Illovo in diversification drive, targets soya, cotton

Malawi Stock exchange-listed (MSE) Illovo Sugar (Malawi) plc on Monday outlined its strategic plans that will drive the expansion agenda for the local sugar manufacturer in the near future.

Speaking in an interview on the sidelines of an investors meeting in Blantyre, Illovo Sugar (Malawi) plc managing director Lekani Katandula said high on the agenda is the diversification of its crop production.

He said the idea is to grow its footprint in the agriculture space to complement what the government is looking for in setting up anchor farms with value-addition.

Said Katandula: “We are exploring various opportunities, including testing to grow at small-scale different crops to see what could be technically viable in our estates. Thereafter, we will expand production of whatever we choose dependent on the trials we are running for different crops, including cotton and soya.

“Dependent on the crops which turn out to be good and viable for the locations of our estates and the viability of the value-addition that we can do, the sizes of the markets in those areas, in the next year or so, we can get to a point where we are more definitive on what alternative crops we are going into and how we are scaling up in coming years.”  

He was, however, quick to mention that the company has not developed much in that space as such investment in those areas will depend on the size of the opportunity. 

Katandula said the company is also exploring opportunities to grow in terms of how much power it produces. 

“Today, we produce electricity to run part of our machines in Nchalo and Dwangwa and we would like to make enough not only to run our two factories, but also run all our agricultural needs and even feed some to the national grid.

“If all goes well, we could get to a point where instead of taking 20 megawatts (MW) from the grid from Nchalo and Dwangwa, we could be giving into the grid 30 MW,” he said.

Meanwhile, in the half-year period ended February 28, Illovo posted a K33.7 billion profit up from the K9.2 billion reported for the same period last year.

In his explanation of the profit jump, Katandula said the performance reflects the many initiatives the company is undertaking to become much more market and consumer-centric.

Illovo Sugar (Malawi) plc is the country’s biggest sugar manufacturer and annually cultivates around 1.8 million metric tonness (MT)of cane from its two estates in Dwangwa, Nkhotakota and Nchalo in Chikwawa, employing about 9 500 people.

This is supplemented by approximately 350 000 MT produced by Malawian smallholder farmers.