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19 May 2012 | Kamalpreet Badasha
Drinks company Diageo is to invest in $1.5 million (£940,000) in a barley-farming project in Ethiopia and $2 million (£1.26 million) in a sorghum project in Tanzania.
The announcement was made this week at the Symposium on Global Agriculture and Food Security in Washington DC, US. The drinks company, which is behind brands including Baileys, Smirnoff and Guinness, has signed letters of intent to begin the projects this year.
In Ethiopia, Diageo will build a public-private-partnership with the Ethiopian Agricultural Transformation Agency. The aim is to source 1,000 metric tons (MT) of barley from local smallholders, landowners whose plots are smaller than a farm, during the first year. The project is scalable, which means that the aim is to increase capacity by sourcing up to 20,000 MT of barley in future.
In the case of sorghum – a grass from which syrup is made – the project will see Diageo collaborate with the Government of Tanzania to scale-up sorghum cultivation and sourcing. The aim is to produce up to a potential 20,000 MT per year of sorghum by 2016. Local smallholders will work together with larger farms to develop and share sustainable cultivation and post-harvest practices of sorghum.
Diageo sees the investment as a way of providing a secure source of raw materials while reducing exposure to unpredictable global commodity markets. It currently sources about 50 per cent of its raw materials locally in Africa and aims to increase this to 70 per cent.
Diageo Africa president Nick Blazquez said: “As our largest emerging market region, Diageo has invested more than $1.5 billion (£94 million) in Africa over the past five years. Supporting local agricultural development is not only a good thing for local economies, but is a crucial component of Diageo's growth strategy in Africa.”