African Agriculture Announces Multi-Year Supply Agreement with South Korea-Based Holding Company Dr. Kahn
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Insights
The multi-year supply agreement between African Agriculture Holdings Inc. and Dr. Kahn is a significant strategic move for the former, indicating a substantial expansion into the Asian market. This deal may potentially secure a steady revenue stream for African Agriculture over the next two years, as it involves the supply of alfalfa from 700 hectares currently under development. Such agreements are pivotal for companies looking to diversify their customer base and mitigate market risks inherent in the agricultural sector.
The expansion into South Korea, a market known for its stringent quality control standards, not only opens up new revenue channels but also serves as a testament to African Agriculture's product quality. The deal also underscores the importance of sustainable agricultural practices and food security, which are increasingly becoming key factors in supplier selection. Investors may view this development positively, as it reflects the company's ability to execute its growth strategy and secure high-profile international contracts.
From a financial perspective, the supply agreement is expected to contribute to African Agriculture's revenue for the fiscal years 2024 and 2025. This could lead to an improved financial outlook for the company, potentially affecting its stock valuation positively. Investors often look for such long-term agreements as they provide better visibility on future earnings and can be a stabilizing factor for stock performance.
It is also important to note that the diversification of African Agriculture's sales into nine countries within the ECOWAS region, the Gulf and now Asia, reflects a strategic reduction of geographical and client concentration risk. This could result in a more robust and resilient business model, which is an attractive trait for investors seeking stability in the volatile agriculture sector.
Alfalfa is a high-demand commodity in the livestock industry, particularly for dairy and beef production due to its high nutritional content. The partnership with Dr. Kahn indicates a growing demand for quality feed in South Korea's dairy and beef industry, which is undergoing modernization and consolidation. This trend is reflective of a broader global movement towards improved agricultural efficiency and sustainability.
The ability of African Agriculture to meet the demands of such a fragmented industry suggests the company's operational capabilities are well-aligned with industry trends. Furthermore, the focus on sustainability and global food security resonates with current socio-economic priorities, potentially giving African Agriculture a competitive edge in attracting partnerships and funding focused on sustainable development goals.
New York, Jan. 04, 2024 (GLOBE NEWSWIRE) -- African Agriculture Holdings Inc. (Nasdaq: AAGR), (“African Agriculture” or “the Company”) a pioneering company operating a commercial-scale alfalfa farm in Senegal and dedicated to food security for the coming century, today announced a multi-year supply agreement with Dr. Kahn, a South Korea based diversified holding company, for the supply of alfalfa to South Korea. Under the terms of the agreement, African Agriculture will supply up to the entirety of the specific production of the 700 hectares that are currently under development. The supply agreement is expected to contribute to 2024 and 2025 revenue.
“The scope of this agreement proves out our growth strategy, providing us with a validation by a leading South Korean company, representative of the highest quality control standards in that market,” stated Alan Kessler, Chairman and CEO of African Agriculture. “We have now sold into nine countries in the Economic Community of West African States (ECOWAS) regionally, with additional commercial international shipments to the Gulf. This supply agreement to Asia represents further commercial validation of our pilot program, and we look forward to scaling our production. As a company focused on global food security and sustainability, we are committed to enhancing Africa's role of feeding the world.”
Mr. Lee, the CEO of Dr. Khan commented, “We are excited to partner with African Agriculture to supply market-leading alfalfa hay to the local Korean market for years to come. We continue to witness an increase in demand for alfalfa hay as the fragmented dairy and beef industry improves, requiring necessary nutritional content, and modernizes its operations, necessitating this important relationship with African Agriculture.”
About African Agriculture
African Agriculture is a pioneering company dedicated to securing food and protein for the coming century. Born out of a global necessity, it focuses on harnessing Africa's vast agricultural potential. With
About Dr. Kahn
Dr. Khan is a South Korean company leveraging technology to provide health and well-being to the country. Dr. Khan’s origin traces back to the medical industry but has since expanded to include one of Korea’s leading indoor smart farms as well as a platform technology company that powers one of the most comprehensive and far-reaching online marketplaces for local private farms across rural South Korea.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, which involve substantial risks and uncertainties. Forward-looking statements contained in this press release include, but are not limited to, statements about our performance under the terms of the supply agreement and the expansion and scaling of our operations in the Korean market and globally. You should not rely upon forward-looking statements as predictions of future events, the outcome of which are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to differ materially from those described in the forward-looking statements, including those more fully described in our most recent filings with the Securities and Exchange Commission.
Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made and we undertake no obligation to update any forward-looking statements, except as required by law.
Investor Contact:
David Waldman/Ted Ayvas
Crescendo Communications, LLC
Tel: (212) 671-1020
Email: AAGR@Crescendo-IR.com
Media Contact:
Brigit Hennaman
Rubenstein Public Relations
Email: bhennaman@rubensteinpr.com
Company Contact:
Maxine Gordon, Head of Academics, Media, and Public Relations
African Agriculture Inc.
Email: mg@africanagriculture.com
FAQ
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