AGRIBUSINESSES' CHANGING PLAYING FIELD

The local agricultural sector’s exceptional performance since the beginning of the year has players in the industry rearranging themselves.

- Jacques Claassen

Since 1994, South Africa’s former agricultural cooperatives have generally transformed themselves into well-managed agribusinesses. In fact, they are still undergoing a process of further consolidation, capital formation and value creation for shareholders.

But the coronavirus pandemic means this is happening against a backdrop of the worst crisis and disruption since World War II.

Besides the rearrangements taking place on the field on which agribusinesses play, it is interesting to also take note of the latest economic indicators (see box on p.43).

Business playing field

Francois Strydom, CEO of the agribusiness Senwes, points out that the field on which the country’s large agribusinesses play is increasingly in a state of flux. In fact, he expects possibly only four major groupings could remain within the next 12 to 18 months. Currently there are only ten or so large agribusinesses of a cooperative nature that supply input resources and technical, financial and marketing services to producers – compared with more than 30 in the late 1980s.

Apart from agribusinesses that focus on, among others, citrus and ostrich farmers, some of the major agribusinesses are (in alphabetical order and with the location of their headquarters in brackets): Acorn Agri & Food (Somerset West); BKB (Port Elizabeth); GWK (Douglas); Kaap Agri (Paarl); KLK (Upington); NWK (Lichtenburg); OVK (Ladybrand); Senwes (Klerksdorp); Suidwes Landbou (Leeudoringstad); TWK (Piet Retief); and VKB (Reitz).

Among these companies there has been some rearrangement over the past year or so.