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INVESTING IN THE FULL FOOD CHAIN.

There has been a succession of big agribusiness investments by Japanese companies in Africa over the past few years, often by buying stakes in established operators. They have been attracted by Africa's increasing population and particularly the growing number of middle class people, in 2015, Mitsubishi bought a 20% stake in agri-trader Olam International for $1.1bn. The Singapore-based firm, which trades in a wide variety of commodities, including rice, coffee and cocoa, selected Mitsubishi in a competitive bidding process because it hoped that the Japanese company's processing and manufacturing operations would dovetail with its trading network.

Japan's Sanyo Foods took a 25.5% stake in Olam's instant noodles business in 2013, then 25% equity in Olam's packaged foods business for $187.5m the following year. Its packaged foods operations cover a wide range of goods, including fruit juices, biscuits, tomato puree and seasonings. The two companies are seeking to make use of their respective distribution networks.

In particular, Olam and Sanyo are seeking to build market share in Nigeria. Mahadevan Ramanarayanan, Olam's president and global head of packaged foods, said: "With Sanyo's noodle expertise this meant we could grow the instant noodles business at a much faster rate, bringing out new flavours and new products. In particular, we focused on developing flavours that corresponded to well-loved Nigerian local dishes, coming up with innovative formats in the noodle cake and also how we could make the product more convenient given the Nigerian and Sub-Saharan context."

In March 2018, Mitsui & Co bought a 30% stake in Dubai-based ETG, which trades in agricultural produce, fertilisers, seeds and agricultural chemicals, predominately in East Africa but also more generally on the continent. The $265m acquisition will allow Mitsui to market seeds and fertiliser specifically designed for local soil conditions, as well as its irrigation systems. ETG also has storage, processing and manufacturing operations in 36 countries. Mitsui is attempting to position itself as one of the biggest players in the global agricultural commodity trading sector. It has already bought a 50% stake in US soy company Bluegrass Farms and taken over global vegetable seed firm Top Seeds 2010.

In the same way, Toyota Tsusho completed its first fertiliser blending plant in Kenya in 2016 to produce a balanced blended fertiliser designed for Kenyan soil types to avoid low harvests and the acidification of farmland. Toyota Tsusho Fertilizer Africa worked with Moi University and several NGOs to produce what is now called Baraka Fertilizer. The factory in Eldoret, in western Kenya, is designed to reduce the 600,000 tonnes of fertiliser that the country imports every year, as well as boosting agricultural production. It is now also developing specific fertilisers for sugar cane and legumes, and is seeking to expand its operations in Uganda and Tanzania.

Caption: Japanese companies have invested across the food chain in Africa, including in packaged goods.

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Title Annotation:Special Report: Japan: Africa
Comment:INVESTING IN THE FULL FOOD CHAIN.(Special Report: Japan: Africa)
Publication:African Business
Date:Aug 1, 2019
Words:476
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