(Bloomberg) -- Food and resources company Phoenix Commodities Ltd. will buy more rice from India as it expands its business in Africa to meet increasing demand.
The company wants to boost its rice trading volumes to between 2 million metric tons and 2.2 million metric tons over the next three to four years, Chairman Gaurav Dhawan said in a phone interview. That compares with 1.5 million tons this year. The company says it is already one of the top three rice traders globally.
Increasing incomes and changing food habits in Africa have created an opportunity for the company to increase sales of its flagship Happy Family brand rice, Dhawan said. Much of the planned increase in Phoenix’s supply will come from India, the world’s biggest exporter, he said. It will be supplemented by rice from Pakistan, Thailand and Vietnam.
While global rice trading is dwarfed by corn and wheat, it is a staple food for more than half the world’s population. Worldwide exports in 2018 will hold near this year’s record 45.7 million tons, on expanding consumption in Africa and the Middle East, the U.S. Department of Agriculture estimated in November. Sub-Saharan Africa accounts for about 30 percent of global imports.
Phoenix, which began as a rice trader in 2000, expects to generate $1.3 billion in annual rice sales over the next three to five years, Dhawan said. That compares with projected total revenue of $4 billion. It recently secured a S$275 million ($203 million) borrowing facility that will give it more flexibility to buy rice in Asia and distribute it in Africa.
The company plans to spend $300 million over the next five years, mostly on increasing processing and production, as well as expanding into farming in Africa, Kazakhstan and Ukraine, Dhawan said. Phoenix operates in 22 countries in 10 businesses including grains, sugar and coal with total supply chain volume of 11 million tons.
Louis Dreyfus Co. is estimated to be the world’s largest rice trader with volumes of about 2.6 million tons a year and Olam International Ltd. is estimated to sell about 1.7 million tons, according to California-based researcher the Rice Trader.
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