THE HABIT OF WATER

Zambia 2017 | AGRICULTURE | B2B

With 60% of southern Africa's freshwater and a taste for tilapia, aquaculture in Zambia holds relatively unexplored potential.

Bryan McCoy
BRYAN MCCOY
CEO
Yalelo
Adam Taylor
ADAM TAYLOR
Managing Partner
Oakfield Holdings

Can you tell us about the inception and development of Yalelo in the Zambian market?

Bryan McCoy Yalelo commenced operations in 2013, and in five years has grown to become the largest fish producer in Africa. Zambia and several of its neighbors have a strong cultural affinity for fish, particularly tilapia, but local wild-capture supply has been depleted due to years of overfishing in lakes and rivers. This presented a commercial and social impact opportunity for Oakfield Holdings, Yalelo's majority shareholder, to establish a sustainable fish farm. It has been necessary to develop an integrated business model due to underdevelopment of the aquaculture value-chain in the region, including a hatchery, primary production, processing, distribution, and retail. As an example of strengthening the value-chain we recently partnered with Danish firm Aller Aqua to construct Sub-Saharan Africa's largest aquafeed factory. We received environmental permits in 2016 to increase production to 30,000 tons and are in the final stages of planning a significant increase in production for the second half of 2017. Thereafter, we expect to increase volumes by around 50% per annum.

How did the partnership between Yalelo and Aller Aqua come about?

Adam Taylor Oakfield Holdings, the majority owner of Yalelo, realized that securing large volumes of high-quality fish feed was critical for its medium- and long-term aquaculture growth strategy. If it takes 1.5kg of fish feed to produce 1kg of fish, that amounts to 45,000 tons of fish feed for Yalelo's 30,000 ton medium-term target for fish production. It was clear that the local fish feed industry was not growing in line with our requirements. Oakfield has a proven ability to execute within the Zambian operating environment, particularly in terms of implementing international best-practice operations and project management. However, we do not have experience in fish feed production and, therefore, felt that a partnership would give the best chance of success. We found Aller Aqua to be an ideal match: the firm is one of Europe's leading fish feed producers and its board already saw the opportunities of long-term African economic growth, including demand for affordable protein in Southern Africa. In October 2015 we formalized the partnership and have proceeded quickly, with first commercial production from the Zambian plant on schedule for August 2017.

What is the makeup of your distribution?

BM The majority of our distribution remains within Zambia due to the large latent demand; however, we do export to DRC and Malawi and anticipate that exports will lead volume growth on a medium-term horizon. To expand our geographic reach on the continent while remaining price competitive, we expect to establish an additional farm further afield in the next one to two years. Within the Southern African region there is significant room for further expansion of the production operation on Lake Kariba, and we are proceeding down that path.

What opportunity exists to support smallholder fish farmers within the region?

AT Smallholder fish farmers present significant commercial and social impact opportunity. We believe any scalable solution must be commercially viable. Smallholder farmers are a large potential market for fish feed from Aller Aqua and for fingerlings sales from Yalelo. Yalelo already works with local smallholder farms in the Siavonga area, providing the necessary inputs and then purchasing the fish upon harvest. This enables smallholders to focus on fish farming without needing to worry about breeding, cold-chain distribution, and market access. We intend to leverage Aller Aqua's significant experience in smallholder extension services in Egypt, where the firm sells approximately 75,000 tons of tilapia feed per year to small- and mid-sized farms.

BM If Zambia continues to expand in this sector as it has done of late, then in the next five years there is potential for significant exports of fish from Zambia into regional markets. The aquaculture sector in Zambia is still small today but growing rapidly, and Yalelo is the fastest-growing aquaculture business in Africa. Given that the two most advanced fish feed plants in Sub-Saharan Africa will both open in 2017 in Zambia, it appears the requirements for a strong sector are falling into place. We also see significant demand in neighboring countries, meaning there is a receptive market for this increased production, too. From a foreign exchange perspective, the net effect of this fish movement will have a positive impact on the Zambian economy. This drive is very much a combination of the efforts of the government and the private sector. The Zambian government enthusiastically supports the development of aquaculture. Even President Lungu himself has established fish ponds at State House. The private sector has identified a market in Zambia for fresh fish, and as long as the government continues to create an investment-friendly environment, the aquaculture sector will grow as a result.