Farming risks are well known. Droughts, floods, frosts, hail and the like present daily challenges. The prices of farm products fluctuate dramatically with changes in the balance of supply and demand. Governments play a key role in the agricultural economy, setting tariffs, allocating water rights, providing subsidies and regulating markets, to mention a few key areas of government involvement. We mitigate these risks by cultivating a range of crops in a variety of well-spread geographic regions.
We forge operating partnerships with like-minded organisations to add value to the group’s production.
The group has a longstanding relationship with Two-A-Day, which packs and markets the group’s deciduous fruit production. Two-A-Day is owned by its grower-suppliers and essentially operates as a co-operative, distributing income to shareholders via rebates on packaging and marketing costs. TAD is a 50% shareholder in Tru-Cape (with Ceres Fruit Growers) which markets the TAD production. TAD is also a shareholder in APL Cartons, which gives it access to low cost packaging material, and Link Supply Chain Management, which manages logistics for its exports. Elgin Fruit Juices, a wholly-owned subsidiary of TAD, processes poor quality fruit not suitable for the local or export markets to juice. TAD provides a technical advisory service to growers and a service for the aggregated purchase of chemicals and fuel.
TAD supplies fruit to more than 60 countries around the world. This diversity considerably mitigates the risk posed by market volatility. CBL owns a 19% shareholding in TAD and supplies approximately 25% of TAD’s throughput. The outstanding service provided by TAD is certainly a significant factor in the success of the group in the deciduous arena.
So too, the group’s banana production is distributed by Lebombo Growers in which the group has a 27% shareholding in the line with its product supply. Lebombo operates on a similar basis as TAD, distributing its surpluses to grower shareholders via a rebate on product supplied. Lebombo supplies approximately 23% of the South African market. It has been particularly successful in the Western Cape where it has established a state-of-the-art distribution centre near Wellington to supply selected retailers directly. A similar facility has been established in KwaZulu-Natal.
The total South African banana production is marketed locally, as bananas for sub-tropical regions are generally unsuitable for export due to under-skin discolouration caused by low winter temperatures. This makes the market susceptible to dramatic supply – demand and consequently price fluctuations.
More recently the group acquired a shareholding in Mayo Macadamias which processes, markets and distributes its member’s products, both locally and globally. Mayo also essentially operates as a co-operative. Our membership in Mayo fits with our philosophy of participating in the downstream value chain.
It is our conviction that in order to remain competitive, we need to continuously improve and upgrade our farms and farming methods.
In recent years we have converted more than 2 000 ha of irrigation to drip systems. Not only does the drip use less water resulting in lower electricity consumption, but it also delivers significantly higher yields.
The use of variable – speed drives in our pumping systems, which adjust the speed of the pump for the water requirements and pumping head on a continuous basis, has reduced electricity consumption.
We continually replant old cane, banana and deciduous fields with new varieties to achieve better yields and quality. Our Granny Smith apple orchards are now planted under shadenet to reduce the incidence of sunburn and improve quality.
New techniques and processes are constantly applied as we increasingly move towards precision farming methodology.
We make widespread use of irrigation probes to define water requirements more accurately and have started using satellite technology and drones to refine our management techniques.
It is an established strategy of the group to participate in partnerships with communities and other recipients of quality farmland through the land restitution process. Via the partnership mechanism Crookes Brothers offers its expertise and administrative systems to optimise sustainable farm production to maximise the financial benefits accruing to the community. At the same time structured mentoring and training programmes are used to transfer skills to community members.
Typically an operating company is set up which is majority owned (51% to 55%) by a community property association (CPA) or trust, with CBL owning a minority shareholding. The JV company leases the farmland from the CPA or trust formed to own the land on behalf of the community. CBL provides management services and working capital finance to the operating company, which is directed by a board on which both parties are equally represented.
Our success in these ventures is achieved by establishing a strong mutual trust with the communities and their leadership, through regular communication and by taking a strong and active interest in the community well-being. With land restitution gaining momentum, we believe that the group can make a substantial and increasing contribution to the government’s transformation initiatives through participation in these partnerships.
Some of these ventures are described below:
Mthayiza Farming (Pty) Limited
Since 2008 we have been involved in a partnership with more than 1 000 households comprising the Libuyile community near Malelane for the management and operation of a 1 100 ha cane farm. The farm was acquired by the community from a third party through the land claim process.
Mawecro Farming (Pty) Limited
A major part of the group’s 2 500 ha Komati Estate, which was sold to government in 2010 and leased back on a 10-year lease, was transferred to the neighbouring Mawewe community in 2015. After engagement with the community it was agreed to convert the group’s rights in terms of the balance of the lease into a 20-year partnership with the community from 1 April 2016. While this arrangement results in a short-term reduction of profits, it offers significant long-term economic benefits and will position the group as a major player in this arena. Approximately 500 households benefit directly through dividends, rental payments and preferential employment opportunities in the Mawecro operation.
Bellcro Farming (Pty) Limited
A similar structure was implemented from April 2017 at the 43 ha Belleview deciduous fruit farm previously owned by the group, where we have established a partnership with 11 ex-employees.
Other Opportunities
We have concluded a memorandum of understanding with the KwaCele community at Scottburgh to involve them as partners and shareholders in the Renishaw property development project itself.
We are working with the Two-A-Day Group which packs and markets the group’s deciduous production to establish a farming venture in which our deciduous division employees will own a major shareholding.
Through our transparent, fair and empathetic approach to these partnerships, we are gradually establishing a reputation as partner of choice and receive regular approaches from communities for assistance. These need to be approached with caution due to the complex dynamics of community politics, but we believe that we can expand our role in this arena.