Counting the cost of drought

Sasha Planting

In the Western Cape, the 2018-19 summer will be less traumatic than the last as dams have slowly filled. That said, the impact of the drought is still being felt. For agri firms, the drought hit where it hurts most – the bottom line.

“The drought meant that our customers did not have profits to reinvest back into their businesses last year,” says Kaap Agri CEO Sean Walsh.

“If they don’t have the fruit to export, they don’t buy cartons from us. It’s that simple. This cost us revenue growth. While farmers have been slow to pick up their spending, there are definitely green shoots about – the deciduous fruit harvest was good and the wheat harvest is looking promising.”

In fact, for Kaap Agri, the drought’s impact far outweighed the impact of the land expropriation discussion, he says. “We are not seeing disinvestment or a wait-and-see approach to investing.

“Many farmers are exporters and they cannot afford to fall behind in their investment cycle. They know that if they do, they will get left behind and they will never catch up.”

This isn’t to say this sentiment’s felt across the board. “The land expropriation debate has impacted some property values and investment in stressed farming regions, notably in the Free State, but this is not the case in the Cape. I cannot speak for everyone, but we are engaging far more constructively with the government on this issue than we were a year ago, and that has to be positive.”

Revenue increased 2.1% to about R6.55 billion (2017: R6.42 billion). Recurring headline earnings grew 1.7%; recurring headline earnings per share increased 0.7% to 354.10 cents.

Regulatory delays

“We estimate the drought impact on Wesgraan and agri retail to be 11.3% of the targeted 15% growth with a further 6.5% impact due to regulatory delays in the retail fuel environment. The remainder of the business grew by 4.5%,” says Walsh.

Moneyweb

Wholesale travel club Vacation Hub International has come under fire over its cancellation practices but insists its contracts are completely in line with the Consumer Protection Act (CPA).

This comes after some members unsuccessfully tried to cancel contracts within the five-day cooling-off period allowed by the CPA, where contracts are the result of direct marketing efforts.

In an RSG Geldsake interview, Vacation Hub’s Hannelie Jacobs said the club would never refuse to cancel a contract. The only reason a contract may not have been cancelled is due to non-compliance with the contract’s terms and conditions (Ts&Cs).

“Our agreement is completely in line with the Consumer Protection

Many farmers are exporters and they cannot afford to fall behind in their investment cycle.

Sean Walsh Kaap Agri CEO