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November 19, 2008

South Korean company plans maize project in Madagascar

A South Korean company hopes to turn an undeveloped stretch of Madagascar into a corn-production center, an official said on November 19.

Daewoo Logistics Corp. envisions growing corn on 2.5 million acres of land, mostly in the Indian Ocean island's arid west, said Shin Dong-hyun, the Daewoo official in charge of the project.

Besides corn, the company also wants to plant palm oil on 741,000 acres in rainy eastern Madagascar, Shin said. He said Daewoo has secured a 99-year lease and is working out final details on rental fees and taxes with officials in Madagascar. "We hope we (can) launch the project as soon as possible," Shin said.

South Korean business groups have expressed interest in investing once the deal is finalized, he said. He said it will likely cost $6 billion over the first 25 years.

Ultimately, the project is targeting production of 5.5 million tons of corn a year, though that could take 15 years to achieve, Shin said. South Korea currently imports about 11 million tons of corn a year, he said, mostly from the United States.

Shin said the sparsely populated area on Madagascar's west coast targeted for corn production lacks roads and irrigation facilities, which will need to be built. About 2,000 hectares may be planted initially, he said. There is "almost no infrastructure there now," he said.

He said the company has yet to finalize a sales plan for the corn it produces, though added it could end up being used as corn starch or animal feed in South Korea or exported to the Middle East, India and China.

Daewoo plans to bring in agricultural experts from South America and South Africa to work on the project. Laborers will mostly come from Madagascar, with a few from South Africa, he said. The project could end up creating more than 70,000 jobs on the island.

"We'd like to contribute to Madagascar's economic development," he said.

Forbes

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