Black-owned agricultural services company Umlimi Services on Tuesday announced in a statement that it has launched as an empowered service provider to the agricultural sector.
Umlimi is capitalised at R250-million and is driven by ex-Dimension Data financial director Malcolm Rutherford, together with Soto Ndukwana, chairperson of Ifula Holdings, and Chris Nissen, the CEO of Newline Property Investments.
The company said Ifula, Newline and broad-based empowerment shareholders will hold 79,9% of Umlimi, making it one of the most substantial black-owned agricultural enterprises in South Africa.
Umlimi will act as a service agent to farmers and manage the substantial chain of costs that occur beyond the farm gate.
Umlimi’s services will include production and development, procurement and sales, supply chain management and financial services, and will initially target the fresh-produce agricultural market.
According to the company, the fruit market is a significant contributor to foreign currency for South Africa each year, with fruit exported from South Africa worth about R6-billion each year.
Currently, approximately 75% of the cost of produce on the shelves of the retailer relates to costs beyond the farm gate, which the farmer is accountable for, and over which he has neither control nor influence.
“What Umlimi offers is the management of the farmer’s cost chain on a transparent and accountable basis to ensure the cost competitiveness of South African fruit in the northern-hemisphere markets, together with better returns for South African growers,” Umlimi CEO Malcolm Rutherford said.
He added that besides Umlimi offering a management service, there are also significant financial opportunities around the enormous value of turnover controlled by major exporters.
“This is not only limited to the area of currency management, but also include advances and production finance to the farmer. Both advances and loans have limited credit risk, particularly if the financial organisation that provides these funding mechanisms has control of the cash flows associated with the sale of the production output,” Rutherford pointed out.
Umlimi non-executive chairperson Soto Ndukwana said the fruit industry today is still in a transition phase as it migrates from a totally regulated system to a free-market system.
Ndukwana noted that the marketing focus has shifted from the producers to the retailers, who are becoming more and more demanding of the quality of produce.
“In this changing environment, Umlimi is a truly unique initiative. There is currently no empowered group adding value through marketing and post-production services that is able to serve the interests of the growers as well as the consumers,” Ndukwana asserted.
The model adds significant leverage to the government’s agricultural reform policies, and Umlimi is optimistic about the opportunity of working with the government and NGOs to assist in implementing the ideology of the agricultural black economic empowerment (BEE) charter.
“The issue of BEE has to be addressed on a broad scale in the fruit industry. The limited progress that has been made has been focused on the production level of the value chain, with virtually no black participation in the sector past the farm gate. As an 80% empowered group, Umlimi will make significant strides in transforming this sector,” added Umlimi director Chris Nissen.
“BEE and transformation ideology is not only about establishing equity participation of historically disadvantaged individuals, but also about establishing the structures and business processes to truly transform society. Our model at Umlimi positions us at a level to interact with emerging growers and facilitate their sustainable success as participants in the economy,” Rutherford added.
“It is certainly possible for South African producers to remain globally competitive in world fruit markets, but there needs to be systemic support for agricultural transformation at all levels. The structures that were established in the days of single-channel marketing will not work in the new competitive environment, and a truly South African company needs to drive this South African issue,” Citrus Marketing Forum chairperson Arend Venter said.
Venter said Umlimi is a unique empowerment group that not only aims to facilitate true empowerment throughout the value chain from production to final destination, but also has structured itself to respond to the new competitive landscape. — I-Net Bridge