AFGRI strengthens focus on grain business through sale of poultry business and PIC provides funding for transaction

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AFGRI, the leading agricultural solutions and industrial foods company, together with the Public Investment Corporation (“PIC”) today announced the sale of AFGRI Poultry, as well as AFGRI’s Kinross Animal Feeds Mill (“Kinross Mill”), to AFPO Consortium Proprietary Limited (“AFPO”), a Black Economic Empowerment consortium (“the BEE consortium”) led by Matome Maponya Investments (Proprietary) Limited (“MMI”). The PIC funded the acquisition. AFGRI Poultry has been renamed Daybreak Farms, and is now owned 54% by AFPO Consortium; 36% by the PIC on behalf of its clients, and 10% by employees and management.

Chris Venter, CEO of AFGRI, said “AFGRI’s strategic vision is to drive food security across Africa.  Our focus is to enhance AFGRI’s position in the grain value chain, and this transaction is another step toward that.”

He went on to elaborate that the divestiture is in line with a strategic decision to concentrate efforts on its core grain businesses and position the company for growth. “From a financial perspective the transaction enables AFGRI to reduce its gearing levels, fund priority businesses and reduce overall debt,” Venter said.

“AFGRI’s remaining foods and processing businesses are well aligned to grain commodities,” he went on to say.

The acquisition of Daybreak Farms by AFPO Consortium represents a landmark transaction for black ownership in the agriculture sector, and has created the first significant black owned enterprise in this sector. Agriculture is a key sector of the South African economy, and constitutes a vital employment provider, especially in rural areas, as well as a sustainable source of foreign exchange and inward investment. It is estimated that more than 40% of South Africa’s total population is dependent on this sector.

Daybreak Farms is a mature, well-established and integrated poultry business with critical mass and a fully capitalised infrastructure which compares very favourably to South Africa’s other commercial suppliers of chicken.  The company processes over a million birds per week, and the business includes the growing and processing of broilers into fresh as well as frozen whole birds, individually frozen birds and portions.  The inclusion of established feed milling operations in the transaction ensures an integrated supply of specialist feeds for the process of growing chickens.

Chief Executive Officer of the PIC, Dr Daniel Matjila, says: “The funding was made possible with allocation from three of the PIC’s clients, the Government Employees Pension Fund (GEPF), the Unemployment Insurance Fund and the Compensation Commissioners. These clients have a socially responsible investment mandate, which seeks to achieve two important outcomes, namely: to generate financial returns, whilst at the same time contributing to job creation.”

“This transaction is important in that it enables previously excluded groups of people to participate in the poultry industry.  The planned expansion of the operations will contribute to food security, with more jobs created.  Above all, this transaction is in line with our clients’ mandates,” adds Dr Matjila.

In addition, AFGRI Poultry sold some of its in-house farms to black farmers which increases supply from black farmers to over 20%. The consortium is excited about the opportunity of expanding the poultry business and growing its supply into new markets.

Mr. Kholofelo Maponya, the Chief Executive Officer of Daybreak Farms, says: “We are excited about this opportunity to participate in a critical sector such as poultry. We are, in particular, looking forward to contributing to food security here in South Africa whilst at the same time creating jobs in the communities in which we will be operating.”

Venter went on to say, “This transaction is agreed in the spirit of ensuring job stability for employees and as such no retrenchments or job losses are expected to take place. This is an important undertaking for both parties.”

“We are pleased with the transaction as AFPO will be a significant poultry producer in South Africa and will benefit from ownership of the Kinross Mill, both as a direct benefit to the poultry operation as well as having the ability to provide animal feed to third-parties,” Venter concluded.

Dorp van die Jaar 2015 finalists

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Congratulations to all the finalists in this year’s Dorp van die Jaar competition. All the best for the remainder of the competition.

Click here for voting details

Petrus Steyn

Newcastle

Swakopmund

Meyerton

Middleburg

Thabazimbi

Wellington

Jeffreys Bay

Douglas

Dorp van die Jaar semi finalists

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We look forward to visiting the various towns which proceed to the finals

Innovative Partnerships Stimulate Investment in Small Scale Agribusiness

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When the tractor at AA Ataqwaah Enterprise broke down for the last time in 2011, Managing Director Abdulazziz Munkaila did not know how he was going to accommodate the 50 farmers around Zabzugu District in Northern Ghana who depended on his services to prepare their farmlands for planting. He had tried to access mechanization services from other providers, but they proved unreliable and the high interest rates at Ghanaian banks made buying a new tractor financially impossible. Without dependable tractor services, Munkaila’s nucleus farming enterprise was forced to cease financing other agro-inputs to smallholder staple food farmers because it had become too risky.

Three years later, through a deal brokered by the USAID Financing Ghanaian Agriculture Project (USAID-FinGAP), AA Ataqwaah became one of fourteen “small to medium including large enterprises” (SMiLEs), working in the rice, soybeans, and maize value chains, to receive a loan from Sinapi Aba Savings and Loans (SASL), which they used to purchase a new John Deere tractor. USAID-FinGAP staff had negotiated with Danida for a low interest, guarantee-backed sum of capital worth US$3 million for USAID-FinGAP partner’s SASL to provide loans with the specific purpose of providing land preparation services. USAID-FinGAP then linked SASL and AFGRI, the local John Deere dealer, to create an appropriate tractor equipment loan product for agriculture service providers. To make the financing attractive and feasible, John Deere covers 4 percentage points of the interest charged by SASL and offers training and equipment warranties for the life of the loan. Repayment begins in July 2015 with bullet payments over three years.

“Access to the John Deere tractor has been a relief to me and smallholder farmers in the area. I plan to assist between 110 and 120 outgrowers in rice (about 100 acres) and maize (about 280 acres) during the upcoming season,” Munkaila said. “I will also cultivate 100 acres rice and 50 acres maize on my own farm.”

Now that agricultural service providers like AA Ataqwaah have the ability to provide land preparation services, they have the necessary confidence to extend new input financing to smallholder farmers. SASL has made 15 tractor loans worth almost US$450,000. Each loan represents expanded agricultural services to support on average of 200 rice and maize smallholder farmers, bringing the program’s reach to nearly 3,000.

Gerrie Jordaan, Country Director of AFGRI Ghana, who has seen sales of John Deere tractors and accessories increase by about 20%, said, “Farmers are able to buy full complements of tractor and accessories since they do not need to mobilize funds to cover 100% of the cost. Moreover, these farmers are able to buy mechanization equipment such as planters which are also financed under the same arrangement.”

USAID-FinGAP used internal staff resources to link agents already providing services and subsidies and unlock commercial financing at competitive rates. The result was successfully expanded critical agricultural services for Northern Ghana’s poorest agricultural entrepreneurs. USAID-FinGAP has discovered that, rather than investing in new subsidies or technologies, sometimes the innovation is in the bundling and linking of existing tools to create economies of scale that are commercially viable for everyone.
AFRGI Sales Manager Bernard Asamoah-Akrasi summarized it eloquently when he said, “The collaboration brokered by USAIDFinGAP is bridging the financing gap.”

 

AA Ataqwaah’s new John Deere tractor provides land preparation services to over 100 smallholder farmers in Northern Ghana.

AA Ataqwaah’s new John Deere tractor
provides land preparation services to
over 100 smallholder farmers in
Northern Ghana.

Gerrie Jordaan

Gerrie Jordaan, Country Director of AFGRI, has seen local John Deere tractor sales increase by about 20%.

 

Emerging farmers in South Africa will help take the agricultural sector into the future

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Media Release

Nation in Conversation

Nampo Harvest Day

12 – 1 5 May 2015

The vastness of South Africa, coupled with a good climate allows the country to be a leading food producer, producing sufficient food to feed the nation and export surpluses globally.

In order to ensure sustainable agricultural practices into the future, it is, however, essential that the sector invests in the development and training of emerging farmers to become more commercially viable.

South Africa’s commercial farmers form backbone to ensuring food security for our nation and economic stability. Agriculture remains one of the largest employers in the country.

AFGRI, as a leading South African agricultural services and food company, is committed to playing its part in providing support to existing large commercial farmers and contributing to the development of smaller, emerging farmers. It helps to ensure that skills, passion and talent are passed from one generation to the next. The industry needs to keep pace with technological changes, advances and changing food requirements.

Commercial farming in South Africa is a highly-complex and sophisticated business. Given the technological revolution in farming, even emerging farmers now have to be well-equipped in order to become the commercial producers of the future.

Access to finance and efficiencies is key, and land transformation remains a challenge to South African agriculture. AFGRI believes support of emerging farmer is paramount to the transformation of this sector, without losing sight of the importance of the commercial farming sector.

“Viable agriculture ensures food security, employment opportunities and forex exchange earned from exports for the country,” explains Chris Venter, CEO of AFGRI.

It is for these reasons, and in recognition of Government’s efforts to transform the agricultural production sector, that AFGRI launched its Harvest Time Investments initiative in 2012.

The Harvest Time Investments programme is targeted at micro emerging farmers and large emerging producers. It operates as a joint venture with the Vastfontein Community Centre outside Hammanskraal near Pretoria. The programme assists its members with a diverse range of practical and theoretical training over a five-year period. They also benefit from experienced mentors and tutors giving guidance throughout the entire agricultural value chain.

The emerging farmer initiative operates within the parameters of a number of strategic partnerships including seed, fertiliser and other input suppliers, mechanisation companies and a number of governmental bodies.

Direct benefits include technical skills transfer, more employment opportunities, increased personal income and community transformation.

“A pivotal aim is to assist farmers to realise their potential and that of their farms. We are convinced that this sector will continue to contribute to the development of our country and people,” says Venter.

Given its commitment to the development of the local agricultural industry, AFGRI is pleased to support the Nation in Conversation dialogue platform at Nampo 2015. “We believe Nation in Conversation champions the cause of agriculture. Wide and on-going consultation is required to move our industry into a new era,” says Venter.

Nampo Harvest Day annually draws all the relevant role players in agriculture together over a four-day period. This platform allows conversations to take place amongst key role players so that major issues affecting agricultural producers in South Africa can be brought to the fore.

AFGRI will be participating in Nation in Conversation from 12 – 16 May 2015, where topics include labour relations, land reform, availability and sustainability of natural resources, and technological integration in agriculture.

Panelists participating in the debates are well-versed on these topics. “The value AFGRI adds stems from our experience and knowledge of what is happening at a ground level in agriculture. Our sector will continue to contribute to the development of our country and its people,” ends Venter.

Oscars of the Legal fraternity

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AFGRI Legal Team - Robyn van Heerden and Pieter Badenhorst

Robyn van Heerden and Pieter Badenhorst

The team won Legal Department of the Year (for the second consecutive year) and the Innovation Award at the 2014 African Legal Awards. This is the first time an in-house legal team has won the Innovation award.

The team was also a finalist in the CSR category resulting in the team being the most nominated and awarded in-house legal team at the prestigious award ceremony. The African Legal Awards is an international competition which recognises exceptional achievement, excellence and innovation within the African legal profession. The judging panel is made up of 25 Africa-based general counsel and other senior members of the African legal community. More than 80 nominations were received by the judging panel this year.

African Legal Awards 2013: Legal Department of the Year Small Team     African Legal Awards 2014: Legal Department of the Year Small Team     African Legal Awards 2014: Winner Innovation Award

Read more on the Innovation Award on Legal Week: Innovation Award: AFGRI

AFGRI sponsors Blue Bulls rugby

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Vodacom Blue Bulls - AFGRI Jersey Handover

AFGRI, the leading South African agricultural services and diversified foods group, announced on 29 January 2014 their active participation in the sponsorship of Blue Bulls rugby in South Africa.

Chris Venter, CEO of AFGRI, said at an official Blue Bulls Company (Pty) Ltd press conference today that AFGRI is pleased to be associated with a winning culture.

Blue Bulls CEO Barend van Graan is pleased to welcome AFGRI on board

“I would like to take this opportunity to welcome the AFGRI team to the Vodacom Bulls family. We look forward to working with you both on the field and off as we strive to grow and improve the game on a professional level as well as community development level by creating opportunities for young rugby players.”

AFGRI draws its history in South Africa back 90 years and so too the Blue Bulls are no strangers to transformation, tenacity and a fighting spirit. The Blue Bulls hold no less than 23 ABSA Currie Cup titles in South Africa and three titles in the Super Rugby competition which has been in place since 1996. This approach to winning appeals to AFGRI since the sponsorship will also contribute towards sport, player and community development some of AFGRI’s areas of operation.