U.S. Firm to Invest U.S.$210 Million in African Agric Export

A United States firm, Carlyle Group, is leading a $210 million private equity investment in the procurement and export of agricultural commodities from Africa to Asia, Europe and America.

Other minority investors include Pembani Remgro Infrastructure Fund, a South Africa-based private-equity firm and Standard Chartered Plc, Africa Private Equity division.

The $210 million would be invested into Export Trading Group, a Tanzania-based agricultural company that sources commodities from Africa’s small farmers for export.

Making the announcement in Washington recently, the Managing Director of the Carlyle sub-Saharan Africa Fund, Genevieve Sangudi, disclosed that this was the first investment of its new sub-Saharan Africa Fund.

She revealed that the sub-Saharan Africa Fund, targeted at $500 million, is a reflection of how private-equity firms are trying to position themselves to tap into the continent’s new consumers as well companies that are expanding on the back of demand for food and energy from the rest of the world.

“Competition among global rivals is heating up in Africa, as investment returns diminish in more developed parts of the world,” she said.

Sangudi noted that Africa’s prospects appear more appealing than in the past, largely because it is expanding faster than most regions outside Asia and the Middle East. The continent’s young people are also making their way to the cities and stoking consumer demand.

She disclosed that the Carlyle Group is a global alternative asset manager with more than $156 billion in assets under management across 99 funds and 63 funds of funds vehicles.

The Export Trading Group, which trades 25 different commodities, from cashews to coffee, said that with the injection of $210 million fresh capital coming on the heels of $74 million earlier invested by Standard Chartered it is set to double sales.

The company revealed that it earned $884 million in revenue in the fiscal year ended March 31, and projects that figure will rise to $1.5 billion next year. 

Managing Director of Export Trading Group, Ketan Patel, disclosed among other things that the Group expects to use the fresh capital from Carlyle and others to expand transport and distribution networks in Africa to get more farm-grown food onto the continental and global markets, and also acquire more warehouses in Asia, where it buys rice and fertilizer.

In its recent assessment of the continent’s growth, the International Monetary Fund had estimated that sub-Saharan Africa’s economy would expand by 5 per cent this year.

Courtesy: Mask Africa

LIVE RICE INDEX

INDIA:

Indian white rice prices have softened this week as harvesting of the main (kharif ) crop has progressed well following dry weather, thus increasing availability. IR 64 5% broken is currently listed at US $420 PMT FOB and PR 106 5% broken at US $480 PMT. Demand for Indian white rice remains slow, although unconfirmed reports suggest that China’s COFCO has agreed to buy 100,000 MTS of various qualities of white rice from India. 

Indian Basmati exports between April and October 2012 totalled 1.92 million MTS, up 17% on the corresponding period last year as a result of increased demand from traditional buyers in the Middle East and sales to new buyers in Africa. However, sales to India’s third largest Basmati export market, Iran, may soon be reduced as Iran is planning to rework its multiple exchange rate system in order to negotiate the various trade sanctions imposed upon the country.

VIETNAM:

Vietnamese prices are softer again this week, despite supply remaining very tight and exporters still having to fulfill their commitments to Bulog of Indonesia, Bernas of Malaysia and West African Buyers. 5% broken white rice is currently listed at US $430 PMT FOB, whilst 25% broken stands at US $400 PMT FOB. There has been a lot of speculation as to what is causing the prices to soften, although there is certainly less demand from local buyers than there has been in recent months. 

Some exporters may also be eager to clear their warehouses due to fears of flooding which could damage their stock and as they begin to prepare their facilities for 2013 crop arrivals (although these are unlikely to begin until February at the earliest).

PAKISTAN:

Pakistani white rice prices have remained stable this week as the market has reopened quietly following the Muharram Ul Haram New Year holidays. IRRI-6 5% broken white rice is unchanged at US $435 PMT FOB. The attention of the market is largely focused on East Africa and China as exporters are hoping for a significant increase in buying when Chinese importers are allocated their next tranche of import licences in January. Purchases of small volumes of 100% broken white rice have continued from West Africa and a single shipment is expected to be loaded from the first week of December.

USA:

The market in the south has been quiet following the Thanksgiving holiday, although domestic demand has continued for small volumes; the Kansas City Commodity Office will tender for 1,450 MTS of U.S. #5, 20% broken white rice and a further 390 MTS of U.S. #2, 7% broken white rice on 4 December. The start of the hunting season has led to a quietening of the market, although mills are booked through to the New Year largely because the 79,000 MTS awarded under the Colombia Tariff Rate Quota is required to be shipped by 31 December. Long grain prices remain unchanged, with U.S. #2, 4% broken at US $620 PMT FOB and U.S. #1, parboiled 4% broken at US $625 PMT FOB. Additional offshore demand has come from the European Union as the first tender of the January 2013 Tariff Rate Quota has been issued, totalling 9,681 MTS of milled rice of U.S. origin.

SOUTH AMERICA:

Prices in South America are softer this week, both Argentine and Uruguayan 5% broken white rice varieties are now quoted at US $630 PMT FOB. Although the Brazilian government continues to attempt to ease the situation by auctioning paddy from its stocks, the significantly smaller crop harvest in the 2011/12 season compared to 2011 could ultimately mean that Brazil becomes a net importer of rice this year. Estimates suggest that Brazil’s total imports for 2012 are likely to reach at least 900,000 MTS which is a 50% increase from the year before.

Courtesy: Live Rice Index. 

Indian Govt. approves more exports of Rice & Wheat

The Cabinet Committee on Economic Affairs has approved the continuation of the unrestricted export of wheat and non-basmati rice.

This is in view of the adequate availability of wheat and non-basmati rice in the domestic market, an official statement said.

The proposal was moved by the Department of Commerce. Sources said additional wheat exports of up to 2.5 million tonnes (MT) would be allowed from the Government’s stocks.

The Government is sitting on a huge pile of wheat stocks pegged at 40.57 MT as of November 1 about thrice the buffer and strategic reserve at this point in time. The Government’s latest move would help fetch better realizations as global wheat prices have firmed up as drought in countries such as Russia, Ukraine, the United States and Australia has slashed output hurting supplies.

The Government had earlier allowed exports of 2 MT from the Central pool stocks, of which over 7.5 lakh tonnes has already been shipped out of the country. 

Courtesy: The Hindu Business

Global agricultural commodity prices likely to remain high

             Although global agricultural commodity prices have come off recent peaks, food price inflation remains a concern in developing countries; and over the next ten years, agricultural prices are expected to remain on a higher plateau even as energy price levels and volatility are seen to condition the outlook, according to the latest OECD-FAO Agricultural Outlook 2012-2021.

CEREALS:

As for cereals, stocks are expected to get tighter over time. The stock-to-use ratios will remain below historical averages, posing the risk of future price volatility. Interestingly, the Black Sea region will play a larger role in the world wheat trade. The Russian Federation, Ukraine and Kazakhstan are expected to become much more important sources of wheat export by 2021; but high production variability in this region may have implications for global trade and world price volatility, the report has cautioned.

Larger exports of rice are projected from the least developed countries in Asia while rice imports are to increase in Africa.

OIL SEEDS:

Oil seeds production and exports continue to be dominated by the traditional players, but emerging exporters such as Ukraine and Paraguay are expected to increasingly contribute to global export growth. China, the dominant importer, will account for more than half of total world imports. Brazil’s oil seeds production growth is expected to slow from 4.9 per cent to less than 2.0 per cent over the next ten years. As for sugar, food and fuel (ethanol) demand will sustain over the medium-term and help maintain prices at a high level. Production cycles will continue to characterize sugar markets in Asia, leading to occasional large trade fluctuations and price volatility. A key driver of the sugar market will be how Brazil’s cane crop is allocated between sugar and ethanol.

MEAT:

Meat consumption in developing countries is set to expand. Large Asian economies, crude oil exporting countries and Latin America where income gains are expected to be significant will drive demand for meats. Poultry meat will lead the anticipated growth as the cheapest and most accessible source of meat protein, overtaking pig meat as the largest meat sector by the end of the decade. Aquaculture is set to surpass capture fisheries in food consumption. Fish production is one of the fastest growing sources of animal protein. World fisheries and aquaculture production are expected grow by 15% over the next ten years. A 33% growth in aquaculture production will take it past capture fisheries as the primary source of fish for human consumption by 2018.

DAIRY PRODUCTS:

While developing countries will become most important producers of milk, a modest increase in consumption of dairy products – with the exception of cheese and fresh dairy products - is expected in developed countries. By 2021, the consumption of all dairy products is expected to increase by about 30 per cent in developing countries.

Interestingly again, developing countries under the lead of India and China are projected to overtake developed countries in milk production by 2013.

Courtesy: The Hindu Busines