AgriSol Energy and Serengeti Advisers are partnering to contribute to Tanzania’s long-term food security. Tanzania has abundant arable land, much of which is not currently being farmed, and yet the country faces periodic food shortages. AgriSol Energy and Serengeti have joined together because they see an opportunity in the short-term to help develop a solution for Tanzania’s food security challenge through the use of modern, sustainable agricultural methods and, in the longer-term, the ability to help address the East African region’s food security issues.

In Western Tanzania there is extremely limited modern, large-scale farming. The AgriSol project plans to develop two farms in Kigoma of approximately 13,750 hectares. The project will use world-class, sustainable and environmentally responsible farming methods. Such farming methods will dramatically improve yields of maize and other food crops over current average yields in our country. In 2010, Tanzania’s maize yield of about 1.2 tons per hectare was approximately half that of Zambia’s (2.2 t/ha), a third of those achieved by South Africa and Brazil (4.1 t/ha) and just 13 percent of U.S. levels (9.2 t/ha).

AgriSol Energy Tanzania Limited is a Tanzanian company that is a joint venture between Serengeti Advisers Limited of Dar es Salaam and the AgriSol Energy group of companies in the United States. The principals of AgriSol Energy are investors with a long-term commitment to sustainable and socially responsible agricultural development, consistent with our planned activities in Tanzania.

AgriSol Energy has a close affiliation with Summit Farms in Alden, Iowa, which has a very successful integrated crop and protein production operation. Summit Farms' founder and CEO, Bruce Rastetter, is one of the founders of AgriSol Energy and has a long track record as an entrepreneur building agricultural businesses, as well as being a leader in sustainable development and education.

We have worked closely with the Tanzanian government in developing this project, engaging in transparent consultation at every stage of the process, to ensure that the local and national interests of Tanzanians are fully taken into account. This project is designed with the explicit goal of benefiting Tanzanians by encouraging the development of a modern agricultural sector.

For the extension and community development aspects of our projects, we are working with leading agricultural universities in Tanzania, the U.S. and globally to advise us on the small farmer and outgrower elements of the project. We will also consult with them regarding environmental sustainability issues to ensure that we are farming in an environmentally and socially responsible manner at all times.

As we further develop the project, we will continue to bring world-class partners and their expertise to Tanzania, as well as work with established organizations within the country.

Our primary objective is to produce food for the benefit of Tanzanians. We will do this by producing crops to add to our country’s grain supply and producing greatly needed value-added products that are currently imported in meaningful quantities. In addition, we will build modern storage facilities so that our harvested crops and those of others will not spoil before they can be distributed and consumed. We also will work with the Tanzanian government and private business to develop and expand local markets, increase awareness of pricing and other market information, and improve food distribution within the country

Our longer-term vision is to help re-invigorate the country’s agricultural sector into a vibrant pillar of Tanzania’s economy by helping to make modern farming techniques, inputs, training and equipment available to Tanzanian farmers so that they can significantly increase crop yields, and eventually produce excess crops and other value-added products for sale in the region and beyond.

We intend to grow maize and soy and to use these crops for three primary purposes:

• Direct use as food grains for Tanzanians;
• To produce cooking oil. Tanzania imports a large percentage of its cooking oil, but we believe that Tanzania can and should produce its own cooking oil; and
• To produce feed for livestock.

Our operations will include livestock production in order to help address Tanzania’s protein deficiency problems. We intend to focus on poultry production initially, both eggs and meat, because they are rich in protein and are affordable enough that they are increasing as staples in Tanzania’s national diet. Currently, Tanzania imports chickens from as far away as Brazil because domestic chickens are frequently more expensive, have an inconsistent supply and are perceived to be of a lower quality than foreign imports. Our program is designed to increase the quantity and improve the quality of chickens in Tanzania for Tanzanians. By creating modern poultry operations, locally produced chickens will be less expensive than imported chickens without sacrificing quality. In future years, we will explore raising cattle to produce meat and dairy products.

Our project in Kigoma involves approximately 13,750 hectares, a tiny percentage of the overall available land in Tanzania, but large enough to have a meaningful impact on the country’s agricultural industry by demonstrating what is possible with Tanzania’s rich resources. The 13,750 hectares are in two plots: one approximately 10,500 hectares at Lugufu, and one approximately 3,250 hectares, north of Basanza village.

Tanzania has 43 million hectares of arable land, of which only about 10 million hectares, or 23 percent, is currently being farmed, leaving more than 30 million hectares available to produce food for the people of Tanzania and, eventually, the rest of Africa. Right now, due to the lack of access to modern farming methods, inputs, tools, equipment and storage facilities, Tanzanian farmers struggle to consistently provide food security for themselves and for Tanzania.

We believe that with today’s scientific knowledge and agricultural production capacity, it is unacceptable for anyone in Tanzania to risk going hungry, especially when we have so much underdeveloped fertile land available to grow food.

Our current plans are for Kigoma only, at Lugufu and at a second, smaller location near Basanza village.

As has been widely reported in the media, we have had discussions with our government about developing farms at Katumba and Mishamo in the future. We engaged in those discussions with assurances from our government that, based on agreements reached between Tanzania, Burundi and the UN High Commission for Refugees (UNHCR), the refugee camps at those locations were already in the process of being closed and the refugees resettled.

Understandably, with the camps closed, our government wanted to restore the land, which has been depleted by decades of use, to a more productive state once the refugees were resettled. However, that process has been delayed at Katumba and Mishamo and, while we have an open memorandum of understanding in place, we have halted active development efforts for those sites until the situation is resolved.

The decision and the process for relocating the refugees was developed, and is being implemented, based on agreements reached among the Tanzanian and Burundian governments and the UN Refugee Agency (UNHCR). These decisions were made publicly and widely reported. AgriSol was not involved in these negotiations and did not encourage the resettlement of the refugees in any way.

Importantly, the decision to repatriate those who wanted to return to Burundi and naturalize those who wanted to become citizens of Tanzania was made before AgriSol ever became involved. AgriSol has never contemplated developing land inhabited by refugees, nor would we ever force refugees from their homes.

Yes. Small farmer and outgrower programs are an integral part of our overall project. We will provide local farmers with training in modern agricultural techniques and help them with access to modern inputs (seeds, nutrients, crop protection), tools and equipment. We will also help them secure micro-financing loans from various micro-finance institutions in the country.

We will build and make available storage systems so less small farmer crops spoil. We also will work to establish fair and transparent markets for crops and other agricultural products produced by our neighboring farmers, and increase access to local, regional, national and international market information so that they can make informed decisions about how to manage their farms.

Our programs will support and encourage small farmers and outgrowers, whose crops can be combined with ours, to produce value-added products including animal feed, cooking oil and meat. In this way, they can share in the benefit of the value-added products we produce.

The small farmer, outgrower and community development programs will be funded by income from our farms. This is a critical difference from typical extension programs, which depend on donors. With these programs, once funding ends, the programs frequently fail because they are not self-sustaining. Instead, we believe that combining a commercial enterprise with an extension program helps guarantee the program’s funding and long-term viability. Kilombero Sugar, for example, has had such a program in place successfully in Morogoro for many years.

To design the small farmer, outgrower and community development programs, we consulted with agricultural experts from Sokoine University of Agriculture, the leading agricultural institution in our country, as well as local and national officials from our government and others, in a process led by experts from The College of Agriculture and Life Sciences at Iowa State University, one of the worlds’ leading agricultural institutions. Going forward, we will continue to work with leading agricultural academic institutions in Tanzania, the U.S. and globally to advise us on the small farmer, outgrower and community development elements of the project.

Yes, small farmers will be consulted during the next phase of our project’s development. We have just completed our feasibility analysis and preliminary planning, which included a series of listening sessions and a workshop led by us, to solicit local input from political, university and technical leaders at the national, regional and district levels. Twelve key needs were identified by our fellow Tanzanians at that workshop and will be incorporated into our program.

This process has helped us clarify where and when the project might begin. With those clarifications, we will now proceed to the next phase of the planning process, during which we will meet directly with smallholder farmers, outgrowers and rural community leaders, in addition to local government officials to discuss the design of our small farmer, outgrower and community development programs and their participation in them.

We recognize that our project is dependent on the support of many different people – not just farmers, but local businesses and the community at large – so we will create community development trust funds to help build community centers, medical clinics, schools, water purification systems, power generation and other infrastructure projects identified by the community. We know that if the communities in which we operate are healthy and productive, our project will have a much greater chance of success.

Our project will produce a broad range of agricultural, economic, infrastructure and societal benefits for Tanzanians, including:

1. Training in modern farming methods and technology;
2. Increased access to modern inputs (seeds, nutrients, crop protection), tools and equipment;
3. Significantly increased crop production, resulting in enhanced food security, and the ability to increase local production of animal feed, cooking oil and protein-rich meats;
4. Increased access to modern food storage facilities, which will prevent waste and spoilage;
5. Creation of fair, open and transparent markets for local agricultural products, and increased access to pricing and market information;
6. Increased access to micro-financing and other types of credit for small farmers and outgrowers;
7. Infrastructure development – roads, electricity, water;
8. Community development programs to provide funds for community centers, medical clinics, schools, water purification systems, power generation and other local infrastructure projects;
9. Increased income for small farmers, decreasing food costs for ordinary consumers, and improved health for children; and
10. Thousands of direct and indirect jobs for our fellow Tanzanians, and the development of ancillary local business.

Yes. Jobs will be developed in numerous places:

1. On our large-scale commercial farms;
2. On the small farms and with the outgrowers as they expand their operations;
3. In the markets that will be developed for selling our crops, and those of others, as well as value-added products;
4. In the infrastructure development that will take place on our farm and in the surrounding areas and communities – roads, electricity, wells, storage, etc.– and which will also have to be maintained;
5. In the various suppliers of goods and services that will be needed to support our commercial operations and the surrounding, growing agricultural zone; and
6. In the community centers, medical clinics and schools that will be developed in local communities.

Recent experience in Brazil provides a real-world example of how modern agriculture can benefit local farmers. There, under a government very concerned about preserving local jobs, modern agriculture has been a driving force to upgrade the labor force, provide training and produce better and safer jobs. For example, the government has enacted legislation banning the use of certain aspects of manual labor in sugar cane production, and supported training workers to use modern techniques and equipment, with the end result that the existing labor force is learning new skills and thereby is able to manage larger farms, increase crop production and decrease dangerous work and injuries.

No, we will be leasing the land from the government. While a final price has not yet been agreed to, we believe the terms and conditions will be fair and competitive, and will result in major, long-term benefits to the people of Kigoma first of all, and to other Tanzanians as well.

We are negotiating directly with the government in an open and transparent manner. AgriSol’s cost for leasing the land from our government involves several components:

1. Actual rent for the land;
2. A major investment in land improvements, farming and processing equipment and infrastructure necessary for the project;
3. A major investment in small farmer, outgrower and community development programs; and
4. Taxes that we will pay to our local and national governments each year.

First, our primary objective is to produce crops that serve the demands of local markets. We will work with our government and private businesses to develop and expand local markets and improve food distribution within the country to make sure that this happens.

Second, we also believe there is a very good business opportunity here, for us and for local farmers, and that there is a profitable market for the products we will produce. This will, in turn, demonstrate to others that Tanzania is an attractive investment destination.

Our research indicates that, based on the distance from our farms in Kigoma to Tanzania’s main ocean ports and the country’s current road and rail infrastructure, the cost of transportation to global markets is prohibitive, and therefore it is only feasible to sell our products locally and in neighboring countries at this time.

As infrastructure and logistics improve that picture may change, but our business model rests on selling products from Kigoma locally, to the rest of Tanzania and in neighboring countries. Therefore, our plan is to meet Tanzania’s demand, then sell surplus crops and value-added products in adjacent regional markets.

No. Ethanol production is not in the plans for our project in Kigoma because we believe the real economic opportunity in Tanzania is in cooking oil and meats. Our objective is to create large-scale agriculture zones that help stabilize local food supplies, create jobs and economic opportunity for local populations. Our intention is that our crops will be used to help Tanzania achieve long-term food security and to produce quality cooking oils and meats to improve the country’s well documented protein deficiency and overall nutrition.

As crop production increases over time, excess crops that are not needed for valued-added food products could become available for other uses. Depending on the crop produced, they may be used as feedstock for biofuels production or power generation, in addition to a variety of other options.

But such discussions and decisions are well into the future, and will be undertaken with the Tanzanian government and other local stakeholders if and when appropriate.

We anticipate starting our farming activities and small farmer, outgrower and community development programs in Kigoma in 2012. It will take several years for the project to be fully implemented. Agricultural projects require many years to reach their full potential and AgriSol Energy is a long-term investor.

We forecast that it will cost more than US $100 million over the next 10 years to develop our farms in Kigoma fully.