Investments from Finfund to upgrade sustainable avocado farming in Tanzania

Local coffee farmers from Tanzania’s Kilimanjaro region have turned towards avocado farming as an alternative cash crop due to the diving costs of coffee.

Africado, a Tanzanian company that contracts commercial and local smallholder farmers, specializes in avocado farming and exporting. The company recently received a secured loan of EUR 2.5 million from Finnfund, a Finnish development finance company.Avocado farming provides the company’s employees and contracts farmers with higher and more secure income than coffee production.

Africado has begun to expand and develop its operations with the help of the new financing. For example, the company aims to expand its avocado plantations and the packing department’s operation. In addition, the company intends to diversify to other varieties of avocado and nuts.

“Finnfund’s funding of Africado has enabled Africado to pursue new investment opportunities. In expanding production areas and with the introduction of new avocado cultivars Africado will have a sustainable business to the economic benefit of the local community in terms of employment and development and nationally e.g. in terms of increasing export earnings,” says James Parsons, CEO of Africado.

For more than 100 years since its introduction by the Germans, avocados have been extensively grown for domestic household consumption in gardens and small farms within Kilimanjaro. The humid tropical climate in the area give perfect growing conditions where avocados thrive naturally yet an absence of markets and knowledge of commercial varieties has implied that avocado production has provided no economic value

Commercial production only started in 2007 when Africado acquainted Hass with Kilimanjaro at its very own plantations after which the company has worked closely with local smallholders training about good agricultural practices and providing market access.

At present, the outgrower program includes around 2000 local farmers, creating jobs and income for thousands of people in the area. For example, the company has received an international certification from GlobalGAP for safe and sustainable agricultural practices. In 2016, its outgrower programme also became G.A.P. Award winner as the second African company.

New development operations are expected to double the number of jobs and provide employment for women in particular. From the point of view of Siha and Tanzania as a whole, Africado promotes responsible agricultural and employment practices and generates export revenue, strengthening the country’s current balance of payments.

“We want to support the growth of Africado as well as strengthen the development of the whole area. It is important to promote responsible farming methods of avocados and other crops. With the help of Africado, the smallholders also get an important sales channel and opportunity to export their products,” says Jari Matero, Senior Investment Manager, Head of Agri and Forestry portfolio.

Agriculture is one of the focal areas of Finnfund, as developing countries greatly need agricultural production, but also because the sector has great potential. Most African farmers are smallholder farmers, many of whom produce crops of low value for personal and local consumption. It is often difficult to process and sell the crop forward. Therefore, the responsible development of agriculture and food production is key to sustainable development.