By Wendell Roelf
CAPE TOWN (Reuters) - Yes Bank expects a $150 million Tanzanian rice and wheat project to reach full production by 2011, the first of several large African farms it is funding, a senior bank official said on Monday.
Listed on the Bombay stock exchange, the bank is providing finance to Indian companies eager to invest in farming projects in the world's poorest continent.
"Basically we are looking at a more inclusive model wherein the local farmers can be organised into a producers company, and they would be the suppliers to the processing facility that would be set up. So it's predominantly not to acquire huge tracts of land," Raju Poosapati, vice president food and agribusiness research at the bank, told Reuters.
He said Yes Bank was not involved in controversial "land-grab" projects or buying up large swathes of arable land in Africa to ease food security concerns of foreign countries.
Large swathes of arable and fallow land are attracting millions of dollars investment in Africa's stagnant agriculture sector, despite a global downturn, as rich countries such as Saudi Arabia and South Korea worry about food security.
A United Nations independent expert warned last week that foreign investors risk a backlash from local populations feeling marginalised by farmland deals that don't take their needs into account.
Poosapati said the Indian bank's deals typically involve investment of between $120 million to $200 million each, and could provide opportunities for African farmers to export their crop to India.
Poosapati said Yes Bank's clients included large Indian rice, wheat and edible oil processing companies, which would grow the crops and sell the produce locally, some to India.
"We are looking at between 30,000 and 50,000 hectares for rice and wheat in Tanzania," said Poosapati on the sidelines of an African agriculture conference outside Cape Town.
He said Yes Bank would fund a processing plant -- with about 225,000 metric tonnes of processing capacity a year when it reached full production within 18 months -- close to the farm.
Depending on the project, Poosapati said Yes Bank could provide the entire amount, a mixture of debt and equity or syndicating the finance requirements.
Poosapati said Yes Bank was also considering projects in Mozambique, Malawi, Madagascar, Angola and Namibia.
"We are looking at some large-scale agriculture projects predominantly in cereals, lentils and oilseeds, basically to create both production and also the primary and secondary processing if required," he said.
He added that maize and oilseed projects were also being eyed. India imports more than 5 million tonnes a year of maize year and is one of the world's largest importers of edible oils.
Besides large-scale farming projects, Poosapati said the bank was also involved in funding "agro-food parks" in Africa.
"What we are looking at is the creation of sustainable (zones) with spatial integration of production, processing, trade and the logistics supply chain," he said.
The first of these agro-parks, to be developed at an estimated cost of $200 million each, is planned for Mauritius and a second for South Africa, Poosapati said.He said these parks would cater for local and global markets, with a local tenant managing the park, such as a food processing company or fresh produce exporters.