Wehan Coertze

Viljoenkroon (ZAF)
Role(s):
Founder/Owner/Principal

CFT Groundnuts

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Location: Viljoenskroon
Industry: Agriculture
Year Founded: 2011
Number Employees: 500-1000 people
Business Stage: Creation/Idea
Entity Type: "C" Corporation
Description: CFT Groundnuts is a group of highly skilled people each with their own specialties who want to enter the groundnut industry as a group. We don’t want to follow the same route as the rest of the players in the groundnut industry. We want to do it differently; by instead of going into the confectionery market with the groundnuts, we want to start the production of refined groundnut oil, cake and flour in South Africa. There is a lot more products which derive from these main product lines which will be discussed in detail further on in the business plan. These products are unknown to our local market, but is the two main products our export groundnuts from SA is being used for. With India, China, Europe and US being the 4 largest importers of groundnut oil and cake thus making them the two primary markets we will export to. India along with China accounts for half of the world's groundnut production today. Groundnut is the major oilseed crop in India accounting for 45% of oilseed area and 55% of oilseed production in the country. India is rated as the third largest producer of groundnut in the world with annual production of over 5-6 million tons. Gujarat, Andhra Pradesh, Tamil Nadu and Karnataka are the leading producers in the country and accounts for nearly 75% of the total output. Groundnut contributes to nearly 25% of total oil seed production in the country. Nearly 75% output occurs in June-September and the rest during November-March known as khariff and rabi seasons respectively. Climatic conditions, especially South-West monsoon plays significant role in shaping the fortunes of groundnut in the country. The price of competing oilseeds like soybean, palm oil, sunflower, mustard etc. influences price of groundnut and oil. Global production of groundnut seed and oil oscillates between 21-24 and 4-5.5 million tons. China (2-2.5 million tons), India (1.5-2 million tons) are the major producers of groundnut oil, followed by Sub-Saharan African countries and Central and South America. Global trade of groundnut oil is to the maximum of 1 lakh tons a year. Senegal and Argentina are the major exporters. International price movement of soyoil at CBOT and palm oil at BMD, Malaysia also influence the groundnut oil prices. Festivals and celebrations also increase consumption and the prices. The positioning of the largest net exporters has shifted considerably during the last six years. China, although it has become the largest producer, lost over half of its shares in the export market of hand-picked selected groundnuts, mainly because of the increase of the domestic consumption. India moved up to second place; Argentina and Viet Nam doubled their shares, while exports from the United States decreased slightly, facing strong competition from Argentina. World export trade averaged 1.2 million tons of groundnuts, valued at over US$ 948 million per year over the last five years, out of which nearly two-thirds was provided by developing countries. About 80% of exports consisted of edible groundnut varieties, with the remaining 20% of groundnuts used for crushing. International prices of edible groundnuts fluctuated widely over the last decade, influenced by both market fundamentals and seasonal factors. Being quality driven we are planning a startup operation by buying an existing plant in Viljoenskroon that are available to run an operation of 1000 tons per month of high quality product. The bulk of our planned export clients are based in Japan, Europe India and China. These clients are well acquainted with the plants potential. Local clients are companies like Tiger Foods, Black Cat, Retailers like Pick and Pay, Checkers, Spar, Fruit and Veg’s and smaller chain stores. By forming a BEE Business we also want to use incentives/grants from local government to plough back into the community to uplift and enrich people’s living standards as well as educating people to use their skills to be a full filled person in life. Agriculture in South Africa has been one of the only departments in the South African economy which were growing despite the economy going through a recession. With this growth it sets itself to be a stabile growing industry in which investors are curtain of capital growth and an excellent return on investment. Objectives: A) To setup a state of the art modular groundnut sorting plant with Oil press, Bottling line, Oil Cake Processing Plant, Peanut Flour Mill, Flour Packaging Line, Pelletting Plant and Briquetting plant. With all the smaller production units we will gear ourselves to be able to create extra revenue streams with products that are known to the current industry as waste material. Every single piece of the peanut plant will go through a value adding process to become a high income product. B) To set up the Agri-division with mechanized groundnut equipment we will be able to help more farmers to plant and harvest their groundnut crop. Eventually these mobile units will move from farm to farm to plant and harvest groundnut crops. With this initiative the famers don’t have to do the big capital layout for buying the equipment themselves but can hire this business-unit to do all cultivations to secure a maximum yield for crop to be delivered to the oil processing plant. Through this initiative we can encourage the production of groundnuts through commercial and even emerging farmers by removing the stumbling blocks for the producer. C) To empower previously disadvantaged workers through an entrepreneurial program that create job opportunities and thereby address social and economical problems within our community. Job creation is our primary objective in putting together teams of harvesters who can work alongside the mechanical equipment. Through national government initiatives we will be able to give these workers a market related income, skill development and even entrepreneurial opportunities. The CFT Board is even willing to help the employees to setup a company between them which can hold up to 30% of Shareholding in the operating company. D) We want to go the full circle in the groundnut industry. To do this we need to establish our own equipped farms which will produce groundnuts solely for our processing plant. These farms will give us the opportunity to produce our own seed and cultivars at a fraction of the cost which we them supply to the contracted grower which want to produce groundnuts for us. With self -production we can also secure enough produce to run a maximum capacity throughout the year. Few if any other groundnut plant does have enough produce from contracted farmers to run at maximum capacity throughout the year. With the downward trend in the amount of hectares planted in SA, more and more processing plants will feel the impact on their cash flows not having access to adequate produce to sustain 12 months of operations. Facilitating our own planted hectares we can secure a 12 month sustainable produce. Opportunities: With the global trend of a growing demand for groundnuts as well as the reduction of production we truly believe that an investment into this industry now will place all of us including our investors in a win-win situation with long-term rewards. To quote an old saying: “If everyone gets out, you get in.” Locally the industry players are all looking towards confectionaries to increase their product range and profitability. We want to go in a totally new direction with groundnuts in SA. By producing Groundnut oil, - Cake, - flour, - feed pellets, biomass briquettes, animal fodder and hay we distinguish ourselves from the rest of the processors. All the products are unknown to the local market which makes it an open playing field. These products are sort after internationally which brings a high demand market to our doorstep. With the Agri-division we will encourage more farmers to produce groundnuts for the plant through the simple fact that they don’t have to do big capital expenditure on groundnut equipment. This Business Unit can be rented by farmers to do all the cultivations and harvesting of their crop if their crop is contracted to the plant. Al the more maize farmers are running into financial trouble thus more and more arable land are becoming available on auctions. For us to secure enough produce to be able to supply the local and international market, will we have to acquire arable land to produce our own groundnuts. Ideally it will be to acquire 6000ha arable land to be able to produce groundnuts sustainably to the sorting plant so that profitability margins are kept at a level to which all investors can see return on their investments far beyond what they expected. Threats: We don’t foresee threats other than the ever decreasing supply that makes availability vulnerable. China for instance (The biggest producer) is already changed from an exporter to an importer because of their local demand. Labor situations are not going to change due to the ever increasing pressure on job creation, development, upliftment etc. The Zimbabwe situation is an example of thousands of people streaming over our borders to look for a living. This is the result of terrible misgoverning a country, misleading their people and living in a dream world of sick politics. By realizing the realities of the existing situation and addressing it timorously we can all prosper from this.