Farmsecure RSF

completed

The privately owned Farmsecure (“Farmsecure” or the “Group”) was formed in 2004 to provide scientific farming, insurance risk mitigation, working capital and marketing services to grain farmers. Since then, the Company has continued to grow both organically and through acquisitions and currently contracts and or partners with farmers on approximately 140 000 hectares on which they farm about 650 000 tons of grains and oilseeds (approximately 7% of South Africa’s grain production), raise 100 000 heads of cattle and farm 3 200 hectares of fruit across the nine provinces of South Africa. The Company is currently considered to be an innovative participator and service provider in the areas of, agri-inputs, primary agriculture and agri-outputs through its contracting of and partnerships with large-scale farmers in South Africa.Farmsecure operations can be mainly broken down as follows: Farmsecure Fruit and Fruit Growers; Farmsecure Grains and Livestock; Farmsecure Technologies (Farmsecure Carbon, Pro Gas Solutions, Kynoch Fertilizer, etc); and Farmsecure Global Markets. Farmsecure has recently entered the fruit sector in own production and packaging. It manages about 15 million cartons of fruits a year (of which own production accounts for 6 million cartons). Under the grain contract-farming model, Farmsecure provides pre-harvest working capital through a Contract Farming agreement with selected farmers. Through this Contract Farming agreement, Farmsecure establishes conditions for scientific implementation of the production, working capital, insurance, including weather risk cover, and marketing of the grains to be produced. The Company agrees with the farmer, among other parameters, on farming practices (including scientific farming) to be applied to ensure maximization of the yields (under the supervision of Farmsecure Agri Science). Under the livestock contract-farming model, the Company provides selected farmers with working capital towards purchasing young animals to raise/fatten-up for sale to a slaughter house. As with crops, Farmsecure agrees with the farmers on best veterinary practice to be applied to ensure maximization of the weight of the animal at slaughter (under the supervision of Farmsecure’s animal scientists).In 2011, Farmsecure introduced Farmsecure Optimized Farming (FOF) an enhanced variant of the original grain contract-farming model. FOF, which is the Company’s preferred model going forward, currently covers 55 farmers compared to 352 farmers in the contract farming model. In this model, Farmsecure signs a long term farming and lease contract with the farmer (as opposed to the annual contract under contract farming). Farmsecure takes over the farming operations and the farmer is employed to farm on behalf of Farmsecure. Thus, Farmsecure is more hands-on in terms of monitoring farming operations and as a result has a better control over the application of best farming practice.Farmsecure Carbon, which is 100% owned by Farmsecure Technologies – a subsidiary of Farmsecure, is a project development and consultancy Company for greenhouse gas emission mitigation and renewable energy in the agricultural sector and on farm level. Farmsecure Carbon currently has a portfolio of more than 20 waste-to-energy projects, which include processing of by-products into fertilizer, in various stages of development.. Kynoch Fertilizer is a leading importer, blender and retailer of a complete range of granular, liquid and specialty fertilizers in Southern Africa. Kynoch is the exclusive distributor of Yara International’s premium products in Southern Africa and sells around 400 000 and 100 000 tons of fertilizer annually in South Africa in the rest of Southern Africa respectively. Pro Gas is an inputs supplier of Nitrogen in the form of direct ammonia application in South Africa and in the Southern Africa region. Pro Gas is estimated to sell 4 000 tons of liquid ammonia annually.The IFC investment (the “Project”) consists of an up to 500 million South African Rands ($64mn) funded risk participation in Standard Chartered Bank South Africa (“SCB” or the “Bank”) financing facility to Farmsecure. The Project will enable SCB to increase its exposure to Farmsecure while the Group expands its operations in and potentially outside of South Africa