Agriterra moots sugar move

03/07/2009 Robert Tyerman

Agriterra buys corn from local farmers at half the international price and makes corn flour for local consumption

Phil Edmonds’ African food group Agriterra expects a turnaround to profits as it contemplates a move into sugar.

The AIM-quoted company, which began life as Sudanese oil flop White Nile, owns two mills in Mozambique and buys corn from local farmers at half the international price, operating in each district as a monopoly buyer, and makes corn flour for local consumption. Based in the Mozambique capital of Maputo, Agriterra, which also provides farmers with seed and fertiliser in exchange for corn, is embarking on an ambitious expansion programme, says spokesman Jeremy Gray.

This aims to add capacity and lift annual turnover in Mozambique from below £3 million to £50 million by 2011. Gray says the company, which lost £2.1 million in the six months to last December but still has £6.5 million cash and ‘ten years' tax breaks in Mozambique’, intends to increase its beef herd from 600 cattle to 10,000 in three years.

He adds that Agriterra, steered by Edmonds and his right hand man Andrew Groves, is planning a move into Tanzania, which will need £6 million four two mills. In addition, the company is contemplating moving into sugar in southern Mozambique, where land is becoming available, which is potentially attractive but capital intensive, needing plenty of water, and would require funding.

The entrepreneurial Edmonds’ mining venture CAMEC owns more than half of Agriterra, having set it up by exchanging assets for shares and cash. Gray cites expectations of a move into net profits of between £2.5 million and £4.5 million in the current year.

Agriterra shares have put in a hair-raising performance over the past year, swinging between 27p and 0.63p. They now trade at 3.38p, valuing the company at £16 million and are a punt on present plans coming to fruition profitably