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How well is transformation doing in the Langkloof?

The Jobs Fund Initiatives is the Deciduous Fruit Development Chamber’s Commercialisation Programme. It started in 2016 and is aimed at graduating a group of smallholder farmers to commercial status. Hortgro and the DFDC-SA recently went on a monitoring and evaluation visit to the Langkloof to see how the seven farms, being part of this initiative, is looking now, a year after the project ended. Joining the team of Dr Thembi Xaba (CEO DFDC-SA), Mariette Kotze (Hortgro: Group Operations Manager) and Chrismaine Abrahams (Hortgro: Project Manager, Producer Support Programmes) were Marvin Khaile and Ardre Jacobs from Standard Bank’s Agricultural Business Banking. Standard Bank was part of the visit to assess whether there are ways in which they can assist with a tailor-made funding solution for deciduous fruit producers. SEFA, Khula Credit Guarantee joined the visit with the intention of getting to understand the deciduous fruit industry business operations in the respective projects.

The Langkloof is one of the most productive deciduous fruit producing areas in South Africa. In this Kloof you will find a mixed bag, from huge farming conglomerates to emerging transformation farmers. But you will also find the equaliser, the weather. From abundant water to drought to hail devastation, all in the same season in a stretch of about 160 km long.

Be that as it may, black producers had to put their request for aid to the Jobs Fund in 2016 and, after evaluation, everything fair towards growing the farms into sustainable businesses was granted. From trees to tractors. Looking at it farm by farm, a year after the Jobs Fund Initiative ended, the monitoring and evaluation team found the following:

JD Rovon

JD Rovon

The Jobs Fund Initiative (JFI) initially assisted with funding to plant 6 ha of apples, a tractor and sprayer as well as some production inputs. In 2019 the farm entered into a joint venture with Humansdorp Co-op to bridge their cash flows problems. The beneficiaries of JD Rovon retained 60% ownership of the operating entity.  They have managed to reduce the debt from  R4million to R2 million. Apart from the financial side, production also improved from the previous year with more bins being harvested in 2021. Although the drought is still an issue in the area, the farm still have enough water available to irrigate their orchards.

Mariette Kotze, Hortgro:

“It’s a display of resilience. Despite many of the farms that were severely negatively impacted by the hail during January 2020, the Covid-19 pandemic, rising input costs and the impact of the on-going drought, the resilience of these growers to bounce back and face the coming season head-on is inspiring to say the least.” 

Misgund-Oos

Misgund Oos

Misgund-Oos was assisted through the Jobs Fund project to plant 19 ha of pome fruit orchards. On 12 January 2021 the farm experienced extreme hailstorms which resulted in a 90% loss in production. They had insurance in place but could not claim 100% of the loss since only high value/export cultivars were insured. According to the farm manager, Jenniville Uithaler, they only received about 25-30% of the possible income through their insurance claim. Due to the hail damage the farm is currently struggling with cash flow. However, the coming season looks promising with a good harvest from the trees that were planted through the JF project. They are optimistic that the business can recover financially.

Chrismaine Abrahams, Hortgro:

“The optimism of these farmers is a lesson to everyone out there. Through the DFDC’s Commercialisation Programme they have been given a chance. They are going to make it work, whatever nature throws at them.”

Mistico Trading

Mistico

Mistico was assisted through JFI to plant 20 ha of pome fruit orchards which should produce a harvest in the 2022 season. Mistico Trading also entered into a joint venture with Humansdorp Co-op in 2019. They established an operating company, Mistico Farming Company, in which the 29 beneficiaries of Mistico Trading have 51% shares. Although the current liabilities exceed the current assets, with this new structure they have a repayment plan in place. Also, they have removed 26 ha of unproductive orchards which will have a welcome decrease in cost. They are planning to replant at least 20 ha depending on funding. However, they have been advised to only plant once the farm becomes profitable, given that they already have 75 ha of fruit established.

Marven Khaile, Standard Bank Agricultural Business Banking:

Overall, the business is promising. It should be highlighted that, like any other business, the long-term success of it is dependent on strong management. At this moment Mistico seems to be moving in the right path from a management point of view. The business has a potential to be bankable.”

Rica’s Fruit

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Rica’s Fruit on the farm Langfontein was also part of JFI being supported to develop 20 ha of pome fruit orchards and to acquire seven tractors and seven sprayers. Langfontein was hit by a devastating hailstorm in January 2021 which basically destroyed their entire harvest. This, coupled by the drought that the area is still experiencing, negatively impacted on their yields and income Rica’s Fruit have entered into a funding and marketing partnership with Golden Harvest, which should over the years ease off the financial burden that the business is currently experiencing. According to manager Ricardo du Preez, Golden Harvest is committed towards financially supporting the farm. In addition, Rica’s removed the low production orchards which will have a positive impact on their financials.

Ardre Jacobs, Standard Bank Agricultural Business Banking:

Leadership and management appears firm and focused and well versed in the business and industry. Orchard condition reflects good management. The business has a potential to be bankable.”

Anhalt

Anhalt

The JFI assisted the farm to develop 16 ha of pome fruit orchards. Currently the farm has a total of 81 ha established. According to farm manager, Nico du Preez, their biggest challenges are water (with Haarlem dam only at 30% capacity) and old infrastructure including equipment and machinery. Financially the farm is performing well and they are expecting a good harvest in 2022. Over the long-term they plan to access 40 ha of land that belongs to the Haarlem community. Anhalt would like to develop the land since it’s not currently being used and they have enough water rights.

Marven Khaile, Standard Bank Agricultural Business Banking:

Anhalt appears to have a clear vision and direction of where it wants to be in the short, medium and long-term. There is still vacant land that could be the potential for the business for future orchard expansion as per management assertion. Anhalt has the potential to be bankable.”

Hoë-uitsig Co-op, Ongelegen

Hoe Uitsig

The farm is currently in financial distress due to the on-going drought that the area is still experiencing and the hail damage in January 2021. According to the beneficiaries they urgently require assistance with cash flow. Presently they are prioritising which orchards to maintain, given the water and inputs availability. Without sufficient water, the orchards will start to perish. In terms of the financials, the project can request emergency funding through the 50 Commercial Programme with the Western Cape Department of Agriculture. The young trees look good, but the irrigation water is depleted. When the rains come, so will their rescue. No matter what, they are hanging in there. Resiliently.

Ardre Jacobs:

“All the challenges need to be addressed individually with the aim of making the business sustainable in the short, medium and long-term.”

Tulpieskraal

Tulpieskraal

Tulpieskraal was assisted via the JFI to plant 8 ha of pears on their farm. In total, the project now has 16 ha of pears established. Unfortunately, they do not have any more land available to develop further. Their wish is to purchase the neighbouring farm which consists of 17 ha of land. Financially they are not able to do so within the near future. Yet, once all the orchards start producing they should be in a better financial situation. The trees planted through the commercialisation programme will deliver its first harvest in the 2022 fruit season.

Dr Thembi Xaba, CEO, DFDC-SA:

“The visit to Tulpieskraal was encouraging as it demonstrated focus, and consistency in good farm management practices by the project. At this stage it’s difficult to single out one success factor, as the visit to the various projects has demonstrated to the team that the success of these projects is as a result of a combination of factors, being; determination, resilience, good governance and growth vision.”

 

After all is said and done, the question is: Was the commercialisation programme of these black farmers worth it? Even with all the outside elements such as the weather and Covid-19 taken in consideration, the monitoring and evaluation team are all in agreement that the answer is a definite yes. The orchards that were established during the last four years with the latest cultivars are looking promising and this will definitely result in increased production from black growers and increased returns back to the farm.  Mariette Kotze sums it up: “We are proud to be part of the journey of each one of these businesses.”

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