Cru launches Malawi ethical investment venture

INVESTMENT management company Cru has publicly launched a venture for specific ethical investment in Malawi’s agricultural sector.

It wants to raise £30m in the first half of 2008 to secure 20,000 hectares of land additional to that it has already acquired.

Cardiff-based Cru will use Africa Invest to establish a commercial agricultural business in Malawi, with the aim of making profit and alleviating poverty.

The company has been tested for the last two years to see how successful it could be.

It has been expanding its senior management team, providing for greater operational control of the farms, focusing on crop selection on high-value export markets and a major expansion to its outgrowers schemes.

The company has established 8,000 outgrowers (small scale producers), 6,500 producing paprika and 1,500 producing chillies – and its returns on capital in 2008 are forecast to be between 35% and 45%, with total investments totalling £1.8m so far.

Cru says 50% of the 20,000 hectares of land it acquires in the first half of 2008 will be placed under irrigation and two paprika processing plants will be established to deal with 6,000 tonnes of paprika. It wants Africa Invest to become a major exporter of bird’s eye chillies and herbs – with field tests on mint and basil already in place.

Jon Maguire, CEO of Cru, said, “Investment into Africa Invest has two principal profit drivers; land and food. We create our farming land bank from two sources; leasehold, which is customary land that cannot be sold, and freehold, principally former tobacco estates.

“We acquire arable land for less than £250 per hectare and by international standards this is extremely low.

“For instance, compared to UK arable land, our land is at a 95% discount. As pressure for farmland grows globally Malawi farmland prices should rise substantially.

“Food prices are rising strongly. Arable land is being put to biofuel, reducing supply for food. Population growth, particularly in developing countries, is increasing demand for food. Thus, with supply falling and demand rising the outlook for higher food prices, and increased profits for us, is bright.”

Mr Maguire said investment in Africa would provide far more positive results than simply donating aid. “In such a short time, Africa Invest now financially engages with some 80,000 Malawians, helping to lift them out of poverty, this includes our outgrower schemes which are family run,” he said. “When I first went to these rural areas the people and their villages had no money, some had never even seen money.

“Now it’s different, money empowers them and this has significant knock-on effects to the local wider economy. Africa Invest is employing 2,400 people, providing them wages three times higher than average and offering a career path to all.

“We have established a feeding programme at every one of our farms, providing nourishing porridge four times a week to 1,450 orphaned and malnourished children, Aids victims and the elderly.”

Cru will raise its £30m by opening a collective fund allowing for charities and institutions to invest as well as offering a structured product allowing for retail UK investors to in-vest.

The product would be capital guaranteed and Cru said it is confident the money can be raised by next May.