Scan for Capital Harvest

July 2018This is a monthly environmental scanning document with extracts from a range of press

articles deemed to be of possible strategic importance to Capital Harvest. The articles arearranged according to a framework of topics. For each article its title, author (where

available) and source are stated.

Editorial

Agriculture

According to labour broking site Indeed.com, advertisements looking for biotechnology scientistshave increased by 64% in the last two years. Gene editing can be used to improve the welfare ofanimals. Traditionally, the horns of dairy cows are routinely removed to prevent the cows fromgoring one another and farm workers. The procedure is painful and widely criticised by animalwelfare groups, so scientists are trying to edit the cows' genes so they will be born without horns.Similarly, scientists hope to breed pigs that will not reach puberty so they do not need to becastrated. There are two main problems with gene editing. Firstly, mistakes can occur: insertions ordeletions can be made in unintended parts of the genome, or cloning of the cells (which is often anessential part of the process) can produce abnormalities. Secondly, there are ethical concerns aboutchanging the natural world.

The US's National Pork Producers' Council says it is facing losses and contraction due to internationaltrade disputes. But US farmers who raise speciality pigs – such as organic, Certified Humane, andheritage – are making healthy profits. Their products command premium prices, and consumersusually choose the products out of conviction. However, high-end pork brands demand high and veryspecific standards of their suppliers, making it expensive for farmers to join the niche, profitableindustry.

A new hatchery for layer hens in China will be the largest in the world and is expected to produce 60million chicks per year. In comparison, SA has a total layer hen population of just over 23 million.Despite its size, only 20 people will be employed at the Chinese facility due to automation. Thehatchery cost around R300 million to build.

In the US, supermarkets lose an average of $2 300 per store per day due to food expiration. The retailsector accounts for 40% of total food waste. A new tracking system, Wasteless, will offer customersdynamic pricing based on product expiration date. Prices are automatically lowered as the expirationdate approaches. The correct price at any given time is displayed using electronic shelf labelling. Indetermining the price of a product, the system takes into account 43 factors such as supply, demand,location, holidays and time of day. Wasteless is presently in a trial phase in several US supermarkets.

In SA, food waste is estimated at £4.7 billion per year, of which 50% occurs in the fruit and vegetablesector. Emerging farmers often cannot afford cooling technology to reduce the temperature ofproduce immediately after harvest. UK-based Dearman is using grant funds from the Department ofInternational Development to produce a mobile pre-cooling system with a liquid nitrogen engine thatcan be used by small-scale farmers in SA. The cooling system will produce zero emissions and is beingdeveloped in Gauteng.

In July the 16th stage of the Tour de France cycling event was halted for approximately 15 minuteswhen police used teargas to break up protesting farmers, and some cyclists needed time to recoverfrom the gas. The farmers used bales of hay to block the road in protest against the Frenchgovernment's reduction in state aid.

After an extremely hot summer and record-low rainfall, the northern part of Germany finds itself inthe grips of drought. The farming sector is expected to lose billions of euros in 2018. Grain crops are18% smaller, some fruits were harvested weeks earlier than usual, and dairy farmers haveslaughtered cows. Like Sweden and Greece, Germany has also been affected by fires due to the dryconditions.

In July a delegation of 30 SA farming families visited the Stavropol agricultural region in Russia. Up to15 000 SA farmers are reportedly interested in moving to Russia. Russia has 43 million hectares ofunused farmland, and has recently started giving out free land to Russian citizens for farming. Theland give-away program, which began in 2014, is seen as a significant success.

Since 1990 the area used for potato production worldwide has increased by 40% and harvestedvolume has doubled. Over the same period, the trade value of potatoes has increased by 400%. Themost significant increase in value has been noted in developed countries. Only six per cent ofpotatoes produced in the world are traded internationally. Africa has great potential to expandpotato production. Potatoes deliver three to four times more kilojoules per hectare than grain crops,and can therefore efficiently feed the continent.

In Johannesburg office farms are gaining in popularity. Companies plant herbs and vegetables onrooftops, balconies and walls for employees to pick in order to make their own fresh lunches.Google's SA office is one example of a company with such a rooftop garden. The garden is used byemployees and by the in-house restaurant. Google says the garden builds corporate identity andhelps towards a favourable green-star rating.The World Wide Fund for Nature (WWF) says farms in the Western Cape are the most water-efficientin SA. In the province 5 874m³ of water is used per irrigated hectare‚ compared with 9 913m³ inMpumalanga. On average‚ Western Cape farms have been forced to cut water use by 60% since2017. The WWF was particularly impressed by the way some farmers tackled shared risks – in Ceres,for example, farmers removed water-thirsty alien vegetation upstream and invested in educating thesurrounding communities.

A Robertson farmer is marketing his invention called Tree Hog, an injection-moulded plastic casewith a micro sprinkler. The case encloses the base of a tree and can last for eight years. It combines

the benefits of micro and drip irrigation, and the minimum water saving is advertised to be 50%. Itreduces evaporation as well as the need for weeding around young trees. The product is backed byPrimafruit, one of the UK’s largest fresh fruit suppliers. Over 40 000 units have been distributed,including many outside of SA.

SA's government is banning high cube containers on standard trailers from SA's roads with effectfrom January 2019. In July the Cape Chamber of Commerce and Industry said exceptions to the ruleshould be granted, else exports and relations with other countries could suffer damage. If exceptionsare not granted, the fruit export industry will be severely affected, as the cost of converting from astandard to a low-bed trailer is approximately R300 000 per trailer. High cube containers on standardtrailers remain legal in SA's neighbouring countries, and these will no longer be able to cross theborder into SA unless exceptions are granted.

Stellenbosch University's Business School recently released its Fourth Industrial Revolution (4IR)Evaluation Report. The report was commissioned by the Western Cape's Agriculture Department toprovide a strategic outlook. Smart technologies are emerging in the 4IR, enabling the province towork towards higher yields, reduced costs and improved nutrition. Agriculture should embrace farmmanagement software, precision agriculture and predictive data analytics. Robotics and drones willincreasingly monitor crop health, soil quality and weather. Blockchain can aid the traceability ofproducts, while the sharing economy and crowdfunding can help to develop viable small farms. Themain challenge is to make sure that small-scale farmers also benefit and are not left behind by thetechnologies. Partnerships between large and small-scale farmers are encouraged, as it facilitatesjoint access to finance, markets and technology.

Vinpro says wine-grape farmers remain optimistic, despite more than a third of producers making aloss and production recorded at 15% lower than in 2017. Many farmers are leaving the industry,uprooting vines or not replacing vineyards. On the positive side, lower production and stock levels inSA – coupled with limited global supply – could result in a significant shortage of wine. This is alreadybeing seen in higher retail prices.Swartland wine estate Org de Rac established itself as an organic wine brand in the 2000s. Now it isproducing vegan wines, citing strong global demand from millennials in particular. Fining agents areused to reduce astringency and bitterness in wine, and to remove some of the proteins that canmake wine go hazy. Egg whites and certain fish products are traditionally frequently used as finingagents. Org de Rac now uses only non-animal fining agents, such as clay-based bentonite, to achievethe same effect. The SA Vegan Society estimates that the number of vegans in the country doublesevery two years. Britain, one of SA’s major export partners, saw a 185% increase in vegan productsfor sale between 2012 and 2016 – 600 000 people in Britain are vegan. China predicts a 17% growthin veganism between 2015 and 2020. In the US vegans increased by 600% over the last three years.Many consumers do not realise that wine contains animal products, but as this becomes betterknown, Org de Rac wants to have a head start in serving the vegan market.

Capespan recently launched its new dedicated soft citrus brand, Outspan Gems. The originalOutspan brand dates back to 1936. The brand Outspan Gems will be used for soft citrus varietiesproduced, procured and marketed globally by Capespan. The lucrative Asian market is one of theimportant target markets of Outspan Gems. SA expects increased citrus production due to ideal weather in large production regions, andexpanded acreage. Reduced mandarin production in the Western Cape (2% lower) is offset by theirincreased tariff-free export to the US (5% increase), resulting in continued annual growth.Burgersfort in Mpumalanga has excellent soil quality and weather well-suited to citrus production.Indigo Fruit Farming therefore considers it the ideal location for its new 14 000m2 packhouse thatcan pack 38 tonnes per hour. The packhouse, called Naranja, is one of the largest in SA. In high

season over 400 people work day and night to sort and pack soft citrus coming in from a radius of200km. The main products are ClemenGold and SweetC mandarins. Transport and logistics are thebiggest challenges, as SA's road and harbour infrastructure battles to cope with the increased citrusvolumes. At the harbour truckers sometimes encounter strikes, and often face long truck queues,traffic fines while queuing, insufficient reefer plug points and a shortage of cool rooms. The height ofthe avocado season coincides with that of citrus, which places further strain on cool facilities at theharbours. It takes 45 to 50 days for Naranja's soft citrus to complete the journey from the orchard toreceivers overseas.

Winter rain and snow in the Western Cape are ideal growing conditions for waterblommetjies. After the waterblommetjie harvest was almost non-existent for the past two years, it is returning to normal in 2018. Commercial waterblommetjie production takes place around Piketberg, Porterville, Riebeeck-Kasteel, Worcester, Wolseley, Wellington and Saron. The tubers are planted in dams during late summer or early winter. One of the earliest producers already started harvesting in April this year, and harvesting generally lasts until early spring. Waterblommetjies are mostly consumed fresh, but also canned. Individual farmers produce between 1 and 5 tonnes of waterblommetjies annually. National retailers tend to stock Western Cape stores first, with the remaining produce going to other provinces. There is growth in consumption in Gauteng and the Free State, but waterblommetjies don't sell well in KZN.

Siyazama Klipland Boerdery is a BEE company based in De Doorns. Twelve years ago eight emerging farmers leased the farm. They approached a commercial farmer and asked him to mentor them. Two years later, the Department of Rural Development and Land Reform purchased the farm for R5 million and the emerging farmers are now leasing it as a Proactive Land Reform Acquisition Strategy (PLAS) farm. By 2008 enough grapes were produced to achieve profitability. Every year two to three hectares are replanted with seedless varieties – presently around 80% of the harvest is seedless. The farm has the potential to produce 150 000 cartons per year. SATI funds some of the plant materials and the DRDLR assists with input costs. The Department of Agriculture helps with implements and production capital. Siyazama has its own packhouse, and exports are handled by In2Fruit (which also supplies some loan funding for production). The EU and Far East account for 95% of export sales, 2% is sold locally, and 3% is sent to De Doorns Wine Cellar. The past season has been difficult due to the drought – volumes are in line with the previous season, and a borehole has been sunk. One of the farmers' biggest challenges is acquiring credit, because despite having a 30-year lease in place, they do not own the land. Other challenges are theft, high input costs and the limited size of the dam. Thefarmers hope to acquire the farm within the next five years with help from government.

Banking & Capital Markets

Nedbank's venture capital fund has invested in Cape Town-based aerial data analytics companyAerobotics. The company was founded by two South Africans in 2014 and was one of 24 global start-ups to participate in Google's Launchpad Accelerator in San Francisco from January to June this year.Aerobotics employs satellites and drones to capture multispectral images of orchards to help farmersoptimise yields and manage costs. The focus is on tree crops such as citrus, fruits, and nuts. Machinelearning is used to assess crop health and to control pests and disease. The technology is already inuse on 60 000 hectares in several countries – 90% of customers are in SA, with the rest in Australia,Spain, France and the US. The app acts similarly to a Google map, directing the farmer to specificproblem trees. The basic package uses satellite data which is updated every five days (depending oncloud cover), together with a scouting app, and costs the farmer R10 per hectare per month. Theaddition of drone fly-overs to increase the accuracy of data costs R100 per hectare per flight, withthree to four flights per season yielding the best results. Aerobotics says its competitive advantage

over other drone companies lies in the software that can individually identify and analyse every treeon the farm.Nedbank says its equity investment in Aerobotics is a strategic move because the corporate andinvestment arm of the bank wants to focus on agri-finance, which is presently under-represented inits portfolio. The deal gives the bank an opportunity to invest in a growth market. But the intention isalso for the bank to use the data in its business banking division. Nedbank is gathering data fromaerial images – on a trial basis – on the farm of one large commercial client. It wants to eventuallyuse this data to develop agri-finance products. Nedbank says it is “uberising” the process of earlystage agricultural finance and initiation facilities. The concept is new and according to Nedbank it isnot used anywhere else in the world. Yield estimates, which can be determined through dataanalytics, coupled with forward price estimates will be used to determine forward cash flows andbiological asset valuations. Such information could be used for credit and risk modelling, and even toprovide credit based on the valuation of individual trees.

Afgri has raised R1 billion in funds from shareholders Fairfax, Bafepi Agri, the PIC and its ownmanagement, that will be spent on growth opportunities in agriculture, food processing and financialservices. The majority of the equity raised – R800 million – will go to Philafrica Foods which plans togrow in Africa. Afgri left the JSE in April 2014, and has since expanded into Africa (it is now present in11 African countries) and into Australia (where it runs Australia's largest John Deere dealership).Since de-listing it has also bought the Bank of Athens. This year Afgri will for the first time reportearnings before interest, tax, depreciation and amortisation of over R1 billion. Afgri's financialservices arm, GroCapital, will house Bank of Athens once all formalities are finalised. The bank will bere-branded. Moneyweb reports that de-listing has been good for Afgri, because acquisitions inAustralia and the Bank of Athens in SA would have been difficult if Afgri had still been listed.

Newly formed agri-company Acom Agri & Food (AAF), which is estimated to be worth between R4.3billion and R4.6 billion, has delayed its JSE listing to the second half of 2020 in order to make changesto its portfolio before listing. AAF was formed in May when Somerset West-based Acorn Agri mergedwith Caledon-based Overberg Agri. AAF is backed by African Rainbow Capital and Sanlam PrivateWealth. AAF is more diversified than Zeder in terms of operational agribusinesses and strategicinvestments. AAF's interests include dried fruit businesses Montagu and Grassroots, fuel distributionspecialist Moov, grain storage services, a retail offering, mechanisation equipment, financial servicesand packaging solutions. AAF also holds investments in Boltfast (steel fasteners), BontebokLimeworks, Bredasdorp Abattoir, ACG Fruit, Lesotho Milling and Port Elizabeth-based BKB. For theyear ended February 2018, AFF reported revenue that more than doubled to R6.4 billion (driven byacquisitions), with gross profit up 42% to R720 million.

The IDC has recorded its highest level of impairments in five years. Non-performing loans are at R7.5billion in the annual financial statements. There has been a R1 billion increase in post-tax profit,which is at R3.2 billion. The IDC approved 202 transactions during the year under review.

Contents

AgricultureThis man rewrites the genetic code of animalsIt’s a great time to be a fancy pork farmerNew Chinese hatchery to produce 60 million chicks annuallyTurning supermarket trash into cashDearman technology targets food waste South AfricaTour de France interrupted by farmers armed with bales of hayRecord drought grips Germany's breadbasket15,000 white South African farmers seek refuge in RussiaEnormous potato production potential in AfricaThese Joburg offices now have farms inside them — and workers get to harvest lunchWestern Cape agriculture adds up the cost of the continuing droughtThis SA-created irrigation system cuts water usage by up to 70%‘South African high cube ban to cause chaos’Securing a sustainable future for agriculture in Western CapeSmart farm renaissance possibleWine farmers stay positive despite many producers in the redThis SA farm made a name in organic wines – now it is going veganVegan wine produced in SwartlandNew gems in the Capespan crownSouth Africa expects to produce more citrus fruits this seasonEpicentre of soft citrus boomProper Cape winter heralds good waterblommetjie seasonDe Doorns’ empowerment table grape farm

Banking & Capital MarketsNedbank bets on drones reshaping agri financeTech start-up could save agriculture millionsWhy delisting has been good for AfgriHybrid agriculture company pushes out JSE listingNonperforming loans heap pressure on state-owned IDC

Agriculture

This man rewrites the genetic code of animals

For nine nerve-racking months beginning in the summer of 2014, Dan Carlson waited for his labexperiments to be born. Carlson and his team at the biotechnology startup Recombinetics had madea small tweak in the genetic code of dairy cattle in an attempt to prevent the animals from growinghorns. Now, that edited DNA was being copied over to the cells in fetuses growing in their surrogatemothers.No one had tried this before, so it wasn’t clear it would work. And compared with the mere days ittakes for the cutting-and-pasting of genes to complete in culture dishes, the months-longpregnancies were agonizingly slow. “You hope everything is going well,” Carlson says. “You’reexpecting it to come out without any horns or horn buds, but you just don’t know.”As is common with cloned animals, most of the embryos never made it. But Buri and Spotigy, twocalves born in April 2015, were free of the telltale bumps that eventually sprout into horns. Thatmeant they would be spared the fate of millions of U.S.-raised cattle, whose horns are destroyedwith a hot iron or toxic paste shortly after they’re born or are sheared off when they’re older. It’s apractice Carlson knows his own father, a farmer, struggled with. The painful procedure is done toprevent the cows from goring one another or their human overseers, but People for the EthicalTreatment of Animals and other animal-welfare groups vociferously oppose it. (PETA isn’t a big fan ofgene editing either, which the organization considers animal experimentation.)Scientists like Carlson—who are manipulating DNA to not only improve animal welfare, but createbetter crops and treat human disease—are one of the hottest commodities today in biotechnology.U.S. job postings for the profession surged 64 percent over the last two years, according to the jobsearch site Indeed.com.People like Carlson can do this work thanks to two methods, both discovered less than a decade ago,that have made gene editing cheaper and easier. (The technique used to develop Carlson’s hornlesscows is called TALEN; the more famous one, which came slightly later, is called CRISPR.) Carlson isnow involved in several projects that employ gene editing in animals, including one that keeps pigsfrom reaching puberty so they need not be castrated. His profession is the focus of the secondepisode of Bloomberg’s mini-documentary series Next Jobs, which profiles careers of the future.Carlson is so confident about the milk’s safety he says he wouldn’t hesitate to feed it to his threechildren. Jennifer Kuzma, co-director of the Genetic Engineering and Society Center at North CarolinaState University, is more cautious. She notes that gene editing tools sometimes slip up by makinginsertions or deletions in unintended parts of the genome (Carlson’s team looked for these so-calledoff-target events and found none). Cloning the cells, which is often an essential process in geneediting, can also produce abnormalities, she says. Kuzma also says there needs to be a broader conversation about the underlying ethics of thetechnology. “With these genetic engineering techniques becoming easier to implement and morepowerful too, we’re at a critical point where things could change in the natural world,” she says.In May, Recombinetics moved one step closer to commercializing its technology, announcing apartnership with Canadian semen distributor Semex. The two companies plan to spend the next fewyears working with regulators in Canada and the U.S. Absent significant obstacles, we may live in aworld in 20 years in which no cow would ever need to be dehorned, Carlson says. “Whether thisstrain of animals takes off, it’s really up to the government and public acceptance,” he says. “I can’tdo a lot about those things. I’ve just got to do my job.”

Aki Ito, Bloomberg, 19 July 2018

It’s a great time to be a fancy pork farmer

In a trade war, it pays to be off the grid.Farmers have been on the front lines of Donald Trump’s tariff standoffs. Hog prices have tumbled inrecent weeks as the U.S. production outlook swells while retaliatory tariffs from Mexico and China—countries that represent 40 percent of total pork exports—have left Americans with a ham glut.In an emailed statement on July 6, the National Pork Producers Council said, “We now face largefinancial losses and contraction because of escalating trade disputes.” Even after thanking thepresident for the planned $12 billion aid package announced this week, National Pork ProducerCouncil President Jim Heimerl stressed in his statement the industry’s “valuable international tradingrelationships” that have added $53.47 to the average price, $147, that producers pocketed for eachhog sold last year.Not all pork farmers are so worried about their bottom lines. Farmers raising speciality hogs such asorganic, Certified Humane, and heritage say their loyal customers won’t be swayed—yet—bycheaper competitors. They don’t expect their prices to drop much, if at all, along with those of thecommodity suppliers. “People buy my pork because they’ve done the research, formed opinions onanimal welfare, regenerative practices, and strengthening the rural economy,” says Will Harris ofWhite Oak Pastures, a Georgia farm with seals of approval from Global Animal Partnership andCertified Humane.His hogs are raised in the woods—eating what they forage, supplemented with peanuts andpastured eggs—and they command a significant premium. While consumers can buy 12 ounces ofOscar Mayer bacon for $7.99 at Amazon.com, Harris’s Iberico bacon goes for $31.99 a pound on hiswebsite. “There will be a lot of resilience in continuing to support products like ours.”Commodity farmers see it as well: Going upmarket might act as a hedge.Since the trade disputes began, Niman Ranch and Applegate, industry leaders of higher welfare porkand subsidiaries of Perdue Farms Inc. and Hormel Foods Corp., respectively, have both reported anincrease in interest from farmers that want to supply them. Signing up is not easy.“Typically, not one farm that calls us is in full compliance,” says Matt Hackfort, senior director of rawsupply at Applegate. “There’s a high percentage of fallout because of the drastic changes that areneeded” to meet their husbandry standards.“We’re blessed with a customer base that is either so food-centric that Niman is still in theiracceptable range, or so values-based [they] go out of their way to get a product that lines up withtheir belief system,” says Jeff Tripician, general manager at Niman Ranch, which mostly sellsdomestically; a 12-oz. pack of Niman Ranch pork sausage sells for almost twice as much as acomparable product from Hillshire Farms Naturals. “Values-based [customers] go out of their way toget a product that lines up with their belief system.”Niman’s Certified Humane pork products come from a network of farms required, for example, toprovide their hogs with pasture or bedding that allows them “to play, forage, explore, root, andchew.” Unlike many hog farmers, these additional restrictions come with long-term contracts thataren’t based on the commodity market, providing short-term shelter from tariffs.“Today, our farmers are sitting there, breathing a sigh of relief,” Tripician says.Applegate’s Hackfort says the company is used to selling a higher-priced product, and consumers areused to buying it: “These tariffs, it’s another addition that’s going to increase the delta, but the deltais the delta because of the differentiation of how we produce animals, which is much bigger than theimpact the tariffs are going to have.”“Our target customer is the one who is looking to buy for quality, not on price,” echoes David Kemp,chief executive of Les Trois Petits Cochons, maker of organic and heritage pâtés, mousses, terrines,and charcuteries.Stuart Blankenhorn, director of category management for Blue Apron, the meal kit company whosepork comes from hogs raised in group housing instead of gestation crates, characterizes demand for

premium products as “pretty inelastic.” The company hasn’t yet seen any change in prices from porksuppliers, but if the price drop continues for six to 12 months, “expect an impact,” he says.Customer loyalty, in order words, is finite in the face of cratering prices. For the first signs, look to the restaurant industry, which is always looking to widen its razor-thinmargins. Data from BlueCart, an online hospitality industry marketplace, shows that at least some ofthe food-service buyers that was ordering premium pork appear to be switching to commoditysources. While last month, 79 percent of its pork sales were for premium products, only 64 percentwere from July 1 to 18. That’s also significantly lower than the 87 percent the database facilitated inJuly last year. “The notion that people don’t care about better food has been overcome. They do,” says DavidBarber, co-owner of fine dining restaurant Blue Hill and founder of Almanac Insights, a BlueCartbacker. “But there is a price-premium tolerance that directly affects decisions for many. When thegap is too wide, customers will opt for cheaper and less sustainable alternatives.”Greg Gunthorp, who raises Duroc pigs on pasture, from “farrow to finish,” in LaGrange, Ind., agrees:“The level of commitment of buyers will shrink as the commodity price drops to next to nothing. It’sjust too much of a premium.”Yet, for now, high-end producers are holding firm, prepared for any dip in consumption. “There is a huge cost to raising heritage pork, truly free-range,” says Ariane Daguin, founder andchief executive officer of high-end meat distributor D’Artagnan Inc. Her consumer prices are, like hercontracts with farmers, based on such costs of production as breeding, outdoor space, labor, andfeed. “We’re not going to compromise,” she says.This suits farmers such as White Oak’s Harris just fine. “Our goal is to sell the production we make onour family farm,” he says. “We don’t want to run a huge multinational corporation. My goal is notunbridled growth.”

Deena Shanker, Bloomberg, 26 July 2018

New Chinese hatchery to produce 60 million chicks annually

A new hatchery for layer hens, the Huayu International Poultry Incubation Centre in Handan inChina’s Hebei Province, said to be the largest in the world, is expected to produce about 60 millioncommercial layer chicks/year.This equates to about 200 000 chicks/day, six days a week, and the high-tech facility is manned by astaff complement of only 20 people, according to a report by Reuters.The Huayu International Poultry Incubation Centre is a joint venture between the global geneticscompany Hy-Line International and the Chinese firm Huayu Agricultural Technology.It has been under construction for several years at an estimated cost of US$ 22,6 million (about R300million).A report entitled ‘Dynamics and Patterns of the Egg Industry in APEC member countries’, released bythe International Egg Commission on 20 July, said it was estimated that the layer hen population inChina was more than 1,35 billion in 2016.At the time, China contributed a total volume of more than 26 million tons or 35,9% of global eggproduction.In comparison, South Africa’s layer flock was at just over 23 million hens, according to an eggindustry statistics summary for 2017 published by the South African Poultry Association (SAPA).This was 6,6% down on hen numbers in 2017, which could be attributed to the impact of the avianinfluenza outbreak on the industry.

Sabrina Dean, Farmer's Weekly, 27 July 2018

Turning supermarket trash into cash

Wasteless has launched the world’s first machine learning and real-time tracking solution for grocerystores to offer customers dynamic pricing based on product expiration date.Wasteless allows supermarkets to sell more and waste less. The solution leverages dynamic pricingthat lets consumers choose how much they want to pay for a product based on its expiration date.Wasteless continuously monitors stock levels, if an item is almost out of stock, the store is alerted. Ifit has been on the shelf for too long, the price can be automatically reduced. This meanssupermarkets never run out of their customer’s favorite products. Wasteless recaptures lost revenueopportunities like food waste cost and out-of-stock costs, and creates new revenue opportunities byincreasing the availability of products.Supermarkets in the United States lose an average of $2,300 per store, per day from out-of-date foodthat ends up in trash cans. This results in a $57B yearly loss for the U.S. grocery industry. Meanwhile,supermarkets lack of ability to manage inventory in real-time, creates a $47B loss due to out-of-stockitems, empty shelves and overstock. Food waste and inventory inefficiency stand as two of the topchallenges in retail. Wasteless helps solve these issue by:

• Recapturing lost revenue and cost from unsold items• Continuously monitoring stock levels to anticipate out-of-stock and low-stock instances

before they occur• Increasing sales and shelf turnover through the use of dynamic pricing

Wasteless combines item-level RFID sensing, a sophisticated dynamic pricing engine, and ElectronicShelf Labeling. These technologies allow retailers to use the power of Internet of Things and machinelearning to impact their sales. Wasteless continuously tracks product information such as expirationdate, Batch ID, and location in order to generate a Unique ID code for each product. Shoppers canthen select a product that expires in two-to-three weeks for the regular price, or a product thatexpires in one-to-three days for a fraction of the price. The Wasteless Dynamic Pricing Engine takesinto account 43 factors such as supply, demand, location, holidays and time when calculating a pricefor a product.“Dynamic pricing is something used daily when booking a flight, a hotel, or an Uber, and there is noreason why our groceries should be different” said Ben Biron, founder and COO of Wasteless. “This isamazing for all stakeholders because it means lower prices for the consumer, more revenue for thesupermarket, and of course, it saves our planet by significantly reducing food waste at the retail level,which accounts for 40 percent of the world’s total food waste.”Wasteless is currently in trial with several retailers, and in March 2017, the company closed a $400Kseed round investment from SOSV, Food Angels, Jonathan Ofir, and Winsten Ltd., in addition tojoining the Food-X accelerator by SOSV.

FreshPlaza, 10 July 2018

Dearman technology targets food waste South Africa

Dearman’s liquid nitrogen refrigeration technology is to be used in a new project, aiming to reduce the waste from fruit and vegetable harvests in South Africa. Food waste in that nation is estimated tobe worth £4.7 billion annually, half of which occurs in the fruit and vegetable sector. Low farmer income makes access to cooling technology difficult.Dearman’s 24-month project, backed by grant funds from the Department for International Development, seeks to develop a mobile pre-cooling system, using the company’s ground-breaking liquid nitrogen engine. Pre-cooling rapidly reduces the temperature of produce immediately after harvest, to ensure minimal post-harvest food loss.

The technology has already been trialled with the Dearman engine in transport refrigeration. Seen asan alternative to traditional diesel units, it harnesses liquid nitrogen to deliver zero-emission powerand cooling.In South Africa, Dearman will develop a mobile, off-grid, zero-emissions system that allows smallfarmers to access affordable pre-cooling. The company is working with local partners cold chainoperator Transfrig and food producer Harvest Fresh, a family-owned business based in the Gautengprovince.

FreshPlaza, 21 July 2018

Tour de France interrupted by farmers armed with bales of hay

The Tour de France 16th stage restarted on Tuesday after a brief halt when national gendarmes usedteargas near the peloton to break up a protest by farmers.Bales of hay blocked the road 26km into the day’s ride from Carcassonne as farmers demonstratedagainst a cut in state aid.Among the riders affected by the teargas was Team Sky’s overall leader Geraint Thomas, who waspictured rubbing his nose following the incident.Video footage of the incident appeared to show liquid being blown back into the advancing pelotonafter being sprayed by an officer from France’s national gendarmerie against a protestor. TV imagesshowed Tour de France medical officers handing out eye drops to riders including green-jersey pointsleader Peter Sagan.The 218km stage with a finish in Bagnères-de-Luchon and featuring two first category climbs in thePyrenees restarted at 10.36am GMT after an interruption lasting about a quarter of an hour. "After a15-minute long interruption caused by protesters, the race is back on," organisers said in a briefstatement on leTour.fr.This year’s Tour de France has been marked by a series of incidents on the sidelines of the race,including abuse directed at Team Sky and four-time champion Chris Froome. Amid a general feelingof suspicion surrounding Sky and their sheer domination of the race, Froome has been spat at andmanhandled, Thomas has been booed off the podium and some of Sky’s staff have also faced abuse.

AFP, 24 July 2018

Record drought grips Germany's breadbasket

Withered sunflowers, scorched wheat fields, stunted cornstalks - the farmlands of northern Germanyhave borne the brunt of this year's extreme heat and record-low rainfall, triggering an epochaldrought.As the blazing sun beats down, combine harvesters working the normally fertile breadbasket ofSaxony-Anhalt in former communist East Germany kick up giant clouds of dust as they roll over thecracked earth."It hasn't really rained since April and that's the main growth period for our grains and the othercrops -- we've never seen anything like it," said Juliane Stein of Agro Boerdegruen, a farmingconglomerate formed after German reunification in 1990."We've reached the point here in Germany where we're talking about a natural disaster that's athreat to our livelihood."A natural disaster is declared by German authorities during a drought when at least 30% of theaverage annual harvest is destroyed.

Given the massive losses feared by the sector this year, the German Farmers' Association (DBV) hascalled crisis talks on Tuesday to discuss urgent state aid.While southern Germany has seen largely normal rainfall this year, the north has been in the grip ofan unrelenting high-pressure system creating weather conditions more familiar in southern France orItaly."We expect billions in losses," DBV president Joachim Rukwied told German media last week.The grain crop alone has shrunk by up to eight million tonnes or around 18 percent this year,stripping $1.6bn from revenues so far."The government needs to declare a state of emergency so that farmers in areas hit hardest by thedrought can be helped directly with cash aid," Rukwied said.While the sunshine has fostered larger and sweeter fruit than usual, sugar beets, rapeseed, potatoand corn crops have been decimated in the drought, prompting farmers to cut their losses andharvest two to three weeks earlier than usual."The cornstalks are knee-high" and are sprouting smaller cobs or none at all, said Stein of AgroBoerdegruen, located about 150 kilometres west of Berlin."Normally they should be over two metres by now."Stein said that to grow crops like potatoes - a staple of the German diet - her farms have long reliedon watering systems because the region, in the rain shadow of the Harz Mountains, is generally toodry.However it is too late to expand such systems to other fields this year, and in the long run would betoo expensive to justify with other crops.Meanwhile the knock-on effects of the grain shortage have already been dramatic, depriving farmersof animal feed and sending prices soaring.Many dairy farmers have responded by selling their livestock. The number of slaughtered cows andheifers surged 10 percent in the first two weeks of July, according to figures from the FederalAgriculture and Nutrition Agency.While Sweden and Greece have been ravaged by devastating forest fires, Germany has been lessafflicted due to its less vulnerable types of vegetation and higher concentration of fire brigades.However grain fields mark an exception and Saxony-Anhalt has seen wide swathes of farmland go upin flames."Wheat when it's dry is as flammable as straw," Stein said.A drive through the farmland east of the River Elbe shows crops covered with the black soot ofrecent fires, with 70 hectares (170 acres) near the village of Barleben bearing the apocalypticremains of a spark that raged across the parched field this month.So will northern Germany become a region of olives, wine and citrus fruits? Stein said farmers herewill likely find other ways to adapt.No-till farming, which allows seeds to be sown without disturbing the soil, and the use of mulch toimprove germination rates are two techniques already in practice.Meanwhile seed breeding is developing crops that are more resistant to heat and dryness. Howeverthe process can take a decade or more and the European Court of Justice ruled last week it should beconsidered genetic manipulation and thus subject to stricter scrutiny by regulators.Thomas Endrulat of the German Weather Service said it had been at least 15 years since the countryhad experienced a similarly hot, dry summer.Such extremes matched forecasts seen in climate change models for Europe but he warned againstdrawing catastrophic conclusions from an "exceptional" year."You are seeing a rising number of heatwaves, just like you have hard winters or heavy rainfall andfloods," Endrulat told AFP."That bandwidth is part of our weather in central Europe."But for farmers in the grip of this year's drought, that is cold comfort."You plant the grain in the autumn, it germinates and then it needs water in the spring to grow,"Stein said. "If that doesn't happen, there's nothing you can do."

Fin24, 29 July 2018

15,000 white South African farmers seek refuge in Russia

This week, Russia’s Rossiya 1 TV reported how a delegation of 30 South African farming families hasarrived in the Stavropol region farmbelt. The group says it is facing violent attacks and death threatsat home.Up to 15,000 Boers, descendants of Dutch settlers in South Africa, are planning to move to Russiaamid rising violence stemming from government plans to expropriate their land, according to thedelegation.The new South African government, led by President Cyril Ramaphosa, has pledged to return thelands owned by white farmers since the 1600s to the black citizens of the country. The governmentsaid it is planning to put an end to what it calls the legacy of apartheid, where most of South Africa’sland is still in the hands of its minority white population.Rights groups have said the initiative incites violence. There were 74 farm murders and 638 attacks,primarily against white farmers, in 2016-17 in South Africa, according to data by minority rightsgroup AfriForum.Rt.com reported how Russia has 43 million hectares of unused farmland, and has recently begungiving out free land to Russian citizens to cultivate farming. The land giveaway program, which beganin 2014, has been a huge success.

FreshPlaza, 11 July 2018

Enormous potato production potential in Africa

Since 1990, the acreage used for potato production worldwide has increased by 40%. The deliveredvolume has also doubled. Over the same period, the trade value of potatoes has shot up by 400%.Dr Maximo Torero is the World Bank’s Executive Director. He says that, in a large part, this imbalanceof increasing production versus the increasing value of potatoes can be found in the frozen productsector. “The most significant increase in value has been noted in developed countries. These includeAmerica, Belgium, the Netherlands, and Canada”, Torero said at the recent international potatocongress, held in Peru, South America.He emphasised that favourable trade agreements in the Americas and the European Union grantsother potato producing countries access to international trade. “Only six per cent of the potatoesproduced in the world are traded internationally. This is versus 17% of the worldwide grainproduction”, Torero said.Torero used these facts to paint a picture of the realities and issues global potato producers have toface in order to reach the United Nations’ Sustainable Development Goals (SDGs).After the conference, Dr André Jooste, CEO of Potatoes South Africa, highlighted four realities andproblems. They are:

• By 2050, the demand for food will have increased by 40%• Sustainability and productivity will become increasingly important• Climate change will make decision-making, sustainability, and profitability difficult• Governmental policy can and must be advantageous for the agricultural sector.

Many international research projects were discussed at the congress. These are being done to tacklethe issues mentioned above, as well as other problems. The goal is to reach the SDGs, which aim to,among other things, eradicate poverty, hunger, and the lack of clean water and proper sanitation.

According to Jooste, four factors - which were discussed at the conference - are needed to unlock thepotato sector’s full potential and, so, achieve the SDGs:

• More nutritious potato cultivars with higher production potentials are going to becomeincreasingly important. They must also be able to withstand climate change.

• Better potato sprout quality and production are needed. This, and improved distribution thatcan guarantee the permanent use of disease-resistant sprouting potatoes, will be a decidingfactor.

• Better management practices to ensure increased productivity and sustainability must bedeveloped. Systems that support decisions can achieve these. Diagnostic equipment fordisease and pest control, as well as better water and soil management practices, are alsoneeded.

• Integrated food safety and the development of the value chain must ensure access todynamic markets. Here, partnerships between the private and public sectors can be decisivein ensuring profitability.

Jooste added that Africa has the potential to make an enormous contribution toward the successfulachievement of the SDGs. Between 1994 and 2006, Africa supplied a mere 5,6% of the world’spotatoes. There is, therefore, much potential to increase production on that continent.“The expansion of potential must coincide with an increased demand”, says Jooste. “That is whyenergy and investments must be focused on better access to the market. The development ofdynamic low-cost value chain and consumer education are also priorities.”“A focused approach must be followed to promote the nutritional benefits of potatoes above othercrops. For example, potatoes can deliver three to four times more kilojoules per hectare than graincrops. There is, therefore, room to improve the value potatoes offer. However, this will require theinvolvement of everyone across the entire value chain”, Jooste said.For more information about the congress, and to read the full report, go towww.worldpotatomarkets.com or visit the 2018 International Potato Congress website atwww.worldpotatocongress2018-alap.org.

FreshPlaza, 13 July 2018

These Joburg offices now have farms inside them — and workers get to harvest lunch

Some South African office workers are picking their own herbs and vegetables for lunch, withoutever leaving the office. An organic salad can be quickly put together from lettuce, garlic, tomatoes, cucumber, onion, andbell peppers for instance, and topped with lemon juice — all picked from 'office farms' as theinstallations are colloquially known.Edible business gardens are also taking over office rooftops, balconies and walls. Urban Harvest, a company that sets up and maintains edible gardens, says it has already created 250such gardens, and has many more potential customers thinking about urban farms.Vicinity, a company that manufactures the structures for such gardens, confirms the trend.Most of their installations are corporate-oriented. Vicinity just signed on one of the Radisson's CapeTown hotels to install a rooftop garden with edible plants.Google South Africa's office has one such small vegetable garden on its rooftop, offering a quiet,environmentally-friendly retreat with various edible plants."A business is seen as more cutting edge and credible if it includes green practices or characteristics,such as offsetting its carbon footprint, in its work," says MD of Urban Harvest, Ben Getz.Obtaining a favourable green-star rating is also an incentive to install an edible garden, Urbanmanager Timothy Kachiri tells Business Insider South Africa.

Payroll company Sage's building in the new Menlyn Maine development – which promises "tobecome Africa's first green city" – sports a 4-star green-star rating and features a functioningvegetable garden on the roof that provides the canteen with fresh herbs and veggies.Google South Africa also directs its fresh produce in-house restaurant Gogo's Shebeen.According to a 2015 Human Spaces report, people who work in environments with natural elementsreport a 15% higher level of well-being, a 6% higher level of productivity, and a 15% higher level ofcreativity than those who work in environments devoid of nature.Hotels and restaurants are also increasingly producing right on site.A vegetable garden allows The Westin's chefs in Cape Town access to fresh, organically-grown herbsand vegetables for use in dishes promoted as having a minimal carbon footprint.Manager of The Culinary Table restaurant in Johannesburg, Warren Tshuma, says its garden is tied toa philosophy of "honest garden-to-table cuisine, made from scratch."The Culinary Table also saves money by sourcing ingredients from its own garden, according toTshuma. It takes about three days on average to install a big business garden or one for a small office space.Vertical gardens take about a day and half to erect, says Kachiri.

Timothy Rangongo, Business Insider SA, 27 July 2018

Western Cape agriculture adds up the cost of the continuing drought

Rain may have fallen‚ but farming in the Western Cape is still reeling from the impact of the drought.Job losses totaling 30‚000‚ an economic loss of R5.9bn, and a drop in exports of up to 20% werereported on Wednesday by the World Wide Fund for Nature (WWF) at an agricultural producers’event in Robertson."Many hectares of productive fruit trees and vineyards have been removed ahead of the normalreplanting schedule due to the lack of available water, as well as to prevent disease and pests fromspreading‚" said WWF.With 270‚000ha under irrigation‚ agriculture used 43% of the water in the Western Cape‚ but WWFsaid farms in the province were the most efficient in the country. They used 5‚874m³ of water perirrigated hectare‚ compared with 9‚913m³ in Mpumalanga.WWF said the Western Cape was the country’s leading farm exporter. "In this provincealone‚ agriculture sustains a R530bn economy. This sector employs about 180‚000 workers‚ while theagri-processing sector adds another 126‚000 jobs to the economy. Together‚ these sectors employ15% of the provincial labour force."On average‚ farms in the province had been forced to cut water use by 60% since 2017. "Waterrestrictions varied from 50% in the Breede Valley and 60% in the Berg River and Riviersonderendregion, to 87% in the Lower Olifants River Valley [Clanwilliam‚ Klawer and Vredendal] towards theend of the past irrigation season over the dry summer months‚" WWF said."As a result‚ there has been a significant decline in overall output as farmers prioritise crops withhigher profit margins‚ such as fruit‚ and choose to abandon vegetables and other crops. A multi-yearcrisis like this one can also put pressure on future production seasons. Hence farmers will have tocontinue to find ways to reduce use and innovate."Some of these innovations were already working‚ WWF said. "Near Ceres‚ for instance‚ fruit farmershave shown that water security can be improved by tackling shared water risks upstream‚ such asremoving water-thirsty alien invasive vegetation‚ combined with doing education drives with thesurrounding communities downstream."In the Boland and Elgin regions‚ many farmers are actively engaged in water stewardship initiativesfacilitated through their local conservancy or fire protection agency‚ which has resulted in fullerdams and a decrease in fire risk during the drier summer seasons."

Dave Chambers, Business Day, 19 July 2018

This SA-created irrigation system cuts water usage by up to 70% ̶ and is revolutionising orchards

Tree Hog can cut an orchard’s water consumption by up to 70%, with minimum savings starting at50%, says its inventor Louis Loubser, a farmer in Robertson in the Western Cape.The device is an injection-moulded plastic case with a micro sprinkler which encloses the base of atree, and is designed to last up to eight years.It combines the benefits of micro and drip irrigation.It is backed by one of the UK’s largest fresh fruit suppliers, Primafruit, and over 40,000 units havebeen distributed.“Tree Hog turns long hours of irrigating... into roughly twenty minutes,” Loubser told Business InsiderSouth Africa. “It’s not difficult to do it, but you need to commit to it.”Because Three Hog encloses the base of a tree, it drastically reduces typical evaporation, and keepsthe soil temperature constant helping a young tree’s development.Unlike conventional drip irrigation systems, Tree Hog wets a much larger area at the base of a tree,helping the tree develop a strong root system.It also reduces the need for weeding around young trees.“At first farmers are all sceptical, but after a demonstration they are all believers,” says Loubser.Louber developed Tree Hog in 2015 after his farm suffered from severe water restrictions.“My mother decided to get some new plants for her garden, and I was furious,” Loubser says. “But, while she was planting, I noticed the sprinklers were already on in her garden, and I saw someof the planting pots were upside down in the bedding. That’s when it clicked!”Louber, who produces the units via his company Louirrigate, believes the success of his invention liesin its simplicity. “I think our world focuses so much on new technology and how to make our lives easier, that whatwe forget about the basics,” he says. Louis is in the process of patenting Tree Hog globally, and says he has already started supplying tofarmers elsewhere in Africa, and exporting to Europe and Australia.He believes the product will improve agriculture across the world, and possibly expand agriculture topreviously unusable land.

James de Villiers, Business Insider SA, 2 July 2018

‘South African high cube ban to cause chaos’

The South African government needs to grant an exemption to the height regulations for high cubecontainers in the same way as it has done for car carriers and double decker buses.This was said in a statement by the Cape Chamber of Commerce and Industry, which has warned thatenforcement of the ban on the use of high cube containers on standard trailers in January 2019 hasthe potential to cause chaos to roads, exports and relations with other countries.A statement by the chamber, released last week, pointed out that the ban would be especiallydamaging to the vital fruit export industry. President of the Cape Chamber, Janine Myburgh, notedthat the cost of conversion from standard to low-bed trailers, required by the Department ofTransport, would be around R300 000 (€20,000) per trailer.“Many of the companies that transport the containers of export fruit are small businesses run by thepreviously disadvantaged and operate just two or three trucks,” added Myburgh. “They simply

cannot afford the conversion costs and recovering them from an agricultural industry that has justexperienced the worst drought in more than100 years will not be possible.”She also pointed out that it was not practically possible to convert all trailers in the remaining fewmonths before the implementation date.According to Myburgh, these high cube containers on standard trailers are legal in South Africa’sneighbouring countries which meant that trucks could be stopped at our borders - and this could notonly strain relations but also possibly cause international incidents.

FreshPlaza, 18 July 2018

Securing a sustainable future for agriculture in Western Cape

The development of commercially viable smallholder farmers is a key element in securing asustainable future for agriculture in the Western Cape. This is according to Angus Bowmaker-Falconer, research associate at the University of StellenboschBusiness School (USB), who provided a summary and main findings of the recently released FourthIndustrial Revolution (4IR) Evaluation Report at an event in Stellenbosch last week. Bowmaker-Falconer said an “Agri Renaissance” of higher yields, reduced costs and improvednutritional value of foods was possible for the Western Cape’s R50 billion agricultural economy if thefarming sector, government and education institutions worked together to harvest the benefits ofthe smart technologies emerging in the 4IR.He said one of these benefits was the potential for smart water technology and intelligent irrigationsystems to dramatically reduce agricultural water use in the drought-stricken province, whilemaintaining and improving production levels.Bowmaker-Falconer said the “new normal” for agriculture was a future in which agriculturaltechnology (AgTech) enabled more efficient and sustainable farming, providing food security in aninclusive and equitable economy.The Western Cape Department of Agriculture, commissioned the USB to provide a detailed report toobtain a strategic outlook on the future for agriculture in the province in the context of the 4IR, theemerging technologies and innovations that could change farming methods and production and theopportunities that these present for a sustainable future for both large and small farmers. “Agriculture and agri-processing are strategically important sectors for the Western Cape, for theirlarge absorption of unskilled labour and for their economic contribution, accounting for more than10 percent of the regional economy, more than half of its exports, and 20 percent of South Africa’sagricultural output,”said Bowmaker Falconer. He said the “Agri Renaissance” scenario developed by the USB researches saw agriculture embracingtechnology such as farm management software, precision agriculture and predictive data analytics,enabling producers to use robotics and drones to monitor crop health, soil quality and weather. “In this best-case scenario, agriculture will benefit from the innovations of the digital economy, suchas blockchain technology to provide product traceability, an increasingly important issue forconsumers, and concepts such as the sharing economy and crowdfunding to stimulate thedevelopment of commercially viable smallholder farmers and agri-entrepreneurs. "By adopting the smart and interconnected technologies of the new industrial era, agriculture in theWestern Cape has the opportunity to reposition its brand, engaging consumers through new digitalplatforms, attracting new career entrants to high-tech employment applications,” said Bowmaker-Falconer.He warned, however, against the creation of a digital divide, wherein only certain role playersbenefited from 4IR opportunities, saying that the sector and government needed to work together tocreate an enabling environment for small-scale farmers to access technology, training and finance.Economic Opportunities MEC Alan Wind said it was up to the Western Cape to ensure that the

province made the most of the Fourth Industrial Revolution and was not stuck in the first, second, orthird revolution because it was important for food security across the region.Winde said key to ensuring an agricultural renaissance would be collaboration, and “connecting thedots” between various players and sectors to ensure that they were able to develop and growtogether.“We need to join the dots between agriculture, health, education and the private sector. We arehome to some amazing fintech development and we should be harnessing those skills and ideas inagriculture. I’m pleased with the research finding that there is room to create new jobs and retainpeople for future skills. We need to be asking ourselves how we are going to get Generation Z to gettheir boots muddy,” said Winde.He said currently, the average age of an artisan in the Western Cape is 60.“We need to change that so young people have the skills and knowledge that will equip them to bethe drone pilots, food technologists, coders and developers that the Fourth Industrial Revolution willrequire,”said Winde.Bowmaker-Falconer said the scope of the 4IR went beyond smart and connected machines.“We are pivoting towards a fusion of the physical and the virtual world. Interoperability, advancedartificial intelligence and autonomy are becoming integral parts of a new industrial era. What setsthe fourth industrial revolution apart from its predecessors, is that change is not only fast, but isexpanding exponentially across multiple areas of a deeply interconnected world, leading to‘unparalleled paradigm shifts’ in the economy, business and society. Touching every aspect of humanlife, technology advances are spread widely via the internet, and available at relatively low cost,” saidBowmaker-Falconer.

Joseph Booysen, Business Report, 3 July 2018

Smart farm renaissance possible

Agriculture could benefit from digital technology, such as blockchain, to provide product traceability,which is increasingly important for consumers, according to a new report.The report by the University of Stellenbosch Business School recommends that agriculture engageconsumers, who are becoming better informed about food safety, quality, the traceability ofproducts and the use of chemicals.The opportunity is for producers to market their brands, as consumers have an increasing influenceon retailers to stock products that meet specific requirements and seek out niche products topurchase directly from producers, the report says.The researchers recommend that producers turn to blockchain technology to provide verifiableinformation to track food origins.Blockchain, or the distributed ledger system, has given rise to cryptocurrencies such as bitcoin. Thesystem uses independent computers to synchronise transactions online without the need forindependent validation.A research associate at the university, Angus Bowmaker-Falconer, said agriculture and agri-processingare strategically important sectors for the Western Cape because of their large absorption ofunskilled labour and for their economic contribution, accounting for more than 10% of the regionaleconomy, more than half of its exports, and 20% of SA’s agricultural output.By adopting the smart and interconnected technologies of the new industrial era, agriculture in theWestern Cape has the opportunity to reposition its brand by engaging consumers through digitalplatforms, attracting career entrants to high-tech jobs and becoming an investment proposition forsmart technology applications, says Bowmaker-Falconer.

The "Agri Renaissance" scenario developed by the researchers sees agriculture embracingtechnology such as farm-management software, precision agriculture and predictive data analysis,enabling robotics and drone surveillance.The Western Cape’s department of agriculture commissioned the report to gain a strategic outlookon the future for agriculture in the province in the context of the fourth industrial revolution,emerging technologies and innovations and the opportunities that these present for sustainablefarming.The report says tertiary institutions will need to strengthen their courses with the theory, skills andknowledge related to the fourth industrial revolution, which will in turn attract new students to thesector.Bowmaker-Falconer said the government should develop the enabling conditions to support newentrants and smallholder farmers. This would include incubation and mentoring, education ontechnology, farming practices and business education, and access to finance.He encouraged partnerships between large agri-businesses and small farmers that could supportjoint access to finance, markets and technology.Smallholder farmers are advised to use concepts such as the sharing economy and crowdfunding toexplore the pooling of resources and the creation of networks to strengthen their ability to produceat commercially viable scale, he said.

Bekezela Phakathi, Business Day, 4 July 2018

Wine farmers stay positive despite many producers in the red

Wine-grape farmers remain optimistic about their future even as more than a third of producers aremaking a loss.Just as worrying is that the industry now has 25% fewer producers than a decade ago.Wine-grape production for the year was nearly 1.23-million tonnes, about 15% down compared to2017, according to wine producers body Vinpro.It says the only way to ensure a sustainable supply of wine is for farmers to receive higher prices fortheir wine. The average net farming income was about R45,000/ha compared with the R70,000/harequired to be financially sustainable.Wine is one of SA’s largest agricultural exports, with nearly 100,000ha of vineyards, mostly in theWestern Cape, accounting for 4% of world production.Vinpro said many wine-grape farmers were either leaving the industry, uprooting vines for moreprofitable crops or not replacing vineyards.The Bureau for Economic Research and the Bureau for Food and Agricultural Policy predict that at85,000ha, the area under wine grapes will be about 10% smaller by 2022.Vinpro MD Rico Basson on Wednesday ascribed the decline in the number of producers over the past10 years to various factors including profitability, economy of scale, and mergers."This decline is in line with the bigger picture of agriculture globally, as well as in a local context," hesaid.SA is the eighth-biggest wine producer. The industry contributes R36bn to GDP and employs nearly290,000 people.However, citing impact studies, the decline in the number of producers had not affectedemployment opportunities."It’s important to remember that although the number of producers have become less, the hectaresof vineyards have not declined at the same rate at all and in some instances where vines wereuprooted, other more labour-intensive crops were planted," Basson said.In 2017 the wine industry sold 447-million litres in the local market and exported some 448-million.The 895-million-litre total represents a 3.5% increase compared to 2016.

The challenge for 2018, said Basson, was that lower production and stock levels reaching equilibriumcould result in a significant shortage of wine to service the local and export markets at 2017 levels."We have in the short term already seen evidence of above-average adjustment of prices at SouthAfrican retail level for certain wine categories with further adjustments expected over the mediumterm," he said. "In an environment of short supply, and with the local and export markets asconsiderations, the highest bidder will win."A global wine shortage would have a positive effect on sales volumes and value growth in priorityexport markets.Basson said the winter rains in the Cape had brought some relief for farmers. "We are not out of thewoods by a long shot, because the major storage dams are … only around 50% full, [but it] isconsiderably better than the 25% at this stage last year."

Bekezela Phakathi, Business Day, 26 July 2018

This SA farm made a name in organic wines – now it is going vegan

Org de Rac in the Swartland of the Western Cape, made a name for itself as one of South Africa’ feworganic wine farms in the early 2000s. Now it is going vegan, to satisfy “enormous demand”. Veganwines opens the cellar to a growing generation of consumers who avoid animal products completely,says Frank Meaker, cellar master at Org de Rac. “Having kept a keen eye on the local andinternational wine market, there can be no doubting the enormous rise in veganism as a way of life,especially among the so-called millennial crowd,” Meaker told Business Insider South Africa.“Being a red-blooded South African who enjoys my braai and a platter of cheese, I never thought theday would come when I would be admitting that veganism is becoming a general trend amongconsumers.”Vegan wines do not use the egg whites and certain fish products which were used to fine wines. Fining agents are used to reduce astringency and bitterness. They also remove some of the proteinsthat could make wine go hazy, and help adjust the colour of the wine.Org de Rac now employs non-animal agents such as clay-based bentonite to achieve the same effect.The South African Vegan Society estimates that the number of vegans in the country doubles everytwo years.“Being a producer of vegan wines comes at the right time for us as there is growing generation ofeveryday consumers avoiding animal products totally,” Meaker says.Britain, one of South Africa’s major export partners, saw a 185% increase in vegan products launchedin the UK between 2012 and 2016, and China predicts a 17% growth between 2015 and 2020.In Hong Kong alone, 22% of the population self-identifies as practising some form of a plant-baseddiet. Mattias Kristianson, founder and editor chief of Sweden's first full vegan food magazine VEGO, saysveganism has seen a global explosion in recent years. "In a few years, it went from being a fad diet to becoming a viable variation in everyday cooking,"Kristianson says."Today, vegetarian and veganism is nothing you are questioning or despise, at least not at the level itwas a few years ago, it’s something that people are actually proud of."

James de Villiers, Business Insider SA, 10 July 2018

Vegan wine produced in Swartland

The wine industry can expect the demand for wines free from animal-based products to increase asveganism becomes one of the fastest-growing consumer trends globally.Org de Rac, the organic wine farm in the Swartland, has eschewed all animal products such as certainfining agents that have been part of the traditional wine-making process, and along with its organicstatus is experiencing an increase in demand due to its vegan-friendly wines.“From the outset Org de Rac followed an organic wine strategy as it suits modern consumers andorganic farming delivers the best quality wines, to our mind. But having kept a keen eye on the localand international wine market, there can be no doubting the enormous rise in veganism as a way oflife – especially among the so-called millennial crowd which is an important part of the wineindustry’s consumer base,” says Frank Meaker, cellar master at Org de Rac.Traditionally, egg white and certain fish products were used in fine wines – getting rid of thecloudiness to leave a clear, polished drink.“At Org de Rac we don’t use any of these, employing the non-animal agents that are available, suchas clay-based bentonite,” says Meaker. “Being a producer of vegan wines comes at the right time forus as there is growing generation of everyday consumers avoiding animal products totally.”There’s been a 600% increase in people identifying themselves as vegans in the US over the lastthree years. According to a report by research firm GlobalData, only 1% of US consumers claimed tobe vegan in 2014. In 2017 that number rose to 6%.In the UK the number vegans increased by 350% compared to a decade ago, according to researchcommissioned by the Vegan Society in partnership with Vegan Life magazine. Over 600 000 Britishpeople regard themselves as vegan, and the increase shows no signs of abating.Even China is going vegan: research predicts that China’s vegan market will grow more than 17%between 2015 and 2020. And in Hong Kong, 22% of the population reports practicing some form of aplant-based diet.Meaker says this global increase in veganism is affecting producers of food and beverages, and winecannot be excluded as the trend rises.Britain saw a 185% increase in vegan products launched in the UK between 2012 and 2016, and inAmerica producers of dairy products are switching to soya and nut alternatives to meet demand. InSouth Africa the SA Vegan Society reports of the number of vegans doubling every two years.“Wine hasn’t generally been identified as a non-vegan product due to the labelling laws and becausepeople associate it with grapes,” says Meaker.“More producers will be taking steps to ensure their wine is vegan-friendly, however, and those thatalready have are finding traction in the market place. Ignore the reality of veganism at your peril.”

Fin24, 12 July 2018

New gems in the Capespan crown

Capespan recently launched its new dedicated soft citrus brand Outspan Gems.Outspan Gems is an expansion of Capespan’s iconic citrus brand, Outspan, and will be usedexclusively to brand soft citrus varieties produced, procured and marketed globally by Capespan.The rich heritage of the Outspan brand was a key consideration when Capespan decided to launchthe Outspan Gems brand. “The Outspan Gems brand will expand the Outspan offering beyond thebrand’s core and will highlight the unique attributes offered by selected soft citrus varieties” saidAdéle Ackermann, Capespan Group Brand Manager.The iconic Outspan brand dates back to 1936 when it was the only brand associated with the SouthAfrican citrus export industry. It was significant in providing a strong foundation to the South Africancitrus industry, and therefore the Outspan brand will always be honoured for laying the foundations

for the South African citrus industry globally. Today, 82 years later, and with fruit no longer onlysourced from South Africa, Outspan has developed into a truly international brand. Retailers, tradersand consumers alike want Outspan quality all year round.The word GEMS translates perfectly into all languages, especially Asian languages. Its true meaning -brilliant, outstanding and precious – also fittingly describes the qualities of the products that thebrand will represent. “The brand delivers a product to customers across the world that is fun,youthful, healthy and bold. Most importantly it will be a brand that will be trusted to deliverconsistent quality sourced from the world’s best growers, always fresh and great tasting,” saidAckermann.“With the existing brand awareness, brand building and association over many years it is a naturalprogression for Capespan to extend this brand offering to their soft citrus products” says Tonie Fuchs,Capespan’s managing director. It is in line with Capespan’s drive to reduce business complexity andto have fewer and bigger brands, aligned to Capespan’s global, year-round product offering.Capespan, through its marketing channels and associates in the Far East, JWM Asia, will launch theOutspan Gems brand into markets such as Hong Kong, Singapore, Thailand and China where there isa big appetite for the Outspan brand. The brand will be supported with value-added packaging andin-store point of sale promotions.Fuchs says that: “With the forecasted global growth in soft citrus volumes, our aim is to createexcitement around the unique features of this exciting commodity. We especially see significantopportunities in the Asian markets where consumers rely heavily on trusted product brands likeOutspan to introduce, develop and deliver exciting new products to these markets.”“We are confident that Outspan Gems will grow to become an iconic brand among the fruit brandsof the world, representing a mark of quality, not only in Asia but in all Capespan’s markets globally.“We are very proud to build on the Outspan brand association and we are excited to see what theOutspan Gems brand will bring to the fruit industry over the next 82 years” said Fuchs.

FreshPlaza, 16 July 2018

South Africa expects to produce more citrus fruits this season

Given the expansion of the acreage and the ideal weather conditions recorded in the main producingregions of Limpopo, the Eastern Cape and Mpumalanga, South Africa expects its citrus production toincrease this season.The drought in the Western Cape will likely lead to a decline in the production of mandarins;however, their tariff-free export to the United States under the African Growth and Opportunity Act(AGOA) is expected to continue recording strong annual growth.Subsequent estimates indicate that the country's grapefruit production will increase by 5% and reach370,000 tonnes in the 2017/18 season, mostly due to the expansion of the acreage and the goodweather conditions in the main producing regions of Limpopo and Mpumalanga.Grapefruit exports are expected to grow by 4% and reach 240,000 tonnes in the 2017/18 season,based on the increase in production, strong demand in Asia and some EU countries, and exportstatistics up to April 2018.The production of oranges will grow by 8% to 1.47 million tonnes in the 2017/18 season, mostlythanks to the normal amount of rainfall and an expansion of the acreage in the main producingregions of Limpopo, Eastern Cape and Mpumalanga, which account for about 82% of the total areadevoted to the production of oranges. The fruit's exports are expected to be 4% higher, reaching 1.22million tonnes in the 2017/18 season, based on the increase in production, the growth in thedemand from China and Hong Kong, and South Africa's successful efforts to address the challengesposed by black spot in the EU market.

The production of mandarins is expected to fall by 2%, to 255,000 tonnes, in the 2017/18 season,mainly due to the impact of the drought, which has led to lower yields in the main producing regionof the Western Cape.The export of mandarins in the 2017/18 season is expected to increase by 5%, to a total of 220,000tonnes, based on the sector's strategy of prioritising export markets over national ones, and thestrong demand for this fruit in the world markets.

FreshPlaza, 5 July 2018

Epicentre of soft citrus boom

One of the largest soft citrus packhouses in South Africa is situated in Burgersfort, Mpumalanga, anarea that has two things going for it: some of the best soil in the country, a Hutton that continuesdown for many metres, and a climate of cool nights and hot days, eminently suitable to soft citrusproduction.Put the two together with the global boom in soft citrus, and you have the recipe for exponentialgrowth, to which Indigo fruit Farming has responded with its Naranja packhouse of 14,000m2 andthe capacity for 100 bins (or around 38 tonnes) an hour.Some navels and Valencias, and an eventual portion of 10% of lemons are packed here, but mostlyit’s soft citrus that are delicately lowered onto the Maf Roda sorting line. The packhouse has receivedthe highest accreditation ratings of both the British Retail Consortium Accreditation and Tesco.“We treat soft citrus like stonefruit, a very sensitive commodity,” says Josef Malan, general managerof Naranja Packers. “The difference between a class 1 and a class 2 carton is R100 [6 euros]. In amodern packhouse we have complete consistency – class 1, class 2 and select are always the same.With modern technology you can get a 2% to 10% improvement in packouts – it’s had a dramaticinfluence.” Lucille Strecker, systems and information manager at Naranja, notes that traditionally,class 3 fruit accounted for up to 15% in the packouts, but that average is now down to 8%.In designing the upgrade of the original packhouse, Josef Malan and his colleagues had visitedpackhouses worldwide, with the view of including pioneering automation so that, if ever need be,the packhouse can keep running with 18 people. Besides, as he points out, to process 100 bins perhour would necessitate twice their current staff numbers.As it is, now during high season there are just over 400 people working day and night to sort andpack the bins of soft citrus coming in from a radius of 200km: Letsitele, Hoedspruit, Burgersfort,Nelspruit. Their projections are for 64,000 tonnes a season and currently it stands at approximately30,000 tonnes, a stepdown from where they expected to be this year after hail in the Lowveldreduced it by 8,000t.In the quest to differentiate themselves and their product – ClemenGold and SweetC mandarins aretheir biggest output – the packhouse offers over twenty different packaging formats to clients, aprocess which took five years to source the right carton designs, the right materials and the rightmachinery. Another first was their biological water recycling plant. It filters and cleanses the 50,000 litres ofwater used in the packhouse for re-use in irrigation.Getting the fruit from the packhouse and to the foreign buyers is a concern, as road infrastructure(rail infrastructure plays a scant role in fresh produce transport) and harbour facilities are groaningunder the weight of the tremendous increase in citrus and other fresh commodities.“Our challenge ahead is transport and logistics,” says Josef Malan. “Say you pack 32 pallets an hourand the packhouse is working through the night, that’s 640 pallets per day and to move that, you’retalking approximately 30 trucks. So you need 30 trucks at the packhouse, 30 on the road and another30 on their way back, in other words 90 trucks in circulation for one packhouse.”

That is, assuming that everything goes well at the harbour. A recent strike of harbour workers causeda delay, as do mundane things like insufficient reefer plug points at the harbour or long queues oftrucks at the harbour. “The trucks back up into the surrounding roads and traffic officials are foreverwriting out tickets for our truck drivers,“ Lucille says. “At the harbour the trucks can’t offload quicklyenough. They stand and wait if there aren’t enough cool rooms available.”The height of the avocado season coincides with that of citrus, which places further strain on coolfacilities at the harbours. The choice of harbour for Naranja Packers depends on cultivar, timing anddestination. If fruit go to Cape Town Harbour, almost double the trucking cost from Burgersfort, it’s inthe European market a week earlier, while Durban Harbour provides good opportunities for returnjourney freight (although the recent listeriosis scare affected that).It takes about 45 to 50 days for their soft citrus to complete its journey from the orchard to itsreceivers overseas.

Carolize Jansen, FreshPlaza, 22 July 2018

Proper Cape winter heralds good waterblommetjie season

For waterblommetjie lovers, the return of plentiful winter rain and snow to the Western Cape meansthe return of this beloved edible aquatic plant, endemic to the Boland (images right and below rightby Lee Schwagele).The waterblommetjie (‘little water flower’) harvest was almost non-existent for the past two years,due not only to the drought but also to winters that were too warm and water temperature thatwasn’t cold enough to induce flowering, for it is the inflorescences that are eaten.Commercial waterblommetjie production takes place around Piketberg, Porterville, Riebeeck-Kasteel,Worcester, Wolseley, Wellington and Saron. The tubers are planted in dams during late summer orearly winter (one of the earliest producers already started harvesting in April this year). Theinflorescences are picked and thoroughly rinsed for consumption, mostly fresh but also canned.Individual farmers produce between 1 and 5 tonnes of waterblommetjies annually. Harvesting of thesweetly-scented flowers and stems last until early springtime, when the tubers are removed for theirsummer dormancy period.The provenance of their first waterblommetjies is a closely-guarded secret by farm stalls, allcompeting to be the first to offer waterblommetjies in winter. There is still widescale waterblommetjie harvesting from natural ponds, for use in farm kitchens orsold by the roadside, but retailers require more stringent food security measures. One retailer hasbeen stocking waterblommetjies at its stores countrywide – although their first priority when thefirst waterblommetjies come in, are their Western Cape stores – for the past twelve years, and it hasseen growth particularly among consumers in Gauteng and the Free State. In KwaZulu-Natal,however, with its firmly-established Indian cuisine, waterblommetjies don’t fly off the shelves.“After two non-existent waterblommetjie years we’re just happy to have waterblommetjies again,”says a vegetable buyer at a major retailer, himself a lover of waterblommetjiebredie(waterblommetjie stew). “It’s going to be a lekker, normal waterblommetjie season.”He continues: “The waterblommetjie industry is a vibrant industry, the tubers are widely sold andplanted in the Boland, a bit like tulip bulbs.”On the first of September the annual waterblommetjie festival takes place on Rhebokskloof wineestate in Agter-Paarl. At the festival, where the stew will be made like it's done in the winelands, itwill find a use in some non-traditional ways, like waterblommetjie ice cream.

Carolize Jansen, FreshPlaza, 13 July 2018

De Doorns’ empowerment table grape farm

To be successful, don’t treat a land reform farm as a project. It’s a business, and as the owner, youshouldn’t look for handouts. So be on the lookout for profit-making opportunities and ways ofproviding high levels of employment.This is according to Alec Abrahams, managing director of Siyazama Klipland Boerdery, a BEE companyin De Doorns in the Hex River Valley, Western Cape.For Alec, acquiring Siyazama Klipland was the realisation of a long-held ambition after years ofencouraging youngsters to become entrepreneurs.“I obtained a B. Com, then taught accounting at a high school. But owning my own business wasalways my dream,” he recalls.This opportunity presented itself 12 years ago when the late Niel Jordaan’s farm, Klipland, come ontothe market at a fair lease. Alec and his wife, Charlene, joined up with six others – Vaaltyn andKatriena Pieterse, Johannes and Maria Matabo, Liesbet Jack and Jersey Mxala – and approachedFrans Hugo, a local farmer for guidance in obtaining the farm.Frans became their mentor and helped them make a success of the venture.For two years, the group leased the 40ha farm on their own. Then the Department of RuralDevelopment and Land Reform (DRDLR) bought the farm for about R5 million as an empowermentinitiative, and Siyazama has been leasing it from them as a Proactive Land ReformAcquisitionStrategy (PLAS) farm ever since.According to Alec, the beneficiaries of PLAS do not own the land: they are given long-term leases bygovernment with the option of buying the land from the state after a certain period.In 2006, about 80% of the farm was planted to seeded grapes.“Initially, it went well with the seeded grape varieties. When we took over the farm in 2007, wepacked about 80 000 cartons, which we increased to 90 000 in 2008, turning our first profit. In 2010,we reached a record of 101 000 cartons,” Alec recalls.In 2011, with the trend towards seedless grapes, they realised they had to make the change. Overthe past seven years, Siyazama’s production has therefore been shifting steadily from seeded toseedless. Currently, around 60% of grapevines on the farm produce red seedless grapes, while blackseedless grapes constitute 20% of production.Crimson Seedless is the predominant variety planted, and Sweet Celebration, Flame Seedless,Autumn Royal and seeded Red Globe are also planted.According to Alec, replanting was not without its difficulties.“Our production fell from a record 101 000 cartons in 2010 to 80 000 cartons in 2011. Each year wereplant between 2ha and 3ha. Replanting costs can run to R400 000/ ha, so most of our profits arereinvested in replanting,” he says.Alec credits the South African Table Grape Industry for funding some of the plant materials undertheir Preferred Cultivar, Preferred Country programme, as well as the DRDLR for assisting with inputcosts, and the Department of Agriculture, Forestry and Fisheries (DAFF) for providing implementsand production capital.He hopes that the replanting will be complete within the next two years, turning the farm into a100% seedless operation. He adds, however, that they will reap the benefits only when the newvarieties start producing significantly. The farm has the potential to pack 150 000 cartons a year.“We hope to achieve that within the next two to three years,” he says.Siyazama has its own packhouse, and exports are handled by In2Fruit. The EU and Far East accountfor 95% of export sales, 2% of the grapes are sold locally, and 3% are sent to De Doorns Wine Cellar.Alec says in order for them to be independent of funding from the DRDLR, they secured a productionloan from In2Fruit. The company supports a black-empowered fruit export company, RainbowProduce, which assists with Siyazama’s exports.

As someone who grew up in the vineyards, Alec is no stranger to the challenges of farming. The2017/2018 production season has been particularly difficult due to the drought, and he expects theywill harvest about 80 000 4,5kg boxes.“Although this figure is in line with that of previous years, it was a difficult season. In addition to thehigh temperatures, we were also without water for five days at the beginning of harvesting. It had aserious effect on our grapes. We’ve also been allocated just 45% of our annual water allocation.”This prompted them to install a borehole.Although Alec is grateful for the help received from the state, he says that when farming on state-owned land, acquiring credit finance is a struggle.However, he hopes this will change as their lease agreement was extended by 30 years in Decemberlast year.Other challenges include theft, high input costs and the limited size of their holding dam.A few years ago, unemployment and low wages triggered a strike at De Doorns.“As business owners we have the responsibility to create jobs and put food on the table of ourworkers,” says Alec.Currently, Siyazama employs 25 permanent workers and an additional 20 during the pre- and post-harvest periods for suckering and pruning. During harvesting, from the start of January until the endof March, they employ between 80 and 85 seasonal workers.As a former teacher, Alec knows how important training and education are.“Our workers regularly attend various courses. This doesn’t only have a positive effect on thebusiness; it boosts the attitude, productivity and self-esteem of the employees,” he says.He emphasises that the experience of the workforce has played a significant role in the success ofthe business.“Siyazama is Xhosa for ‘We are trying’. Over the past 12 years, we’ve worked together and tried ourutmost to contribute 2018to the farm’s success and create jobs for the local community.“It’s safe to say we are now beyond simply ‘trying’; we’ve shown that we can succeed. We shouldthink of changing our name,” he says.The next major step, says Alec, is to buy the property. “Hopefully within the next five years we’ll beable to do so. “We’re still in the process of developing the farm, but for this we’re partiallydependent on government assistance,” says Alec.He adds that due to the many failed land reform projects, there are many eyes on Siyazama. “We’redetermined to make a success of this farm and to show we mean business.”

Jeandré du Preez, Farmer's Weekly, 12 July 2018

Banking & Capital Markets

Nedbank bets on drones reshaping agri finance

Nedbank’s venture capital fund is betting on drones reshaping agri finance by investing in Aerobotics,a Cape Town-based aerial data-analytics company making waves internationally.The R100 million venture capital fund, which sits within Nebank Corporate and Investment Banking’s(CIB) disruption and innovation hub, NEDX, has made an undisclosed investment in the start-up as itseeks to grow its agri finance book.Aerobotics employs satellites and drones to capture bird’s eye view multispectral images of orchardsto help farmers optimise yields and manage costs. It processes the aerial data through an in-house

analytics programme, which makes use of machine learning to help farmers assess crop health andcontrol for pests and disease.The technology, which can assess the health of individual trees within an orchard, is currently usedacross 60 000 hectares of arable land – equivalent to around 500 farms in South Africa, Australia,France, Spain the United States. Stuart van der Veen, head of disruption and innovation at Nedbank CIB, said the decision to invest inAerobotics stems from the banking unit’s strategic focus on agri finance, a market in which it is“under represented” and aims to win more business.The bank is using the technology – on a trial basis – to gather data on the farm of a large commercialclient, which it aims to use in developing agri finance products. “We can very quickly engage withmultispectral images and produce very accurate and better serving products there and then, whichmeans that we are almost uberising the process of early stage agri finance and the initiation facilitieswith a completely new method that isn’t being used anywhere else in the world.”He previously told Moneyweb that yield estimates, which can be determined through data analytics,coupled with forward price estimates could be used to determine forward cash flows and biologicalasset valuations. Such information could be used for credit and risk modelling, and to even providecredit based on the valuation of individual trees.In practice, aerobotics is being used by farmers to reduce costs and improve productivity.Jean Kuiper of Real IPM, who uses the technology to plan chemical crop protection, said itimmediately helped to reduce chemical usage by 30% as she sprays for what is needed and not outof fear. “Us, as growers, we fear what is going to go wrong. As an apple farmer, you harvest once ayear and can’t afford to let anything go wrong so you blanket spray. Now, with this incrediblyaccurate data capturing, which literally is immediately available you can plan a proper sprayprogramme”. She added that the data can detect problems with trees up to two years before thenaked eye and allows for treatment to be targeted based on individual trees.Aerobotics co-founder Benji Meltzer, also told of how the company was able to save a Western-Capecitrus farmer R51 000 per year on a four-hectare orchard by identifying dead trees, which the farmerwas fertilising and irrigating for no productive use. “It is a long-term benefit. Given how long a treetakes to grow and to produce fruit, the value is extensive rather than just finding a problem thisseason and doing something about it now, [you] can do something that adds value and improvesyour yield going forward.”Aerobotics was founded in 2014 by South Africans Meltzer and James Paterson, who hold mastersdegrees in neurotechnology and aeronautical engineering from London’s Imperial College and theMassachusetts Institute of Technology (MIt) respectively. It was one of global 24 start-ups toparticipate in Google’s Launchpad Accelerator in San Francisco from January to June of this year.

Prinesha Naidoo, Moneyweb, 13 July 2018

Tech start-up could save agriculture millions

Using satellite imagery and drone technology, a Cape Town-based start-up is able to potentially savethe agricultural sector millions of rands in crop losses due to pests and disease, boosting the sectorand contributing to increased food security.Nedbank Corporate Investment Banking’s (CIB’s) Venture Capital Fund has just bought a stake in it.Aerobotics, which was started in early 2015 by James Paterson and Benji Meltzer, focuses onanalysing data for tree crops such as citrus, fruits and nuts.The company employs about 30 people.They have developed software that uses layers of data from satellite and drone imagery to mapindividual trees in order to determine their health and identify those suffering from pests or disease,or from a lack of irrigation or nutrition.

On top of this is an app, which acts a bit like a Google map to direct the farmer to the specific treeswhich are below optimum health, saving time and fuel in large orchards.Speaking at their Woodstock, Cape Town offices this week, Paterson said their basic service, whichuses satellite data updated every five days dependent on cloud cover, together with their scoutingapp, costs farmers R10 per hectare per month.The addition of drone fly overs to increase the accuracy of data costs R100 per hectare per flight,with three to four flights per season offering the best results.While there are many drone image services offered to farmers to give them an aerial overview oftheir crop health, Aerobotics claims to be ahead of the game globally in developing unique softwarethat uses the aerial data to individually identify and analyse every tree on the farm.The resultant early detection of stressed trees saves farmers about R10 000 per hectare in lost yieldsper year, said Paterson.He said their first test client, who has been working with them since the beginning, has saved R51000 per year on a 4-hectare orchard.With four drone flights per season and a basic subscription, the cost of the full service atapproximately R1 600 per hectare over a year still equalled an R8 400 per hectare saving due to earlyintervention.This was about 5% to 10% of nett value per hectare, said Ockie Geldenhuys, chair of the Ceres FruitFarmers Association.Paterson, who is the son of a citrus farmer in Clanwilliam, said they currently have about 500 clientsrepresenting 60 000 hectares on their platform. About 90% of these are in South Africa, but they alsohave clients in Australia, Spain, France and the US.With 100 million hectares of tree crops in South Africa, the company has massive growth potential,currently servicing only 0.06% of its local market and barely touching the international market as yet.This potential has been recognised by Nedbank CIB, which used its newly established venture fund tobuy an undisclosed equity stake in the company.Nedbank CIB head of disruption and innovation, Stuart van der Veen, said the new division wasestablished a year ago to “experiment in frontier technology” to the benefit of their clients, andAerobotics was the new division’s first investment from its R100 million fund, an amount which wasjust “a toe in the water”.Van der Veen said the type of “granular equity allocation” in a tech company such as Aerobotics“hasn’t necessarily made sense for very large balance sheets in the past”.However, the ability to scale up for the biggest industry on the continent has Nedbank introducingthe technology to “a couple of significant clients” and “forward-looking clients”, including agriculturalco-operatives and farmers, within their business banking sector.The bank’s disruption portfolio, Van der Veen said, was looking at how to “create alternative futures”for its clients, and there was “a massive rise in agritech” with food security and farming becomingincreasingly important.The investment in Aerobotics was part of validating technology in this sphere, finding valuepropositions and scaling it up.Van der Veen said the agricultural industry was very complex and there were massive amounts ofdata that had not yet been measured.“So if we draw from that, there’s a lot of optimisation we can add to the farm.”Paterson said farming was moving from the age of mechanisation into the age of digitisation, inwhich existing data was analysed to optimise yields.He said while the Aerobotics software had been developed to identify and analyse individual trees byfeeding countless images into the algorithm, the next step was to enable work at leaf level so thatpests and diseases could be identified before they affected the entire tree.At this level, it would also be useful to field crop farmers, opening a potential market of an additionalone billion hectares for data analysis in South Africa alone.

Steve Kretzmann, Fin24, 15 July 2018

Why delisting has been good for Afgri

Food, agriculture and financial services group Afgri has tapped into shareholders Fairfax FinancialHoldings (a Canadian-based investment business), BEE shareholder Bafepi Agri, the PublicInvestment Corporation and management to raise R1 billion to be deployed on growth opportunitiesin agriculture, food processing and financial services.The group, which left the JSE in April 2014, announced that it has created an investment holdingstructure, Afgri Group Holdings (to be known as AGH), which will enable the group to be agileenough to move faster, CEO Chris Venter told Moneyweb. It will help AGH achieve its aim of being adriver of food security across Africa.Since delisting, Afgri has expanded into the rest of Africa (it is now in 11 countries) and Australia (inagricultural equipment), and bought the Bank of Athens. Its food and agri businesses, Australianbusinesses and financial services form the basis of the new structure.This year the group will breach R1 billion earnings before interest, tax, depreciation and amortisationfor the first time, Venter explained.About R800 million of the amount raised will be used to expand Philafrica Foods, which operatesgrain and maize mills, an oilseed plant, animal feed plants and produces poultry. This will includecapex on current infrastructure, with about 75% likely to be spent on new acquisitions.Philafrica announced on Monday that it had bought a majority stake in Pakworks, which makesNikNaks and Simba for PepsiCo. This follows two deals late last year – a joint venture with chickenproducer Novos Horizontes in Mozambique and the acquisition of the Dutch AgriculturalDevelopment Trading Company’s cassava processing activities. Philafrica plans to spend R1 billion toR1.5 billion in Africa over the next 18 months to two years. Afgri has invested R500 million (of its ownfunds) in its growing footprint in Australia, where it is has the largest John Deere dealership.The financial services arm, which includes access to finance, futures trading, debtor products andfunding of agricultural businesses, will house the South African Bank of Athens as soon as the deal,announced more than a year ago, is given the final green light.Bank of Athens will be housed in GroCapital and, rebranded, will service current customers and lookat additional product lines. Venter said final approval should be given shortly, and that a portion ofthe capital raised has gone towards this acquisition.AGH is also expecting strategic acquisitions in agriculture, food and financial services, and is lookingfor innovation for farmers and food-related businesses. Venter said Afgri has built up a largegeographical presence in South Africa, Africa and Western Australia, and its association with leadingbrands is strong. It is the largest John Deere agency outside of North America.He said acquisitions in Australia and the Bank of Athens in SA would have been difficult if Afgri waslisted, and that going private had facilitated a number of significant events. Its most recent focus hasbeen on positioning the holding company AGH and making sure that it creates “focused entities tobe agile and deploy the capital wisely”.“Having strong shareholders helps us to deploy and raise capital,” he said. “For the moment we havea lot of support from shareholders to support us in terms of acquisitions and they haven’t indicatedthey are at the end of that support.”This means a relisting is not currently on the cards.

Marcia Klein, Moneyweb, 3 July 2018

Hybrid agriculture company pushes out JSE listing

Newly formed agricultural giant Acorn Agri & Food (AAF), estimated to be worth R4.3bn-R4.6bn, haspushed its JSE listing to the second half of 2020 as it tweaks its portfolio.AAF was formed in May by the merger of Somerset West-based agribusiness investor Acorn Agri andCaledon-based agricultural services group Overberg Agri.This new hybrid agribusiness, which has African Rainbow Capital and Sanlam Private Wealth as keybackers, initially slated a JSE listing "in the near future" if conditions were favourable.On Monday AAF CEO Andre Uys argued the group would need to tackle a few issues before applyingfor a JSE listing.He said AAF would want to sell off its remaining minority holding in Pioneer Foods, invest surpluscash and improve profit flows at a couple of under-performing businesses."We won’t do a JSE listing unless we are 100% ready, and we’d like to be in great shape when wepursue a main board listing."Uys said AAF did not need additional capital at this point, but conceded a listing would help sharetrading liquidity. "Given the investment pipeline, additional capital would likely only be required by2020."The JSE only hosts one genuine agribusiness investment counter in the PSG Group, controlled byZeder Investments, which has a market capitalisation of about R9.3bn.Unlike Zeder, which has a handful of mainstay investments in Pioneer Foods, Capespan, Zaad andKaap Agri, AAF is a more diversified span of operational agribusinesses and strategic investments.Interests include dried fruit businesses Montagu and Grassroots, fuel distribution specialist Moov,grain storage services, a retail offering, mechanisation equipment, financial services, packagingsolutions as well as holding investments in Boltfast (steel fasteners), Bontebok Limeworks and theBredasdorp Abattoir. There is also a 99% stake in ACG Fruit, a 35% stake in Lesotho Milling and aholding of 11.1% on Port Elizabeth-based agribusiness BKB.Uys said the enlarged AAF agribusiness was well positioned to snag new opportunities in theagriculture and food sectors as well as in the fuel and energy industries.He said value could also be unlocked by combining certain of AAF’s operational units.Last week AAF released year to end-February results, which for all intents and purposes reflected theoperational performance of Overberg Agri.Revenue, driven by acquisitions, more than doubled to R6.4bn with gross profit up 42% to R720m.Earnings dropped 8% to R146m, but AAF pegged its dividend at 55c per share.

Marc Hasenfuss, Business Day, 17 July 2018

Nonperforming loans heap pressure on state-owned IDC

Nonperforming loans in the Industrial Development Corporation (IDC) have risen to R7.5bn, with adifficult hotel project in Uganda one of the reasons.The state-owned investor recorded its highest level of impairments in five years againstunderperforming assets.The growth in nonperforming loans was in part because of a grace period given to investmentswhere there was a period of construction or ramp-up in production before cash generation to serviceloans began. However, the $100m investment in the Ugandan hotel was problematic.The IDC was involved in legal action to recover the investment and it had the “necessary collateral inplace to mitigate its losses in this case”, it said in its annual report.The IDC’s impairments grew to R4.9bn during the year from R2.1bn, largely because of the writingdown of investments in fertiliser company Foskor, in which it has a 59% stake, and the 74%-held steelbusiness of Scaw, which it bought from Anglo American in 2012.

It wrote off R3.1bn of nonperforming loans, up from R1.3bn the year before and far exceeding thosein the previous three years.The IDC, which is heavily exposed to SA’s mining and minerals sectors, is pushing hard on adiversification strategy and plans to bring more black South Africans into the mainstream economy,said CEO Geoffrey Qhena after the release of the funder’s annual results for the year to end-March.It posted a R1bn increase in post-tax profit, reporting R3.2bn. It approved 202 transactions duringthe year, worth R16.7bn.While the IDC has no intention of abandoning Foskor, which Qhena described as a strategic asset forSA, the same cannot be said of Scaw, which the IDC broke down into three operating units, bringingin partners for two units. Work is under way to bring a partner in at the third unit, he said.The longer-term intention was to ensure third parties owned the majority stakes in each of the threeunits, allowing the IDC over time to recoup its investment and recover the R3.3bn of losses thebusiness has incurred since 2012.At Foskor, the IDC is keen for it to start realising value from its magnetite, which is a relatively low-grade source of iron, as well as to find and exploit the high-grade parts of its phosphate mine tosupply the niche markets that use the chemical in foods and toothpaste.

Allan Seccombe, Business Day, 31 July 2018

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