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Crookes deciduous decision pays off

SUGAR-BASED agribusiness Crookes Brothers looks set to reap a bountiful harvest from its decision to diversify into deciduous fruit in the Western Cape. In the company’s latest annual report MD Guy Clarke anticipated that deciduous production would continue to increase as new orchards come into production. Although warning that the rate of growth might slow next year (after the bumper crop of the current season,) Clark reaffirmed deciduous fruit would become increasingly important to the group in the future.

In the year to end March this year the deciduous operations produced revenue of R134m. This was down on last year’s R142m – but operating profits leapt up to R58m (compared with just R16m in the previous financial year.) Deciduous fruit now accounts for a chunky 39% of Crookes’ operating profits – which also comprises sugar, bananas and macadamia nuts.

Clarke reported that the key feature of the 2016 financial year was undoubtedly the impact of the widespread drought throughout the southern African region. But, he said, the better than expected results from the group’s deciduous fruit and banana operations largely mitigated the impact of the drought.

“This is a particularly pleasing result, with only 46% of the deciduous orchards fully mature following the large-scale replanting undertaken over the past seven years.”

Clark believed further growth was possible in the deciduous fruit segment in the future as the replanted orchards matured.

Crookes owns and operates the Ouwerf Estate – which spans 660 hectares of irrigated orchards in Elgin, Grabouw and Villiersdorp. The company also holds the Belleview joint venture in Villiersdorp, which boasts 40 hectares of deciduous fruit orchards. Clark notes that while some areas of the Western Cape had been affected by drought, the group’s deciduous farms received ample rain in the wet winter period to fill the dams and carry them through the dry summer.

“Provided reasonable rainfall occurs in the current winter, no negative impact is foreseen from the drought.”

Clark reckoned deciduous fruit production in the 2016 season amounted to 81,722 bins – a 33% increase on the previous season. He said the R58m profit haul was enhanced by good yields, high quality and weaker rand boosted prices in the 2016 season.

“It is particularly pleasing to see the large-scale replant undertaken over the past seven years starting to bear fruit. We expect a continued steady increase in fruit volumes as the replanted orchards mature.”

Crookes’ deciduous production is marketed through the Two-A-Day group (TAD,) which is owned by its grower/suppliers. Crookes provides around a quarter of TAD’s fruit throughput and is a 19% shareholder in TAD, an investment that CBN believes might become very lucrative in ensuing years.

Grabouw-based TAD essentially operates as a co-operative and distributes income to shareholders via rebates on packing and marketing costs. But there are several other aspects too. TAD is a 50% shareholder in Tru-Cape (with Ceres Fruit Growers,) which markets the TAD production. TAD is also a shareholder in APL Cartons, which gives it access to low cost packaging material and Link Supply Chain Management, which manages logistics for its exports.

Elgin Fruit Juices, a wholly-owned subsidiary of TAD, processes poor quality fruit (not suitable for the local or export markets) to juice. TAD also provides a technical advisory service to growers and a service for the aggregated purchase of chemicals and fuel. In its central function, TAD supplies fruit to more than 60 countries around the world. Crookes argued that this diversity considerably mitigates the risk posed by market volatility for TAD. About 34% of TAD’s throughput is marketed locally, 21% in Africa, 20% in the United Kingdom, 13% in the Far East and the remaining 12% spread through other countries.

By Jenni McCann 

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