MEC Tina Joemat-Pettersson launches
multi-million rand BEE grape enterprise
Northern
Cape’s MEC for Agriculture and Land Reform Tina Joemat-Pettersson will tomorrow at 10h00 am launch one of
the province’s model Black Economic Empowerment agricultural enterprise, Sonvrucht Farming (PTY) Ltd worth R14 million near Augrabies. The Mayor of Kai! Garip
Municipality Ann Beukes and the Chief Executive
Officer of Khula Enterprise Finance Limited, Xola Sithole will flank the MEC at this august event.
The MEC will hand-over the Land Redistribution for Agricultural
Development (LRAD) certificate worth an estimated
quarter million rand to signify the land ownership rights of the 42
beneficiaries who are currently workers at the Sonvrucht
table grape enterprise. In her keynote address, the MEC
will also flag the equity acquisition that was enhanced by the R3, 832 500 Khula Enterprise Finance loan that was allocated through ABSA. END
Source:
Ministry of Agriculture and Land Reform
Enquiries: Thabo Mothibi 083 255 8840
SHORT
BACKGROUND
42 employees
of the farm Sonvrucht formed the Badirammogo
Trust and purchased 45 % shares in the farm Sonvrucht
and the existing business. 13 of the applicants are women and 22 are youth. The
previous owner of the land, Chargo Trust remains with
55 % with the option to sell it to the Workers Trust in future. A new company Sonvrucht Farming (PTY) Limited was formed to hold the land
and manage the business. The Trust consists of four members of the Chargo Trust and three members of the Workers Trust.
The land
involve in the equity scheme is Portion 1858 (a Portion of Portion 1857): Kakamas Suid Nedersetting
on the road to Augrabies near Marchand.
The extent of the land is 99, 9929 ha.
The farm with
40 ha water rights are planted with 40 ha of export grapes under electronic
drip irrigation controlled from a central computer. Fertilizers are also
administered via the irrigation system. The cultivars on the farm are in line
with the current market trends. The vines were planted between 1998 and 2001.
The farm
should be able to produce 152 000 cartons of export grapes in an average season
– 3 800 cartons per ha. The packing warehouse and cooling facilities conforms
to EUROGAP standards.
ENHANCED
BACKGROUND
1. Background
Information
The property Sonvrucht was bought by Chargo
Trust in June 1998 as virgin land. Since its purchase, the farm has been
developed as a model table grape export enterprise by planting 40 hectares of
table grapes and erecting a modern packing shed, storing and cooling
facilities.
During May
2004 Absa Bank approved a R6, 300,000-term loan in favour of Badirammogo Workers
Trust. The purpose of the facility was to restructure Sonvrucht
Farming (Pty) Ltd to be a BEE (Black Economic Empowerment) agricultural
enterprise. The deal resulted in the Workers Trust acquiring 45% shareholding
of the business, the Chargo Group Family Trust – 47%
and the Farm Manager – 8%. At the time Zelpy 2332
(Pty) Ltd, a shelf company, which was subsequently changed to Sonvrucht Farming (Pty) Ltd, was valued at R14m. The term
loan was approved on a condition that the Land Redistribution for Agricultural
Development (LRAD) grants that the Workers Trust had
applied for amounting to R2, 550,000 will be used to permanently reduce the
term loan. The Northern Cape Department of Land Affairs only approved a grant
of R2, 467,500 in December 2004, hence the LREF
business loan application of R3, 832,500.
2.
Shareholder Structure
2.1. Chargo Group Family Trust – Dr C P van den Hever
Chargo Trust is a
family trust led by Dr Van den Hever, a qualified
veterinary surgeon, who commenced his business interests in table grapes
farming in 1996. Between 1996 and 2001 he purchased three properties (including
Sonvrucht) where he developed 92 hectares of table
grapes for the export market.
2.2. Badirammogo Workers Trust
Badirammogo Trust
comprises 44 beneficiaries (32 males and 12 females) all being the black
workers employed by the Chargo Trust Group. The Trust
was registered in December 2004 and the worker-shareholders will acquire a 45%
shareholding by investing their LRAD grants amounting
to R2, 467,500 and a term loan of R3, 832,500. It is anticipated that the
grants will be drawn-down by the end of March 2005. The Trust Deed stipulates
that shares must be held for a minimum of two years after which the holder has
an option to sell with the first option being offered to the Workers Trust. The
moratorium on the sale of shares in intended to prevent the so-called
grant-laundering by worker shareholders.
2.2.1.
Personnel and Training Policy
The farm is
fully integrated with Primary Agriculture Education and Training Authority (PATEA) training programmes that are presented by M & T Labour Consultants on a regular basis. Up to now training
was mainly aimed at technical aspects of the farming operation.
A complete
management training programme for beneficiaries and trustees will be developed
and implemented. Beneficiaries would have to be trained in decision-making
processes used in a commercial farming operation as well as general life
skills. The long-term objective is to select suitable Trustees to attend a
special management training programmes to equip them for a complete management
takeover. The LREF’s Business Monitor will closely
monitor this milestone. Sonvrucht Farming (Pty) Ltd
will be managed by a seven member Board of Directors of which three (2 females
and 1 male) will be drawn from Badirammogo Workers
Trust.
2.3. Farm
Manager – Mr. H Breytenbacht
Mr. Breytenbacht is a manager at Sonvrucht
farm. He has been with the Chargo Group for 8 years
and has been allocated 8% shareholding in the project.
3. Business
Concept – Sonvrucht Farming (Pty) Ltd
As previously
mentioned Sonvrucht Farming (Pty) Ltd is in the
business of producing table grapes for the export market. Forty hectares of
table grapes have been established during the past five years. The youngest
blocks were planted in 2001 and the farm was in full production for the 2004/05
harvesting season. The marketing risk is mitigated by using the existing
channels utilised by Chargo
Trust (i.e. Colors Agents). Colors is an established
exporting company with a history of good payouts for quality deliveries. The
bulk of Chargo Group’s crop is sold to supermarkets
in the
In order to
achieve the highest possible margins from the exporting of table grapes,
marketing agents need to place the crops at the right market for certain
cultivars and qualities. The large export agents have access to various foreign
markets, which ensures the maximum price for the producer. Sonvrucht
is Eurogap-accredited and representatives of foreign
buyers visit the farm annually to evaluate quality and production practices.
The project intends submitting a proposal to Fairtrade
Trade Mark[1] for accreditation.
According to
the risk analysis report produced by Absa Bank’s
Agricultural Specialist, the past harvest season went smoothly with a 5% drop
in budgeted volumes but very high out-pack percentages of first grade fruit.
The farm is
100 hectares in extent which renders it suitable for further development. Water
rights are available to empowerment projects, however
no further development is envisaged in the short to medium term.
As the farm
is in full production the cash flow budget for Year 1 will be reflective of
subsequent years. Changes in income and expenditure growth depend on
theoretical assumptions based on general economic prospects and projections.
The bank has conducted a sensitivity analysis on variables that could have either
a positive or negative effect on the operations of the farming enterprise. The
following variables were tested and the effect of possible
deviations were found to be within the norm:
Export
prices
Production
costs
Yields
per hectare
Interest
rate
Inflation
Thabo Mothibi
Ministry Agriculture
Tel: (053) 8389-100