Agriculture

Seeds of Change

Agriculture

Comprising 24% of the national GDP, Mozambique's agriculture sector sits atop a wealth of potential as streams of international support begin to pour in.

According to statistics published by the Ministry of Agriculture, Mozambique’s 799,380 square kilometers of area contains 36 million hectares of arable land. Of that amount, only about 4 million-5 million hectares are in use, and 3% are irrigated. With 65.1% of the population living in rural areas and 3.4 million households dependent on agriculture, the development of the sector is key to the future of the country.

Currently, 35% of farmers in the country are exposed to market information, and 3% use fertilizer and pesticides. Although the high costs of equipment and supplies deter the average small-sized landowner from producing on a wider scale, land in Mozambique continues to be affordable to many.

Recognizing the need for more cooperation, local entities and foreign investors are seeking to mutually benefit from smaller projects that easily expand as soon as business is up and running. Meanwhile, large capital investments in wider agricultural initiatives in irrigation and infrastructure, as well as partnerships with development agencies such as the World Bank, continue along a path of success. Foreign players are especially interested in the potential to develop the production of rice—Mozambique currently imports 400,000 tons of rice per year, but has the perfect climatic conditions to grow the crop. In addition, opportunities in poultry, beef, and fish are opening up for those seeking to make coordinated investments along the supply chain.

MAIN CORRIDORS

The development of the agriculture sector depends and focuses on the interconnection of six major growth centers: Maputo, Limpopo, Beira, Nacala, Zambezi River Valley, and Lichinga-Pemba. The development of logistics between these centers is expected to create the so-called “corridors” of agricultural development in the country. According to this model, a larger quantity of main products such as vegetables, poultry, eggs, fruit, sugar, rice, livestock products, cotton, cashews, sesame, maize, tea, coconut, and timber is expected to be transported to neighboring provinces or exported abroad.

The project aims to reduce the quantity of imported products and encourage local farmers to ramp up production. In an interview with TBY, Carlos Henriques, CEO of Mozfoods, noted that the lack of logistics infrastructure in the country has made it difficult for farmers to feel confident about their markets. With 3.5 million farms that need extra support, “we have to guarantee access to the market. From there, the situation will improve for agriculture.” However, there are other kinks to work out before foreign investors and local players can work together to catalyze rapid improvement in the sector, such as securing rights over land, completing the necessary technical and environmental studies, and establishing contractual relationships with local communities about benefit sharing.

One example of the project in action is the Beira Agricultural Growth Corridor (BAGC), the only private sector-led development initiative in the sector. BAGC is a partnership that brings together the government, Mozambicans, the international and local private sector, and development partners to identify key policy and infrastructure constraints. The company’s targeted volume of $1.7 billion in investment, to be disbursed in the period leading up to 2030, will be directed toward transportation and irrigation development, aligning existing programs and investments for better synergy, and mobilizing new resources.

Headed by the BAGC, the Catalytic Fund is designed to make investments in both SMEs and in larger irrigation developments. The institution is expected to boost agricultural productivity and create sustainable, commercially viable businesses. So far, the fund has made 15 investments. “In terms of new resources, we have been able to mobilize $20 million for the Catalytic Fund and another $32 million for agriculture investments in the corridor,” Emerson Zhou, Executive Director of the BACG, told TBY.

AGRIBUSINESS

With consumption levels exceeding supply, the growth of the agribusiness industry will be instrumental in reducing poverty, creating jobs, and securing the economic future of the sector. The government is encouraging the development of agribusiness in terms of crops such as maize, rice, wheat, and cassava, in addition to livestock, to stimulate the evolution of farming as a profitable and meaningful business. With consumption levels of rice, wheat, potatoes, and poultry far exceeding local production, many crops have been listed as “priority investment areas” by the Ministry of Agriculture.

Investment models suggested by the government include setting up turnkey agro-processing industries under partnerships, sourcing raw material through contract farming with growers, and direct farming. To this end, investments in processing and packaging equipment in Nacala, Beira, and Maputo could prove extremely lucrative as the production of poultry, vegetables, fruits, and nuts picks up. The Ministry of Agriculture also highlights the need for the installation of nut and pineapple processing units in Sofala.

For the province of Inhambane, the potential to produce coconuts for a variety of uses important to other countries is being taken advantage of with a focus on agricultural processing. The local farmers are seeking “not just machinery, but also the training of people to produce as much as possible in as short a time as possible,” Agostinho Trinta, the Governor of Inhambane Province, told TBY. “We also want to develop the supply chain in terms of storage, warehouses, refrigeration, packaging, delivery, and logistics,” he added. As one of the largest producers of coconuts in the world, Inhambane Province has a wealth of opportunity to produce a wide range of goods such as coconut water, oil, and fiber. Cassava is another resource that agribusinesses in Inhambane could tap into. Beyond its basic usage as a main course, cassava can be used in the production of beer, muffins, and foodstuffs.

With 2,200 employees and $35 million invested in the country, Mozfoods is the leading agribusiness enterprise in the country. Although the company faces technical and logistical restrictions when selling products on the local market, CEO Henriques believes that in the medium term the company could allocate approximately 50% of its products to Mozambique. In the meantime, Mozfoods is focused on developing a strong R&D branch to add value to the production of crops such as rice and vegetables. “At the moment, we are the only commercial company that has a strong R&D sector,” Henriques explained to TBY, adding, “In the future we would like to take commercial advantage of that—releasing our own varieties that external farmers will buy.” At present, the company uses R&D for its own production processes. However, with more development, Mozfoods is looking to capitalize on the knowledge and the materials it gains from its initial pilot projects by expanding its R&D activity and promoting more products on the local market. Because it operates on an export-oriented model, and certain parameters of quality have to be reached, the company is expecting to become a trailblazer for the wider agriculture sector in Mozambique.

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