PIC invests R60m in Just Veggies

"I needed something substantial to do after rugby and this was a really great opportunity that came my way," said Muir.

Muir teamed up with former Queens College schoolmate Lex Campbell to start an agriprocessing business in South Africa that will be 100% supplied by black farmers. They hope to go head-to-head with major companies such as Canadian firm McCain Foods.

"It is going to be difficult to compete with the big guys. I mean, they can cut prices without even feeling it and price smaller producers out of the market but we hope the fact that all our products will be sourced from black farmers will give us a foot in the door," said Campbell.

For some of the local farmers, this might feel like deja vu because Swiss company BioSwiss - which farmed, processed and exported organic vegetables - operated in the area several years ago.

BioSwiss started operating in South Africa by fluke in 2003. The owner, Martin Barteck, who was married to a Madagascan woman, wanted to start an organic vegetable operation in Madagascar, but political conflict in that country resulted in his very expensive agriprocessing equipment being stuck in a South African harbour.

Farming near Vryheid

To avert a financial disaster, Barteck decided to look for fertile land in South Africa that could be used to farm high-quality organic vegetables. He found the land near Vryheid, in KwaZulu-Natal.

BioSwiss leased land from farms that were transferred to black people by the government and it provided many jobs to people in the area. But almost no knowledge or skills were transferred to the locals during the operation and when Barteck died in 2011, all production on the farms as well as in the factory came to a complete standstill.

Muir said he heard about the opportunity from a friend and picked up the factory from the liquidators at the beginning of 2012.

Then the real work began. Muir and Campbell began engaging with local communities and government bodies to cement partnerships and funding.

Eighteen months later, the pair had the community on board and secured almost R100m in funding from the PIC and other government bodies. The PIC supplied the bulk of the funding of about R60m, which makes it a 15% shareholder, and bought a 15% shareholding in the factory for the local community.

Investment returns

PIC's chief executive Elias Masilela said it "definitely" expected a return on investment from Just Veggies. "As we are investing on behalf of the Government Employees Pension Fund, we have to deliver a dual return, financial and social."

For the community, it's a welcome opportunity to work again.

"First, they gave the land to us and we were landowners, then BioSwiss came here and now this is our third chance," said Bhekinkosi Mbatha, brother of Chief Khumbula Mbatha, who lives on one of the farms flagged to supply Just Veggies.

Three black-owned farms in the Abaqulusi area will be supplying Just Veggies.

"If all goes well, we hope to expand this to other black-owned farms as well," said Muir.

Agriculture in the area has shrunk by 66% from 1995 and of the 244,000 people living in the area, about 150,000 live in poverty, statistics from the Department of Economic Development show.

One main problem is that farms transferred from white owners to black owners through land restitution often go from commercial production to subsistence farming or no production at all.

Annelize Crosby from Agri SA said this was mainly because of a lack of production and finance skills, and the fact that the farmers do not have markets to sell to.

In the Abaqulusi area, about 50 farms have been transferred.

Muir said Just Veggies would have a strong focus on teaching communities the business of farming. "People won't just be told to dig a hole without them knowing why a hole is needed and what it will be used for," he said.

To be commercially viable, Just Veggies would have to process between 10 and 20 tons of vegetables a day. "We expect our first batch of veggies in four months," said Muir.

Muir and Campbell are spending their weekdays in the area to get the project up and running.

Source: Business Times via I-Net Bridge