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MOZAMBIQUE - Agriculture

Mwaura Githendu

General Manager, Olam Agri

Bio

Mwaura Githendu, ACCA, currently the Chief Finance Officer (CFO) for Olam Agri in South Africa, based out of Durban is  an accomplished finance professional with over a decade of experience in financial management and strategic advisory. He has successfully enhanced financial processes and controls, managed substantial portfolios, and led diverse teams across multiple countries. Previously, he served as Country Finance Controller in Mozambique, overseeing a USD200 million portfolio spanning various business including Rice importation and distribution and Edible oil refining and distribution. Mwaura holds certifications in Chartered Accountancy (ACCA) and a diploma in Business Studies from the Institute of Commercial Management (ICM). He is proficient in English, Swahili, and Portuguese, and has been recognized with various awards for his professional excellence.

"It is crucial to deconstruct smart agriculture. At its core, it involves leveraging technology to enhance farming efficiency, output, and optimize human resources. However, it is essential to prioritize empowering individuals, especially in countries like Mozambique, where a significant portion of the population lives in poverty."
TBY talks to Mwaura Githendu, General Manager of Olam Agri, about agribusiness in Mozambique, interest in their business model, and goals for 2024.
Olam Agri is a market-leading agribusiness with a unique focus on high-growth markets and a global presence. Could you provide an overview of the company?

Olam Agri is a subsidiary of Olam Group with over 33 years of global supply chain management expertise. Initially established in Nigeria over 30 years ago, Olam Group later expanded its presence worldwide, including in Africa. Olam Agri operates across six continents and is active in over 30 countries, with a significant presence in 11 African jurisdictions. Our primary focus is transforming food, feed, and fiber for sustainable agricultural development. We engage in various product categories, including grains, rice, animal feed, and cotton, serving consumers globally. As part of Olam Group’s restructuring, specialty food operations were consolidated under Olam Food Ingredients, distinct from Olam Agri. Additionally, Olam’s technology service, MindSprint, offers digital services, while Olam Ventures serves as a business incubator. In Mozambique, Olam’s journey began in 1998, initially focusing on rice supply chains before expanding into cashew and sesame origination. Presently, our focus lies in importation and distribution, particularly in rice and edible oils. We conduct significant value addition, operating two refineries in Beira and Matola, refining crude edible oil and producing related by-products such as soaps.

How has the company and group grown across Africa since its establishment in Mozambique?

Mozambique holds significant importance within the broader Olam Agri landscape, contributing to its diverse portfolio across Africa. Olam Agri operates in 11 African countries, and each country’s portfolio varies, with Mozambique focusing primarily on rice and edible oils, South Africa on edible oils and grains, and Cameroon on rice and grains, among others. In Mozambique, the company has achieved global prominence, particularly in food industry rankings. Presently, Olam Agri commands a significant market share in Mozambique’s rice and edible oils sectors, with 30% control in each category and further growth anticipated in the import market.

What has been the reception of the Mozambican population to the products offered by the company?

Our primary advantage lies in offering essential consumer goods. Before, during, and after COVID-19, consumption patterns shifted significantly. Pre-pandemic, the market was stable with nominal consumption; however, during the pandemic, consumption of basic consumer goods surged due to home confinement, leading to increased demand for rice and edible oil. We observed a notable increase in rice consumption, marking the first growth in Mozambique’s rice market in a considerable period. Currently, Mozambique imports around 520,000 tons of rice and 220,000 tons of refined edible oil, compared to pre-COVID-19 levels of 400,000 tons for rice. While it may not appear as substantial growth at first glance, particularly in the rice category where there are numerous substitutes such as cassava and wheat, this level of growth is significant. Functionally, Mozambique operates as three distinct regions: northern, central, and southern, each with unique consumption characteristics. Despite the northern region having more farmers and agricultural output, it has lower GDP per capita and personal income compared to the southern region. Interestingly, the northern region is the highest consumer of premium rice, despite its higher cost. Consumers in the southern region generally prefer medium rice, with further distinctions between old crop rice and new crop rice. In the northern region, consumption of rice is largely polarized between premium and mass categories, with little middle ground—a unique dichotomy not typically observed elsewhere. Regarding edible oils, if we consider the category size of 220,000 tons of refined oil, the northern region exhibits the highest consumption, amounting to 110,000 tons from an absolute perspective. It comes down to 57,000 tons in Beira and 53,000 tons in the south. Per capita, the north’s consumption of edible oils is the lowest compared to other regions, standing at 6.8kg per person. This indicates a distinctive cooking usage pattern, where oil is utilized more extensively in the north than in the south and central regions, where it is often discarded after single use. Understanding these consumption behaviors helps us tailor our products to better meet consumer preferences and enhance overall satisfaction.

Olam Agri transforms agriculture into a more climate-friendly sector. Could you elaborate on the methods the company employs to achieve this?

Sustainability is integrated into every aspect of Olam’s business, as we strive to be re-imaginers of agriculture, aiming to reduce waste and enhance efficiency in agricultural practices worldwide. Building a sustainable agricultural system relies on three key parameters. Firstly, supporting prosperous farmers is crucial, as their success is fundamental to sustainable agriculture. The second aspect is fostering thriving communities. Agriculture is interconnected with the communities it serves. It is not enough to solely ensure farmers’ financial success; empowering the surrounding communities is equally vital. Through various community-based empowerment initiatives driven by corporate social responsibility, we collaborate with like-minded partners globally. We have observed that by cultivating thriving communities, the ethos of sustainability permeates naturally. Thirdly, it is essential to consider the ecosystem. Coexisting harmoniously with nature is paramount for sustainable agriculture. Practices must prioritize the preservation of water sources, soil health and overall environmental balance. Sustainability encompasses all these aspects, emphasizing continuity and integration into cultural norms. By starting at the grassroots level with farmers, engaging communities and preserving ecosystems, sustainability becomes ingrained and self-perpetuating.

Can smart agriculture be a viable solution for the country’s agricultural sector?

It is crucial to deconstruct smart agriculture. At its core, it involves leveraging technology to enhance farming efficiency, output, and optimize human resources. However, it is essential to prioritize empowering individuals, especially in countries like Mozambique, where a significant portion of the population lives in poverty. Before delving into advanced agricultural practices, we must first focus on providing livelihood opportunities to local communities. Smart agriculture, with its integration of location services, sensors, AI and IoT, holds immense promise. However, we must not overlook the immediate need for job creation and community empowerment. Unlike South Africa, which has transitioned to large-scale farming due to its developed status, Mozambique still has untapped agricultural potential, including vast arable land and opportunities for smallholder farming. Initiatives like outgrower programs can engage communities, provide employment and offer optimal solutions. While smart agriculture is undoubtedly important for our digital future, we must navigate the journey cautiously, ensuring that the steps toward it prioritize local empowerment and economic development.

What are your goals for Olam Agri in Mozambique in 2024?

Mozambique is a land of untapped potential, with a promising future ahead. The country’s abundant resources, youthful population, and government’s focus on sectors beyond just extraction, particularly agriculture, position it as a potential powerhouse in Africa. With supportive initiatives from the Central Bank and Ministry of Finance aimed at enhancing an investment climate, Mozambique is becoming increasingly attractive for businesses like Olam Agri. We are optimistic about the country’s growth trajectory and are committed to investing heavily in Mozambique’s promising future in 2024 and beyond.

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