FARLAND INVESTMENT LIMITED

COMMERCIAL AGRICULTURE

KOLIR RICE PROJECT

UGANDA

An Opportunityfor

INVESTMENT

Project Location:

Kolir Sub County of Bukedea District,Uganda

Project Partners under a JVA:

JVC: FARLAND AGRO (U) LIMITED

JVC – Partners:

FARLAND INVESTMENT LIMITED

RHM FOODS (U) LIMITED

KOLIR SUB-COUNTY of BUKEDEA DISTRICT

The Project:

• Establish Commercial Agriculture in Kolir Sub Country.

• Bring 60,000 hectare of land in use for commercial farming for Rice production.

• 10,000 hectare of land being brought into productive farming in Phase -1.

Project Goals: Phase-1

1. Produce 90,000 MT of paddy per year.2. Export 43,400MT milled Rice with good value addition.3. Contribute to world food security and social stability.4. Create jobs for local community and foreign skilled workers.5. Develop farming & value addition infrastructures.6. Support small out-growers with knowledge and skills.7. Provide micro finance support to farmers.8. Increase productivity through better seeds and mechanised farming.9. Reduce costs of production through better management of resources.10. Maximise profit through reducing waste and improved efficiency.11. Implement sustainable environment management practices.12. Become East Africa’s largest commercial Rice grower in 10 years.13. Pay better dividends to investors.

Rice in the global market

• Staple food for 50% of world population

• In 2009, global production and global consumption estimated at 440 million tons milled rice (659 MMT of tons paddy)

• Thin and residual global market (29.8 million tons)– 7% of world production

traded• Global stocks at : 90 MMT (75

million MMT in 2007)Source USDA 2010

1960/61

1961/62

1962/63

1963/64

1964/65

1965/66

1966/67

1967/68

1968/69

1969/70

1970/71

1971/72

1972/73

1973/74

1974/75

1975/76

1976/77

1977/78

1978/79

1979/80

1980/81

1981/82

1982/83

1983/84

1984/85

1985/86

1986/87

1987/88

1988/89

1989/90

1990/91

1991/92

1992/93

1993/94

1994/95

1995/96

1996/97

1997/98

1998/99

1999/00

2000/01

2001/02

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

120

170

220

270

320

370

420

470

World Production MTConsumption MT

World trade in rice is about 30 million tons

Major exporters are:• Thailand, • Vietnam, • United States, • India and • Pakistan

Rice importers are:• Indonesia, • Brazil, • Iraq, • Philippines, • Bangladesh and • the Arab world

RICE IN BANGLADESH:• Rice is the lifeblood of Bangladesh• producing about 25.0 million tons (for 140

million people)• 2.3 million people being added each year to its

population• require about 27.26 million tons (2020)• 18 percent of the Gross Domestic Product (GDP)• providing about 70 percent of an average

citizen's total calorie intake• rice area totals about 10 million ha• 93 percent of the total area planted to cereals• farm size has declined from 1.43 ha in 1961 to

0.87 ha in 1994• average rice yield remains low at about 2.7 t/ha

(some growth was achieved during recent years)

ASIA:• In Asia, total annual rice

production must increase by 60 percent.

• 3 billion people in Asia• Production at above 420 million

tons a year• 100 million additional mouths

have been added since 2005• Prices shot up 30 percent (2005 to

2007) and 40 percent since 2008• 4 percent sustained growth in

agriculture is needed

A Demand Analogy

High volatility of international rice prices but upward trend projected

Source: OSIRIZ/InfoArroz,CIRAD

•Impressive surge in prices in 2008 followed by a fall just as spectacular. Prices still remain high.• The FAO all-rice index (2002-

2004=100) more than double between 2005 and 2010 from 125 to 260.

• In Nov 2010 prices for ThaiA1Super and Thai 100 USD/t are 480 USD/t and 550 USD/t

•The variability (CV) of Thai100 up from 15% in 1990s to more than 50% in 2000-10

•Global rice prices are projected to increase by 2.5 to 3% every year until 2017 (USDA, 2008)

Increasing Importance of Rice in SSA

2011 AfricaRice Science Week and GRiSP-Africa Science Forum

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

02000400060008000

1000012000140001600018000

0

0.5

1

1.5

2

2.5

Figure1: Total paddy production, area harvested, paddy yield, import of milled rice, and arable land per agricultural population

in SSA

Import Quantity (1000 tonnes)

Area Harvested (1000 Ha)

Total paddy production (1000 tonnes)

Paddy yield (t/ha)

Arable land per agricultural population

Year

(000

t, 00

0 ha

)

(t/ha

, ha/

pers

on)

Regional analysis

Country 1970’s 1980’s 1990’s 2001-2005

Kenya 24.56 30.19 31.58 32.39

Tanzania 184.05 329.54 446.29 456.97

Uganda 12.4 17.29 54.47 85.76

East Africa 1613.6 1880.5 2245.2 2598.8

2011 AfricaRice Science Week and GRiSP-Africa Science Forum12-16 September 2011

Average milled rice production (000t)

Country Yield Area Production

Kenya 3.66 4.02 7.83

Tanzania 14.03 -1.57 12.24

Uganda -1.41 7.67 6.15

East Africa 6.73 0.45 7.21

Growth rates (%) of Yield, Area and Production (2001-2005)

Research Days 2010, 29 Nov-2 Dec 2010

Country 1980’s 1990’s 2001-2005

Kenya -0.02 3.12 31.58

Tanzania 9.13 5.65 -1.19

Uganda 4.44 13.55 5.04

East Africa 1.38 3.79 2.66

Country 1980’s 1990’s 2001-2005

Kenya 0.98 0.42 0.16

Tanzania 0.94 10.3 0.86

Uganda 0.85 0.95 0.76

East Africa 1.03 1.04 0.93

Growth rate of consumption (%) Self sufficiency ratios

Where we are today!

• 10,000 hectare of farmland – leased for 49 years with automatic right to renew at the end. (Oct 2011)

• Testing seeds for cultivation – in collaboration with JICA & NAADS and Ministry of Agriculture of Uganda. (Dec 2011)

• Planned to cultivate 405 hectare, for rice growing from March 2012.

PHASE-1

Phase-1: Total Project Cost

Land Cost

Land Dev

elopmen

t

Construction W

orks

Machinery

& Equipmen

ts

Electr

ical Eq

uipments

Industrial

Vehicle

Other Eq

uipments

Transport v

ehicle

s

Office eq

uipments

Furnitu

re an

d fixtures

Regulat

ory ex

penses

Deposit

for supply

utility

Other co

sts

Manpower

for projec

t exec

ution

Pre-opera

tional exp

enditu

reIDCP

Working C

apita

l

Total

Inves

tmen

t with

IDCP

Total

Inves

tmen

t with

out IDCP

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

Investment Cost of the Project Cost

Investment Cost of the Project Cost

With IDC $21.7 M

Without IDC $20.4M

(in 000, US$)

Thousand MT

@ 30.00 Thousand

US$

Thousand MT

@ 500.00 Thousand

US$

Thousand MT

@ 0.00 Thousand

US$

Thousand US$

Husk Milled Rice ?? Gross Revenue

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

21.38 641.52 43.42

21,708.00

0.00 0.00

22,349.52

21.38 641.52 43.42

21,708.00

0.00 0.00

22,349.52

Estimated Annual Output

Estimated Annual Output Average

(in 000, US$)

Product CostItem Year 1 Average

Crop Total Production Cost 12,600.00 12,600.00Operating Cost 2,562.83 2,933.99Direct Material Cost 15,162.83 15,533.99Repair and Maintenance Cost 300.37 363.62Depreciation Cost 1,565.20 875.74Cost of Goods Sold 17,028.39 16,773.36Administrative Costs 331.76 370.99Financial Expenses 773.05 -21.34Total Expenses Before Tax 18,133.20 17,123.01Cost per Thousand MT of Husk 24.34 22.98Cost per Thousand MT of Milled Rice 405.67 383.07

(in 000, US$)

4,216.32

5,226.51

4,216.32

5,226.51

Estimated ProfitNet income - before tax Net profit - after tax

1st Year Average

5 years Tax Holiday assumed in the calculations

(in 000, US$)

IRR NPV @ 7% Payback Period ROI BEP in capacity utilization

0.32

34,219.04

4.00 0.21 0.56

Base Case ScenarioSeries1

(in 000, US$)

Farland Agro (U) Ltd. Kolir Rice ProjectAmount is Set to Thousand of US$

Investment Cost of the Project Estimated Annual OutputItem Cost Item Unit Year 1 Average

Land Cost 0.00 Husk Thousand MT 21.38 21.38Land Development 1,000.00 @ 30.00 Thousand US$ 641.52 641.52Construction Works 1,033.00

Milled RiceThousand MT 43.42 43.42

Machinery & Equipments 3,420.00 @ 500.00 Thousand US$ 21,708.00 21,708.00

Electrical Equipment 500.00 ?? Thousand MT 0.00 0.00Industrial Vehicle 12,500.00 @ 0.00 Thousand US$ 0.00 0.00Other Equipment 515.00 Gross Revenue Thousand US$ 22,349.52 22,349.52Transport vehicles 165.00Office equipment 10.00 Product CostFurniture and fixtures 20.00 Item Year 1 AverageRegulatory expenses 27.10 Crop Total Production Cost 12,600.00 12,600.00Deposit for supply utility 1.00 Operating Cost 2,562.83 2,933.99Other costs 75.00 Direct Material Cost 15,162.83 15,533.99Manpower for project execution 138.00 Repair and Maintenance Cost 300.37 363.62Pre-operational expenditure 165.00 Depreciation Cost 1,565.20 875.74IDCP 821.90 Cost of Goods Sold 17,028.39 16,773.36Working Capital 1,316.25 Administrative Costs 331.76 370.99Total Investment with IDCP 21,707.25 Financial Expenses 773.05 -21.34Total Investment without IDCP 20,391.00 Total Expenses Before Tax 18,133.20 17,123.01

Cost per Thousand MT of Husk 24.34 22.98Scenario Base case scenario Cost per Thousand MT of Milled Rice 405.67 383.07

IRR 32.03%NPV @ 7% 34,219.04

Payback Period 4.00 Net income - before tax 4,216.32 5,226.51ROI 20.63% Net profit - after tax 4,216.32 5,226.51

BEP in capacity utilization 56.42%

Events 2011 2012 2013 2014 2015

JVC Formed August

JVA Oct

NEMA Dec

SURVEY Feb

SEED TEST Dec

POP Dec

Land Dev March (1,000h) 2,000h 5,000h 10,000h

Finance Jan

Purchases Feb

Project Implementation Plan

Thank you!