AgDevCo, a social impact agribusiness investor, announced a $1.6m debt investment into a Malawian sugarcane cooperative for fixed and working capital expenditures.
The Phata cooperative is working with a specific structure whereby smallholder farmers in the Chikwawa district in Southern Malawi aggregated their land plots together to form a cooperative and contracted Agricane to manage an irrigated sugarcane plantation. 436 farmers representing 302 ha of land joined the scheme that was part-financed by AgDevCo.
The first phase turned out to be very successful. Through an offtake agreement and good management, Phata was able to distribute dividends to its members, reaching $800/ha in 2015/2016 and developed several initiatives to improve food security (credit facility, subsidized maize, aquaculture etc.).
Now Phata is rolling out a second phase that will involve 300 additional ha of land contributed by 880 farmers. AgDevCo shows its support of the scheme by contributing $1.6m to the development and working capital.
Dividends, which have steadily increased since Phata’s inception, will create additional income for local communities. The area allocated to irrigated food crops for the benefits of the members will also be expanded by a further 53 ha.
The largest impact of this investment should be to show how good management and a structure benefiting local communities through a cooperative can lead to increased production and income in the agricultural sector in Malawi. At the end of this investment, AgDevCo expects that Phata will be self-sufficient and self-funded.
Jim Henderson, AgDevCo Malawi’s associate director said the success of such projects are dependent on a good off take arrangement and a strong management team
Rachel Kawawa, Phata’s Chairlady said the combination of a strong board made up of elected members from the cooperative and independent members offers a platform for good governance
Bouke Bijl, Agricane’s Project Manager in charge of Phata said the success of phase 1 and the uplift to their members has encouraged the new members to join the expansion program