US agribusiness giants are taking advantage of the weak rand and depressed farm economy in SA to expand their footprint through tie-ups with local companies with the expertise and customer networks they need to penetrate promising regional markets.
Land O’Lakes, a Fortune 500 member-owned co-operative based in Minnesota, posting $15bn in sales last year, is the latest to announce a move. Last week it said it was acquiring a 52.5% stake in Villa Crop Protection, headquartered in the Western Cape, for an undisclosed sum.
Pesticides and other ‘crop protection solutions’
The deal partners Villa with Land O’Lakes subsidiary WinField. Both formulate and distribute pesticides and other “crop protection solutions” designed to increase crop yields. In support of sales, they also offer training and consultancy services.
“This is our first major international commercial investment in Africa,” Land O’Lakes CEO Chris Policinski said in a statement.
“We look forward to bringing proven products from our WinField business to SA’s market and investing in the research and development efforts that will provide new products to local growers that help produce more food, more sustainably.”
Land O’Lakes sees Villa’s “training institute” helping it tailor its own products and sales strategy to compete in African markets.
Villa Crop Protection MD Andre Schreuder said on Friday that Land O’Lakes’ stake in the company would see the two firms consolidate in the South African market and expand further into Africa. Villa Crop Protection already has a small presence in numerous African countries, he said.
Seeds, fertilisers and chemicals in bed together
“Africa is a difficult, high-risk market to operate in. Now I think with the financial backing of Land O’ Lakes we can take another look at Africa — but it is going to be a long, slow process,” Mr Schreuder said.
The sale would also enable the South African company to expand into seeds and fertilisers. The firm’s management and staff would remain the same, with staff secondments from the new parent company.
Villa Crop Protection has a product formulation facility, Fountain Chemicals, located between Johannesburg and Pretoria, with a regional head office and warehousing facility located in Wellington near Cape Town.
In December last year, Cargill, which, if publicly held, would rank 12th in the Fortune 500, bought out minority shareholders of Country Bird, then SA’s number three poultry business in sales, through its in-house private equity arm, Black River Asset Management. In February, Cargill said that it was investing $12.5m to upgrade its Pietermaritzburg animal feed operation.
GM maize our staple food
Land O’Lakes’ stated rationale for taking a majority stake in Villa mirrors the reasons DuPont gave for purchasing 80% of Pannar Seed in 2013.
The deal, as summarised by the Des Moines Register — a newspaper in Iowa — “would allow (DuPont) to tap into Pannar’s insight on the continent while giving the US firm access to the South African company’s corn (maize) genetics that have been specifically tailored for the region”.
Willem Ellis, president of the South African Chamber of Commerce in America, who keeps close tabs on US agribusiness from his base in Minneapolis, said on Friday that further deals were in the pipeline.
“Land O’Lakes see their investment as a springboard in the rest of the continent. Cargill is also looking for more opportunities. SA’s assets are cheap right now so don’t be surprised if you hear of further acquisitions.”
By Simon Barber and Mark Allix. Source: BD Live
Bring in more chemicals and GMO crops and call it ‘sustainable’ agriculture - this is what’s going on now, whilst we battle with droughts and a weak Rand. US taking advantage of our situation. And more to come. Be warned.
Every article like this inspires more and more to turn my garden into a chemical and GM free food forest so I never have to buy food from a supermarket again! They can keep their toxic soup thank you.