‘Win-win’ poultry empowerment deal
In a landmark deal for the South African poultry industry, poultry product distributor Sovereign Foods said yesterday it had signed a preferential procurement agreement for dayold chicks, hatched and reared by Cultiver Investments on its farms in Limpopo.
With this deal, Sovereign estimates the black-owned agricultural company could reach a turnover of R659m over the next decade.
This estimate, based on the demands of clients, will in turn set Cultiver well on a path to become one of the largest 100% black-owned poultry hatching and rearing operations in Southern Africa over the next three years, the company said.
Cultiver, a black economic empowerment beneficiary in terms of the Proactive Land Acquisition programme, leases breeder and hatchery operations near Mokopane and a broiler farm near Polokwane.
Sovereign has also incorporated components of management support, farming skills transfer and credit facilities in the agreement.
Sovereign CEO Chris Coombes said the off-take deal would remove barriers for entry and market risks for the company while contributing to growth and sustainability of a relatively young start-up, eager to grow and make its mark and contributing to food security.
Cultiver director Muzi Twala said: “Cultiver will retain its existing ownership structure and operate independently from Sovereign Foods.
“However, we will remain in very close orbit to Sovereign to access its knowledge, research and development, and best practices in relation to day-old chick and broiler production.
“The support base of senior expertise to improve our efficiencies, levels of productivity and our venture’s profitability is also [welcomed].”
Twala said Cultiver had obtained 125,000 breeder birds from Sovereign Foods and said placement of additional parent stock at its Polokwane farms was well under way.
“This will enable Cultiver to produce approximately 342,000 hatching eggs a week, from which 285,000 day-old chicks will be hatched each week. This, in turn, will result in an output of 23,000 tons of broiler meat a year.”
According to forecasts from the company, which already employs 151 people, it expects to create more than 700 new direct jobs over the next few years, with a total of 1,000 direct and indirect jobs expected to be created through the value chain.
Coombes said the transaction was a win-win deal for both companies.
“For Cultiver, the deal entails skills transfer, access to finance, and the removal of market risk.
This would allow the senior management team to hone farming and management skills.
“For us, the long-term offtake agreement creates security in relation to our supply chain, while locating it within the government’s national transformation and empowerment policy frameworks.”