South African agriculture has experienced many major challenges in the past few years. However, the export of agricultural products and the practice to meet international standards by more growers make this market full of development potentials.
Recently, AGROPAGES interviewed Mr. Gideon Hefer, CEO of the Intelichem Group, a leading agricultural company in South Africa. He introduced the current challenges and future development trends of South African agriculture. As a local company offering diverse product – including specialised plant nutrition, crop protection, seeds supplier, seed treatment, technical support and agricultural consulting - Intelichem provides producers with a complete solution for a large variety of crops, complementing the whole food supply chain in South Africa.
In this interview, Mr. Hefer elaborates on the company's strengths and the effort they made to help local farmers better participate in agricultural competition. To companies who want to enter this market, Mr. Hefer also advised them to fully understand the market environment before entering, and to adopt different development strategies in different regions.
Gideon Hefer, CEO of the Intelichem Group
A (AGROPAGES): Please introduce the main challenges and changes of agricultural development in South Africa in recent years.
H (Mr. Gideon Hefer): The South African agricultural industry has experienced a number of significant challenges during the last couple of years, most not under control of the industry.
• Adverse weather conditions - With only 2 – 3% of the soil regarded as high potential for crop production, a change in weather patterns influence the food safety of the country directly. The lack of funding and government support makes the affected farmers very vulnerable.
• Input costs have been on the increase due to international price fluctuations linked to the depreciation of the local currency. Especially farmers producing for domestic markets are more exposed to cost pressures with domestic prices not keeping up with the rise in costs.
• The impact of policy - uncertainty had a significant impact on farmers and investment decisions. The issue of land expropriation without compensation has placed a heavy burden on the entire sector and the impact will only be known in a couple of years.
• Safety on farms and attacks on farmers and their workers remain a pressing issue. Many farmers and farm workers are living in fear and are prevented to move freely outdoors, especially after sunset.
The picture is not just bleak. Several crops have experienced significant growth and smaller crops such as tree nuts and blueberries have been very successful. The demand from foreign market for safe food, traceability and related requirements necessitate that these farmers keep up with the best international practices. Modern farming practices, the use of technology and science are key to be successful in this highly competitive market.
Another opportunity exists to include thousands of small scale farmers in the growth of the industry. A collective effort between government, organised agriculture, input suppliers and banks are required to make this a reality. This opportunity remains a key driver for economic growth and employment in rural areas. Literally hundreds of thousands of hectares of under or non-utilised land are available in several provinces such as the Eastern Cape and KwaZulu Natal. This opportunity remains a key driver for economic growth and employment in these areas.
A: Please introduce the InteliChem Group, including the company's history, the group's divisions and its main products and services. What is the development strategy of InteliChem Group?
H: The strategy of the InteliChem Group is to offer a unique value proposition of products, services, supporting technology with the required expertise to the benefit of our customers.
The value proposition of the Group consists of the following main segments:
• InteliGro provides integrated crop protection and specialised plant nutrition solutions. Strong emphasis is placed on developing our bio-rational offering with food safety focus.
• InteliSeed has a high-quality seed range with supporting seed care expertise. The main focus areas are vegetable seeds, oil seeds, pastures and legumes.
• Meridian provides the Group with dedicated in-house product development with its own formulation facilities, focussing on differentiated and new generation products, catering for the changing needs of the market.
• The specialised plant nutrition range of the Group is developed by InteliFert with inovative products such as controlled release fertilisers and biostimulants. Carbology® is an innovative nutrition concept which has been developed and applied with great success over more than a decade optimizing yields and quality in various crops.
• Independent and impartial agricultural consulting services are provided by ProCrop, with 6 functional areas covered ie crop protection, plant physiology, soil and irrigation, research, training and diagnostic services.
• Innovative supportive technology compliments the package with real time information, reporting and decision-making tools assisting our experts in making accurate and informed recommendations.
A: Can you introduce your R&D suite? Which aspect is your R&D mainly invested in?
H: Some research and development projects are combined in our companies to achieve additional benefits. Significant amounts are invested annually as part of our strategy to be innovative and remain a leader.
Meridian Agritech is actively involved in product development trial work for crop protection and biological products. Hundreds of trials through our in-house department and carefully selected contractors are performed across South Africa annually.
InteliFert performs trials for product development on new generation plant nutrition products. In our quest to increase quality and yields of crops the generation of trial data remains critical.
InteliSeed operates 3 dedicated trial sites located in the southern, central and northern parts of South Africa. Genetics are evaluated to determine the suitability for local conditions as well as for market requirements.
A: What is the general condition of soil management in South Africa? You have a good development in soil solutions, please introduce the solutions?
H: South African soils have generally a very low cation exchange capacity and are low in organic matter levels. There are large differences in nutrient content, pH, salinity and organic matter content within and between soil types, which depends on climate, vegetation, topography and soil texture.
Plant nutrition recommendation based on soil and leaf samples are backed with InteliGro`s new InteliBio Solutions approach, that consists of well researched Bio-control, Bio-stimulant and Bio-inoculant products.
Biological solutions can be implemented on most crops and form part of a holistic view towards long-term sustainability. This begins in the soil where certain cultural practices like minimal tillage, cover cropping, and crop rotation can play an instrumental role in soil health. The soil health approach is supported by a focus on the roots (Rhizosphere), where there are strong symbiotic relationships between plant roots and certain micro-organisms.
A: What is your international business layout? How did you built and maintain your supply chain?
H: The InteliChem Group is closely aligned with various multinational suppliers, amongst others Syngenta, Bayer, BASF and Corteva Agriscience. Through the comprehensive distribution channels of InteliGro and InteliSeed proper market coverage is offered to our suppliers. This supplier base ensure that new technology is accessible to the Group and can be presented to our customer base.
A: What is the history of cooperation between InteliChem Group and Chinese pesticide suppliers? Have you been affected by the shutting down wave of the agrochemical factories in China?
H: The InteliChem Group, and in particular Meridian has built significant relationships with various strategic suppliers in China. This does more than just ensure supply for the Group, the relationship also enables open communication in cases where product supply constraint may occur. This could be a real time shortage, such as in the case with recent explosions in China which had an immediate effect on supply. Alternatively, the insight some suppliers have into factories closing either temporarily or permanently, can give Meridian the ability to order forward in cases where the affected products are core to the portfolio.
Meridian and therefore the group have certainly been affected by the shutdowns recently in China. The effects have been felt in a number of ways:
• Firstly, the availability of active ingredient (AI). This stems from shut downs due mainly to environmental inspections. These inspections have been implemented throughout the entire chemical industry. Producers of agrochemicals may not be able to get intermediate substances necessary to produce the final AI.
• Secondly, ordering of many AIs or finished product need to be done far more in advance than previous. For certain products, orders need to be 3-6 months in advance. This is to ensure supply of customers of Meridian timeously. As can be imagined, this would affect any business in a number of ways including having higher inventory quantities, and negatively affecting cashflow. It is absolutely key for Meridian to have our core portfolio of products available in time for key customers. Supplier relationships are crucial to enable supply and reasonable pricing.
A: How do you view the development opportunities in crop protection market in South Africa or Africa? Any suggestions for companies that want to enter the market?
H: The African market has experienced significant growth in crop protection usage over the last 2 decades. With the population growth linked to the increase of the middle class and urbanisation throughout the continent the demand for food is on the increase.
Unfortunately, some unscrupulous suppliers have exploited some of the markets with substandard products. The InteliChem Group is evaluating different options to ensure that the users of our products are properly trained and supported and that the products are applied responsible manner. Knowledge transfer, mentoring, support to local trading partners and stewardship will be paramount when expanding into Africa.
Knowledge of the local markets, the regulatory environment, political and economic stability are key before entering a new country. Even within a country you are faced with different requirements and methods which you have to be aware of. We are excited about the prospects of the African agricultural industry but will follow a cautious approach with our evaluation process.