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May 08, 2008

Dubai conglomerate to embark on rice farming in West Africa

Stallion Group, one the largest regional conglomerates in West Africa, has started a major rice farming project that entails an indigenous production and milling of 2.25 million tonnes of rice per annum in Nigeria and a further 500,000 tonnes per annum in Ghana.

The investment also covers investment towards a 700,000 tonnes fertiliser plant, farming equipment, tractors and transportation vehicles assembly plant, rice milling machinery, logistics infrastructure and all other accessories related to rice production and milling. The project value is expected to be around $1.20 billion and is being developed under the auspices of the ministry of agriculture and water resources (Nigeria).

The federal ministry of agriculture continues to indicate that Nigeria can be self-sufficient in rice production, as virtually all-ecological zones in the country are suitable for rice cultivation. The Federal Government is reported to be holding a 30 percent equity stake in the venture and has actively facilitated the participation of state governments.

Sayyadi Abba Ruma, minister of agriculture and water resources, in an interview, confirmed government’s intention to focus on rice production, livestock and fisheries, to boost food security.
Ruma said currently, the country spends about $267 million annually on the importation of over two million metric tonnes of rice, while it produces only a mere 300 thousand metric tonnes, representing 0.96 percent of the global production.

For the Dubai-based Stallion Group, this is a natural progression into the development into large scale farming from being an established player in agri-business for the past many years. The multi-billion dollar group owned by the Vaswani brothers, Sunil, Haresh and Mahesh, has a global presence in 18 countries in addition to the strong presence in most West African countries including Nigeria, Ghana, Benin, Ivory Coast, Senegal, Cameroon and Angola.

The annual demand in the country exceeds seven million tonnes with an estimated shortfall of three million tonnes. Nigeria’s rice production in 2008/09 is forecast at 3.1 million tonnes, up from 3.0 million tons in 2007/08. The government has stressed to rice farmers, processors and marketers the need to produce high quality rice in order to enhance consumer acceptance. The expansion of domestic rice milling is also supporting these efforts to boost production.

As part of a backward integration programme, a few companies are at various stages of developing nucleus estates that would use local farmers as out growers to supply rice to the mills. It is anticipated that this will encourage more farmers to expand into rice production.

Stallion has taken a lead in driving a major initiative aimed a alleviating the critical problem of food shortage in the country and is associating with some globally renowned companies like Asia Golden Rice (Thailand),Capital Rice (Thailand), KRBL (India) to deliver what would be a project of unprecedented proportions in Nigeria. The group is also reported to have finalised a 500,000 tonnes per annum project in Ghana with Rice Mills in Tema.

Having already established the largest state-of-the-art rice mill in West Africa, Stallion is aiming to establish a wider presence across all the rice producing states through a fully integrated farming programme.

The programme envisages establishment of an installed capacity of 2.25 million tonnes of parboiled paddy, thus resulting in backward integration of 400,000 hectares of land under rice cultivation. The expansion of procurement and distribution network to several states in Nigeria will be implemented under the project. Stallion has reportedly finalised contract farming models within the respective states that involves procurement, production, distribution, trading and contract farming infrastructure.

Business Day Nigeria

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