COMPANY PROFILE
2015
Lona Citrus
+ (021) 481 8200 | www.lona.co.za
company profile
Enjoying the fruits of its labour Editorial: Harriet Pattison
Now standing as the fourth largest exporter of citrus in South Africa and the eighth largest company within the export industry, it may come as a surprise that Lona Citrus has only been in the industry for less than a decade, but has already added zestful influence and support to the rural farming communities working and growing within the Eastern Cape…
With a noteworthy and entrepreneurial history, Lona Citrus was started almost a decade ago in 1996 by Spencer Johnson, using only his father’s garage as his very first office base. Financed with a loan of just R30,000 from his already fruit-farming Uncle, Johnson was acutely aware of the discontent amongst local farmers surrounding the current state of the industry and how business was being done, so he decided to start his very own marketing company. Over the next five years, with Johnson at the helm of the company, it focused its efforts on vegetables, a variety of exotic fruits, wine, dried fruit and tea, but in 2004 a decision was made to concentrate solely on the growing citrus fruit market. “At this point citrus was doing very well and
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covered 70% of the commodities being traded,” explains General Manager, Irving Davelaar. “Obviously, domestically, it is geographically well spread so it limits risk when it comes to natural disasters, macro-economic impacts, pests and diseases, and fruit flies etc. Also, from an international marketing point of view, the market is huge. It spreads from Canada right across to Japan and this is why the company decided to divest from everything else we were doing and focus more on citrus. From then on we became a citrus export specialist. “As export volumes increased, Spencer recruited a few more people to manage logistics, marketing, procurement and other functions across all the commodity groups.” And just a few years later, in 2005, Lona Citrus
Lona Citrus
made the decision to integrate into primary agriculture and invested in its very first farm. This move not only helped the company economically but in a business sense too, providing it with a more reputable stance with much larger and international retailers. “We invested in our first farm and this gave us further credibility with the likes of retailers such as Tesco, Sainsbury’s and Marks & Spencer. This gave the company a sustainable advantage too as it was now seen as a grower and exporter/trader supplying to some of the largest retailers in the world. “We have since invested in a couple more farms, to secure the sourcing of the fruit and gain more control of the supply chain. We are involved in all areas, from the farm all the way to export. Inbetween that we help farmers develop; we finance
them, we aggregate their fruit and then we export it. This has given the company solid ground to stand on,” explains Davelaar. It is this support and reliability which Lona Citrus has continued to build on, helping to establish itself as a dependable citrus export specialist.
INCREASING THE CARTON COUNT Lona Citrus is certainly not averse to aiding the social and economic development of rural farming within the country either, recently joining forces with Riverside Enterprises. An established citrus farming, packaging and marketing company in the Eastern Cape, there are more than 20 citrus farmers now receiving export support due to the help and support of this joint venture.
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company profile
“An increase from 70,000 cartons in 2012 to 180,000 cartons in 2013. Exceptional achievements, considering some of these farms were not even producing just a couple of years ago” “Lona has played a big role over the last nine or ten years in mentoring these farmers. Assisting and facilitating these farmers in the process to obtain the relevant knowledge such as what fertilisers to use, when to use them, how to plant trees, how to manage admin and finance etc. “The main areas that farmers need support with is admin and finance. There is often a lack of paperwork, audit trails and the knowledge of financial management. It’s very admin intensive on our side and it’s important to act in an advisory capacity and not boss people around. It’s a challenge but it can be very interesting and it’s amazing, the feeling you get when you’ve been working at it for a couple of years and you see the improvement on the farms because of your input.” With numerous initiatives in place, both Lona Trading and Riverside Enterprises have already helped eight
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emerging farmers in the Alice Kat citrus development program to receive their respective title deeds, thereby finally owning the land in which they farm. The joint venture aims to provide support and services to the grower base, helping to facilitate access to markets, offering training and technical support, providing administrative support and encouraging compliance with accreditation systems including Fairtrade, Tesco Nature’s Choice and GlobalGAP. Responsible for the marketing and logistics of emerging farmers and their citrus crop, Lona Trading hopes to achieve an increase in the number of cartons that are exported from these farms to 300,000 a year. This increase carries added benefits - bringing in a Fairtrade social premium in excess of R1.5 million in its first year alone. A prime example of where this venture has made a notable impact is the Mabunda farm in Letsitele. With an estimated 200 hectares of citrus and 95 hectares of mango plantings, Lona Trading exported the majority of the farm’s citrus crop in the last two seasons, receiving a Fairtrade and GlobalGAP accreditation in 2008. The fruit from the Mabunda farm is now exported to over 40 different countries and as a result of a new operating model, production on the farm has quadrupled, leaving a significant and positive impact on both employment and revenue.
EASTERN CAPE DEVELOPMENT Even as a one man band, Lona Citrus plays an invaluable part in turning the lives of many farmers around, dramatically increasing their exports by
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Hamburg Süd’s citrus export guide
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Cape Town & Port Elizabeth Area Manager - Eastern & Western Cape Paul Klackers Tel : + 27 41 581 2692 Mobile : + 27 82 553 2379 E-Mail : Paul.Klackers-external@hamburgsud.com
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company profile
more than double in numerous cases. “We have seen massive changes, sometimes in just a short amount of time,” Davelaar explains. “For example, there is a farm in north that we got involved with. In the beginning they were exporting around 20,000 cartons of citrus. In 2010, they did around 450,000 cartons. This improvement was over just four years. “And in the Eastern Cape, we’ve seen the same thing,” says Davelaar. “We partner with a group of farmers, the Landbank and the IDC where we do all of the ground work to get these growers up and running and this year for the first time they broke the 100,000 carton mark. An increase from 70,000 cartons in 2012 to 180,000 cartons in 2013. Exceptional achievements, considering some of these farms were not even producing just a couple of years ago.” The Industrial Development Corporation (IDC) is also doing its bit to help reconfigure the rural farming industry within South Africa, especially in the Eastern Cape where unemployment continues to be rife. At its full production established in 2011, the farms generated an estimated R61.5 million in annual foreign exchange earnings.
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Financing is essential for the rehabilitation of these rural farms, helping to fund the farmers’ land acquisitions from the Department of Land Affairs and re-plant over 300 hectares of citrus orchards. Riverside Enterprises has also been involved in the project, administering loans, providing marketing and an integrated service from primary production, through to packaging, marketing, logistics and administration. The company initially began providing this support back in 2000 following the wave of poor fruit quality coming from these farms in the Eastern Cape. In fact it was this continued support from Riverside Enterprises and the positive response from other farmers looking for the same professional assistance that led IDC to get involved too. Geoffrey Qhena, CEO of IDC explains: “These farms were developed on state land under the Ciskei government and limited farming experience and working capital has left them debilitated. The investment and association with Riverside boosts the fruit quality; ensures a marketing avenue and instils new hope for these farmers.” Rehabilitation programs such as these can influence a ripple effect of benefits, initially
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helping to improve yields and fruit quality and leading to an increase in fruit volumes and orchard acreage. More employment opportunities will arise as a result with a promise of development within the rural farming sector and so creating a better vision and spirit for these communities.
FOURTH LARGEST EXPORTER With such impressive growth and industry influence over the last ten years, Lona Citrus has made an assuredly positive impact on the rural farming industry in Southern Africa and a difference to so many farmers who struggled for so long in much harsher market conditions. Irrefutably one of the largest and most influential citrus exporters within the industry today, the future looks to continue much the same way if Lona Citrus continues to place as much importance on the customer as it has done in recent years. “If we look at the market, we are the fourth largest exporter, when it comes to citrus, in South Africa and we are the eighth largest company in the export industry and that’s all commodities included. Lona remains privately owned and is
one of the largest citrus exporters in the industry,” explains Davelaar. “We fight to get the best returns for our producers and we fight to keep our customers happy. There is a fine balance between the two. We see the producers as one of us and we place huge importance on the customer because if you have no home for the product you have nothing. “We manage to consistently find a balance between the two and that is one of our key success factors,” Davelaar concludes
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