New market player poised to enhance food processing in Africa
Johannesburg– Newly-established Philafrica Food (Pty) Ltd (“Philafrica Foods”) – part of AFGRI Group Holdings, a leading investment holding company focused on food and agriculture – has plans to change the face of food processing both locally and across sub-Saharan Africa.
With a focus on investing in food categories across Africa, and on locally-sourced raw materials, the company is already actively seeking investment opportunities on the continent. This will include building greenfield production sites and making strategic acquisitions in South Africa, Côte d’Ivoire, Ghana, Ethiopia, Kenya, Nigeria, Mozambique, Rwanda, Senegal, Tanzania, Uganda and Zimbabwe, amongst others.
“We believe there is an incredible opportunity given the robust and growing demand from African consumers and global markets, and Africa’s huge potential of uncultivated arable land. The continent is well-positioned to fulfil this demand,” says Philafrica’s CEO, Roland Decorvet, a seasoned expert in the food processing sector in Africa, Europe and the Far East.
Decorvet cites several examples of why Africa can play a pivotal role in providing food for the burgeoning world population. “Sub-Saharan Africa boasts millions and millions of hectares of high-potential agricultural land, and yet less than 10% is under cultivation. What’s more is that this continent offers 60% of the world’s uncultivated arable land.”
Not only could the continent support global food demands, but should also be able to provide for its own people, which is becoming a priority. “Demand for food in Africa is rising – sub-Saharan African’s food and beverage market is set to triple by 2030, reaching US$1 trillion, with the middle class projected to rise from 123 million to over 1 billion by 2060, making it the fastest growing middle class in the world.”
With food production already under pressure – the Food and Agriculture Organisation of the United Nations (FAO) estimates that food production must increase by at least 60% to respond to the demands of the nine billion people that are expected to inhabit the planet by 2050 – it is crucial to look for viable solutions, Decorvet believes.
“Our goal is to become a key food operator across Africa in the next 25 years, supporting the transformation of the continent from one of subsistence agriculture to one that is food secure and a net exporter.”
Decorvet explains that farmers in Africa face many constraints that keep production yields low, and as a result large multinationals can’t get the raw materials they need for processing locally. “Our role is to change this – we believe that the most effective way to transform agriculture in Africa is to create market pull through large-scale food processing. To do this, we believe it’s critical to support each stage of the value chain and care for all stakeholders.”
For Philafrica Foods this means vertical integration straight back to the farm gate; working closely with smallholder farmers on crop variety improvement and technical assistance; staying current on global commodity markets to ensure leading procurement practices; implementing best-in-class manufacturing practices and adapting the business model based on how the local market operates.
“We will leverage our South African based expertise and capabilities to expand here in South Africa as well as into new countries across sub-Saharan Africa. We are prioritising opportunities where we can substitute imported products with locally grown or processed products.”
Decorvet adds that the company’s expansion strategy is to invest in various crop categories, in countries where it sees long-term growth potential, which will also positively impact on the livelihood of smallholder farmers. As mentioned, this includes South Africa, where opportunities have been identified in KwaZulu-Natal and the Western Cape.
“When conducting business here and in the rest of the continent, we primarily look to source locally produced raw materials that can effectively replace imported raw materials and products. We strategically support each stage of the agricultural supply chain to ensure consistent quality supply of raw materials into our production sites — which means we look to engage both commercial and smallholder farmers across any new food category or country we enter.”
To support its expansion plans, Philafrica Foods will look to form partnerships on the supply-side and develop off-take relationships with those who share its vision for the transformation of African agriculture. “This includes partners within the food industry that want to secure processed raw material support that strengthens existing procurement processes or are looking to venture into new African markets with a trusted partner, as well as within the agricultural and donor communities on the supply-side of our new projects, who share our passion for strengthening smallholder farmers in sub-Saharan Africa to become food secure and net exporters.”
Philafrica will further be supported by AFGRI Group, an investment holding company focused on food and agriculture with an underlying ethos as an enabler of food security in line with the Philafrica vision.
About Philafrica Foods
Philafrica Foods is one of the largest food processing company in South Africa where its owns and operates 12 manufacturing plants. These include maize mills; wheat mills; an oilseed-crushing, extraction, and refining plant; and animal feed manufacturing plants. It is actively investing in new markets by building greenfield production sites and partnering with existing food processing businesses in sub-Saharan Africa. Philafrica Foods is owned by AFGRI Group Holdings, an investment holding company with interests in agricultural products and services.