PROSPECTS, THE FUTURE OF OUR
SENWES GROUP AND OUR PARTNERS
Over the past 12 to 18 months, the long outstanding consolidation and
restructuring of the agri-business sector were initiated. It impacted on
all role-players and presented opportunities to those who were prepared
and had the strategic insight, relationships and balance sheet capacity
to react to it.
The Senwes Group successfully obtained control over KLK Landbou,
a financially sound and well managed business which reflected good
financial returns. We will continue to harvest and exploit synergies,
invest further in its core business units and create opportunities for the
support platform and business enablers of its current portfolio.
We also continued to de-risk and grow our equipment portfolio by
the addition of the Staalmeester and Falcon businesses and we are
investigating the possible integration between the two businesses, to
compliment the current Senwes Equipment footprint.
The remaining 50% share of the Grainovation business was also acquired
to enable the Senwes Group to exploit the full benefit and integration
of the Market Access Channel with Senwes Grainlink and
Tradevantage.
During the last few years, the over-liquidity in the credit extension segment
of the food and fibre value chains, decreased significantly and
will result in both a lower appetite and higher pricing. This reality will
impact on both the primary producers and agri-businesses exposed to
them. Access and affordability will therefore be more important in the
immediate future and may influence discussions on who has the ability
to conclude a transaction, rather than who is the preferred partner to
conclude a transaction with.
The Senwes Group believes now, even stronger than before, that clarity
on strategy, the ability to execute and manage our balance sheet capacity,
will be the differentiators between role-players. We believe that our
sector is at an important moment of change.
COMMENTS AND POSITIONING OF THE
SENWES GROUP IN RELATION TO THE
COVID-19 PANDEMIC
The Covid-19 pandemic timeline from December 2019 and its local
effect since March 2020, have left every individual, sector, business,
country and value chain influenced in its own unique way.
Governments across the world reacted differently to the pandemic and
therefore businesses in all countries, as a result of the lockdown regulations,
were likewise affected.
The Senwes Group, as in other matters, chooses not to become entangled
in philosophical theories on the issue, but to look at it clinically
as a business; protect and advise our clients and staff, adhere
to govern ment regulations and strategically position our business to
emerge as a clear leader, with a transformed business that is even
more focused on a solution-based answer to our client base.
Some of the major effects we see at this early phase of the unfolding
of the pandemic, are the following:
� Much lower financial liquidity in the sector.
� Most soft commodity price trends are lower.
� Lower GDPs and therefore lower demand levels due to higher unemployment
rates and bankruptcy levels of businesses.
� Further consolidation of especially the input businesses of the
agri-business sector.
� Lower profitability of all client categories, once the current year
cash flow injection has flowed through due to a record expected
harvest during May to August 2020.
� The emergence of a much more locally focused economy compared
to the more globalised economy of the past.
The Senwes Group will remain focused on consolidation, while we
keep our very specialised approach as a role-player in different food
and fibre value chains. The Senwes Group’s interactions with clients,
staff, input partners and a dynamic business model of scenario setting
was practically demonstrated throughout the pandemic. We choose to
be actively involved in engaging government through mainly the Agbiz
platform, where we can show proven success, and not to engage in
public debate about matters with no execution and no success to back
that up. Despite all the loss of life and destruction of economic value
brought about by the pandemic, we recognise the following:
� The pandemic itself is a biological phenomenon that will eventually
pass, while its after-effects on lives and businesses will be long-
lasting (three to seven years).
� The way businesses react to it, will have serious implications for
their long-term strategic positioning (an opportunity for some and
a threat for others).
� Agri-businesses which already had focused strategies, strong balance
sheets and good cash flow situations are likely to emerge as winners
in the post-Covid and “new normal” world.
� Consumers will “buy down” to staple foods - therefore a balance
between the current oversupply in soft commodities and the higher
demand from consumers.
� The “new world” of business will be risk-averse and personal
bio-security measures at workplaces will be much higher on the
agenda.
42 ROOTED IN AGRICULTURE