Remitto

REMITTO

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REMITTO

Remitto Targets

Countrywide Growth PRODUCTION: David Napier

Those active in agriculture and farming understand they work in industries with significant challenges. But for those that can offer fantastic service to clients, things are not so trying.

In fact, the future looks bright for companies like Remitto, who have been delivering excellence for the past four years. MD Derek Alexander talks to Enterprise Africa about how his company will continue to grow by following sound business principles. www.enterprise-africa.net / 3

INDUSTRY FOCUS: AGRICULTURE

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Another year is rolling into its last quarter and it’s another year which has been like a roller coaster ride for those active in South Africa’s agricultural industry. Fluctuating currency, land reform, drought, skills shortage, economic turmoil and many more complicated issues have made the sector a challenging place to operate.

But, despite the unpredictable nature of the industry, those businesses that are focussed on delivering excellence for their clients are managing to not only survive, they are thriving and growing.

Remitto is the perfect example.

Founded in 2013 by Derek Alexander, the company has become known as an industry leader in South Africa’s agricultural sector through the manufacturing, importing and distributing of world-class herbicides,

pesticides and fungicides.

Four years into its life and growth is very much the appropriate word to associate with Remitto. This Free Statebased company has avoided any of the pessimism that has engulfed others.

It has not become embroiled with economic and political negativity that has been peddled in the news. Remitto is a quickly growing business with big ambitions for its long-term future.

“In the beginning, it was just me but with the help of great suppliers who were keen to help me with good payment terms and efficient product supply. I started with my own funds so there was no involvement from banks or financial institutions,” Derek Alexander tells Enterprise Africa.

“I was working with Yield Chemical Group for 17 years and that company went through an ownership change.

// IT MAKES SENSE FOR US AS WE LIKE TO OFFER MORE THAN JUST PESTICIDES; WE WANT TO OFFER EVERYTHING THAT CAN HELP WITH THE EFFECTIVE RUNNING OF THE FARM //

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I was the MD of that company and I didn’t agree with the methods that the new owners were putting in place for future growth. I saw a gap in the market and I left the business to start my own company with nothing but the knowledge and experience I had gained over the years.”

A true entrepreneur, Alexander has built Remitto around the Free State’s farmers which produce 70% of South Africa’s grain.

“Remitto means ‘yield’ and that is what we are all about – producing more and being more efficient,” he says.

GROWING Currently, Remitto employs around 130 people and works for a strong customer base in the central regions of South Africa with some exposure in the north.

But in the future, Alexander is keen to grow into the agricultural centres of the Eastern and Western Cape where there are large markets to attack. However, competition is fierce in these markets and Remitto will look to promote its in house brands which are specifically designed for South African conditions.

REMITTO

“There are some companies that have country-wide exposure and that makes things challenging as they can lean more heavily on suppliers.

Personally, I have had to decide whether we want to be big or whether we want to be effective. We can be profitable both ways, but we must pick our scale.

Time will tell which is the best method.

“We have in house brands, under the name DNA Plant Sciences, and with these products we are already busy expanding in the Western Cape.

It will be on a wholesale basis but, with the Western Cape being the biggest market, we have decided we cannot stay out of it.

“It is challenging but will get easier with time as we develop and release more of our own products,” he says.

And as expansion in South Africa continues, Remitto will also look beyond the country’s borders for growth

opportunities. Alexander explains that the company has already had some success exporting to Namibia and will soon begin a push to gain traction in Botswana and Zimbabwe.

“Logistically, they are wellpositioned for us,” he says. “Botswana is dryer and focussed on livestock farming which we can help with.

Zimbabwe is the former breadbasket of Africa; its agricultural industry was even bigger than South Africa in the past and I believe they are now at a turning point with the new political system there. Because of these positives, we have decided to go in Zimbabwe, with a partner, to target the industry there as it grows.”

Zimbabwe has stated its desire to reach ‘middle-income status’ by 2030 and the new government has highlighted agriculture as a key component of the plan to attain this.

// IT IS A RELATIONSHIP-BASED INDUSTRY. THERE’S LOTS OF TRUST BETWEEN PESTICIDE ADVISORS AND THE FARMER //

PORTFOLIO DEVELOPMENT Without a line of products that deliver the best possible service, Remitto would not have achieved the success that it has realised to date and Alexander is very keen to ensure that the product range remains first-class.

To stay at the forefront of the market, Remitto has recently partnered with, among others, European suppliers Agrivi and Biovert to bring new products into its stable.

“Biovert offers nutritional products and products that can enhance current pesticides and help them to perform better. There are also some products that are designed to enhance soil health, help microorganisms grow and help bring nutritional deficiencies to an optimum standard. For a long time in this industry, farmers tend to think they have replaced the organisms they take from the soil but that is not the case. We are at the stage where most of the farmers now know that and that product is now in place to help with that situation,” details Alexander.

The company’s partnership with Agrivi will see a new type of software

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INDUSTRY FOCUS: AGRICULTURE

product offered and Alexander explains that expanding its service offering is part of a wider growth strategy.

“It makes sense for us as we like to offer more than just pesticides; we want to offer everything that can help with the effective running of the farm.

“In the industry, you either get a financial programme or a management tool. The product from Agrivi that we will offer is a complete package and can do costings and finances as well as complete management. It controls everything on the farm so that a farmer can understand how much everything costs. It’s a cloud-based programme and can be used to store all harvest and crop reports for as long as necessary. It is a one-stop shop for a farmer who needs to know everything that is happening on the farm.

“Lots of farmers are using different systems but the results from our testing is that this one is very good.”

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Alongside these innovative and interesting products, Remitto continues to develop its own inhouse brands and Alexander explains that more will come to the market as soon as they are approved by the relevant authorities. To date, the company has registered 15 products and has 44 more going through the process.

“It is more time consuming than difficult,” he admits. “You have to show proof of your chemical composition and then you have to undertake field trials. That can take one or two years depending on the type of product you are registering. Then you have to submit your report, and that is where the problems lay. Previously, this used to take around six-months and today the average is 21 months. You can easily wait up to four years for a product and that creates a big problem. Quite apart from the money you have to spend, it is the most time-consuming thing we do in the business.”

STAYING POSITIVE Despite the challenges in the agriculture and farming industries, Remitto has manged to grow significantly since its establishment. “We are in a country where the exchange rate is dictating prices, so the difficult thing is to maintain margins,” says Alexander. “You must maintain margins as you have a turnover increase as prices increase, so we have targeted a 10-12% turnover increase each year. We have been fortunate to achieve that to date.”

And the MD expects this success to continue, even with the major problem of drought presenting significant challenges to the industry.

“Two years ago, we saw a huge impact from drought on our sales,” he says. “The experience over the past year has again highlighted the problem of farmers access to finance. That is why we are planning to expand into areas with a slightly different climate and access to modern irrigation. It’s another

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reason we are looking at Zimbabwe and Botswana, to spread risk. South Africa has excellent farmers but our climate is getting dryer and hotter.

Maybe we are just in a cycle, but it’s definitely one of the biggest issues.”

The other big issue facing the company, and the industry – land reform. While Remitto is not directly impacted by the problem, the indirect impact can be major.

“Everybody knows that food production is important but, right now, it is more political than to do with helping companies feed people.

Land is the last issue that hasn’t been transformed to everyone’s liking. As long as that remains a problem, that will keep people from investing into agricultural industry. The politicians are making the right sounds, but the usual problem here will be whether they can implement. All of the good plans and visions are nothing if you cannot implement,” says Alexander.

Overall, now is a good time to be in the agriculture and farming space.

Demand for food products will only continue to grow and the government is pumping money into the sector to ensure it becomes a sustainable job creator. In October, the Department of Labour announced its intention to invest R800 million in agriculture and related business over the next year. Deputy President David Mabuza said land reform processes that South Africa is undertaking pose no threat to the agriculture sector and the South African economy, and the Agriculture, Forestry and Fisheries sectors created an additional 39,000 jobs in the fourth quarter of 2017, according to Stats SA. Remitto is perfectly placed to capitalise on this development.

“It is a relationship-based industry,” says Alexander. “There’s lot of trust between pesticide advisors and the farmer. We always stick to sound business principles that have been in

place since the beginning.

“After five years, most of our systems are running hitch-free and we have resources to invest into expansion and risk mitigation so that will be the focus for the next five years.”

Asked if the future is exciting for Remitto in southern Africa, Derek Alexander is unequivocal.

“I enjoy this business very much,” enthuses Alexander. “My focus is to keep the business exciting by always having one or two new projects. As long as we have that, it will always be exciting.

Now is an exciting time; there is always uncertainty in some situations but we are certainly entering an exciting phase for our business,” he concludes.

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ENTERPRISE AFRICA

NOVEMBER 2018