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Planting seeds of capital

Planting seeds of capital

DESPITE drought conditions drying up prospects for much of South Africa’s productive farm land, the Western Cape agricultural sector saw an active period of investment in 2015.

The year was capped by US-based agricultural giant Land O’ Lakes acquiring a 52,5% stake in Villa Crop Protection (VCP,) a leading crop protection products company that has a regional headquarters and large warehousing facility in Wellington. Land O’ Lakes is one of the world’s largest agricultural co-operatives with annual sales of more than US$15bn (over R200bn.) VCP is a niche player focussing on the development and registration of unique commodity crop protection products. The company has more than 250 product registrations. Encouragingly Land O’Lakes said the deal with VCP would capitalise on the growth potential of the South African agricultural market.

In a joint press release the companies spoke of joining two complementary portfolios of productivity-enhancing crop input products and services to help all sizes of farms sustainably improve their yields. This is Land O’Lakes’ first commercial investment in Africa. Chris Policinski, president and CEO of Land O’Lakes, said South Africa had a dynamic and growing agriculture industry.

Another US-based company One Thousand and One Voices (1K1V) – which is headed by an ex-South African and funded mainly by wealthy families – could also scout the Western Cape’s fertile agri-sector for opportunities to invest. The fund – headed by Hendrik Jordaan – has already made two agri-business acquisitions in South Africa, including Upington-based RedSun Dried Fruit and Nuts.

During the year PSG-aligned Zeder Investments – for so long the driving force in agribusiness investment in SA – bought out minority shareholders in Malmesbury-based Agri-Voedsel and Bellville-based fruit exporter Capespan. At the time of writing, rumours abound that Zeder could raise fresh capital to broaden its investment portfolio.

What is interesting to note is that Western Cape-based poultry and egg group Quantum – in which Zeder has a significant stake – has been building its presence in the animal feeds segment. Quantum recently acquired the Olifantskop feed mill near Paterson in the Eastern Cape for R47m. The deal allows Quantum – which owns the Nova animal feeds brand – to break into the Eastern Cape animal feed market. This region could not be supplied from its existing feed mill in George.


By Jenni McCann

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