Thursday, December 9, 2010

Speedy’s Food Industries sees gold in agro-processing

By Richard Chirombo
There is nothing wrong linking the name Speedy’s to vehicle sales. What is wrong is to confine the name to vehicles only because, as recent investments suggest, Speedy’s directors think bigger than vehicles. At least, that is the impression one gets from what some companies under the group are venturing into.

Of late, the Speedy’s Group of Companies has adopted a new approach to its services’ portfolio; the latest development being its increasing interest in agro-processing. Through Speedy’s Food Industries (SFI), a member of Speedy’s Group of Companies, the company is investing massively in poultry farming and Agro-processing.

Faced with such favourable conditions as the availability of human resource, 219 acres of land, a strategic location and a vision; It did not take SFI Limited long to decide and invest K40 million into poultry farming and Agro-processing. The company’s project brief touts that the injection of funds into an area many consider the mainstay of the rural masses could go a long way in finding a solution to the country’s poultry farming and agro-processing needs.

Not that there was anything missing at Mapanga, a suburb located some 5 km from Limbe, the ‘trading centre’ of Malawi’s commercial city, Blantyre. It is just part of SFI’s new strategic thinking, largely premised on the fact that there is still room for new players in the industry- more so for Mapanga. Its strategic locale in terms of market access and availability feeds well into the plans of all those wishing to get the best out of any business venture.

This principal also applies in poultry farming and Agro-processing of animal and poultry feed.

SFI has read through the prism of largely untapped potential in the industry, dispelling the notion that market diversification is all about short-term returns, largely attained through the importation of foreign goods. For a long time, people and companies failed to see the business viability of investing in Mapanga, up until SFI - registered under the Companies Act of the Laws of Malawi- decided to put its allotment of 219 acres of land to good use.

And good use has come to mean bringing in new innovations, expanding market portfolio and diversifying service output and changing with the times in an economy that leans on agriculture to stand still, repositioning strategies matched by the zeal, expertise and experienced hands of Mr. Riaz Jakhura and Alexander Oonnoonny, Managing Director and Group General Manager, respectively.

Under them, SFI has extended the comforting shed of employment to communities around Mapanga and beyond. In a country where a large chunk of the population is grappling with unemployment and with the unemployment rate still a mystery, the social-economic impact of putting 300 people on guaranteed monthly returns cannot be underestimated. What is more? SFI’s Social Impact assessment documents indicate that, for every individual employed, five more people benefit.

This is not strange because Malawi’s extended family system has had a long hold on the country’s history.

Riding over the wings of vast experience in poultry farming and Agro-processing, SFI has quickly created a niche for itself, subsequently positioning itself among Malawi’s leading suppliers of eggs and Agro-processing products, flooding the largely-unexplored market with a daily output of up to 1500 trays of eggs, culminating in 45000 eggs per day, all from its chickens at Mapanga. However, the company foresees increased fortunes because current output does not represent maximum output.

There are plans to improve daily egg production by 25 per cent next year, along with pipeline initiatives to up animal feed production, another crucial component of SFI’s business portfolio. The idea is to maximize output. Production presently stands at 10 tons per 8 hour day-shift. This represents potential because it translates into only 3 per cent of the design capacity of the plant based on a double shift.

While the company uses half of the feed to meet its own needs, 50 per cent is divided between local sales and exports- further contributing towards the Malawi government’s policy goal to overturn the economy from a predominant importer to net exporter. The most encouraging factor is that all facets of production are done locally, without exporting scarce jobs abroad.

SFI currently employs 300 people, cast across the board in management, farm produce and manufacturing operations. But Jakhura and Oonnoonny are not satisfied. Relying on the time-honoured principal that the best indicator of good progress lies in self-belief and continued investment, SFI has injected K40 million into a massive FEED PALLETIZING , OIL PRODUCTION & FARMING PROJECT estimated to run for 12 months.

Main components of the project include: Feed production, to include palletizing feed and oil (a by-product from the palletizing process); crop production; fish farming; Beef (cattle) farming; and intensive production of broiler chickens.

Under palletized feed and oil production, the company seeks to improve feed quality and increase unit production. The feed-palletizing process is a double-shaped sword: It stands to improve both nutrition- content and reduce the amount of waste material found in normal feed. This process requires use of an extruder, which will produce oil as a by-product.

As if to buttress the point that there is no need to tolerate waste in a world that has no spare raw materials, Sachas Bakery- one of the subsidiaries within the Group- will benefit from the by-product (oil) because it will be employed as a raw material in the confectionaries’ business. A project brief also adds that any surpluses will be earmarked for the local and international market.

“At present, we are making mash feed, but it is not 100 economical for a commercial farm like ours. This is so because wastage during consumption is high, as compared to palletized feed.

“If the feed is palletized, the protein levels also increase and feeding wastage can decrease by 10 per cent, translating into reduced costs. Currently, instead of giving 90gm palletized feed to layer chickens, we use 120 gm. of mash feed per chicken per day. We can change this and save 30 gm. per chicken,” says the project brief in part.

There is another plus. The palletized feed will also kill weevils that prey on produce, in the process enhancing chickens’ productivity. It is also envisaged that this will cut the mortality rate of chickens.

Adds the report: “The feed cost can be drastically reduced by palletizing the feed. The high energy output in the feed will also help us reach achieve higher egg production levels from the farm. The oil from Soya, ground nuts, sun flower, cotton seed, among others, can be used in our sister company (Sachas) and the excess sold to other consumers .The cake, a by-product of the oil mill, can be used in producing stock feed.”

The company also sees improved fortunes in crop production. This area of focus covers a wide array of crops and revolves around Agro-processing activities aimed at achieving optimum output production and improved returns. The chief raw materials include maize, soya and sunflower.

SFI wants to venture into intensive maize and soya farming at its farm and will embrace the concept of multiple-cropping. The aim is to cut on over-dependence on contract buying of these crops. Key to the attainment of this goal is the company’s increased focus on production of the staple food, maize.

It is hoped that, by embracing modern agricultural methods, crop production will culminate into an estimated yield of 1000/50kg bags per acre, translating into 200,000kgs of maize from the 200 acres. Production levels will thus hit 200 tons per annum. The development means that, from an annual average requirement of 1000 tons, the farm will provide 20 per cent of requirements at current production levels.

The expected outcome will be increased feed production to 3,025 tons, 1,825 tons of which will be put to internal use as production of eggs peaks at 1,500 egg trays per day. The surplus of 1,200 tons of feed is to be sold to the public.

However, maize is not the only strategic crop to be grown on the farm; soya is next in line, and will be grown on the same area of 200 acres, with the aim of reaching the 100 tons production cylinder, thereby curtailing contract purchasing costs to 350 tons per annum, down from current figures of 450 tons per annum.

These two crops (soya and maize) stand to benefit from irrigation farming as SFI plans to utilize drip-irrigation. The farm has a perennial stream running across it as well as three boreholes dug within the confines of the Mapanga farm. The water from the stream will be tapped into irrigation, providing the opportunity for winter cropping to achieve, at least, two harvests of soya and maize per annum. With 400 tons of maize and 200 tons of soya per year, the venture is bound to reduce operational costs.

Also in the fray of activities is fish farming. With all-year round water availability guaranteed, 30 ponds earmarked for tilapia (Chambo) fish farming are to be constructed, with a daily catch of 1000 tilapia fish per day. The chicken manure will be used to feed the fish, as is universally recommended by agricultural practice.

The good thing about Agro-processing, according to SFI, is that a company can venture into other forms of farming (including fish farming),knowing that the by-products of Agro-processing are the capital needs in the other types of farming. That is why fish farming also features highly in SFI’s plans.

And so does beef cattle rearing (farming). As Malawi’s beef needs grow, there is need for corresponding supply. Taking a leaf from a limited population of cattle reared on trial basis at Mapanga farm, the company now wants to go about the beef cattle business full-throttle. At the moment, a few cattle are kept on the farm for trial to determine suitability of the climate in the area, a process that has proved very successful already. Now the ultimate goal is to keep as many as 150 cattle for beef.

Also in the offing are plans to embrace goat farming (for its meat). In readiness for this, the company has already invested in an abattoir, to be ready in a few months time. Construction of the building is almost complete and equipment has already been ordered. While beef will be sourced from other farmers, a cold-room has already been built with equipment installed ready for use.

Just like beef cattle and fish- all of which depend on Agro-processing by-products to flourish- so do broiler chickens. SFI knows this pretty well, and has included broiler chickens’ production as part of its K40 million investment. Here, diversification is the key word. Venturing into broiler chickens production is a way of diversifying both the Agro-processing and poultry farming activities, which have been the long-time main stay of SIF.

Arrangements are underway to construct houses, starting with 30,000 chicks weighing 2.5kg on average. Within 42 days,chickens will be ready for slaughter. The impact will be increased feed requirements. However, as much as 964 tons additional maize and 500 tons of Soya will be required. The design of the abattoir and the cold room has taken the broiler chickens into consideration.

While SFI already has a lot on its plate, Mr. Jakhura and Oonnoonny are not distracted; instead, they look to the future with confidence. Some of the plans include the purchase of a hatchery with the capacity of 10,000 chicks and parent stock. Equipment required for establishing the hatchery and the parent stock will be imported as part of a plan to help SFI meet its input requirements, a necessary factor in ensuring sustainability and viability of its business operation.

In trying to achieve all this, SFI has also considered its social responsibility role, premised on the philosophy of direct engagement with members of the community who make us what we are, as well as the general populous. The company will, in this respect, engage local people in its farming activities on a contract basis.

Under this arrangement, an individual will be allotted a piece of land, and supplied with selected seeds and agricultural chemical inputs- principally fertilizer and chicken manure. The contracted people will be supervised by an agriculturist employed by SFI. All this will be based on the understanding that the company will buy all the maize and soya grown by these farmers at an agreed minimum price.

This will have a positive trickle down effect, both on the social and economic front. The one hundred people earmarked to benefit from the programme will be able to support up to five more people per family, totaling five hundred in all. The enhanced earning power of the people will spur the growth of micro- businesses within the area and the trickle down effect is bound to benefit many more families in the surrounding communities.

We also plan to organize community members into farmers’ clubs and equip them with chicken farming skills with the guarantee that SFI will buy the broiler chickens and the eggs from them. We will also supply fish siblings and ornamental fish as part of the economic empowerment programme. It is our unique way, as Speedy’s Food Industries Limited, of discharging an important social responsibility to the community.

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