Gary Stowe's Chihuahua Cattle & Cotton sells refurbished cotton gins in the East African nation, and will soon produce beef as well
Gary Stowe, 56, has done business globally in the cotton and cattle industries for a quarter-century. But now the entrepreneur is embarking on his biggest challenge, establishing a beef production company in the East African republic of Tanzania. Stowe, who has 15 full-time employees in his Chihuahua Cattle & Cotton, based in Albany, Ga., is aiming not only for commercial success but also to modernize the agricultural sector in Tanzania. Stowe spoke recently to Smart Answers columnist Karen E. Klein about his new venture and doing business overseas. Edited excerpts of their conversation follow.
What does your current company do?
We buy U.S. cotton gins that are 10 or 15 years old and obsolete due to new technology, refurbish them, and sell them abroad through agents in 22 countries. There's a large market for refurbished cotton gins, particularly in the Third World. Before I founded my current company, I lived in Chihuahua, Mexico, for 15 years and imported cattle into the U.S. So I'm very familiar with doing business internationally.
What are the plans for the new business?
We've founded a joint venture called Triple S Beef in Shinyanga, Tanzania. That's in the northern part of the country, just south of Lake Victoria. We'll begin by selling local beef on the national market and once we get the packing house [to fully meet] European and American standards, we'll begin to export into the Middle East. Of course, everyone's goal is to export to the European and U.S. markets eventually.
How did you ever come up with the idea of starting a business in Tanzania?
I've traveled extensively in Africa for more than 10 years, doing sales and service for our cotton gins. I noticed that there are cattle on every corner, and I found out the price of beef was very inexpensive. Then I discovered a meat-packing plant that someone started to build in 1978. They got about 85% of the construction work done on it, ran out of money, and quit. This facility has been sitting there for 30 years, with a rail line on one side and electrical power lines on the other. It seemed like an ideal opportunity.
And I like Tanzania. It's a young democracy with a good, sound government and no internal political struggles. The government has been very supportive of us, from regional economic commissioners all the way up to the president's cabinet.
What will it take to get Triple S Beef operational, and what's your timeline?
We went to the government and purchased a bid document for the facility, then we talked to investors, and I got on the Internet and started making phone calls and found MasterPlans, a company that helped us write a super-duper international business plan. I have two American partners who will move to Tanzania and oversee the project hands-on, and I have a couple of Tanzanian investors. We're still hunting for a few more. We'll have to raise $30 million just to get it up and going. We hope to be in operation and producing by the second quarter of 2008.
I figure to get to the stage where we're a full-fledged operation will take five to seven years and probably over $300 million, some which will be self-financed.
What are the unique challenges of working in East Africa?
There is zero irrigation in the region, so we intend to drill our own wells. English is pretty widespread, but Swahili is the native language. There is no refrigeration, so we'll have to power our own refrigeration in the packing plant and in our trucks. All our machinery and supplies will have to be imported. The good news is that communications are much better than they used to be, which will allow me to continue my business here in the U.S., and go back and forth to Tanzania frequently and work from both places. Cell-phone service (BusinessWeek.com, 10/13/07) is good all over Africa. You'll see a child driving cattle in the middle of nowhere talking on his cell phone. We'll probably put in a satellite system and our own servers for Internet access.
Of course, there's a huge labor force that's much less expensive than in the West, and the raw product will be much less expensive, so overall we hope we have a lot more margin than we would for a similar operation in the U.S., but things are not really as cheap as they look from the outside.
Why is that?
Well, you have to provide a lot of benefits for your workforce, in terms of health care, education, and training. These people expect to become your family, not just your employees, and you grow to feel a great responsibility toward them. We plan to develop a labor pool management program and human resource training initiatives to help them adapt to modern farming, ranching, and meatpacking techniques. We also want to present genetic improvement programs to the local cattle farmers and train them in energy and water-saving techniques.
We want to help the local producers, who we'll be buying from, to improve their production and their health standards. Now, it takes them four to five years to bring their animals to market. We can show them how to produce the beef in six months to a year, which will improve their income, give their kids a reason to stay on the farms, and free up more grassland for additional production.
What advice would you give to other U.S. entrepreneurs interested in starting businesses abroad?
Get a great big dose of patience before you start. As Americans, we want to do things yesterday. In most places outside the U.S., nothing happens that quick. It takes time to prove yourself to people. They're much more relationship-oriented and they want to be kept abreast of all the day-to-day stuff happening at your company. We contacted the Tanzanian investment center, which has an informative Web site, and hired a good attorney in the country, but everything takes dedication and time.
Of course, I've done business there for several years and I know a lot of customers there, which really helps. Also, I have a certain confidence level, having worked on so many business projects in my life. It would be much more difficult for someone to just get on a plane and try to go over there and start something from scratch.