In the quaint and charming city of Grahamstown, in South Africa’s Eastern Cape, an innovative agricultural business has the taste for success and is looking for sustained growth throughout 2016 and beyond.
The export industry is a positive space to be in right now. Thanks to the depreciation of the Rand in international currency markets, South African goods are attractive to foreign buyers and when you have products that are internationally recognised for quality it makes things especially exciting.
Grahamstown-based Carara Agro Processing is a perfect example. Established 12 years ago, this agri-focused business produces unique food products for export. The flagship product for the company is the cherry pepper.Crunchy and sweet, Carara’s little red pepper has the appearance of a cherry tomato, but with a surprising zesty flavour. Cored and de-seeded, its enduring bell-shape, mild heat and crunchy texture make it ideal for stuffing or eating whole. The company also produces other pickled products and sends them out to hungry customers all over the world.
After starting out as a small operation, today Carara Agro has two major processing plants and works closely with farmers to produce quality goods. It’s a classic business case; an example to follow; where all the ingredients for commercial success have been added and developed at the right times.
Managing Director, Mike Duxbury, an experienced farmer originally from Zimbabwe, tells Enterprise Africa that the company is now looking for new markets and also pushing its new products lines which have so far been very well-received.
“The product is very popular and we have expanded. We did 400 tons in our first season but now, in the last two or three years, we’ve been close to 2400 tons. We’ve expanded drastically over the years and now we are at a plateau so we’re looking to add other products to our portfolio. We would love to be able to increase our cherry pepper business by finding new markets,” he says.
“We export 95% of our product. Our biggest market is Europe and specifically Germany. We’ve never explored the Eastern markets so we’re going to a tradeshow in Dubai next year. We believe that there’s huge opportunity in the United States, we have all the relevant FCA approvals for our products, but we’ve had limited success there and we are hoping that we can work there more in the future.
“There is a market in Africa. We’re looking at our smaller lines for the local retail market in South Africa but that is not the main focus of the business.”
GOLD STANDARD
The company has been lauded recently for a new product line that is becoming popular in local and European markets.
“We’ve got a gourmet chutney which we’re pretty excited about,” says Duxbury. “It’s been launched in a supermarket chain in the Netherlands and we believe it is a very unique product with a unique taste. We entered it into the International Taste and Quality Institute and we got a gold medal for superior taste and hope that this will give us traction with customers in Europe. We sell it in the local market and it’s very popular. The next thing that we’re excited about is roasted vegetables. The first product that we intend to do significant volumes with is a roasted marrow for export.”
All of Carara’s processing facilities are audited and certified by WFSO to HACCP, ISO 22000 PLUS ISO/TS 22002-1 standards and products also carry Kosher and Halaal certification. As part of the company’s ongoing focus on excellence, it guarantees products to be consistently top quality, meeting and ensuring customer satisfaction through continual improvement.
Although the company is now seeing success, it hasn’t always been this way and Duxbury and other shareholders had to plan a strategy carefully when the business was in its infancy.
“The majority of the shareholders were ex-Zimbabweans and due to the political situation we were unable to continue there. We had an idea and we bought it with us down to South Africa and we established the company in mid-2004. In 2005, we had our first production run.
“Carara cherry pepper is our main product and that’s been the focus since day one. We’ve slowly added other product lines but the majority of our production is the cherry pepper.
“I’m now the only full-time working shareholder,” he says. “Initially there were four shareholders who came down from Zimbabwe and teamed up with a South African Farmer to set up the factory Carara Agro Processing. We couldn’t keep up with demand so we consequently brought in some other people from Zimbabwe and South African and set up another factory in Natal called the The Natal Pepper Company in which Carara has a 50% shareholding. It’s a similar operation focussing predominantly on cherry peppers.”
CYCLICAL BUSINESS & CYCLICAL ECONOMY
As mentioned, the economic situation in South Africa right now, with depreciating currency, means that exports are very attractive in foreign markets. According to SARS, total exports from South Africa increased by 6.3% to R96.1 billion in March of 2016. However, this has not and will not always be the case.
“It definitely helps us but things go in a cycle and when the Rand strengthens again we can end up in a totally different situation,” explains Duxbury. “At this stage, the long-term trend for the Rand is weak and that is good for us but it’s unlikely that we’ll get a price increase in Europe as there’s huge pressure on food prices. Inflation here is at least 10% with our costs and that comes out of the devaluation. At the moment it’s favourable but things change very quickly.”
Because of this uncertainty, Carara has to be efficient and well-organised.
“Our target is to boost or business during our ‘off season’,” says Duxbury. “We will continue to invest in our facilities and build relationships with our partners so that we can grow. As we explore more markets, our output will grow and that will mean that we will have to invest more and that’s something we are happy to do. Our ultimate vision was to become recognised worldwide as a top quality, reliable and consistent producer of cherry peppers and other pickled products and I believe we are now there.”
One area where organisation can become complex is with staff. Grahamstown has a population of around 70,000 people and in season, Carara employs in excess of 1000 people (across the Carara group inclusive of seasonal farming jobs the business has created close to 6000 seasonal jobs). While this gives management things to think about, Duxbury says that effective management is key to the success of the business.
“We contract farmers to produce all our peppers. We don’t get involved in growing the peppers apart from providing an extension service to farmers for basic assistance and monitoring. Carara’s focus is primarily on the processing, packaging, storage, dispatch and delivery of our products to our customers around the globe.
“The levels of staff we employ is a challenge and that’s where the success of the business lays,” he says. “If you can manage and motivate a happy workforce you’ll be successful and if you can’t then you’ll quickly fail.”
Carara sets out its stance when it comes to its employees in its ‘company values’ where it states: ‘We develop an environment in which our employees can experience involvement that matters, accountability for problem solving, creativity and decision making so as to add value to our company. We maintain the highest possible standard of safety and health in the workplace environment’.
Success with employees is hugely important in the South African agriculture sector, a sector that has had its fair share of problems in the past few years. Fortunately, through successful management and an unwavering drive for quality, Carara has laid the foundations for a business that will continue to thrive in the future. Product, promotion and people are all on point – now it’s just a case of maximising. Carara cherry peppers are helping to build this important business and ‘whether you slice them, dice them or stuff them. Be creative. No gourmet platter is complete without them’.