Growing Pains: A self-feeding frenzy

2013-11-27 10:00

There are changes afoot. Whether I’m visiting the rural areas of my great-grandparents or driving along the streets that raised me, I can’t help but notice new schools, new shopping centres and new residential or office complexes.

I’ve noticed just how little of their development I have actually noticed.

It’s as if they were always there, or just popped up one day.

But of course, that’s not the case. Before something big comes up, there’s a lot happening to raise it, all of it unseen.

It hit me like a ton of bricks in the past fortnight that the seeds of the next big thing we’ll be fighting about in a few years’ time are being sown right now. Besides a few business news articles, in our business press,this momentous development is almost unseen to most of us in everyday society.

It’s the sale of one of South Africa’s largest food companies?–?Afgri.

For 90 years, Afgri has supplied vital services to South Africa’s farmers?–?from the food they feed their animals, to the tractors and mechanised equipment they use, to the financing of their crops and capital purchases, and the milling, storage and selling of their maize. Our maize.

For a country that counts mealiemeal and chicken as key staples, Afgri, which will churn out 11?billion kilograms of maize, is a very big deal this year?–?a very big unseen deal.

So, of course, anything that happens to it should be of great concern to us all.

So what’s happening? Well, a new company calling itself AfgriGroupe, which comprises its management team, is buying out Afgri for about R2.5?billion.

Happily for shareholders, that price is more than 50% of what the market thought the company was worth two months ago. Is it worth it? Well, obviously for the thus far unknown American funders, it is.

What sort of return will these US funders be looking for and how can it be assured?

Is it inconceivable that Afgri’s relationship with its 7?000 farmers would be leveraged to increase the use of genetically modified (GM) seeds to improve yields?

Similarly, is it inconceivable that as food prices start to rise, even the best grain starts to leave our shores for “larger markets” as Afgri pursues better earnings?

It is within this context that we should view the takeover bid of Afgri.

If it is successful, it will mean that half of the 10 most important players in our maize industry will be foreign companies.

Monsanto, the world’s poster boy for GM crops, is one of two maize-seed producers alongside Dupont-owned Pioneer.

Monsanto is from Missouri in the US; Dupont is from Delaware in the US.

Meanwhile, Louis Dreyfus and Cargill, our largest grain traders, are from France and Minnesota in the US, respectively.

Afgri was grown out of a farming cooperative that was heavily invested in by the apartheid government to ensure South Africa’s food security. They knew that hunger leads to revolt faster than marginalisation.

Afgri’s denationalisation means that even the handlers of our grain are now becoming controlled by foreigners.

What will this mean for a government working to ensure that no one goes to bed hungry?

The story of Afgri isn’t just a business issue.

It’s about our food security and what our plans are for this as a nation.

It is about what goes into the food we feed our family now and tomorrow.

It is a story of investment and return.

We must ask what you, your family and all the others who made Afgri’s business viable are getting for their investment.

If you are not sure of the answer, then it’s time to make some noise about it.

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