In 1991 the world was changing.
The US army was busy launching its Desert Storm combat operations in Iraq and Kuwait as the Gulf War escalated. It was the year when countries such as Ukraine, Belarus, Georgia, Kazakhstan, Estonia and Latvia all emerged to claim independence one by one.
By the end of the year, the Soviet Union ceased to exist, as Boris Yeltsin became the first democratically elected president of Russia.
The wave of nationalism sweeping across eastern Europe saw Croatia and Slovenia declare independence from Yugoslavia, ultimately leading to its collapse.
The German parliament voted to move the seat of the German capital back to the city of Berlin and thereby completed the process of reunification started a year earlier. In South America, the Mercosur trading bloc was first established, as Argentina, Brazil, Uruguay and Paraguay signed the treaty of Asunción.
In India, the ambitious Narasimha Rao was elected as the country’s new prime minister and immediately set about a process of economic liberalisation in India for the first time since its independence.
It was the year when the last legal threads of apartheid were unwound from South African law after Nelson Mandela was released from prison less than 12 months earlier. 1991 also saw Tim Berners-Lee create the world’s first website, at the same time as Starbucks opened the doors of its very first coffee outlet in Seattle.
But 1991 was also the year when Limerick native Francis Grogan, at the age of 30, touched down in the Zambian capital of Lusaka for the very first time. And just like the change that was happening in the rest of the world, Zambia was about to experience a major upheaval that would set the country on a new path of economic change. Little did he know it at the time, but it was also going to take the young Francis Grogan down a road he is still travelling to this day.
Over the years Zambeef has helped to formalise the retail trade in Zambia.
After gaining independence from Britain in 1964, the people of Zambia knew only single-party rule for 27 years. However, in October 1991, Zambia held its first free elections and a new party called the Movement for Multiparty Democracy (MMD) swept to power in a landslide win. Prior to this, the single-party government had controlled virtually everything in a socialist-style state. But the newly elected government embraced free trade for the first time and begun the process of liberalising the Zambian economy.
Back when I came to Zambia in 1991, the one-party state was removed in a landslide election by the MMD
This new government embraced free markets and free trade and abandoned the socialist approach of the previous government,” says Grogan, who found himself in Zambia after applying for a job he read in an Irish newspaper.
“The government owned absolutely everything. They owned all the meat factories, the supermarkets, the bus companies, the railways, farms, flour mills and bakeries. Everything was owned and run by the government and, as a result, it was highly inefficient and run down due to lack of investment.”
Unsurprisingly, the decision by Zambia’s newly elected government in 1991 to liberalise the economy and begin the process of selling off these state assets led to huge structural changes in Zambia. The biggest shock to Zambia’s economy was the privatisation of the country’s mining sector, which was by far the biggest employer. Grogan says the country was very poor at this time, with thousands losing their jobs.
“The government made some brave decisions when it abolished exchange controls and sold off a whole pile of state-owned enterprises,” he says. But it was from this programme of economic liberalisation that Grogan made his first break in Zambia when he, along with his business partner Carl Irwin, grabbed an opportunity to lease a small abattoir and processing plant, as well as opening retail outlets around the capital city of Lusaka.
“We opened butcheries all over Lusaka, delivering the meat in old landrovers. We formalised what was previously a highly informal business where meat was sold in unhygienic, open air markets,” says Grogan.
From this relatively small start in retailing, Irwin and Grogan would build a business known as Zambeef with an annual turnover of $220m. The vertically integrated company has operations today in grain handling, dairy, beef, pork and poultry processing, as well as a retail footprint spread among more than 170 stores, with over 30 of these located in Nigeria and Ghana.
“By 1995 we had 10 retail outlets. The same year, South African retail giant Shoprite acquired seven newly privatised former government supermarkets in Zambia and we got the franchise to run their meat markets or butchery counters,” he adds. Since then, Shoprite has expanded its chain in Zambia to 30 supermarkets with another 30 located in Nigeria and Ghana. The retailer has continued its partnership with Zambeef throughout this expansion phase helping the company to broaden its footprint on the African continent.
Outside of the state and the mining industry, Zambeef is the largest employer in Zambia with over 6,000 staff.
Although starting out in retail, Grogan and Irwin kept branching out into new areas as opportunities arose. They quickly realised that many of the primary food processors in the country were struggling, as they had no real route to market through supermarkets or foodservice like you might see in a developed country. In Zambia in the early 1990s, the food market was dominated by informal trading, with street merchants selling one or two chickens, for example.
This lack of route to market gave Grogan and Irwin the opportunity to acquire or construct beef abattoirs in cattle producing areas of Zambia in the early years of the business. This gave the business a processing footprint along with a route to market through their retail business, which was ever-growing.
“In Africa, the trading was very traditional. But we managed to formalise it and actually started supplying the informal side of the market too. We became the biggest meat slaughterer in the country and we were selling a lot of beef and chicken to the informal sector. So we’ve integrated ourselves very well into the local market in Zambia,” says Grogan.
Over the years, more and more opportunities arose for Zambeef and it spread its wings into everything from oilseed processing to dairy to poultry production. Today, the company processes about 100,000 head of cattle, 100,000 pigs and over 11m chickens per year. Zambeef also takes in close to 7.5m litres of milk annually for processing into milk powders, spreads, cheeses and yoghurt.
The business has one of the largest cropping operations in Africa, with 50,000 acres planted annually in maize, wheat and soya bean. The raw material from these crops is used to produce the 170,000t of animal feed Zambeef sells annually. However, it has not all been plain sailing, according to Grogan.
“We’ve been in the trenches here in Zambia for 25 years and that’s a long time. It’s very different from being in the trenches in Dublin, London or Chicago or wherever you are,” he says.
“I found it extremely primitive when we first arrived here, but now we’ve brought the standards right up. If you went into one of our shops now they have standards as high as any country in western Europe. We brought first-world standards to retailing in Zambia.”
Food export hub
What’s clear from speaking to Grogan is that Zambia is a country with massive agricultural potential. With a population of just 15m people, the country is more than able to produce enough food to feed itself. It even exports a little to its neighbours.
But Grogan is much more ambitious than this. He sees Zambia with the potential to develop into a food production hub for southern Africa and export to all of its neighbouring countries (hence why it is often referred to as the mini-Brazil of Africa).
However, the majority of food imported by Zambia’s neighbouring countries is currently coming from places like South America and the Black Sea. Argentina, in particular, is a major exporter of soya beans, wheat, beef and chicken into the region.
“We see enormous opportunity here. Zambia has only 15m people, but surrounding us are 350m people. Zambia is self-sufficient in food, but a lot of the countries around us are not,” says Grogan.
“It’s ridiculous in this day and age that they are still importing vast quantities of wheat from the Black Sea and soya beans and chicken from South America. We’ve got the soils, the climate, the raw resources to become a food production hub for this region,” he adds.
When you think of agriculture in Africa, the lack of water often springs to mind as the greatest challenge. The opposite is the case in Zambia, with over 40% of the water in sub-Saharan Africa located there.
Not only is the country well-supplied with surface water from the many tributaries flowing into the Zambezi river, but Grogan says there is a lot of water in the ground. The biggest challenge for the country is building the infrastructure to access the water and redistribute it for farming needs.
There are hydroelectric dams built along the surface rivers in Zambia for harvesting water and electricity generation, but Grogan believes the number of dams could be increased 1,000% to harvest all of that water properly.
“There’s so much of that water that just washes down the Zambezi river and flows out into the Indian Ocean 2,000km away,” he says. However, while the water is there, building the infrastructure to maximise its potential is the difficulty.
“The Zambezi and Kafue rivers are massive rivers. However, you have to get power into them and you have to get roads there,” says Grogan. “It’s not just a matter of starting up your tractor to begin planting crops. You have to have massive infrastructure and it’s very expensive. But the opportunity to grow food is there and the opportunity to export that food is there.”
At present, Zambeef is operating irrigation systems on about 20,000 acres of land between three large farms. The irrigation system allows the group to double-crop every year on this land, with a winter wheat crop usually followed by soya bean in their hot summer period.
Grogan says the grass-legume alternation from wheat to soya means you could farm with this sort of rotation almost indefinitely given Zambia’s climate.
Agribusiness Report 2017: hurdling barriers at Ornua " target="_blank">Importance to the country’s food security
Zambeef has become such a major player in the agriculture sector of Zambia that it is now a critical part of the entire country’s food security. The company produces over 20% of Zambia’s wheat, 25% of its soya and accounts for about a third of its poultry production, as well as being the country’s largest pork and beef processor.
With more than 6,000 full-time staff, Grogan says the company is also the largest employer in Zambia outside the mining sector and the government. As such, the success of the company is almost intertwined with the success of Zambia as a country.
This growing importance in the economy of Zambia was one of the main reasons that Grogan and his team decided to float Zambeef on the stock market.
“We listed on the stock market in Lusaka in 2003 and then we listed on the AIM stock exchange in London in 2011. The reason for floating the company was down to a combination of things,” says Grogan.
“By 2003, Zambeef was becoming a very large and very visible company. We went on the Lusaka stock exchange and the NAPSA government pension scheme is now a very large shareholder in the company. It personalised the business and brought us enormous goodwill in Zambia,” he adds. Today, Zambeef is recognised as one of the country’s flagship companies, reflecting the importance of the business to Zambia’s food security.
The 2017Irish Farmers Journal/KPMG Agribusiness report entitled Agricultural Thinking: inside the minds of global agri leaders comes free with this week's Irish Farmers Journal.
Read more
Agribusiness report 2017: the cutting edge of change in New Zealand
The Irish Farmers Journal / KPMG Agribusiness Report 2017
Agribusiness Report 2017: hurdling barriers at Ornua
This is a subscriber-only article
SHARING OPTIONS: