Page last updated at 06:52 GMT, Wednesday, 11 March 2009

Zambia's agri-business powerhouse

By Ian Brimacombe
BBC World Service, Lusaka, Zambia

The BBC's Komla Dumor speaks to Francis Grogan, the managing director of Zambeef

Empty plastic sterilised bottles roll down a Zammilk production line about 50 km north of Lusaka.

It takes less than three seconds for a machine to spray yoghurt into each bottle.

Further down the line, another machine screws the lids on. The bottles are then whisked off to sell in shops.

This factory is not just producing yoghurt, but also fresh milk, cultured milk, and a popular flavoured drink called Zamsip.

Over 25,000 litres of milk products are processed here every day.

The company that runs this processing plant, Zambeef, began as a small butcher shop in the capital, Lusaka in 1991.

Agri-business is definitely the future for this country

Since then it has grown to become one of the biggest food production businesses in Africa.

Place "Zam" in front of just about any food product, and there is a pretty good chance this company is producing it.

African breadbasket

Zambeef slaughters 60,000 cows a year.

At the same time, Zamchick produces and processes 3.5m chickens. Then there is Zamleather, Zamflour, and Zamshu, among others.

"Agri-business is definitely the future for this country," says Zambeef's managing director, Francis Grogan.

"Zambia has got huge masses of land. We've got very fertile soil, fantastic rainfall and a climate perfectly suited to growing crops."

Many would agree.

But so far, Zambeef stands out as a rare Zambian agricultural powerhouse.

School children in Zambia
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Turning the countryside into a viable, sustainable industry on a much larger scale is something people here have talked about for ages.

But until now, it has not happened.

That is because it takes more than mother nature's blessing to turn Zambia into an African breadbasket.

"The problem is money," says Mr Grogan.

"It costs $10,000 a hectare to turn bush-land into farmland. That's just getting the electricity and irrigation up and running," he says.

Loan problems

Then there is the fact that banks in Zambia only make loans in US dollars, and the revenues are generated in Kwacha, the local currency.

That carries the potential of exposing farmers to big losses when the dollar appreciates - as it is doing at the moment.

"It's a very risky business," says Mr Grogan.

The other challenge for Zambian farming has been the country's proximity to its much bigger neighbour, South Africa.

"South African exporters have used their export power to destroy farming potential in Zambia," says Ndambo Ndambo, executive director of Zambia's 300,000-strong National Farmer's Union.

So in light of all this, how has Zambeef done it?

Francis Grogan says the company business model of controlling every stage of the food production chain - including retailing - has been the key to its success.

Mr Ndambo agrees.

"Zambeef is providing leadership in farming," he says. "They can compete with South African producers. They have the muscle."

Small producers

But Zambeef will remain the exception to the rule, says Mr Ndambo, unless the Zambian government begins to make investment in agriculture a top priority.

That, he says, means giving farmers financial breaks, encouraging banks to lend to the sector, and making it more difficult for South African competitors.

Dairy cows at Zambeef
With the right incentives agri-business could become Africa's new emerging market

"Now is the time for investment in Zambian agriculture," he says.

These days, the government might just be swayed.

Zambia's Agriculture Minister, Dr Brian Chituwo, says the government recognises that the country's farmers need incentives if the industry is to continue to grow.

"We don't really believe that agriculture can take off without credit facilities," he told the BBC World Service.

Dr Chituwo says the problem of access to credit, which is particularly critical for small-scale farmers, will be addressed in the next session of parliament.

"I intend to introduce a bill in parliament - the agricultural credit act - this we believe will assist small-scale farmers particularly to access money."

Since the downturn, the price of Zambia's biggest export, copper, has more than halved, and mines in Zambia's copper-belt are beginning to close.

Suddenly, the need for a more diversified economy has taken on a new urgency.

When it comes to farming, Zambia certainly will not be starting from scratch.

The country's share of food and other farm products in total exports has been increasing - from less than 5% in the 1980s to more than 20% today.

Zambia is also better able to feed itself, becoming mostly self-sufficient in staple products like wheat and maize.

Now, the Zambeef success story might just provide enough incentive for Zambian policy makers to place agriculture at the centre of a new economic strategy.

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