- By Lynda Kiernan-Stone, Global AgInvesting Media
Land O’Lakes Pursues African Expansion with Bidco JV
Land O’Lakes has announced a joint venture with Kenya’s Bidco Africa for the formation of Bidco Land O’Lakes Ltd. – an entity created through the consolidation of the two companies' complementary animal feed portfolios.
Under the terms of the agreement both partners will hold a 50% stake in the operation, which will leverage Land O’Lakes’ leadership position within the sector against Bidco’s market knowledge and East African distribution networks.
Led by CEO Vimal Shah, Bidco is the largest manufacturer of edible oils in East and Central Africa and holds a 49% share of the edible oil market in Kenya. The group also manufacturers canola and other edible oils, detergents, soaps, and baking powder, bringing in over $500 million in annual revenues.
“This is an exciting new chapter for us, and will allow us to experience meaningful growth in the feed sector, while making a positive impact on local farmers,” Shah said in a statement. “Farmers in Kenya need access to critical resources like high quality feed, otherwise, their efforts will be both inefficient and ineffective.”
Agriculture accounts for 26% of Kenya’s total GDP and employs about 75% of the total population according to the Economic Review of Agriculture 2015 issued by Kenya’s Ministry of Agriculture, Livestock and Fisheries.
As a sub-sector, Kenya’s animal feed industry has seen steady significant growth in the ten years to 2014, according to the GAIN report, Kenya Animal Feed Situation 2014, published by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS). From a demand of 300,000 tons in 2008, demand for animal feed in Kenya has more than doubled to 650,000 tons by 2014. However, tight supplies of raw materials, a lack of industry-wide standardization and low-quality products have hindered the industry from reaching its potential.
In response to this void, Land O’Lakes plans to bring its proprietary products and its expertise in food and quality standards, which it employs through its animal nutrition business in the U.S. to the venture. The partnership is also planning for the future development of value added feed products and services for the market and its expansion to other African countries.
“This investment in Kenya presents an important and exciting opportunity to concurrently expand our international commercial footprint, while creating a meaningful opportunity for farmers across East Africa to access the high-quality feed they need to achieve profit-generating yields,” said Chris Policinski, president and CEO of Land O’Lakes, Inc.