The awards ceremony was recently held during the Africa Investor Agribusiness Investment Summit hosted by the Kwa-Zulu Natal Department of Agriculture, Environmental Affairs and Rural Development.

The Agribusiness Investment Awards, run by leading international investment research and communications group Africa Investor, are the first to recognise Africa’s global agribusiness community.This community contributes to the continent’s agricultural sector by promoting innovative investments across the main agribusiness and finance sectors in Africa.

“The level of winners this year is a testament to the series of impressive organisations pioneering agribusiness investments across the continent,” says Vice Chairman and Managing Director of Africa Investor, Hubert Danso

SAB’s Taung Small Holder Farming project was rated ahead of similar schemes across the continent.

The Taung Barley Farmers Scheme in the Northern Cape was launched by SAB in 1994 as a means of encouraging enterprise development.

“SAB believes it is important to take a leadership role in areas where we believe we can make a difference in the lives of people and not only to promote business success.

“We take a hands-on and progressive approach to achieving this aim, the benefits of which are evidenced by the success of the Taung Barley Farmers,,” says John Stenslunde, General Manager SAB Maltings and Hop Farms.

The project is managed by the SAB Maltings’ Irrigation Agricultural Services team in partnership with the North West Department of Agriculture, Conservation, Environment and Rural Development and the local tribal authority. It spans approximately 1 500 hectares of land and helps around 150 Emerging Farmers generate an income from barley and maize in the area.

SAB provides the finance to the farmers to grow the crops, agricultural extension services to ensure yields and quality and guarantees a market for the product.

Through a partnership with GrainSA, a voluntary association of grain farmers, the project is able to provide skills that empower farmers to work independently on a sustainable basis.

SAB KickStart has, since its launch in May 1995, benefitted more than 22 936 young entrepreneurs through a total investment of R51 million in grant funding by SAB. From this total number of beneficiaries, 3200 small businesses have been established.

SAB established the programme to initially address youth unemployment in South Africa. It later flourished to become one that encourages a spirit of entrepreneurship amongst the youth.

SAB provides young entrepreneurs with monetary grants for business start-ups and the expansion of existing businesses, and also focuses on skills development through training and mentoring.

“It is important to SAB that we help to build sustainable businesses through the SAB KickStart programme, rather than just pumping money into them. We take an interest in how these businesses can contribute meaningfully to the economy of the country and to its people,” says Dr Vincent Maphai, SAB Director Corporate Affairs and Transformation.

Many of the SAB KickStart businesses have gone on to become multi-million rand companies, employing a significant number of people. These companies have contributed to both job creation and the South African economy.

“Entrepreneurship is critical and a key contributor to the country’s economic growth. SAB has for many decades focused on skills development to offer the youth a platform which empowers and improves their lives and many others through business development,” says Dr Maphai.

SAB KickStart has become one of the country’s leading and largest entrepreneurship programmes within the private sector with the programme having become an international benchmark for successful small enterprise development. The SABMiller group has adopted SAB KickStart in four other countries to date – Columbia, North America, Hungary and Botswana.

Each year, SAB KickStart has seen budding and existing entrepreneurs between the ages of 18 and 35 years enter the competition. The primary intention is that candidates develop sound business ideas into viable and sustainable businesses. Many of these businesses have become suppliers to SAB with the dual effect that new entrepreneurs are assisted to run sustainable businesses.

To commemorate its 15 year history of promoting youth entrepreneurship, SAB has embarked on a nationwide search for the Ultimate SAB KickStarter. This is an existing business owner whose business was either started or expanded by the SAB KickStart programme in the past.

SAB is calling on past winners to showcase their business successes, with the best being celebrated at an awards function in October, this year. The winners will receive an exciting and valuable package geared to further grow their business.

Past SAB KickStart winners will be required to submit an entry and then demonstrate their business growth and success since first participating in the programme. Shortlisted finalists will be subjected to a rigorous independent judging panel which will select the best of the best SAB KickStarter.

Previous SAB KickStart winners include, Neil van Schalkwyk, who first sold and commercialised the now world famous Vuvuzela; Lere Mgayita, whose shoe-shine businesses are now a permanent feature at major airports across South Africa; and Thabang Molefe, whose Roots Health and Beauty Salon has grown from a ‘one-woman’ business to a fully-fledged national operation employing 42 people and generating a multi-million rand annual turnover.

Running concurrently with the search for the Ulimate SAB KickStarter is the annual competition. The 2010 SAB KickStart entrants have already been shortlisted and are currently participating in the mentoring and training phase of the programme. These winners will be celebrated along with the announcement of the Ultimate SAB KickStarter at the 15th Year Anniversary event in October.

Other initiatives launched by SAB in the past to support entrepreneurial development include the Owner Driver programme, which saw former SAB employees starting their own companies to distribute SAB products to the trade; and the Taung Barley Farmers programme in the Northern Cape, which was established in the early 1990s to encourage barley production by local black farmers and reduce reliance on imports.

Indeed, this note would prove incomplete if it ignored the effects of climate change to the agricultural sector. As has been widely documented, the misfortune lies in the fact that the countries most affected will have held the least responsibility for greenhouse gas emissions. The consensus view currently holds that the most severe climatic effect will be in sub-Saharan Africa where higher temperatures will shorten growing seasons of staple crops. This will be further exacerbated by poverty in these geographic regions. This debate has naturally found a place around dinner tables and is further accentuated by climate changes in countries such as Russia, China and Pakistan.
 
Despite the heat wave in Russia currently, and it being the third biggest emitter of greenhouse gases globally, its “attitude to climate change to date has been cavalier, at best.” (Financial Times, 27 August 2010). Concern and media speculation is mounting about whether the recent events in Russia might lead to a sustained rise in agricultural and food prices. The last time the world suffered sharp increases in food inflation was as recently as 2007/08, when, similar to now, droughts in key wheat exporting areas led to serious crop shortfalls. Added to this speculation is China and that country experiencing the worst floods seen in a decade. The shared view seems to be that of a short-lived period (approximately 3 months) of rising soft commodity indices. Due to higher inventories and various other factors we discuss below, the expert view seems to be that prices are unlikely to spiral up to the same extent as three years ago. A few points to make are that, firstly, global grain inventories are at much more comfortable levels as compared to 2007/08.

Globally, wheat stocks are up 50% from this period, and at even greater levels across key producers like China, India and the United States (US). Secondly, the global economy is in a much weaker state where, in the past, food retailers were much more easily able to pass on the higher commodity costs on to consumers. For instance, despite very high prices, coffee growers have been unable to capitalise on these prices due to a lack of demand. A further point we make is that of a much weaker US dollar over the period 2007/08. This currency has shared a long-standing inverse relationship with agricultural commodities. As most commodities are US dollar-denominated, a weaker dollar makes it cheaper for importers thus pushing up demand. What one might expect to unfold would be the ‘safe haven’ role the dollar has often assumed in times of uncertainty. The dollar index today is approximately 10% higher than it was during its low point in early 2008, bringing these commodities off the boil somewhat.
 
There is no question concerning the significance of this theme going forward. With entrepreneurs, financiers and an increasing number of hedge fund managers capitalising on the premise of further profits, it’s difficult to find contradictory views. “Increased urbanisation and the need for sustainable agriculture are putting strain on available arable land, requiring greater yields per acre” (Marius Kloppers, BHP Billiton CEO). Recognised as one of the top three global mining companies, BHP Billiton has seen it fit to diversify assets into agriculture through their hostile bid for Potash Corporation, the world’s largest fertiliser maker. Not surprisingly, the Brazilians and Chinese have hopped onto the band-wagon. As a South African investor, we would expect this theme to ‘feed’ through into sectors such as food producers (e.g. Tiger Brands Ltd, Tongaat-Hulett Ltd) and evidently, fertilizer companies such as Omnia Holdings Ltd.
 
Whilst positive, it would be naïve to expect that the activities of financial speculators in food markets would be welcomed. Various interest groups have (and perhaps rightly so) plainly condemned the growing role played by hedge funds and banks in commodity markets. We maintain that if executed openly and unambiguously, whilst providing the much needed capital into the development of this industry, we would suggest keeping a watchful eye on growth in this sector.

Castle Lager, SAB’s flagship brand, took third place in the same category.  This is the fifth consecutive time that Carling Black Label has taken a first place in the sub-category, Beers.  “It is incredibly humbling that year after year South Africans choose Carling Black Label as their preferred beer brand. We believe that this is a huge responsibility and one which we are honoured to have.”
 
“It is further motivation for us to ensure that we continue surprising and delighting consumers so that they keep coming back for more,” says Andrea Quaye, General Manager Carling Black Label.    
 
The Top Brands Awards research survey to select the best brands was conducted by TNS Research Surveys. At least 3 900 individuals including business people were interviewed and each questioned on how regularly they used the brand. How much better than average the brand was amongst users and non-users was also calculated.  

This year’s research findings indicated that consumers chose more iconic brands with a long history in South Africa. Brands that shone through in 2010 were felt to be proudly South African and trusted amongst consumers.  “The Carling Black Label brand has been part of South Africans’ lives since the 1960s and has since firmly entrenched itself as a beer catering to consumers from all walks of life,” says Quaye.
 
“So well loved is the brand amongst ordinary South Africans, that it is one of the few which, over the years, has adopted a nickname, ‘Zamalek’, that has embedded itself into the country’s spirited vocabulary.” says Quaye.  Carling Black Label, which has always been a beer for real men, has recently refreshed its positioning to reflect a more multi-faceted expression of masculinity which is more relevant to the 21st century South African man.
 
Carling Black Label continues to increase its stature as a champion beer having won 19 international awards for taste, making it the most awarded beer brand in South Africa, ahead of its competitors by a wide margin.
 
On being recognised as one of the country’s most prominent beer brands, SAB General Manager Castle Lager, Alastair Hewitt says, “It is fitting and an honour that South Africans feel passionate about Castle Lager. The brand has always been part of the nation’s fabric and is synonymous with South Africa the world over.”

Keg is a franchised pub and restaurant brand, while McGinty`s is a franchised pub brand. There are currently 28 Keg and 5 McGinty`s franchised outlets in South Africa, Zimbabwe and Mauritius. The transaction is subject to a due diligence exercise. Assuming successful fulfillment of this suspensive condition, the effective date of the acquisition is 01 September 2010.

In the Group`s annual report published in May 2010, Famous Brands stated that the company had evolved its strategic intent, thereby expanding its previous narrow focus on Quick Service Restaurants (QSR) and Casual Dining, to include the broader leisure category, while remaining true to its core competency of food service.

CEO, Kevin Hedderwick says, “The acquisition of Keg and McGinty`s is our first foray into pure leisure. Our strategic intent is to focus on what we do best, namely food service, but in order to continue unlocking value for stakeholders, we have had to consider the broader leisure category in our search for further growth opportunities.”

Jason Kruger, corporate advisor to the current owner of the brands, The Kempston Group, says, “The Kempston Group is currently refocusing on its core assets and businesses which relate mainly to the transport industry and associated activities, and is thus disinvesting from certain non-core activities. Famous Brands is seen to be an excellent successor, who we believe has the ability to continue enhancing the value of these brands and provide excellent support to our loyal franchisees.”

Hedderwick is very familiar with the pub and restaurant category, and the Keg brand specifically, having been the Managing Director and a shareholder in Keg Franchising (Pty) Ltd from 1995 to 1997, a business which he and his partners sold to JSE-listed Kingco in 1997.

“At one point the collective Keg and McGinty`s network comprised around 65 restaurant pubs in South Africa, with representation in Australia as well. Despite the southern African footprint having reduced in size to a network of 33, and the brand no longer trading in Australia, the Keg brand remains category leader in the defined themed pub and restaurant franchised business, which speaks volumes for its equity amongst South African consumers,” says Hedderwick.

According to Hedderwick the pub and restaurant category as a whole has declined in recent years, largely as a result of brands failing to reinvent themselves and remain contemporary and relevant in line with changing consumer dynamics. “However there are a number of independently owned pub restaurants that are growing in popularity, which underlines that there is good growth potential within the category for skilful operators,” he says.

“Of late there has also been a strong revival in the pub restaurant category in the US and UK with the evolution of what is referred to as `gastro pubs` which essentially represent a repositioning of the tired old-style pub category which had become over-dependant on the serving of alcohol to survive,” he says.

Hedderwick notes that growth prospects for the Keg brand in particular are favourable. “While the brand needs innovation and renovation, we are confident that we can restore its rich heritage as a pub and restaurant business, where the emphasis is on the food. In an overall sense, this repositioning will be based on the three pillars which underpinned the brand`s popularity in its heyday, namely good food, good beer, great cheer – and in that order. This iconic brand was, and once again needs to be, perceived by the South African consumer as their `local` – their `home from home,`” he says.

Key to this acquisition are the synergies and benefits to be extracted from integrating both brands into the Group`s comprehensive business model, which existing franchisees will benefit from with immediate effect.

“This transaction is in line with our stated philosophy of accumulating best in class franchised brands, or brands that once acquired, we can make best in class. Our business imperative is to grow and develop leading franchise leisure brands, supporting them with a business model which maximises stakeholder value creation,” he says.

Hedderwick concludes, “Keg and McGinty`s are welcome additions to our robustly expanding brand portfolio, and are part of a deliberate strategy implemented by the Group to make full use of our strong balance sheet to acquire relevant food service brands with compelling upside potential at a time when in certain instances values might be suppressed due to the current economic climate. Our firmly entrenched brand stewardship model continues to serve us well and has proven our ability to manage a wide repertoire of brands within the franchised food service market. Our profit and earnings performance over the years since this journey started is evidence of this,” he says.

“As growth opportunities and synergies are extracted, the earnings enhancing nature of this acquisition will provide further reason to delight our stakeholders,” Hedderwick concludes.

“The time to invest in agriculture in Africa is now. There is substantial political will across the continent, as well as in the Southern African Development Community (SADC), to develop the agricultural sector – and financial institutions such as Absa have an important role to play in investment into agriculture,” says Absa Business Bank Chief Executive, Bobby Malabie.

“South Africa has vast experience in the financial side of agriculture, and we have a lot to offer our continent in terms of our expertise. There is much scope for Absa to positively influence growth and stability in the agricultural sector, promote inter-regional economic growth and, of course, bolster food security for the continent as a whole,” adds Malabie.

“The greatest potential for growth in cultivated land is Latin America, Asia and Africa,” says Hans Balyamujura, General Manager: Africa and Stakeholder Relations for Absa AgriBusiness. But Latin America offers short-term growth potential only, and Asia struggles with sustainable water issues – leaving Africa, “where the long-term potential lies”.

Balyamujura points out that agriculture is the major employer in most sub-Saharan African countries.

“Agriculture still accounts for a large percentage (of GDP), because other sectors are in their infancy,” says Balyamujura. “The percentage that agriculture contributes to GDP diminishes as countries become more developed, but the value of agriculture’s contribution continues to rise.”

Absa’s South African AgriBusiness operation has proven itself as a sustainable model, he says, and will expand well into other African countries. “We want to leverage this expertise and presence from South Africa, into Africa.”

But Balyamujura warns that business conditions for agriculture are not always the same as for South Africa, but that Absa AgriBusiness’ offerings in other countries should be flexible enough to meet local conditions.

“For example, one challenge is that many farmers are smaller-scale producers than one finds in South Africa. Another is that most land in South Africa is freehold, but in many African countries it is leasehold, where the government owns the land and leases it to the occupants. This calls for a different approach in each situation,” says Balyamujura.

He stresses that long-term agricultural sustainability is an important factor in how Absa AgriBusiness is rolled out into Africa: “Deals have to be commercial in nature, but also carry a very strong developmental aspect to them.”

Market stability is another key factor in choosing which crops to finance, adds Balyamujura, who says: “There has to be adequate demand for primary consumption, processing or export. Also important to ensure market stability is the stimulation of intra-African trade.”

For Balyamujura, while Absa AgriBusiness faces challenges in expanding into the rest of Africa, the continent is more politically and economically stable than ever, and presents better business prospects than before.

“Where there is a problem, there is opportunity as well. Through capitalising on such opportunities, Absa AgriBusiness will play its part in developing agriculture to its fullest potential, supporting stable market conditions which in turn encourage sustainable agricultural development, creating wealth for our clients – and turning Africa into the breadbasket of the world.”

Successful trials were run with Dick Cotterell, perishables manager at Spar KZN DC, and consequently over 300 units have been ordered to replace the dry ice, resulting in significant cost savings for Spar.

The Eutectic Holding Plate is similar to a cooler box ice brick filled with a solution which freezes at a predetermined temperature (temperature can be set to customer requirements). Once frozen, the plate can hold the temperature for up to 24 hours.

Among the advantages of using the Eutectic Plates are that they are maintenance free, re-usable, eco-friendly resulting in a reduction in CO2 emissions, durable, easy to handle as you don’t need gloves and the solution can be set to a range of temperatures while dry ice offers only one set temperature.

Although there is an initial cost outlay, the Eutectic Holding Plate systems easily pays for itself in a matter of a few months as there is no consumable cost attached.

Xolani Sele of Spar inserts a chilled Eutectic plate into the holding plate system in the vehicle prior to loading stock for delivery.

But what exactly do these terms mean and how can we accurately ensure that all brands are using equivalent measures?

To respond to these issues and harmonize milk goods, ISO and the International Dairy Federation (IDF) have developed a standard providing testing requirements and guidelines to determine the fat content of milk. Now in its third edition, the standard is for the first time applicable to sheep and goat’s milk, in addition to cow’s milk.

“The fat content of milk is an important quality factor, and a major determinant of the price paid to milk producers,” says Silvia Orlandini, ISO/IDF Project Leader for this edition of the standard (ISO 1211|IDF 1), “Harmonized test procedures allow the comparison of different products from various manufacturers. They also help deter and prevent the adulteration of milk designed to falsify fat content.”

ISO 1211|IDF 1:2010, Milk – Determination of fat content – Gravimetric method (Reference method), provides a test methodology to determine the fat content of milk of good physicochemical (physical and chemical) quality, including guidelines for calculation and expression of results.

ISO 1211|IDF 1 has been an important standard in the milk industry since 1984 when it was first published by ISO. The latest 2010 edition brings the content up to date with state-of-the-art developments. Originally applicable to cow’s milk, the methodology can now be used for sheep and goat’s milk, whether full fat, reduced fat or skimmed, as well as chemically preserved and processed liquid milk.

The standard will be useful to engineers and developers in the dairy industry, regulatory authorities and research institutions, and the farming sector.

ISO 1211|IDF 1 was prepared by ISO technical committee ISO/TC 34, Food products, subcommittee SC 5, Milk and milk products, in collaboration with IDF – a non-profit organization representing the dairy sector worldwide. IDF and ISO have a long history of working together to develop and jointly publish standards methods of analysis and sampling for milk and derivative products.

Some other related examples of ISO-IDF collaboration include fat content determination standards for cheese and processed cheese products, dried milk and dried milk products, evaporated milk and sweetened condensed milk, whey cheese, milk-based infant foods, milk based edible ices and ice mixes, skimmed milk, whey and buttermilk and caseins and caseinates.

ISO 1211|IDF 1:2010 (IDF 1:2010), Milk – Determination of fat content – Gravimetric method (Reference method), is available from ISO national member institutes

Farmers can use the system to retrieve data for fresh produce, livestock, grain and fibre markets, as well as downloading selected foreign exchange rates and economic data. Farmers who have access to ‘real time’ and region specific agricultural commodities price information enjoy a definite advantage over their competitors. Local farmers have struggled with price and volume data since the abolishment of agricultural marketing boards during the 1990s.

“Only single-commodity specialists remain active in the price data space,” says Paul Makube, Manager of Agriculture Information at FNB Commercial. These include grain co-ops which feed data to organisations such as Grain SA and information supplied to members by producer organisations, for instance in the meat, milk and potato industries. Other market institutions such as the South African Futures Exchange (Safex) and fresh produce markets also generate product prices. The challenge has therefore been to provide a holistic view of the domestic produce and livestock markets.

“Since the late 1990s FNB Commercial Agriculture has taken the initiative to supply data, market analysis and relevant agriculture news to its commercial farm customers. We are ready to take this information to the next level, providing farmers with ‘real time’ useable data the likes of which is only selectively available through for instance Safex,” says Makube.

Makube adds, “We hope to use the system to build relationships between FNB Commercial Agriculture and the broad agriculture sector by providing critical information to assist farmers with operational decisions.”

FNB AgriCommodities is invaluable to a broad spectrum of players in the agricultural sector including large scale commercial farmers and small farmers alike. Other individuals and institutions include academics, students, food wholesalers, retailers and processors and even consumer interest groups who for instance need to track food inflation. Subscribers to the portal receive access to price and volume information covering a wide range of fresh produce, crops and livestock.

“Price and volume information, both current and historic, is used by farmers to make informed business decisions. Apart from assisting with day to day planning, commercial farmers also need detailed pricing information in budgets to negotiate lines of credit and other financing requirements with their bankers. Trends for specific commodities are needed in forecasting the long-term sustainability of sectors in the industry,” adds Louis van der Merwe, head of FNB Commercial Agriculture.

FNB is already investigating ways to extend its daily ‘real time’ fresh produce prices to other commodities. The system also provides historic price and volume statistics provided by the Department of Agriculture.

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Asilia marks Agri-Vie’s first foray into the eco-tourism sector, with previous investments made by the private equity fund being predominantly in the food and agribusiness sector.

According to Herman Marais, chief executive at Agri-Vie, eco-tourism is set to experience sustained growth in Africa over the next few decades, as investors increasingly recognise the sector as being a viable and investible industry.

“While.agribusiness remains the most formalised industry in rural sub-Saharan Africa, we believe eco-tourism is ready to make a quantum leap from lifestyle and ego operators, to become a sustainable and investible industry that can add value to conservation and economic growth in the region. With such untapped potential, we are confident that eco-tourism is set to be one of the key sectors in Africa over the next 30 years.”

He adds that there are clear synergies between agri-business and the tourism sector, which provides a ready market for local food products and othe supplies. “The Agri-Vie fund’s investors recognize the commercial and developmental synergies between agribusiness and ecotourism in the rural development context of Africa.”

Another player in the sector, Wilderness Safaris, is currently in the process of listing on the stock exhange in Botswana and Johannesburg, providing further evidence of the evolution of the eco-tourism sector into an investible industry.

He says Asilia – which generates around $10-million in revenues annually from four safari camps and a luxury lodge – is an important part of this growing trend. “Asilia brings a much-needed corporate approach to the business of eco-tourism, which will help to improve the profile of tourism industry in Africa and enable it to build scale and harness the potential of the region.”

Marais says that the investment also remains consistent with Agri-Vie’s stated mandate of making investments into sustainable businesses that are not just profitable, but also have a positive impact on the region in which they operate by promoting socio-economic development. “Asilia already employs more than 350 people in the region, who in turn support hundreds more household members. Business revenues also fund conservation institutions and projects, thus helping to secure Africa’s wildlife legacy.”

Jeroen Harderwijk, Managing Director of Asilia, says the capital from the investment will be used to finalise ongoing projects as well as helping to fund the group’s expansion plans. “We are already one of the top three players in the eco-tourism market in Tanzania and we are in advanced talks to move into the Kenyan market.

“We see both these markets as a core part of our future strategy and our vision is to become a regional leader in the eco-tourism business.”

He says the tourism industry in Tanzania and Kenya currently attracts 800 000 and 1 million tourists each year respectively. “The world is finally waking up to Africa as a prime tourism destination and we expect these numbers to grow from their current base as the region gains further recognition in global markets.”

Harderwijk says one of the keys to operating successfully and sustainably in the East African region is to establish strong relationships with the local communities. “There are unique challenges that one faces in creating tourism establishments in these regions and to deal with these effectively, it is vital that companies work with the local people, not only by providing much-needed employment but also by incorporating them into planned developments in order to have a positive impact on the region.”

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