June 22, 2017

West African agribusiness group RMG Concept Ltd. announced it has acquired a 70 percent stake in the Babator Farming Company (BFC) for a total investment of $1.75 million.

Established by AgDevCo Ghana, a division of British social impact investor and agribusiness project developer AgDevCo, BFC is a 356-hectare irrigated farming company that represents the first phase of the Babator Irrigated Farming concession – a project which is expected to be the largest parcel of irrigated farmland (at 5,740 hectares) in Northern Ghana. The site, which includes processing facilities, includes an ingrower area that will provide 1,000 farmers with irrigation, agro-economic goods and services, and marketing support resulting in ingrower farmer incomes increasing by 300 percent with another 30-50 percent increase to farmers outside the ingrower area.

“RMG’s investment is an important milestone for AgDevCo, being the first commercial partnership at Babator and with one of the leading agribusinesses in the country,” said Daniel Hulls, CEO of AgDevCo. “We look forward to working with RMG and benefitting from their expertise, supply chains and market access.”

Through the existence of BFC, AgDevCo Ghana has demonstrated the commercial viability of the large-scale project. Crop trials have produced commercial yields across a variety of crops and growing protocols, according to the AgDevCo website. Farming operations on site began in early 2017, and by the end of the year the operation is expected to produce 2,000 tons of maize, sorghum, grains, and seeds, and 4,000 tons of onions for the local market.

AgDevCo states that RMG is a natural fit as a partner in the project. Funded with backing from Sidra Capital and INOKS Capital, RMG is a major provider of inputs and is a key commodities trader in West and Central Africa through its subsidiaries Wienco Ghana Limited and RMG Ghana Ltd. The company’s operations span 17 countries, and the group has physical assets in six of those countries.

“Babator is a new key investment for the support of our strategy and we are proud of this important partnership with AgDevCo,” said Daniel Ruegg, CEO of RMG Concept Ltd. “We continue our vertical integration, from the field to the consumer, by developing nucleus farms, small-scale farmer schemes and transformation units. Our commitment is to increase the local production of high quality seeds and food crops.”

Ghana and AgDevCo

As of 2014, 47 percent of Ghana’s population was living in rural areas, with 38 percent living in poverty, according to AgDevCo. Agriculture accounts for 21 percent of the country’s gross domestic product (GDP), and the World Bank ranks it at 75 of 109 for Food Security. Agricultural production in the country is far from being commercialized, especially in the northern regions, and a range of challenges are faced by the country’s agricultural producers, including a lack of access to financing, a lack of proper land rights, and complicated red tape that hinders business development and pipeline projects.

However, while it is true that challenges exist, the nascent potential for scale and commercialization in Ghana’s ag sector poses a significant opportunity for growth, while the country’s socio-economic status reflects an opportunity for positive social impact for patient investors.

AgDevCo became involved in Ghana in 2010 when it partnered with the Ghanaian government to develop commercial agricultural projects in the country with the goal of providing support for smallholders and emerging ag producers.

In addition to the Babator Farming Hub, other AgDevCo investments in Ghana include: Nurevas, a manufacturer and marketer of processed foods; Gadco, a fully-irrigated, commercial rice producer and processor; Gee’s Fresh Point, a slaughterer, processor, and marketer of frozen meat; Samsford Enterprises, a farming company that produces rice and maize in the north of the country; and Zocoffams Integrated, an emerging farming mechanization service business.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.