CARARA AGRO
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CARARA AGRO PROCESSING
Cherry Peppers
Keep on Giving
for Carara PRODUCTION: Karl Pietersen
Exchange rates and water crisis are the key topics at the font of the minds of South Africa’s agri-processing industry. As the country’s products continue to delight in export markets, it’s vital that the water shortage does not halt supply. No one knows this more than Grahamstown-based Carara Agro Processing.
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INDUSTRY FOCUS: AGRICULTURE
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South Africa’s exports remain a critical element of the country’s GDP mix. It is among the top 40 biggest export economies in the world and its chief exports include metals and minerals (platinum, iron ore, ferroalloys etc.), coal, cars and associated products, and food stuffs (fruits, vegetables, oils, wine etc.). South Africa’s key markets for export include China, USA, Germany, and neighbouring countries such as Botswana, Namibia and Zambia. In 2016, South Africa, one of Africa’s largest economies, reported a trade deficit of $4.57 billion (exporting $69.1 billion and importing $73.7 billion according to the OEC), and fluctuations in the price of the Rand have caused concern for exporters. Since 2012, politics and economic
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uncertainty have caused the Rand to swing violently against the Euro; in 2012 it was around 11.06, in 2014 it was around 14.37, in 2016, it was around 16.03 and today the rate sits at around 14.82 for one Euro. And with South Africa’s political landscape going through a further period of change, who knows what the future could hold. One company who is well versed in this type of environment is Carara Agro Processing, exporter of pickled sweet cherry peppers and other products. Back in mid-2016, Carara’s Managing Director, Mike Duxbury told Enterprise Africa that the company was excited about expanding its product range, growing into new markets, and building an even closer relationship with its large employee
base. But this was based on a relatively weak Rand. “At this stage, the long-term trend for the Rand is weak and that is good for us… At the moment it’s favourable but things change very quickly,” he said. A year on, in mid-2017, Duxbury said that the first six months of that year had been “absolutely unbelievable” and that the business was struggling to keep up with demand. This was at a time when exchange rates had shifted significantly. “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,” he said. And now, with further pressure on pricing, the only thing that the company can do is focus on delivering
CARARA AGRO PROCESSING
quality to ensure it can secure contracts in the future. “The exchange rate is totally out of our control but it has such a big influence on our business. All of our production costs are increasing but we are 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,” Duxbury admitted. BUILT ON QUALITY Fortunately, Carara Agro Processing has been delivering quality for almost 15 years. The business was founded by a group of ex-Zimbabwean farmers who moved south to avoid the political turmoil in their homeland. Setting up a modern, state-of-the-art processing facility in the small but appealing city of Grahamstown in the
Eastern Cape, the group quickly began building relationships with local farmers for the supply of peppers, patty pans and jalapeños. After establishing markets in key export destinations, mainly Germany and the Netherlands, Carara quickly became South Africa’s leading exporter in its chosen market sectors and the factory went from strength to strength, creating thousands of jobs and supporting the local community. Following a period of sustained growth, Carara opened a second processing facility, the Natal Pepper Company, in KZN (Carara is a 50% shareholder). Carara’s pickled products are now exported all over the world, and quality and speed of delivery are primary concerns for the company’s management. The positive start to 2017
demonstrates this. A slowdown in local production thanks to drought and problems in supply from Peru meant that customers looked to Carara to fill the space left by competitors, and Duxbury was only too keen to oblige. “We are still producing around 2400 tons but we are planning for a 20-30% increase in 2018. We’re upgrading our canning line and numerous other things in order to increase capacity so that we can meet demand. We’re investing in machinery and in processing capacity so times are exciting,” he said. The company is WFSO:FCA Level 1A (ISO 22000 PLUS ISO/TS 22002-1) registered and remains committed to community upliftment, investing heavily in projects that encourage progress with education, food and farming initiatives.
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INDUSTRY FOCUS: AGRICULTURE
// 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 LOWER PRICE THAN YOU COULD GET IN THE RETAIL STORES // In order to build a new arm for the business, Duxbury has recently been investigating opening up the local market, where the company hardly operates at all, by developing an online shopping experience. Through a seamless and easy to navigate system, customers from South Africa can access the Carara Agro store at www.shop.carara. co.za and purchase their favourite products. The company’s gold medal winning chutney product (International Taste and Quality Institute in Brussels Gold Medal 2016) is available for R40, a jar of marinated
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artichokes can be purchased for R48, a jar of cherry peppers sells for R36, sweetheart peppers R35, and many other products for similar prices. You can also find fantastic recipes that incorporate Carara products. A handful of specialist retailers are also now stocking Carara products and while Duxbury admits that the project is not off the ground yet, it remains an exciting prospect. “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 lower price than you could get in the retail stores.”
SUSTAINABILITY Apart from fluctuations in the exchange rate, the other issue at the forefront of the mind for Carara’s management is the country’s ongoing water crisis. Publicised largely in regard to the problems in the city of Cape Town, the problem is a national one and the Eastern Cape is facing serious difficulties if the situation cannot be quickly reversed. At the end of January, officials in the towns of Hankey and Patensie in the Kouga Municipality said that the dam supplying the area is at a ‘critical level’ and the process of sinking
CARARA AGRO PROCESSING
boreholes is being hampered by the rough terrain in the region. With no rain, the dam will empty and the crops will fail, resulting in large job losses in the agri-sector. These towns sit just 200km west from Grahamstown and if the drought is exacerbated in anyway, Carara’s farming partners could be affected. “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,” Duxbury said. In peak season, across its entire operation, Carara Agro Processing employs approximately 1000 people (6000 seasonal farming jobs) and in regions where the agri-sector is almost the only employer, a
slowdown in production is extremely counterproductive for all involved. As the country looks to drive exports, the impending ‘Day Zero’ (when the taps run dry) must be avoided to ensure jobs are secured and products are readily available. In March 2017, South Africa looked to Qatar as a potential new export partner for food products and in February this year, South Africa remained the biggest supplier of goods to Kenya, highlighting the opportunities that are available. Agro-processing is a hugely important sector for the country, contributing large amounts of total GDP, supporting thousands of jobs, and contributing to the country’s trade deficit. Carara is a premier example of a successful agroprocessing business that should be
viewed as an industry leader and an example to follow. As long as the water crisis can be managed successfully and exports continue to flow, there is no reason why Carara can’t grow further and take a bigger chunk of its chosen markets. “Carara would like to remain recognised internationally as a quality organisation, specialised in cherry peppers and other pickled and pasteurized products,” and to date, the company has achieved this.
WWW.CARARA.CO.ZA
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