Report of the
Managing Director
STRATEGIC, OPERATIONAL
AND FINANCIAL REPORT
The financial year was characterised by difficult production conditions
which impacted directly on the Company’s client base and subsequently
on the Senwes Group. For the past two-and-a-half years the western
part of the country (which primarily represents Senwes’ client base)
experienced a downward production cycle due to drought, whereas the
eastern part of the country had more favourable production conditions.
In order to mitigate risk associated with downward cycles in agriculture,
Senwes follows a strategy of diversifying the business to lessen the
concentration of risk. This strategic goal was again successfully applied
to counteract low production yields which left the Senwes silos at
their lowest levels since the start of the free market dispensation.
International trends
Specific international macro-economic trends form the backdrop of
Senwes’ strategy towards 2020. The first trend is that the primary
producer and the consumer, the two ends of the value chain, are
moving closer together. One reason for this trend is price, but quality
aspects such as food security and safety and option of origin also play
a role. Because the producer and consumer are geographically apart,
the role of other players in the value chain remains constant. These role
players are, however, becoming bigger and more concentrated. Huge
and powerful processing conglomerates and retail groups already
dominate the international and South African economic landscape.
Producers are also consolidating. The 60 000 primary producers of
a few years ago have decreased to less than 30 000, 15% of which
produce 90% of the locally produced protein, fibre and starch.
The consolidation
focus will be driven by
Senwes and its holding
company, Senwesbel in
the coming year.
26
Francois Strydom