Olam plans to go big on Africa coffee plantations

Olam, which says it is the biggest originator of African coffee, has a network of 2.8 million smallholders in 24 African countries involved in cocoa, cotton, nuts and sesame, among others.
Olam, which says it is the biggest originator of African coffee, has a network of 2.8 million smallholders in 24 African countries involved in cocoa, cotton, nuts and sesame, among others.PHOTO: OLAM INTERNATIONAL

It aims to more than double plantation space to 5,000ha from current 2,200ha

KAMPALA • Olam International, a commodity trader controlled by investment company Temasek Holdings, plans to more than double coffee-plantation space in Africa to improve quality control there.

The company, 51.4 per cent held by Temasek, targets total African coffee farmland at 5,000ha, up from 2,200ha already planted in Zambia and Tanzania, Mr Deepak Kaul, senior vice-president for coffee, said by e-mail in response to questions.

In Zambia, where Olam already has 1,200ha planted, it plans to increase estates to 2,700ha through its subsidiary, Northern Coffee, one of the biggest large-scale producers in Africa, Mr Kaul said without providing a timeframe. "As Africa is a central part of our business, we are committed to investing and expanding on the continent," he said. Customers increasingly want "single-estate, certified and traceable coffees".

The company's farms are in their early phases of development, with planting going on and limited production so far, he said. Its Zambian unit started exports to Japan last month.

Olam, which says it is the biggest originator of African coffee, has a network of 2.8 million smallholders in 24 African countries involved in cocoa, cotton, nuts and sesame, among others.

"With capabilities ranging from plantations to distribution and marketing, we maintain very good control over the flow and quality of the coffee we procure," Mr Kaul said.

"We are also actively involved in sustainability programmes that support the development of local coffee communities while protecting the environment."

Africa produces around 10 per cent of global coffee supply, according to the United States Department of Agriculture.

Olam chief executive Sunny Verghese had said last week that the company is ready to deploy almost US$2 billion (S$2.85 billion) on acquisitions to take advantage of slumping agricultural commodity prices.

While Olam is not a household name, it ranks among the top food-commodity traders, particularly in cocoa, nuts, wheat and rice.

The trader says that one in eight of all chocolate bars eaten around the world is made from beans that it handles.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 29, 2015, with the headline 'Olam plans to go big on Africa coffee plantations'. Print Edition | Subscribe