Vita Grain says priority is to support stock-piling of rice in Singapore

Vita Grain could hold key to solving hunger woes;

by Chen Huifen

The Business Times Singapore

Graeme Robertson of Vitagrain signing agreement with Mauritius Minister of Agro Industry Satish Faugoo. Source: Le Matinal

October 6, 2009

UNDAUNTED by a lack of rice industry in Singapore, a group of businessmen here - including Transview Holdings chairman Tan Ching Khoon - have created a company that could hold the key to solving hunger problems worldwide.

Vita Grain Group, which is backed by US $60 million of funding, owns more than 20 different strains of hybrid rice seeds that give higher-yielding, healthier crops. In field trials, its hybrid lines have been shown to produce as much as 12 tonnes of rice per hectare a year - about three times the worldwide average yield of 3.5-4 tonnes per ha per year.

'It makes the argument for hybrid so compelling that it's almost become an international priority for governments,' said Vita Grain chairman Graeme Robertson.

For example, a hectare of land would need about 20kg of a particular grade of hybrid rice seed to grow a crop. If two crops can be grown a year, 40kg of hybrid seeds would be needed. Since hybrid seeds can only be used once, at US $4 per kg of seeds, it would cost the farmer US $160 a year.

Normal rice grains may be free, but the annual yield of 2 tonne per ha per year achieved in many developing countries is significantly lower than the 10 tonnes per ha per year possible with Vita Grain's hybrid seeds. Assuming the current raw rice price of US $200 per tonne, the output with hybrid seeds would have raked in US $2,000 for the farmer, while normal rice would only yield US $400.

Apart from its higher yield, Vita Grain's hybrid seeds also boast of lower glycemic index (GI) levels (high GI food gives rise to diabetes and obesity). The company has already started mass production of the seeds on 50 ha of land in Mauritius. This will be raised to 500 ha of land by July next year and 1,000 ha of land by December next year.

'More than 1,000 ha of seed land in Mauritius can produce, at 4 tonne per ha, 4,000 tonnes of hybrid rice seeds,' said Mr Robertson. 'And you need 40kg of hybrid seeds in one year to grow, say 10 tonnes of rice, but it's probably 16 tonnes or higher than that. So the capacity is huge.'

The impact on food security issues could also be huge. Although the Singapore-based firm is yet to have formal discussions with authorities here, it says its priority will be to support stock-piling of rice in Singapore - which imports about 330,000 tonnes of rice a year - if the need arises.

The company counts geneticist Abed Chaudhury as its chief scientist and shareholder. Vita Grain is eyeing private equity firms with an interest in food security to raise a further US $10-50 million for expansion.

'To develop 10,000 ha of rice would cost us about US $25 million. US $10 million of funding, plus our own investment, will cover that,' said Mr Robertson. He forecasts a 25 per cent return on investment over the next two to three years.

With new investments, Vita Grain will be able to explore further seed production in Asia, the US and South America, as well as rice production using its own seeds. The company is also setting up a rice mill in Mauritius and is in talks with partners in Botswana, Madagascar and Mozambique to develop rice production units that could, at the same time, improve the livelihoods of the local communities.

'The risk is in infringement of our intellectual property because it takes many years of research and development to reach where we are today,' said Transview's Mr Tan, who is executive director of Vita Grain. 'This is why our people are on the ground monitoring our programmes every day.'

Who's involved?

Whos Involved?

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