“Models & Strategies of Investing in Agriculture within the greater Francistown: Possibilities of contract farming by private sector with the local community for technical and

market support”

Francistown Business Forum

August 2014

Baitshepi Babusi-Hill

THE AGRICULTURAL HUB

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Overview of Agric Sector in BotswanaOverview of Agric Sector in Botswana

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• Main stay of livelihoods.

• Food, employment and income.

• Sector is dualistic, consisting of both

a) traditional farmers and

b) commercial farmers,

(main differences here are land tenure, use of technology, and marketing of agricultural outputs)

Botswana’s annual Food Security Situation – Metric Tonnes (2012)

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Product National Demand Domestic Production

% Imports

Sorghum/millet 96 000 51 647 54 % 44 353

Maize 221 000 21 560 10 % 199 440

Fruits and Vegetables 75 000 36 138 48 % 95 203

Pork 972 455 47 % 517

Poultry 64 053 63 412 99 % 4 576

Honey 31 14 45 % 17

Mutton and shevron 997 770 77 % 22

Milk 63 million litres 3 6 % 60 million

Challenges &

Opportu

nities in

Challenges &

Opportu

nities in

Agricultu

re

Agricultu

re

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1. Processing & Value Addition

Challenges

Low levels of agro processing/value addition plants to agricultural produce i.e. •horticulture•meat products•Tannery for hides & skins

•Hides production at over 300 000 annually.

•Either exported raw or discarded.

Opportunities

• Formation of Agro Processing Plants for both horticulture and livestock products

• Tanneries for both exotic and non exotic leather

• Manufacture of leather products

• Collection of Hides and skins

2. Zambezi Integrated Agro-commercial Project Challenges

•Cost of Water extraction

•Feasibility Study

•Environmental Impact Assessment

•Agricultural Productivity

•Business cluster model

Opportunities

•495 million cubic metres/year Water extracted from Zambezi River

•110 km Pipeline construction on PPP, BOT etc

•35,000ha Agro-Infrastructure development of selected Crops

3. Dairy

Challenges

•National demand is 63 million Litres and only met by 6%•Inadequate dairy breeds•Inadequate knowledge•High cost of feed•Unavailable Land for dairy farming.

Opportunities•Increase in No of dairy projects.•Use of Artificial Insemination and modern technology of breeding i.e. sexed semen.•Technology transfer•Production of feed from arable

operations

•Setting aside suitable land for dairy production.

4. Beef Production

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Challenges

•Under utilized abattoirs

•Use of Communal farms (Meraka) vs. Ranches

•Processing of By- products

•Diseases out breaks, e.g FMD

Opportunities•Cattle ranching. •Existence of EU listed abattoirs. •Well developed Livestock Identification and trace back system (LITS)•Range fed beef.•Blood & carcass meal for feeding poultry.•Utilization of other cattle by- products like hooves, horns etc….

5. Other Opportunities in Agriculture5. Other Opportunities in AgricultureSupply and manufacture of farm machinery and implements

• Farm inputs and fertilizer etc.

Ostrich Farming

• Remains unexploited

• High wild ostrich population a sign of good potential (77 000)

• Existence of an EU listed Multi Species export abattoir.

• Existence of ostrich multiplication farm to supply farmers.

Apiculture (bee keeping) Projects

•National demand is 40 tons.

•The highest ever produced was 14.2 tons in 2010/11.

•Utilization of by-products.

•Increase in production.

Floriculture –Production of cut flowers

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Other Opportunities ……cont’dOther Opportunities ……cont’d

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Investment arrangement Leasing out unutilized farms from land owners Leasing out municipal abattoirs Joint ventures Sole or Individual investment Foreign Direct Investment (FDI)

Provision of Agricultural Insurance No Substantive Agricultural insurance

Creation of Conducive environment •Credit facilities to Citizens at low interest rates. •Other undeveloped livestock with great potential Donkey meat (200,000 - 300,000 donkeys)

Sheep and Goats (200,000 sheep & 800,000 goats)

What is Contract farming

Contract farming: •Involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers.•Linking small-scale producers and buyers through business model innovation.•Agricultural production carried out according to a prior agreement in which the farmer commits to producing a given product for a pre determined buyer.

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Benefits of contract farming• Provides a “peace of mind” to the farmers. • It offers the producer 100% guarantee on a minimum price for

the product. In instances where buying prices drop during harvest season, the farmer’s income is secured.

• It gives the farmer an opportunity to budget and plan their farming operations well ahead.

• On delivery the farmer is paid promptly (i.e. the contracted price within 7 days).

• The producer capitalizes on any price rises.• Improve on data collection & intelligence.

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Contract farming Opportunities

1. Sale of Cereals to BAMB•Under this scheme BAMB identifies a market for a particular crop and contracts farmers to produce and supply BAMB with crops such as Sorghum, Maize, Cowpeas or Beans at agreed prices and quantities prior to planting. •This helps to minimize farmers’ exposure to price risks due price fluctuations dictated by market conditions, hence empower local farmers to commercialize their arable farming operations. •This facility is open to any farmer who produces locally provided he can produce 10 Mt or more per crop.

2. Sale of Cereals to Seed Multiplication Unit (SMU)

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Contract farming …….contd

3. Poultry (Challenges)•Famers shy away due to conditions of contract.•Inconsistency of supply.•Quality not met.•Private business not willing to buy locally. •Letter of intent not binding.

Opportunities•Farmers in contracts with private businesses like Richmark, Star, Bobby’s for market access.•Contract with feed suppliers like Feed Botswana.

Contract farming …….contd

4.Horticulture (Challenges)•Saying No contracts (shy away)•Inconsistency in supply•Low quality of produce•Low volumes•Concentration on one value chain•Chain stores import.

Opportunities•Policy support & from government•Niche products (cauliflower, brocolli, lettuce, herbs)•Export opportunities•Specialization•Processing (Mccain)•Partnership trader•Cold storage facilities

What then for Francistown…

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1. The presence of MoA in Francistown2. Agricultural Hub facilitation on Investment3. The presence of Key stakeholders as the city grows4. A conducive environment provided by government being

availed• Seize the opportunity• Align yourselves to the opportunities to assist

government in creating the environment for the investor to come to the city e.g. Richmark will come if there is a call for that.

4. Location of the city –major transport corridor• Access to borders, Airport, foreign markets• Population and market access

Day & Night

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Thank You