CARARA AGRO PROCESSING
CARARA AGRO PROCESSING
‘Absolutely Unbelievable’ Six Months For
Carara Agro Processing PRODUCTION: Manelesi Dumasi
One year on from our last look at the Carara Agro Processing business in the Eastern Cape, Enterprise Africa revisits to find out more about how the company is performing through drought, economic uncertainty and generally unpredictable times.
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INDUSTRY FOCUS: AGRICULTURE
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In June 2016, Enterprise Africa spoke to Eastern Capebased specialist producer of sweet cherry peppers and other food products, Carara Agro Processing. The business was enjoying an exciting and booming period, and thanks to a depreciating Rand value, exporting was thriving. Carara were developing new products, winning awards and discussing strategies for further expansion. This month we talk to Carara Agro Processing again and ask if things are still flourishing. Managing Director, Mike Duxbury explains that business is
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stronger than ever. “The last six months have been absolutely unbelievable for us; demand has gone mad since December,” he says. “Unfortunately, we just don’t have the stock to supply the orders that we are getting. We’ve never been in this position before, we’ve always carried excess stock, but we’ve sold all our excess stock and we’re carrying very little right now. That’s brilliant for us but it’s a concern that we might end up leaving a few customers short. “Demand is coming from Europe, specifically Germany. It’s because of crop failure in SA from our competitors
last year due to drought, and we hear that the crops in Peru are struggling this year. From our competitors underperforming and our reputation for quality, we are seeing significantly increased demand.” INVESTING IN GROWTH Following a hugely successful 2016, investments are being implemented to ensure that growth continues. Carara is keen to meet demand from all customers and is planning to upgrade machinery and capacity as Duxbury explains. “We are still producing around 2400 tons but we are planning for a 20-30%
CARARA AGRO PROCESSING
increase in 2018. We’re busy planning the production side of the 2018 crop right now and we’re upgrading our canning line and numerous other things in order to increase our capacity so that we can meet demand. “We’re investing in machinery and in processing capacity so times are exciting.” Alongside new equipment and improved efficiencies, Carara is looking at new product lines to bolster its exciting range. But the company is also keen to research and invest in product lines that can boost the productivity of its facilities. “We’re always looking for new products, especially those that can
smooth our production periods,” details Duxbury. “We’re a huge seasonal production facility and we want to spread our production time as long as possible. We have a huge factory that lies dormant in July through to September and for the rest of the year we’re starting to fill it up with the main season being March through until May.” Recent exploration into products that can help in this regard have seen Carara working with sweetheart peppers, fresh garlic and roasted vegetables. “The sweethearts can come in in January, February and March and we can get them in before the pepper season.
It’s been fairly successful; we increased production from four tons to 150 tons and we’ve sold 40% of that this year already. We plan to increase production for next year because we believe in the product,” says Duxbury. Processing fresh garlic ready for export occurs during November adding yet another contributor to the Carara revenue stream. INNOVATION In June 2016, Carara released its gourmet chutney product for local and export markets. The product claimed a Gold Star Award from the International
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INDUSTRY FOCUS: AGRICULTURE
Taste and Quality Institute in Brussels for superior taste and 12 months ago Duxbury was excited about the potential of this offering. While growth in demand hasn’t been remarkable, the company remains optimistic about the possibilities for this type of product. “We haven’t seen a dramatic increase in volumes but we still believe in the product. We continue to send out samples and we’re selling about 10 tons per year but it’s not significant yet. “We’ve come up with a new range of chutneys – original, mild and hot – and we will look to push those aggressively,” Duxbury says. Carara is also set to launch its new online shopping project very soon following the identification of a gap in the market as the MD explains: “In the local market, we’ve just rebranded and we’re busy working on a new set of labels and we’re going to launch our new online shopping programme very soon. This is particularly for the
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SA market. We haven’t gone into the major retail chains and we feel there’s an opportunity to deliver directly to people’s doorstep at a price lower than you could get in the retail stores. “It’s a small project to start with but we hope it will lead to something bigger further down the line,” he says. ECONOMY: SWEET OR SOUR? The last 12 months have been tumultuous for the SA economy. Cabinet reshuffles, ratings agency downgrades, unemployment growing, global commodity markets dimming, and Rand prices fluctuating violently have all made for an uncertain and unpredictable environment. But this was the case in 2016 and back then Carara Agro Processing remained on the growth path. Asked if economic challenges have managed to slow the growth of the company, Duxbury says that currency price is where Carara feels the pinch.
“The exchange rate is totally out of our control but it has such a big influence on our business - it’s quite scary,” he says. “Believe it or not, last year’s exchange rate was far better than this year for us. The political aspects that have been widely reported, and the economic rigmarole, hasn’t had the impact we anticipated and the Rand has actually strengthened. All of our pricing is in offshore currency and we’re now getting less for our products than we were last year despite high inflation here. All of our production costs are increasing and yet we’re getting less of a return. As an exporter, there’s not much we can do apart from ride the wave and satisfy our customers in terms of quality. Last year we had an exceptional financial year and this year it’s not looking quite as good even though the orders far better than ever. “We averaged R16.90 to the Euro last year and this year it’s R14.40, so that is a substantial difference.” However, the economy in Carara’s key market, Germany, remains strong and imports continue to flow into the European powerhouse. Locally, the plans for the launch of an online shopping platform demonstrate an appetite for Carara produce, and so the company’s outlook remains positive. PARTNERED FOR SUCCESS Carara Agro Processing was established 13 years ago and since day one the company’s leadership has recognised that the key to real success in this challenging sector is the building of successful relationships. Long-standing, successful partnerships with farmers, government, export organisations, retailers, end-consumers, suppliers and with employees have helped develop the company into the strong position it holds today. And despite economic challenges and practical hurdles for growers, 2017’s production numbers have been largely unaffected, and strong partnerships are an important part of things. “The
CARARA AGRO PROCESSING
Western Cape is talking about the worst drought in 100 years, the Eastern Cape has seen an incredibly bad drought but we’ve still managed to produce very close to our target production,” explains Duxbury. “It’s an unbelievable result and its down to commitment from our grower base. All of our crops are under full irrigation and so significant planning goes into it. Obviously, we are concerned about water availability going forward, both on the farms and at our facilities in Grahamstown, but we are putting in place contingency plans. “We’ve developed a really strong grower-factory relationship without which we wouldn’t succeed. We know that without produce, we are not a business and we need quality fruits to provide the kind of quality our clients want. We put a lot of effort into giving back to the farmers,” he adds.
And it’s not just partnerships with farmers that are going well for Carara; the business also enjoys longstanding and highly beneficial relationships with a strong supplier base in SA. Take the company’s association with SA innovator ViscoDisc; a provider of unique disc inserts that keep produce from protruding above its preserving liquid. The pair have been partnering for a number of years helping each other grow. “It’s a critical input for us; if you don’t keep the product covered in brine, it tends to oxidise and you get a browning and that doesn’t look attractive. We also use the product in our cans,” enthuses Duxbury. In the future, Carara Agro Processing will call on these types of relationship to continue the impressive story of success that has
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seen it grow from a small operation in the quaint and charming city of Grahamstown to become recognised worldwide as a top quality, reliable and consistent producer of cherry peppers and other pickled products. “We can’t complain, the business is growing and remains financially sound. We are in a very fortunate place,” Duxbury concludes.
CARARA AGRO PROCESSING +27 46 6228765 jess@carara.co.za www.carara.co.za
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