17 November 2011
As you'll see from our half year results, SABMiller's African operations continue to be an exciting success story. But the continent itself faces many challenges, not least of which is how to boost agriculture in order to drive growth and development.
Africa's farmers are at the centre of this challenge. Africa has abundant land and natural resources and there are many examples of how hard-working farmers, with the right support, can dramatically increase production. By learning from these successes, agriculture across the continent can be transformed to improve the lives of hundreds of millions of Africa's citizens.
But if we are to help Africa's farmers achieve their potential it's vital that business plays its full role in supporting agriculture. This is nothing new for a company like SABMiller and we have realised in recent years that we have to step up our efforts to work with Africa's army of small-holder farmers - so important to rural life. But there are also compelling business benefits to such a move - including better access to quality raw materials; lower logistical and inventory costs; zero import duties; and shorter, more visible and more secure supply chains.
We are committed to expanding our sourcing from smallholders in a way that generates commercial value for the business and also improves the lives of those in the communities in which we operate.
In 2002 we started brewing ‘Eagle Lager' in Uganda. This was the first time that we had created an entirely new type of beer using a locally grown agricultural raw material - in this case sorghum - sourced from local smallholder farmers. Nine years on, Eagle accounts for nearly 50% of all our sales in Uganda, and the concept has been replicated in some of our other African markets such as Zambia and Tanzania. In Uganda alone, we're sourcing sorghum from around 9,000 smallholder farmers who we've helped to improve their productivity, increase their yields, feed their families and generate an income.
Most recently, we have launched what we believe is the world's first commercially-produced cassava beer - ‘Impala' - in Mozambique. Around 40,000 tonnes of raw cassava will be used annually in making the beer, creating new employment for over 1,500 small-holders and giving us an opportunity to help them improve farming practices and skills.
This is a particularly exciting development because cassava grows abundantly across Africa - in fact it's the continent's most widely-grown but least commercialised crop. It's an excellent source of starch, but one the reasons it hasn't been successfully commercialised is that it starts to degrade almost immediately after it is harvested, which, together with its high water content, makes it unsuitable for transporting over long distances.
We've partnered with DADTCO (Dutch Agricultural Development and Trading Company), which has pioneered an innovative solution in the form of a mobile processing unit which travels to the cassava growing regions and processes the root in situ, preserving the integrity of the starch and meaning that, for the first time, cassava is a viable raw material for brewing on a commercial scale.
If the pilot in the Mozambique is successful, the potential is there to expand cassava beers to our other markets, exactly as we have done with Eagle. And as we expand, we will be sourcing from more and more smallholder farmers. We have already said that we aim in the next two years to increase our local sourcing of raw materials to 50% of our total requirement in Africa - this will include cassava, sorghum and barley.
SABMiller is a global company but our roots - and our heart - are in Africa. We believe in a vibrant and successful future for the continent and are determined to play our role in it, and part of this is to mobilise and support the smallholder farmers who could be at the heart of its success.