- Sector: Scalable enterprises
- Investment (MNOK): 0.0
- Year: 2010
- Region: Africa
- Country: Tanzania
- Domicile: Guernsey
- Instrument: Equity & Loans
- Status: Exit
Agrica is a 5,000 hectare rice and maize farm in the Kilombero Valley in Tanzania. The project, which will produce more than 20,000 tons of rice per year and 30 000 tons of maize, represents a significant increase in security of food supply for Tanzania.
Norfund’s investment in Agrica
Norfund invested in the company in September 2010, and the investment represents for Norfund a continuous focus on the development of sustainable agribusiness in the least developed countries in Eastern Africa. Norfund’s investment has been deployed in the expansion of the farm, including preparation and planting of the last 2,000 hectares of the 5,000 hectares of land now in production, increase in processing and storage capacity, machines and equipment and renovation of a small-scale hydropower plant that supplies the production with clean electricity.
Need for production growth
Agriculture is still dominated by small-scale farmers; about 70% of its farming is dependent on hand-hoe, 20% on ox-plough, and 10% on tractors. Given the government’s efforts of supporting the rural poor and reducing malnutrition, the development of agriculture is a clear strategic tool for the Government to help alleviate the country’s poverty (with the slogan “Kilimo Kwanza” or “Agriculture First”). The growth in food production in Tanzania has been sluggish due to poor supporting infrastructure, inadequate extension services, poor technology of production and a lack of appropriate agricultural financing mechanisms.
Producing rice for the local market
Agrica will produce rice for the local market. With its large production capacity, the farm will represent a significant increase in security to the supply of rice in Tanzania. This project is therefore an important investment for Norfund to help contribute to the nation’s supply of rice and import substitution. A clear goal of the Tanzanian Government is to promote both the role of the country’s smallholders as well as developing larger-scale farms. This makes the Government reliant on local projects such Agrica, and the company is therefore often used as a showcase for Tanzanian Government sector activity.
The system of Rice Intensification program (SRI)
Agrica has in addition initiated a ‘System of Rice Intensification program’ (SRI) to facilitate mentoring of small scale farmers to increase the quality and quantity of their yields, and contribute to ensuring work for the young adults in the area. Norfund is one of several parties funding the program through grants. The SRI program has so far included 4,000 participant farmer families, and Agrica will provide partly offtake to the farmers on market terms. By doubling or tripling rice yields for a farmer family, SRI will essentially double or triple the annual family income, helping to relieve and reduce the poverty levels in the communities surrounding the farm.
The Kilombero plantation in Tanzania was initially developed in 1986-1993 by a North Korean-Tanzanian partnership. After this, the plantation area was partially deserted and people from different parts of Tanzania moved into the area without permission. When Kilombero Plantations Limited (KPL) took over in 2008, the company agreed to give away 389 ha of the property to the nearby village and the people who lived there. The people who lived on the remaining part of the property were offered houses and farmland equivalent to what they previously had at another part of the property – all of this despite the fact that they had originally settled there illegally. The process was conducted in accordance with the “IFC Guidelines of Resettlement” and relevant national legislation.