Kliente kennisgewing: Status van die Land Bank

In April 2020 het ek u op hoogte gebring van die posisie waarin die Land Bank hulle tans bevind. Ek het onderneem om u op hoogte te hou van verwikkelinge, en versoek graag dat u die tyd sal neem om hierdie belangrike inligting te lees waarin ‘n paar nuwe verwikkelinge  bespreek word. Soos altyd bly UNIGRO daartoe verbind om alles in sy vermoë doen om te verseker dat ons kliënte se behoeftes aangespreek word, selfs in moeilike situasies.

Agtergrond

Moody’s Investor Service (“Moody’s”) het op 21 Januarie 2020 die afgradering van die Land Bank se uitreikersgradering van Baa3 na Ba1 aangekondig, en die langtermyn-gradering van die uitreikersgradering van Aa1 na Aa3 op soewereine vlak. Na Moody se daaropvolgende afgradering van die soewereine kredietgradering van Suid-Afrika op 27 Maart 2020, is nog ‘n afwaartse gradering toegepas ten opsigte van alle staatsondernemings, insluitend die Land Bank, wat beteken dat die bank se uitreikersgradering van Ba1 na Ba2 afgegradeer is.

Soos  bo uiteengesit, het hierdie gebeure ‘n beduidende impak op die likiditeitsposisie en kontantvloei van die Land Bank gehad. Dit het daartoe gelei dat die Bank nie onmiddellike verpligtinge kon nakom om ‘n terugbetaling aan een van sy kredietverskaffers te vereffen nie. Die gevolg is was wanbetaling. Die Bank het destyds aangedui dat hulle in gesprek en onderhandeling met die betrokke instansie was om kwytskelding en verlenging van die terugbetalingsdatum te onderhandel. Hierdie konsultasies is na ons wete nie nog nie afgehandel nie.

Soos voorheen genoem, kan enige moontlike wanbetaling van die Bank hulle vermoë om finansiering te bekom, bemoelik. Die onvermoë van die Land Bank om finansiering te onderhandel,  sou dan uitbetalingsverpligtinge ten opsigte van diensvlakooreenkomste benadeel. Dit kan ‘n negatiewe uitwerking hê op UNIGRO se vermoë om deur finansieringsooreenkomste, likiditeit aan boere te bied.

Huidige situasie

UNIGRO en die Bank het sedert 2011 ‘n noemenswaardige vennootskap deur middel van ‘n Diensvlakooreenkoms, wat ons in staat gestel het om verskeie vergaderings met die Bank te hou voordat hierdie situasie ontstaan het, en tydens die hele krisis in voortdurende kontak met belanghebbendes te bly.

Sover UNIGRO bewus is, het die R3 miljard wat deur die Regering goedgekeur is, nog nie gerealiseer nie.  As gevolg van bogenoemde is die wanbetalings situasie nog nie deur die bank reggestel nie, en derhalwe ‘n negatiewe impak op UNIGRO en ons vermoë om ten volle aan ons klante se behoeftes te voldoen.

Ons het derhalwe proaktief begin om met alternatiewe befondsers te onderhandel en is tans in die proses om ‘n maksimum bedrag van R2 miljard korttermynfinansiering, R7 miljard ten opsigte van

langtermynfinansiering, asook addisionele korttermyn en ander befondsing te verkry, om sodoende die impak van hierdie krisis te probeer versag.

UNIGRO sal in die toekoms verseker dat ons eie finansieringslyne gediversifiseer word, om sodoende risiko vir ons klante te beperk, selfs al sou die R3 miljard van die regering ontvang word deur die Land Bank.

Vanweë die omvang van die finansiering en in die huidige ekonomiese klimaat, neem hierdie onderhandelinge egter langer as wat verwag is.  Dit beteken egter dat UNIGRO uitbetalings aan boere  moontlik teen ‘n stadiger pas kan plaasvind  tot tyd en wyl likiditeit herstel word en die Land Bank hul verpligtinge ten opsigte van ons Diensvlakooreenkoms kan nakom.

Ons vra u begrip in hierdie verband en verwag dat nuwe finansiering teen die einde van die jaar in plek sal wees.

Ek versoek u om asseblief in kontak met u verhoudingsbestuurder te bly, want gegewe die klimaat van onsekerheid kan die situasie op baie kort kennisgewing verander.

Laastens, baie dankie vir u volgehoue ondersteuning aan UNIGRO en die AFGRI Groep.  Intussen skakel asseblief met u verhoudingsbestuurder vir opdaterings, maar sodra ons meer duidelikheid het oor die verwikkelinge rakende die Bank, kommunikeer ek weer met u.

Saam sal ons hierdie ongekende tyd in ons land oorkom.

Ross Simmonds
Besturende Direkteur: UNIGRO

Client update on the Land Bank

In April 2020 I updated you on the position that the Land Bank (“the Bank”) found itself in. In line with the commitment to keeping you informed on this issue, please take the time to read this important update outlining some new developments. As ever, UNIGRO remains committed to ensuring it is doing all it can to ensure our customers’ needs are addressed, even in tough situations.

Background

You may recall that on 21 January 2020 Moody’s Investor Service (“Moody’s”) announced the downgrade of the Bank’s issuer rating from Baa3 to Ba1, and its long-term national scale issuer rating from Aa1 to Aa3.  Following Moody’s subsequent downgrade of South Africa’s sovereign credit rating on 27 March 2020, another downward rating adjustment was made to all state-owned entities, including the Land Bank, meaning that the Bank’s issuer rating was downgraded again from Ba1 to Ba2.

As I explained previously, these events had a significant impact on the liquidity position (cash flow) of the Bank, meaning it was not able to meet immediate obligations to settle a repayment under the terms of a revolving credit facility with one of its lenders. The non-payment constituted a default. At the time, the Bank indicated that it was in consultation with the lender concerned to negotiate a waiver and an extension of the repayment date. These consultations are ongoing and have not to our knowledge been finalised.

I also said at the time that any potential default could prevent the Bank from raising funding. The Land Bank’s inability to raise funding would make it difficult for it to meet its disbursement obligations under a Service Level Agreement. This in turn could negatively impact on UNIGRO’s ability to provide liquidity to farmers through our loan agreements.

Current situation

Because UNIGRO and the Bank have had a significant partnership in place through the Service Level Agreement since 2011, we have held several meetings with the Bank both before this situation developed and throughout the crisis, and we remain in constant communication with key stakeholders.

As far as UNIGRO is aware, the R3 billion injection approved by Government has unfortunately not yet materialised. As the situation remains unremedied by both the Bank and by Government, what I warned against has now happened, with an unfortunate knock-on effect on UNIGRO and potentially our ability to lend fully to customers.

We have therefore proactively started a process of sourcing alternative funding and are in the process of securing a maximum of R2 billion in short-term finance, R7 billion in longer-term finance as well as additional short-term syndicated and other funding for facilities to try to mitigate this crisis.

UNIGRO will further ensure that going forward, even if the Bank receives the R3 billion in funding from Government, our own funding lines are diversified to limit risk to our customers. However, due to the size of these funding lines, and in the current economic climate, negotiations are taking a little longer than expected and this in turn means that UNIGRO disbursements to farmers could be at a reduced rate until such time as liquidity is restored, and the Land Bank is able to meet its commitments under our Service Level Agreement. We ask for your understanding in this regard, and expect that the new secured lines of funding will be in place by the end of the year.

In the interim. I urge you to please remain in contact with your relationship manager, as things can change at very short notice in this climate of uncertainty.

Finally, thank you for your continued support of UNIGRO and the AFGRI Group. Please liaise with your relationship manager for updates, although as soon as we have further clarity on developments with regards to the Bank, I will communicate with you again.

Together we will make it through this unprecedented time for our area and the country.

Ross Simmonds
Managing Director: UNIGRO

AFGRI Agri Services to construct new grain bunker in the Eastern Cape to support local farming community  

AFGRI Agri Services, one of South Africa’s leading agricultural services companies, has constructed a new grain bunker in the Eastern Cape to support the local farming community in support of Government’s vision of expanding the country’s agriculture footprint.

This is according to AFGRI Agri Services CEO, Jacob de Villiers, who says the new bunker near Butterworth in the Eastern Cape will offer state-of-the-art storage facilities for both maize and soya beans, offering storage capacity of 15,000 tons.

“This is our first commercial bunker in the province, and also the first commercial storage facility in the Eastern Cape, and we believe it will make a huge contribution to the efforts of local farmers, who will in future be able to securely store their crops without worrying about the produce rotting before it can get to market.”

The bunker in Centane, about 30 kilometres outside of Butterworth, is one of six new bunkers opened by AFGRI Grain Management recently, including the Delmas, Vaaldrift, Devon, Kortlaagte and Chelmsford Dam bunkers.

De Villiers says the Eastern Cape bunker will be managed by AFGRI Grain Management, which will employ and train people from the local community to help run operations. AFGRI Grain Management will also ensure that world-class grain management systems and procedures are put in place. An example is not only offering the storage of grains, but also the issuing of silo certificates, which can in turn be used as collateral for the farmers to secure additional funding.

The bunker will form part of the Centane/Mbashe Agricultural Initiative, a commercial dryland maize and soybean operation, which currently aggregates 2 500 hectares of communal land in rural Eastern Cape into a single commercial farming entity on behalf of 2 252 communal landowners from 34 villages. It is a joint venture partnership between these landowners and WIPHOLD. Gloria Serobe, WIPHOLD founder, says AFGRI Agri Services’ decision to enter the Eastern Cape Province is an exciting development for the province.

“The Eastern Cape is the next frontier for agricultural growth in South Africa. The area has enormous potential as an alternative growing region for South Africa’s food supply. What’s needed to support agricultural development in the region is attention to basic infrastructure, including grain storage facilities. We salute AFGRI for leading the way and investing in the future, not only of the region but also of their business.”

De Villiers said that AFGRI Agri Services is very proud to be helping to build the foundations of a strong agricultural sector in the Eastern Cape, which further includes the tobacco farming project that Lemang Agricultural Services, AFGRI’s training and development arm, is involved with, working closely with British American Tobacco South Africa.

“These endeavours are proof that committed businesses can work with Government to ensure sustainable skills transfer, create job opportunities and at the same time enhance the agricultural value chain,” he concluded.

AFGRI Group Holdings legal team scores hat trick of awards in international legal competition

Centurion, 3 June 2020 – AFGRI Group Holdings, an investment holding company with interests in a number of food, agriculture and financial services related companies providing products and services to ensure sustainable agriculture and food security, is proud to announce that its in-house legal department won three awards at the In-House Community Counsels of the Year Awards 2020, held from Hong Kong last week.

The winners of this annual competition were announced last week via a unique virtual ceremony, during which the AFGRI Group Legal team was announced as the “South African Legal Team of the Year”, the “South African Small Team of the Year” and the “South African Energy and Natural Resources Team of the Year”.

This is the third consecutive year that the AFGRI Group Legal team has won the “South African Legal Team of the Year” award and it’s the second consecutive time that they have won the “South African Small Team of the  Year” award. The international judging panel was particularly impressed with the team’s demonstrated ability to be innovative, efficient, and cost-effective in a challenging environment.

According to Acting CEO of AFGRI Group Holdings, Tinus Prinsloo, “By winning such awards, the AFGRI Legal team does us all proud and ensures that our brand is held in high esteem in such global communities, given that the In-House Community is comprised of over 20,000 individual members with a responsibility for legal and compliance issues in the Asia, Middle East and Africa regions.”

Pieter Badenhorst, who heads up the award-winning team, is no stranger to accolades such as this, and last year became the first General Counsel in Africa to win the “General Counsel of the Year” Award twice at the African Legal Awards. The team has also won several other awards.

“I would like to congratulate my entire team for this remarkable achievement, which endorses the winning qualities and reflects both the work ethic and the values we uphold. There can be no greater honour than being recognised by our peers internationally,” said Badenhorst.

Lemang Agricultural Services collaborates on project with British American Tobacco to train and develop new era tobacco farmers

Centurion, 21 May 2020 – The Emerging Farmer Initiative was launched by British American Tobacco South Africa (“BATSA”) in 2011 to facilitate transformation within the tobacco industry in South Africa. Since inception, the initiative has been funded by BATSA. The project creates new era farmers i.e. tobacco producers within previously marginalised communities in suitable agricultural areas of South Africa.

These new era farmers produce sun-cured Virginia tobacco and food crops (vegetable, maize and bean production) on a rotational farming basis to ensure that their crops mix provides a sustainable source of financial and food security and have a positive impact for their communities.

The groups of farmers successfully cultivated sun-cured Virginia tobacco, which is then sold to BATSA through Limpopo Tobacco Processors. The ultimate goal of this project is to technically grow the farmers, provide incubation and farmer development, financial administration and central purchasing services. By doing this, Lemang Agricultural Services, a division of AFGRI Agri Services, then creates suitably trained, experienced and sustainable new era tobacco farmers who can successfully progress to the status of commercial tobacco farmers.

The initiative currently empowers 150 farmers in total, farming at 15 sites in five provinces; Limpopo, Mpumalanga, KwaZulu-Natal and Eastern Cape, touching 4,300 beneficiaries, offering support through incubation, training and mentorship.

Each of the new era farmers is at various stages of development with continuous training and practical guidance from mentors. Beyond empowering the new era farmers to become experienced, an extension of the programme is to empower the new era farmers to become successful business owners by offering assistance and training in business development, financial and administrative assistance at Lemang’s Training Academy, Vastfontein.

Lemang Agricultural Services will project manage the total programme with a tobacco agronomy team and support from Lemang’s existing team.

Once cigarettes and other tobacco products can be sold again, the tobacco farmers supported by this great initiative stand to benefit enormously, allowing the crop already harvested to be sold and duly processed. This will ensure that money is put back into the farmers’ pockets, and averting further economic hardships for them and their families. This will also allow the new era tobacco farmers to plan accordingly for the season ahead, with the hope of prosperity into the future.

 

Introducing Axl, the ground-breaking online platform enabling the rental of agricultural machinery in South Africa

Centurion, 20 May 2020 – AFGRI Agri Services, one of the country’s leading agricultural services companies, is again leading the charge in the sector, with the unveiling today of a new disruptive agtech platform, the first of its kind in South Africa, known simply as “Axl”.

This online platform is designed to enable the convenient rental of farm equipment, facilitating the contract between the renter and the owner in a few simple steps, all without either having to set foot outside their own door.

In a nutshell, Axl allows farmers to find, rent, and pay for agricultural equipment through a secure online portal, enabling service providers – equipment owners, retailers, and contractors – to build their business and grow revenue streams and optimising the process of renting out their machines. Axl provides world-class payment solutions that ease the cash-flow challenges for service providers while connecting renters to a quality rated service.

Access to the right machinery at the right time is a critical success factor for farmers. “Whether it is a small, emerging, or large commercial farmer, this is an ongoing challenge for farmers of all sizes. Especially now, as the global pandemic has left global supply chains under immense pressure, uncertainty remains in the minds of our customers and currency volatility has resulted in the increase in equipment costs,” says Niki Neumann, the head of AFGRI’s strategic innovation division, AFGRI Technology Services (“ATS’’), which has developed this product, along with AFGRI Equipment.

“We have decided to open the platform up sooner than originally planned due to the increased need for an alternative solution. As with all new products we expect some teething issues, however, we have already had successful rentals via the platform.”

Axl’s first customer and a member of AFGRI’s Future Farmer Forum, Hardu Prinsloo, shares his experience using the service, “It’s always very fulfilling to be part of something new that can make a difference to agriculture as a whole.”

“When we set about developing the concept, we understood that with farming comes many unforeseen challenges, we wanted to build a community of quality-rated equipment service providers to be there for farmers when they need them the most. Uncertainty and change are something we will never see the back of, it is inherent in our lives now and going forward. We are adapting and excited to embark on this journey with our Axl customers,” says Neumann.

AFGRI Equipment branches will be the first to offer the rental service to their customers. However, the platform is for all South African farmers and equipment owners, including contractors and retailers alike.

UNIGRO customers have the added benefit of using their revolving credit or production facilities to pay for rentals via the Axl service. “Axl is an exciting platform, and UNIGRO is excited to integrate its financial services offering in support of the platform.  If a quality product offering like Axl enabled with convenient access to finance, delights our customers then we have been successful,” according to Ross Simmonds, the Managing Director of UNIGRO.

Axl goes beyond an online service – it breaks down the traditional barriers to accessing mechanisation for all farmers; it is creating a secure and shared environment and encourages us to do more with less. In times like these, this has never been more important.

According to Patrick Roux, the Managing Director of AFGRI Equipment, the platform is an exciting product. “It will further allow equipment owners to fully utilise their equipment throughout the year, and I am optimistic that this platform will change the way we utilise farm equipment in the future.”

He said that by launching Axl during the lockdown, AFGRI Agri Services can support farmers through uncertain times in a way not offered in the sector before now. ‘’In the long-term, the aim is to deliver an innovative digital service that both enables our customers to drive sustainability, profitability, and productivity for their business. We are positively transforming the equipment market for the better, starting now.”

Quite simply, Axl keeps the wheels turning.

For more information, visit https://axl.app

Free trial period for eAccounts during lockdown Level 4

Dear valued client,

Free trial period for eAccounts during lockdown Level 4

A great opportunity exists for UNIGRO clients who are not yet using our eAccounts platform to sign up for free during May 2020.

Our eAccounts fees have been suspended, creating a unique opportunity to use this world-class platform for your financial transactions, including convenient access to funding. eAccounts provides real-time transactional capability and access to relevant account information.

For an easy tutorial on what eAccounts offers and how to use it, please take a look at the short video on our YouTube page, at https://youtu.be/Km1zn-RLb5s

Tried it and don’t like it? If eAccounts is not for you, then simply deregister before the end of May – there is no charge for signing up, usage or deregistering during this period.

Stay safe.

Kind regards

 

Ross Simmonds

MD, UNIGRO Financial Services

CFO Magazine features Johan Geel, COO of AFGRI Group Holdings

Johan rejoins AFGRI Group Holdings from GWK, where he served as group FD until April 2020.

On 1 May 2020, Johan Geel rejoined AFGRI Group Holdings as the COO. He left as group FD in January 2018 and served as the group FD of GWK until April 2020.  About his appointment, Johan says it is a “great privilege” to be back at Afgri.

“The AFGRI environment has changed since I left, but I am looking forward to the new challenges in a changing global environment with things like Covid-19.”

He adds that he will review the current company structures with a focus on cost. “In short, we need to get back to basics and focus on what is important and what will make a difference for the new future of the agri and foods environment.”

This is not the first time Johan will be in the COO role at AFGRI. In 2009, he also served as COO until 2012 before being appointed group FD.

Johan was a CFO Awards 2016 and 2017 nominee for his work as the Group FD of AFGRI.

 

UNIGRO gaan voort om eAccounts fooie op te skort

Gegewe die inperkingsverlenging tot en met 30 April 2020, sowel as die bekendstelling van Vlak 4 inperking vanaf 1 Mei 2020, verstaan ons dat ons boere steeds vir die afsienbare toekoms ernstige uitdagings in die gesig staar.  Daarom is dit vir ons aangenaam om aan te kondig dat UNIGRO en GroCapital Financial Services sal voortgaan om eAccounts fooie op te skort met ingang Mei 2020 en waarskynlik selfs langer.

Ons wil u weereens bedank vir u voortgesette ondersteuning en die bydrae wat u lewer in die voorsiening van voedsel vir ons land se etenstafels.

Ons vertrou dat die fooiopskorting sal help om finansiële laste ligter te maak in hierdie tyd en u finansiële adminstasieproses vergemaklik.

Wees veilig.

Ross Simmonds

Besturende Direkteur, UNIGRO Financial Services

UNIGRO continues to suspend fees for eAccounts

Given the lockdown extension to 30 April 2020, and the introduction of Level 4 from 1 May 2020, we understand that our farmers will continue to face a number of serious challenges for the foreseeable future. We are therefore pleased to announce that UNIGRO and GroCapital Financial Services will continue our eAccounts fees suspension into May 2020 and possibly beyond this.

Once again, thank you for your ongoing support and for helping ensure that food reaches the table across the country. We hope that this fee suspension will help ease any financial burden and make your financial administration process more convenient.

Stay safe.

Ross Simmonds

MD, UNIGRO Financial Services