Kaap Agri Operations


A hive of activity
While the rest of the world has battened down the hatches, South Africa seems to be immune, as Alan Swaby learns when talking to one of the leading businesses.
Corwyn Botha is an unofficial but enthusiastic PR consultant for South Africa, never losing an opportunity to suggest that whomever he is talking to not only visits the country but better still, moves there permanently. But as the CEO of a company that is doubling its size and profitability every three years, itÔÇÖs hardly surprising that he is feeling bullish as well as proud about the country he so obviously loves.

ItÔÇÖs unlikely that there are too many operations similar in style and scope to Kaap Agri Operations. Its origins go back almost 100 years, when it was set up as a farmersÔÇÖ cooperative in the West Cape area, when membership was restricted to the farming community. These days itÔÇÖs a limited company, and though shares are not listed, they can nevertheless be bought and sold freely to anyone who wants them.
Essentially, Kaap Agri is a distributor and retailer of just about anything that someone involved with agriculture would need. Its 70 branchesÔÇöAgrimark stores, as they are now calledÔÇöare giant general stores selling food, clothes, medicines and building products as well as agro-chemicals and animal feeds. Behind the shop front are equally large warehouses for bulk and bagged produce. The single largest selling item is diesel fuel.
But there are other strings to the bow. Kaap Agri has a 32 percent stake in PioneerÔÇöa Heinz or General Foods-style multi-brand food manufacturer. Agriplas is a manufacturer of specialized irrigation equipment such as plastic drip lines and micro-spray equipment; manufactured locally, they are distributed nationally by Kaap Agri. Outside the Agrimark catchment area, the business owns and operates large numbers of grain silos.
Perhaps the most successful of Kaap AgriÔÇÖs other interests is the supply of packaging materials, largely to the fruit export sector. The range is both extensive and specialised, providing exporters with everything they need, from folded and printed cardboard boxes through carbon liner sheets designed to keep soft fruit from over-ripening while en route to European markets, to the pallets and stretch wrap needed to consolidate consignments. In this sector, Kaap Agri is the market leader.
The Agrimark chain services a large territory stretching 1,000 kilometers or more from Cape Town to Namibia. But itÔÇÖs an exceedingly wealthy one, accounting for around 60 percent of all South AfricaÔÇÖs exports. Revenue last year amounted to 3.3 billion Rand, which, even with an exchange rate as low as 10 Rand to US$1, makes it a very significant operation, though interestingly, it is not the largest.
ÔÇ£The climate can be difficult here,ÔÇØ says Botha, ÔÇ£with large areas subjected to Mediterranean-style winter rainfall and dry summers. Inputs are always needed and are costly. But in the past few years the weather has been good to us, and farmers have grown bumper crops of everything from wheat to grapes.ÔÇØ
Kaap Agri has to cater for a wide range of farmers and farm sizes. On the one hand, there are 30,000 commercial farmers who operate on a large scale, with farms ranging in size from 4,000 to 40,000 acres. On the other hand there are 700,000 subsistence farmers barely scratching a living.
With plenty of competition from alternative suppliers, Kaap Agri knows that its existence depends on giving customers a good deal. ÔÇ£South Africa is not that important at the international level,ÔÇØ says Botha, ÔÇ£and we donÔÇÖt get the keenest prices for imported goods. But by buying in bulk and distributing goods from our central distribution division, we are able to remain more than competitive on price.ÔÇØ
Logistically, the biggest challenge is coping with the vast distances involved. In certain more populated areas, neighbouring Agrimark stores might only be 15 kilometers apart, but step over the border into Namibia and itÔÇÖs not unusual to have a couple of hundred kilometers between branches.
ÔÇ£It creates a great responsibility,ÔÇØ says Botha, ÔÇ£on our supply chain management. Managing inventories when you carry 6,000 line items and heaven knows how many size variations, and then getting them into the stores at the right volume and time is critical. Still, IÔÇÖm more than pleased with the nine times stock turnover ratio we achieve; it demonstrates that the supply chain is working efficiently.ÔÇØ
Although Botha has a formidable reputation amongst the business community, earning himself the nickname of Big Shark for his aggressive acquisitions, within Kaap Agri he shows a more nurturing rather than controlling managerial style. ÔÇ£The improvements weÔÇÖve made with our procedures,ÔÇØ he says, ÔÇ£are not thanks to me. Instead, what I and my fellow directors have to do is create the right environment in which staff can grow and develop. ItÔÇÖs their ownership of the way the business runs that makes it successful.ÔÇØ
In fact, Botha had just received the first six monthsÔÇÖ figures showing a healthy 28 percent increase. Pioneer has done even better, with 31 percent growth.
Whereas once the South African economy was very much controlled from Pretoria, there is now a free market prevailing, causing Botha to also feel bullish about the future of the country. While admitting that crime is still an issueÔÇöand one which is no longer poverty driven but seems to have become ingrained in certain segments of societyÔÇöhe believes that the government is doing well, and black people are rising to the work opportunities they are now getting.
ÔÇ£South Africa has largely been shielded from the world recession,ÔÇØ says Botha. ÔÇ£Everywhere you look there is building activity, both in cities and in villages. Now that the elections are out of the way, people will get back to taking more interest in the economy than in the government. There is a strong entrepreneurial atmosphere driving the country forward.ÔÇØ