Grain production business in exchange with agriculture inputs with guaranteed off takes
Through an off-take agreement with provincial afro dealers who previously supplied the likes of Cargill, Afgri and milling companies, AGR is guaranteed revenues from the sale of wheat, maize, cassava, beans and soya beans through the SIP: Structured Inventory Products whose commodities will be sold ex-works, meaning no logistical costs are incurred to AGR or its agro hub dealers but to end users. The decentralized operating structure provides the farming companies and AOL' members easy access to vertical and integrated markets, thus reducing their operational costs.
Agriculture – especially small-scale farming – is a vital part of the Zambian economy. The sector employs most of the country’s labor force and accounts for an estimated 21% of the southern African nation’s GDP. Smallholder farmers produce up to 80% of the staple maize in the sub-Saharan country.
But despite its significance, the sector’s potential remains mostly unrealized. This is largely due to farmers’ lack of access to adequate financing, according to a report released in 2016 called Africa Agriculture Status by the Alliance for a Green Revolution in Africa (AGRA). World Bank statistics released last year indicate that less than 3% of total bank lending in Africa goes to agriculture although the sector accounts for about 70% of all employment and over 40% of GDP. In addition, funds generally have not reached smallholder farmers – many of whom remain unbanked and do not possess the assets needed for traditional financing collateral.
African Green Resources (AGR) and its partnership with AFAP are keen to expand its fertilizer commercial farming book in Zambia particularly in rural farming blocks after the COVID-19 epidemic. This includes input finance (Aid for TradeTM) in the form of ferts, fuel, chemicals and implements or equipment to commercial and small scale farmers against a soya or other grain off take contract.
The proposed Covid19 Humanitarian, Agriculture & Economic Assistance package or offering:
- Fertilizer and related inputs can be placed on farm through a registered commercial agro hub dealer or stockiest on extended credit terms sufficient to plant and harvest the crop and get paid.
- Payment for the inputs will be by way of deduction from the sale of the crop (soya, maize or wheat);
- The scheme will buy maize, soya beans, rice and beans, among crops, and pay a portion in cash;
- Further the project will give access to markets to over 250, 000 small-scale and commercial farmers, a portion of credit for next season’ inputs to strengthen farmers’ access to fertilizer for crop production, food security and links to markets.
- The programme is posed to increase farmers’ incomes, create job opportunities, especially for those adversely affected by COVID-19, and resuscitate regional trade.
- In this year’s crop marketing season, the Food Reserve Agency (FRA) in Zambia will buy a 50 kilogramme bag of soya beans at K150 and the same quantity of maize will fetch K110, while a 40 kg of paddy rice will be bought at K70.
There is a growing consensus especially after the COVID-19 pandemic that Zambian or regional agribusiness transactions require innovative strategies to meet their agriculture investment needs and commitments, especially in the input sector where the private sector can get involved.
For inputs and grain markets contact AGR on the following emails;