Sustainability Synopsis May 2014

KPL 5,000 ha rice farm Kilombero Valley, Tanzania

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Mission To Set the Standard for Sustainable Commercial

Agriculture in East Africa through:

– State of the Art Minimum-Impact Farming & Post-Harvest Processing

– Transformative Smallholder Technology

– Renewably Powered Operations

– Poverty Reduction in Areas of Chronic Underinvestment

– Boosting Food Security through Import Displacement

Agrica commenced its first project, KPL, in Tanzania in September 2008

www.agrica.com

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Self Sufficiency Farming in Africa is expensive.

Unlike the Americas and Asia, farm investments require:

• Research programs for:• High yielding seed

varieties• Pest and disease

control• Basic Infrastructure

usually not owned by farm:

• Drying facilities• Milling facilities• Storage facilities• Power generation

plants

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Irrigation Water-efficient irrigation is an important adaptation to climate

change in a drying world

Overhead center pivot irrigation, which requires 50% less water than flood, started with 215 ha in the 2011 dry season

The maximum average achievable rain-fed rice yield over the farm is 4 tons per ha vs. maximum irrigated yield achievable over the farm of 10 tons per ha

Irrigation allows 2.25 – 2.5 crops per year versus 1 rain-fed crop

3,000 ha of center pivot irrigation will require an investment of about $14 million

At full production, the farm will produce 50,000 tons of paddy (un-milled rice) and 6,000 tons of beans & pulses annually

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STRICTLY PRIVATE & CONFIDENTIAL

KPL has refurbished existing 320 kW North Korean hydro and is expanding the plant to 820 kW

KPL plans to construct three 500 kW gasifiers, which convert rice husk into syngas to power internal combustion engines

– Biomass gasification reduces GHG through diesel displacement and avoided methane emissions from degrading rice husk

– KPL is ordered its first 500kW gasifier in April 2014 following a DFID investment (thru AgDevCo) in KPL

Peak production demand of 3 MW will be met through a combination of hydro, biomass and solar, saving about $1.3 million annually in diesel costs

Renewable Energy

Mngeta Hydro Plant, built by North Koreans

Indian Manufactured Gasifier Biomass Plant in USA

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Transparency in Land Transactions:PAPs: Project Affected Persons

When Kilombero Plantations Limited (KPL), Agrica’s Tanzania subsidiary, took possession of the farm in September 2008, local villages disputed the title deed, claiming about half the farm, outside the white border

The government had misrepresented the number of PAPs; our survey revealed to be 2,238 either resident or farming in the titled area

To resolve the dispute, KPL ceded 389 heavily-populated ha, the area within the red border, to a local village and built them a school and wells, leaving a gross farm area of 5,429 ha (13,458 acres)

20 families within the yellow border were moved to the red area, where KPL built houses

80 families within the grey border moved to KPL-built houses (photo below) within the green border outside the farm

An additional 150 non-resident farmers were provided with 3 acres each outside the farm, purchased, cleared and ploughed by KPL

The total cost for the Resettlement Action is estimated at $623,000, ($250,000 was held in escrow from the purchase price of the farm)

The Resettlement Action has abided by World Bank guidance on resettlement, leaving the PAPs better off than they were before regardless of the illegality of their land tenure

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Social Responsibility: Necessary for Good Relations with Poor Neighbors

It is in the long-term interest of KPL to have the full support of the very poor communities surrounding the farm

The 3 villages bordering the farm have a total population of over 27,000

When starting operations, with an annual TZ shilling 50 million (now about $30,000) Community Development Fund, KPL began funding projects chosen by the villages, which include:

– School Classrooms

– Teachers’ houses

– Pumps & water systems to replace dirty shallow wells

The Community Development Fund continues each year

In July 2013, KPL opened a Health Centre, left, for KPL employees and residents of Mkangawalu Village (pop. 14,000) who previously had to walk over 10 km to the nearest clinic. This investment could not be afforded by a smallholder-only development model.

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Smallholder System for Rice Intensification (SRI) KPL is lifting farmer families in 10 villages within 50 km of the farm from subsistence to surplus:

– Traditional rain-fed yields are less than 1 ton/ha vs. SRI farmers’ average of 3.65 tons/ha increasing family income by a factor of 3.5

– KPL’s smallholder program has expanded quickly:

Over 150 farmer families, not formally trained in the KPL Smallholder Program, have adopted SRI techniques from their neighbours

By 2016, The SRI program should be contributing $175,000 annual net operating income to KPL, a poor return on an investment of about $1.6 million which would not be justifiable without the commercial farm

Above: Experimental PlanterBelow: Extension officers reaching isolated villages