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March 2010 |
SA agrifood group Afgri expects the following price range trends in commodities in the short term (per ton):
* White maize: R1,000-1,500.
* Yellow maize: R970-1,500.
* Wheat: R2,000-2,350.
* Sunflower: R3,050-3,700.
* Soybean: R2,400-2,800.
In a recent presentation, Chris Venter, CEO of Afgri, said that in the
group's results for the half-year to end-December 2009 there was a 35%
turnover contribution from "foods" - being oil and protein (about 23%
of 100%); animal feed (about 30%) and broilers (about 45%).
The group offers financial services, trading and agriservices, but
agriservices are decreasing in importance. The food section, which is
basically animal feeds and broilers, is increasing in importance.
A new management structure has been put in place following considerable
rationalisations and large number of sales of feed, snacks and many
other "non-core businesses", including retail businesses.
Afgri has previously entered into discussions with broiler producer
Sovereign in order, according to Venter, to "make (Afgri's) broiler
business more complete".
Said Venter: "We do not want to become huge, but to reach a certain
volume. Our current production of broilers is about 660,000 per week."
He says the "magical figure" in the industry was about one million
broilers per week, at which "costs per ton mean that this is the right
size business". He also said Afgri had identified "a huge opportunity"
in procurement related to its broiler business.
On broiler prices, he said there had not been the normal price
increases for broilers expected at Christmas last year, but Afgri
expected a gradual recovery in prices.
On maize, he confirmed that a very good crop was currently in prospect
in SA, and Afrgi expected to handle a large amount of maize. He said
that this will result in full utilisation of its many silos, and that
it is building bunkers for the additional material likely to come in.
Afgri receives maize from a total cultivated area of about 900,000ha, centering in Mpumalanga and around Gauteng.
Venter confirmed that there has been continued increase in productivity
of SA commercial maize farmers - due to mechanisation as well as seed
genetics. Yields have increased from an average of 1.5t/ha in 1986 to
about 3.5t/ha currently. In some areas where the company operates - for
instance Delmas - 5t/ha is achieved.
In the animal feed operations, he said that Afgri's Daybreak factory is
running at capacity and its efficiencies and yields had increased.
In Afgri's oil and protein business, it had a soy-and-cotton seed mill,
but supplies of cotton seed had decreased. It had thus invested in a
separate sunflower facility and improved efficiency. The oil business
supplies mainly to KFC; its yields have increased.
He said Afgri would spend R50m on a feed mill in KwaZulu-Natal and R35m on broiler expansion.
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