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Crookes g(r)ains R160m

Crookes g(r)ains R160m

SCARCELY a year after increasing its deciduous acreage in the Western Cape, KwaZulu-Natal-based agricultural business Crookes Brothers has divested of its sizeable grain and sheep farming operations in the region.

Last month Crookes announced the sale of Quarrie Farms in Bredasdorp to K2013088981 Propriety Limited (which CBN believes is a company representing a group of local farmers) for a hefty R160m. It seems Crookes has banked a premium price. Notes to the transaction refer to a capital profit of R139m.

Quarrie Farms comprises a handful of farms totalling 3,600 hectares. Farmslands include Farm No. 356, Farm Swartsdal No. 42, a remainder of the Farm Uitzicht No. 38, various portions of the Farm Kykoedy No. 12, Portion 4 (Panorama) of the Farm Half Aampjeskraal in the division of Bredasdorp, Portion 11 (Fourieshoogte) (Portion of Portion 7) of the Farm Quarrie, Portion 3 of the Farm Quarrie A No. 41 and the remainder of Portion 1 of the Farm Quarrie A No. 41 all in Bredasdorp. The farms were used for the farming of grain and sheep, and in the last financial year churned revenue of R23m (with grain production up to 6,708 tons) and contributed an operating profit of R9,1m.

Crookes’ rationale for selling is quite telling: “The rationale is to re-invest the proceeds of the disposal in other areas within Southern Africa which provide a higher return on investment.”

If this comment is read alongside comments made in the most recent Crookes’ annual report, then it seems the company was cashing in on markedly firmer demand for grain farming operations in the region. The improved trading conditions in the Western Cape grain sector and firmer mutton prices in recent years have pushed up the price of farms in the ‘grain belt’. It seems Crookes has made a more than decent turn on the farms, and believed there was now limited opportunity to re-invest in a region where farm prices were booming.

The annual report noted: “The group is of the opinion that better options for investment in grain crops exist in neighbouring countries at lower land prices.”

But Crookes has not completely retreated from the Western Cape. In the last financial year the company completed its final 38 hectares of the deciduous expansion on the Vyeboom farm – bringing the total fruit orchard span up to 470 hectares. Deciduous fruit has also performed strongly for Crookes. In the 2013 financial year revenue from the deciduous crop increased by 45% to R76m and operating profit more than doubled to R25m. 

The total production amounted to 17,143 tons, which was 8% higher than the previous year, despite the area harvested reducing by 12%, due to the grubbing of old orchards on the Vyeboom farm. The average yield per hectare harvested increased by 23% from last year, to a record of 61 tons per hectare.

Encouragingly prices of all varieties increased significantly due to both strong local demand and the weakening Rand against the currencies of the company’s overseas trading partners.

(Interestingly Crookes’ production of deciduous fruit is sold through Grabouw-based Two-A-Day Group, in which the company has a 9% share.)

Crookes indicated that the area to be harvested next year will decrease by a further 50 hectares to 266 hectares out of a total of 470 hectares. But this reduction would mark the end of the accelerated replanting programme. Crookes CEO Guy Clarke reassured that over the next few years the area harvested and production would increase rapidly as the replanted orchards came into production. 


 

By Jenni McCann

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