Afgri partners with East African exchange

Image source: Afgri

Afgri, the agri-services and industrial foods group that delisted from the JSE this year after being bought out by a private investment consortium, established its Collateral Management International (CMI) business in 2008.

Afgri CEO Chris Venter said yesterday CMI had started to gain momentum and "critical mass" in the past 18 months, and now provided collateral management and stock monitoring services in more than 500 storage facilities, mostly in Africa outside SA.

Collateral management refers to third parties guaranteeing the quality and quantity of a farmer's product in a facility.

Farmers are provided with electronic warehouse receipts, which can be used as collateral for bank lending. These receipts also facilitate the trade of their grains on commodity exchanges.

CMI has more than 100 sites under collateral management, and provides stock monitoring and inspection services to more than 400 sites across 12 African countries.

Storage and warehousing services for farming cooperatives

Venter said that Afgri, through CMI, had partnered with the African Exchange (Afex) and its Rwandanbased subsidiary, the East African Exchange, which started operating last year. This included an agreement to provide storage and warehousing services for farming cooperatives in 13 government-established warehouses in Rwanda.

The East African Exchange plans to open hubs in countries including Uganda, Kenya and Tanzania.

Meanwhile, CMI had also signed an agreement to manage an initial seven Nigerian government storage facilities sites in five states in the country's "grain belt".

Afgri management says Africa's farming sector is impeded by a lack of storage facilities, access to stock finance, and inability to market and sell maize and other commodities.

Carolyn Krynauw, senior analyst at Frost & Sullivan, said in a report released yesterday that due to the under supply of grain storage in many African countries, "farmers sell their crops when there is a surplus - receiving lower prices than could be achieved later on in the season when supply wanes and demand rises".

Afgri delisted in April after shareholders approved a privatisation deal. AgriGroupe Investments now has a 60% share held through an offshore structure, while the remaining 40% is held by South African shareholders including the Public Investment Corporation, a black empowerment consortium, and Afgri management.

The transaction was opposed by the African Farmers Association of South Africa, which said it was anticompetitive as it could isolate black farmers from the food value chain.