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Local agri-business set to be 'world leader' in pelletizing

Johannesburg  - With an academic background in agriculture, it was only natural for Johan Eksteen to end up working in the sector. His business, Agricon, offers an innovative solution to farmers, especially with limited resources in these embattled economic times.

Agricon is a manufacturer of cost-effective, eco-friendly pelleting solutions for the agricultural and industrial industries. Eksteen started the business in 1993 with his brother Andre. It has since grown from two workers to around 120.

In 2006, he bought out his brother’s stake in the business and became sole owner. Initially, his brother focussed on the technical aspects and Eksteen had to outsource part of the production.

He recently won the Entrepreneur of the Year 2016 award, in the annual competition run by Sanlam and BUSINESS/PARTNERS. He was also a winner in the competition in 2014, for the small business category.

In an interview with Fin24, he shared more on his pelletizing business and goals to become a world leader in future.

What led you to start the business?

After graduating with a Master degree in Agriculture from the University of the Free State (UFS), I worked in the agriculture sector for 10 years. I recognised a big need for small to medium sized pelletizers. At that stage, the economy was only trading in big pelletizers. So I decided to develop a machine that was not as capital intensive and that farmers could afford.

I started the business in 1993 with my brother. I was very young with no money, so I ran the business alongside a fulltime job. I decided the only way forward as an entrepreneur was to further my studies so I completed my MBA in 2005 and graduated cum laude. Later I decided that I should use all the experience I gathered in the industry and add value by working for myself.

What does pelletizing involve?

In times of drought there are fewer resources available to farmers. Pelletizers process feed into a dry pellets. This is beneficial because there is 30% less wastage of food, either through wind that blows feed away or animals dropping the food as they eat.

The other big advantage is that the digestibility of the food improves by 14.2% so the quality of the milk or meat produced is better.

Why did you decide to enter the competition a second time round?

I entered in 2014 and won the category of Entrepreneur of the Year for Small Business. Given the exposure my business got in the competition, I saw that it created a platform for people to learn about the business.

So I set a target for myself to re-enter in a year’s time and challenged myself to become the overall winner. I knew the extent of the opportunities and exposure afforded to me for winning the category and I knew that the opportunities would be greater as an overall winner.

Johan Eksteen was the overall winner of the Sanlam and BUSINESS/PARTNERS Entrepreneur of the Year awards for 2016.

How has winning the competition impacted your business?

It is an amazing platform to tell people what you are doing in your business. A lot of my friends didn’t know what my machinery could do before the competition. The exposure we get leads to growth and eventually more job creation.

It’s also another opportunity to contribute back towards other entrepreneurs. It is important to keep the mentorship cycle going. Especially when there are negative things in the market, it is good to hear success stories. It gives other entrepreneurs a boost of energy to deal with their circumstances.

What is the extent of the business’s global presence?

We export all over the world, 40% of product gets exported. We have a presence in all African countries, up to the equator. Beyond that we export to Australia, Asia, Sweden and Germany. We are very proud of the fact that we export to Germany because the Germans are very precise.

What differentiates your business?

We have grown the business strongly. Over the past three years, we have grown by a minimum of 42% per annum in turnover. The basis of our growth is that we do not sell a product. We sell a solution. Our product is the means to achieve the solution.

Besides manufacturing pelletizers, Agricon also offers supportive training and installation to clients who use the pelletizers. 

What were some of the major challenges in your business journey?

Every entrepreneur thinks their biggest challenge is funding. They think about funding first before they consider how they can execute a business plan. My vision was to put out a product and see what the market uptake would be, before working on raising funding.

Another area that requires funding is advertising and promotion. Entrepreneurs need to convince consumers that their product will be useful to them. Our business was cash-driven. We offered no credit extensions, so people had to pay cash upfront to get the product. It was important to get them to understand that they would get what they are paying for.

What do you consider to be some major achievements for the business?

At UFS I received the award as entrepreneur of the year at Business School and I also received the achiever of the year award. The business also won various prizes such as the Best Green Business, awarded by the International Labour Organisation.

What are some of the goals for the business?

I would like the business to keep a personalized connection with customers to ensure growth. We are also working on contingency plans to ensure the business has a lifespan longer than my own. We are constantly thinking about the next generation.

We also want to focus on continuing mentorship and support to clients who use the products, it is important for them to get the best value out of it for their businesses. We are selling a service to them.

Word of mouth is very important to promote a business. But it can take one unsatisfied customer to break down an image. So good customer service is key.

We also want to put the business in a position as a world leader in pelletizing. In Malawi there is a market to pelletize tobacco dust, that is a world-first and we provide that service.

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