Crookes MD Guy Clarke said deciduous prices in the company’s major African markets were affected by demand weakness as the oil price fell. The robust oil price has buoyed a good number of oil and gas rich African economies in the last few years. Hopefully the higher crude oil price will see the weaker demand trend in Africa reversed in the financial year ahead.
But African markets were not Crookes’ only challenge. Clarke also noted that economic sanctions against Russia caused an over-supply of fruit in Europe.
“Revenue was consequently markedly lower than anticipated, and with these lower prices, fruit stocks and biological assets did not achieve the levels at which they were valued at the prior year-end.”
The disappointing yield from the deciduous fruit operations coincides with the first time that the contribution of the recently acquired High Noon farming operation was included for a full financial year. Two years ago Crookes acquired the High Noon estate near Villiersdorp – comprising 200ha under deciduous fruit with a further 40ha available for development – for R103m. The deal pushed Crookes’ deciduous area under management to around 700ha – giving the group critical mass in this farming niche. Events certainly put Crookes at an intriguing juncture in terms of furthering its deciduous fruit interests.
The company is in the throes of raising R215m of fresh capital to deploy into new agri-business projects. Clarke reckoned the agricultural environment in southern Africa continued to offer great potential arising from regional economic growth, global food security concerns and renewable energy opportunities.
If smaller deciduous producers are feeling a profit squeeze, CBN has to wonder whether a portion of that R215m might be planted in new fruit opportunities in the Western Cape?