By Tom Robbins
The global food shortage coupled with vast tracts of surplus arable land in Africa made the continent the world's greatest farming opportunity, Avril Stassen, an investment adviser for Agri-Vie's $100 million (R957 million) agribusiness private equity fund, said last week.
Stassen remained bullish on the sector despite the fall in agricultural commodity prices and a decline in capital inflows due to the global financial crisis.
Agricultural commodities had not slid by as much as mineral commodities, he told the exporta Africa Trade & Investment Conference in Cape Town. "The profits are still there" and foreign investors would eventually be lured back by the higher returns in Africa.
Less than 20 percent of arable land in Africa was in productive use and governments were increasingly keen to attract private investors.
Agri-Vie invests between $4 million and $7 million in agricultural processing businesses, preferring to leave the farming to locals.
Unlike traditional private equity funding it uses little debt. Investors include the International Finance Corporation and African Development Bank.
Stassen said rapid urbanisation on the continent was creating demand for an increased variety of processed staple foods. Growth in agri-processing was helped by South African food companies as they sought to expand beyond the relatively mature local market.
Tiger Brands, the country's biggest food manufacturer, has a strategy to expand north.
Last year it bought a controlling stake in relatively small, fast-moving consumer goods distributor Haco Industries Kenya, as a "beachhead" to faster economic growth in the rest of Africa.For a decade, Shoprite has been aggressively expanding north of the Limpopo.