2014’s National Farmer of the Year, the Bosveld Group is the biggest private citrus grower and exporter in South Africa. The family-run business is recognised by most as one of the most innovative and forward-thinking companies in the agricultural sector.
South Africa’s citrus industry has had its fair share of challenges in the past few years. There has been industrial action, economic difficulty with the falling Rand, drought issues, and of course the on-going saga involving citrus black spot (CBS) and the export of fruits.
In 2013, the EU banned most imports of South African citrus fruit because of fears that citrus black spot could spread. CBS is a fungal disease caused by Guignardia citricarpaand it effects the look of the fruit.
The EU Commission said: “The introduction of citrus black spot into EU territory would pose a serious threat to the EU’s citrus-producing areas. For that reason, it is necessary to further restrict the import of citrus fruit from South Africa.”
With the EU being one of the biggest importers of SA fruit (reportedly €1 billion per year), this caused serious concern for all involved and threatened the existence of farmers both small and large.
Fortunately, the ban was lifted in January 2014 but strict conditions were put in place which made life tough for exporters. But now, as we approach 2016, the industry is seeing brighter times. Interceptions of exports with CBS at European borders are down, with November recording the lowest level this year (15 down from 28 in 2014), and 50 million of the 118 million exports going to Europe.
These numbers are largely down to the improvements that have been made at production level by SA’s hardworking farmers. Techniques such as using cleaner water, spraying plants and inspecting the fruit before and after packaging have all yielded positive results.
Citrus Growers Association (CGA) CEO Justin Chadwick said to BDlive last month: “We hope that they (EU) might consider reviewing their emergency requirements that place an additional burden (on us). Hopefully, this good result will help lift those emergency requirements.
“The result also underscores the positive findings made by the EU’s Food and Veterinary Office in August, when they conducted an audit on SA’s risk management system in February and March this year.”
Unfortunately, all of this success comes at a cost. The CGA estimates that citrus farmers now spend R1 billion a year keeping up with sanitary measures to keep CBS at bay. This has resulted in growers working with the government to try and reduce the strict regulations imposed by EU officials.
“This (emergency measures) is not sustainable in the long term, which is why we continue to work hand in hand with our government to reach a permanent resolution of this dispute to ensure the continued growth and survival of this key trading relationship,” Chadwick commented.
So what has this all meant for the farmers; for the people on the ground producing the fruit and exporting it around the world? Well, if you’re of significant size and properly managed, you shouldn’t have been thrown out too much.
Bosveld Sitrus is one of the leading exporters in South Africa, currently producing over five million cartons of fruit for foreign markets. By operating as a commercial operation, with robust business principles, Bosveld Sitrus has managed to thrive through these tough times.
Piet Smit, CEO of Bosveld Group Holdings, told BizConnect that the family business sticks to thorough business philosophies.
“The executive directors of the business are sons-in-law of Milaan Thalwitzer, who joined his father’s 100 hectare citrus farm in 1965, later taking ownership thereof and built the extensive business we have today,” he said.
“We have properly constituted companies, monthly exco meetings, and full sets of accounts for each division and company. We also have non-executive directors on the board to ensure we have independent advice to keep us focused on financial planning and to help us continuously assess our risk and adapt our strategies accordingly.
“For any primary producer to be sustainable and grow, it must make decisions based on sound business principles.
“If you take care of the detail and plan using as much data as possible, you can reduce your operational and financial risk extremely effectively and manage to innovate on a continuous basis,” he added.
SPREAD THE RISK
As part of the company’s plan to reduce operational and financial risk, it has diversified its product range over the years and now supplies many other fruits to complement its citrus business. 1750 tons of banana, 300 tons of avocado, 550 tons of litchi, 2000 tons of mango and 60,000 tons of sugar cane are grown on the various estates in Letsitele, Hoedspruit, Burgersfort, Politsi, Malelane and Komatipoort.
Furthering the variety in the portfolio, Bosveld has made acquisitions over the years that have bolstered its production capabilities. In 2011, Bosveld purchased Golden Frontiers Citrus and Komati Fruits. Around the same time, the company also took up shares in Zest Fruit, a company which exports to markets in the Middle East, Far East, Russia and other important regions.
Expansion and broadening the scope like this brings huge benefits and Nico Groenewald, Head of Agribusiness at Standard Bank, says that the largest African bank supports diversification: “We have recommended for some years that farmers improve profitability through participation in the extended agricultural value chain,” he told BizConnect.
“We also believe it is essential for farmers to move away from putting all their effort into one or two main crops and, instead, have a range of crops to spread their risk, increase revenue streams, enable more environmentally positive activities, and intensify the productivity of existing resources.
“Market tastes shift frequently, so it is vital that farmers become more agile in their operations. Sustainability in the modern era is utterly dependent on adaptability. Bosveld Sitrus exemplifies this.
“It also demonstrates that diversifying within the value chain enables you to spread existing resources over more output, reducing operating costs and increasing margins. You can do more with less.”
Moving into new international markets is also important in times when economic activity can change so quickly. The issues with European exports are ongoing and just a few interceptions of cartons containing CBS could drastically change the fortunes of SA exporters. This is why spreading the risk and heading for Asian and Russian markets is now critical.
“There is a big move towards Asian countries in general,” Dirk Hoffmann, Southern Africa Cluster Manager of Safmarine told IOL’s BusinessReport. “There is a bigger effort aimed at expanding and growing markets other than southern Europe. Of course you never want to walk away from any market, but if that market poses too great a risk to the entire European market, then it is better to take a decision not to risk a big part of your crop.
“In order to avoid a ban of SA citrus, as we saw in 2014, it’s better to avoid the risk and not ship directly to those markets, like Spain, for example,” Hoffmann said.
FARMER OF THE YEAR
In November 2014, the work that Bosveld had done to maintain and grow its position as one of the industry’s leading organisations was recognised by Agricultural Writers SA after the association named Bosveld ‘National Farmer of the Year’.
Agricultural Writers SA was founded in 1977 and today has some 180 members across the country. These members collectively voted Bosveld as the winner ahead of some tough competition. Away from the outstanding work the business has done in maintaining quality standards and yielding excellent crops, the association was also impressed with Bosveld’s work in transformation activities.
This is a company that is at the forefront of the industry, solving problems and overcoming challenges at every juncture. As we move into 2016, there is no doubt that Bosveld Sitrus and the Bosveld Group will continue to shape the citrus sector and stamp SA’s position as one of the world’s premier fruit exporters.