Land O’Lakes, a U.S. agricultural cooperative that is one of the country’s largest producers of butter and cheese, has bought a majority stake in South African farm chemicals company Villa Crop Protection — its first commercial investment in Africa.
Land O’Lakes now owns a 52.5-percent in Villa Crop, a Johannesburg company that’s the market leader in South African’s crop protection chemicals industry, according to Land O’Lakes CEO Chris Policinski, BusinessJournals reports. Land O’Lakes officials did not disclose terms of the deal.
Land O’Lakes is no stranger to Africa. It has done nonprofit aid work on the continent for decades building food infrastructure, Policinski said.
The company has worked in conjunction with U.S. government funding, but not in an ownership role, StarTribune reported.
Land O’ Lakes has aid programs, advising farmers in Ethiopia, Kenya, Liberia, Madagascar, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe, according to its website.
“In the developing world, there are only a handful of vertically integrated cooperatives operating as independent businesses that are not closely tied to the government,” the company said on its website. With funding from the U.S. Agency for International Development (USAID) Cooperative Development Program, Land O’Lakes examined dairy cooperatives in Kenya and Uganda to understand how these businesses evolved. More recently, it said efforts have been scaled up in Rwanda and Ethiopia.
“Africa is emerging and we think this is a great growth opportunity for agriculture,” Policinski said. African countries “have growing economies and an emerging middle class. Medium- to long-term it’s going to be very attractive place to do business. South Africa is a great first step since it’s the most developed economy and agricultural marketplace.”
Villa Crop Protection reported $150 million in sales in 2014. Its product portfolio and staff complement Land O’Lakes’ crop and seed chemical protection business, Winfield US, which was formed by a recent merger with Ames, Iowa-based United Suppliers Inc, BusinessJournals reports.
Land O’Lakes plans to use Villa’s offices as its African headquarters while it grows in Africa grows, Policinski said.
The company plans more deals to capitalize on Africa’s agricultural potential, Bloomberg reported.
The South African investment “is a platform to drive northward into more markets, and we’ll use our general knowledge of what countries are ready and what farmers ready for what services,” Policinski told Bloomberg. “It’s the next step of development.”
Land O’Lakes had 2014 sales of $15 billion, according to StarTribune. The co-op ranked No. 3 on the National Cooperative Bank Co-op 100 list. In addition to dairy, it’s known for other consumer foods, Purina animal nutrition and farmer production services. Villa Crop Protection will become part of the co-op’s WinField Solutions division, which reported annual sales of $4.9 billion in 2014.
The new partnership will bring products and expertise from WinField to complement the farm chemical formulations that Villa Crop Protection has developed, registered and sold in South Africa.
The Land O’Lakes investment will enhance Villa’s capabilities and complement its products to help meet local growers’ needs, said Andre Schreuder, managing director of Villa Crop Protection, in a statement.
In addition to chemicals for South African farmers, Villa Crop Protection operates Villa Academy Training Institute, training producers and salespeople one how to use farm chemicals to optimize crop production.
Villa owns Fountain Chemicals, a product formulation factory between Johannesburg and Pretoria, and a warehouse outside Cape Town.
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