Crop protection chemical input sector set for major consolidation | Fin24
 
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Crop protection chemical input sector set for major consolidation

Dec 28 2019 18:15

South Africa's crop protection input sector is set for a major consolidation in the next three to five years, according to InteliChem CEO Gideon Hefer.

InteliChem Group is a Stellenbosch based provider of crop solutions to the agricultural industry. It recently announced a transaction whereby diversified majority black-owned and controlled investment company Masimong Holdings, acquired a 47.6% interest for an undisclosed sum in the company.

With more than 1 000 crop protection agents currently servicing about 27 000 commercial farmers, a situation has developed where there is simply too many agents per farmer and per hectare farm land, according to Hefer.

The sector, with an estimated at R9.5 billion per annum turnover at farmer level, currently consists of more than 30 crop protection distributors and it is expected that only 3 to 4 major players will ultimately survive integration and consolidation with a few niche players at regional level.

This is according to Hefer, who is of the opinion that the current situation in the sector prohibits truly value added expertise and advice at ground level.

"The sustainability of the agricultural sector is far more than only product, price or availability, but depends to a very large extent on good advice and expertise on how to make good use of it in different conditions and diverse areas," he says.

Furthermore, consolidation has already taken place on the supply-side of the sector and is gaining momentum in the primary agriculture level.

"As an input or intermediary supplier of crop protection chemicals in the middle of this chain, it is unrealistic to expect not to be influenced by what is happening around you," he says.

In his view, no or limited succession planning has been done with many of the business leaders in the sector nearing retirement. This poses huge challenges for several industry players as skill shortages are at the order of the day.

The current agent model in use in the sector is under pressure with the larger agri businesses not only looking for more technical expertise, but also wider agri know-how, according to Hefer.

agribusiness  |  agriculture
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