Farmer's Weekly (South Africa)
Raising capital remains a headache for emerging farmers
Fruit South Africa shares news about some of its transformation initiatives as well as the challenges encountered in the Western Cape. Glenneis Kriel reports.
Fruit South Africa recently hosted a day where it showcased the fruit industry transformation initiatives taking place in the Hex River Valley and Ceres in the Western Cape.
Load-shedding and problems at Cape Town port were identified as challenges for all three of the farms visited, but access to cheap funding was identified as the biggest growth constraint.
Alec Abrahams, the manager of Siyazama Klipland in De Doorns, said Siyazama was leased from government under the proactive land acquisition strategy (PLAS).
He said that in the absence of land ownership, the business had been struggling to raise capital and almost went bankrupt in 2018 because it was using old table-grape varieties.
Fortunately for the five shareholders of Siyazama Klipland, the South African Table Grape Industry (SATI) facilitated a turnaround strategy and, along with the Western Cape Department of Agriculture, helped the business to renew about 20ha of vineyards between 2018 and 2021. The farm benefitted from roughly R17 million through the Comprehensive Agricultural Support Programme (CASP).
At the time of the visit, 70% of the vines on the 42ha farm were younger than four years of age.
Production, nevertheless, had significantly increased thanks to the use of new and improved varieties. Where the farm packed 65 000 cartons (4,5kg) three years ago, it packed 82 000 cartons last season and already had packed 101 000 cartons so far this season.
“Our aim was to pack 125 000 cartons to 130 000 cartons, but I think we will hit 140 000 cartons this season,” Abrahams said.
However, production costs were going up as they had to use generators to keep the lights on and the scales working in the packhouse during load-shedding. Staff productivity had been negatively affected as the generators were not strong enough to also keep the fans on.
Along with this, load-shedding interfered with irrigation.
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The biggest challenge, however, was that the company was struggling with a lot of expensive debt that rendered them dependent on their creditors.
Another challenge he identified was government interference in geopolitics.
“We export some of our table grapes to Israel at premium prices but have lost this market because of government’s stance on the Palestinian war,” he said.
Robin Johnson, who co-owns Roode Zand Farm Holdings in De Doorns with Elize Boer, said that high gearing and high interest rates were also threatening the sustainability of their business.
“We are grateful for all the support we have received from SATI and government, but we need access to cheaper loans if we want to move forward,” said Johnson.
He also complained about difficulties in sourcing good and reliable labour, despite the huge escalation in minimum wages. “We downscaled labour in the packhouse to get better control over operations, which has helped to improve output per worker. We will increase the number of workers again, over time, but only in line with what we can control.”
Liza Ambraal, one of the nine shareholders of Dwarsberg Farm, thanked all the partners, stakeholders and supporters who stood by the shareholders to support them through thick and thin. “We certainly would not have been here today if it was not for the mentorship of Larry Whitfield of Oast Farm, invaluable guidance from industry specialists, Witzenberg Pals, CASP funding and loans from Hortfin and Oast Farm.”
She explained that they were burdened by crippling debt, lacked essential equipment and had encountered significant hurdles in securing finance without surety.
Ambraal added that the state of the farm mirrored their struggles.
“It was in disarray, covered with littering and debris, while worker housing was in a state of neglect, crying out for immediate attention.”
They also did not have any irrigation system and needed substantial financial investment to help the business comply with GlobalGap and SIZA standards.
“How do we export our fruit to niche markets without complying to industry standards, without financial resources for infrastructure development?” she asked.
The farm also suffered a setback when it planted plum trees that were infected with a virus, which meant much of the plum orchard had to be replaced with other fruit.
The farm currently has 2ha of apples and 8ha of pears that are eight years and older; 2,5ha of apples and 15ha of plums that are three to four years old; and 9ha of apples and 2,5ha of pears that are three to four years old, and still non-bearing.