, mainly aimed at Demand from ahead, which will irrigation for rice Mining Activities improve access to infrastructure in the  USD 67M from JICA and region and boost local Beira Port EU for upgrades to the demand Port of BeiraNote: 1PROIRRI project is part of both the Beira and Zambezi Valley CorridorsSource: BAGC MONITORGLOBES_20120214 13
  14. 14. Agenda Why Invest in Agriculture In Mozambique Agribusiness Strategy and Corridor Attractiveness Agribusiness Opportunities in Mozambique MONITORGLOBES_20120214 14
  15. 15. Commodities AnalyzedFor the sixteen prioritized commodities, additional information is included in differinglevels of detail to supplement the investment cases distributed during the Forum I Rice Soybeans Banana Poultry II Sugar Cane Cassava III Fruit Vegetables Maize Cashew Cotton Oilseeds Pulses Forestry Aquaculture Livestock MONITORGLOBES_20120214 15
  16. 16. Commodities AnalyzedFor the sixteen prioritized commodities, additional information is included in differinglevels of detail to supplement the investment cases distributed during the Forum I Rice Soybeans Banana Poultry II Sugar Cane Cassava III Fruit Vegetables Maize Cashew Cotton Oilseeds Pulses Forestry Aquaculture Livestock MONITORGLOBES_20120214 16
  17. 17. RiceExecutive Summary  Major gap exists between domestic production and demand  Climate and soil are very well-suited to rice, with Market opportunities for year-round production  Significant investment is underway, which may dramatically improve current infrastructure and raise rice yields  There are business opportunities in several parts of the value chain as well as for an integrated producer Investment  One of those opportunities is a medium-size millingOpportunities facility, which requires investment of ~USD 5M  Would be supported by 3,000-5,000 smallholder farmers MONITORGLOBES_20120214 17
  18. 18. Rice – Market Analysis (1/2) Market Rice consumption has doubled over the past decade, but without significant reductions in rice importations Growth Potential Production growth has not been able to overcome demand growth – keeping imports high  Mozambique has the 3rd highest rice Consumption of Rice consumption in SADC, but is mostly (in ‘000 tonnes) dependent on imported rice +90% – Unlike neighbor countries, the share of 455 239 imports has not reduced over time and instead remains around ~60% 2000 2009 – Despite the significant growth potential Share of Imported Rice on for rice (Mozambique’s climate and soil Local Consumption 80% are considered very well-suited to rice), 62% Gap: 60% Neighbor domestic production has only grown countries at the same rate as imports 40% reduced 20% 9% imports to  Without increased local production, this ~10% gap will only grow due to a projected 7% 0% 2004 2005 2006 2007 2008 2009 2010 2011 domestic demand increase per year Mozambique Zambia MalawiSource: IRRI, FAOSTATS, USDA MONITORGLOBES_20120214 18
  19. 19. SoybeansExecutive Summary  Demand for soybeans is increasing due to the development of poultry and soy oil sectors Market  Downstream markets are highly dependent on imported inputs  High availability of natural resources may benefit expansion of soybeans crop  There are business opportunities throughout much of the value chain, as well as for an integrated producer Investment  A ~USD 4.5 M soy extraction & refining centerOpportunities 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 19
  20. 20. BananaExecutive Summary  Opportunity to meaningfully increase Mozambique’s banana exports – Demand imbalances exist in the Middle East, the Mediterranean, and to a lesser extent Southern Africa Market – Year-round, high-yield crop potential within Mozambique provides additional export opportunities and improved margins  Potential for lower farm costs than other competitors  Value chain integration is the basis for an attractive investment prospect InvestmentOpportunities  Opportunity for an investment of $5–6M in a 300 hectares commercial banana plantation leveraging nearby producers to achieve scale at lower investment levels MONITORGLOBES_20120214 20
  21. 21. Poultry – Market Analysis 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 African countries has reported meaningful Poultry consumption has grown less in Mozambique, growth in demand for poultry meat but future growth is expected Poultry Consumption in Africa 2000 Poultry Consumption in Mozambique (in ‘000 tonnes) 2007 (in ‘000 tonnes) +36% +164% +133% +226% 1,228 +21% 137 904 145 35 42 55 24 57 South Africa Angola Zimbabwe 2000 2010e 2020eNote: Djibouti, Comoros, Cape Verde, Ghana, Gabon, Gambia, Angola, Democratic Republic of the Congo, Zimbabwe, Congo, Sao Tome and Principeand Guinea. Source: FAO, USAID, TechnoServe, Monitor Analysis 21
  22. 22. MozambiqueOur Challenge is to Our Pride is to Our Destine is tocontribute towards increase food achieve global foodthe victory against production and and nutritional poverty. generate more security. wealth. THANK YOU Contact Information: Abdul Cesar Lourenço Sambo Agricultural Promotion Centre Investment Promotion Centre +258 82 300 2017 +258 21 313 310 MONITORGLOBES_20120214 22