IDC funds empowered fish cannery

27 June 2008

The Industrial Development Corporation (IDC) has partnered with some of the country’s leading fishing companies to develop a new pilchard canning factory in Mossel Bay – the first of its kind the southern Cape region.

In a statement earlier this month, the IDC said it provided R22-million in funding for black economic empowerment (BEE) company, Mossel Bay Processors, to obtain a 60% shareholding in the new venture, Afro-Fishing.

Diversified fishing group Viking Fishing holds 30% and family-owned fishing company Salkanha Group holds 10% in Afro-Fishing, bringing effective black ownership in the company to 39%.

The BEE consortium, which includes fishermen and women from St Helena Bay and Plattenberg Bay, was responsible for signing the 20-year lease on which the new factory was built.

IDC Food, Beverage and Agro-industries strategic business unit head Rian Coetzee said industry expectations were that fish would remain in the region for the foreseeable future, essentially backing the investment into a new canning factory.

“The investment is in line with the IDC’s purpose of promoting enterprise development,” he said. “That the project is being undertaken in partnership with key industry role players and promotes investment into a new arena, further underpins the organisation’s funding pursuits.”

Using well-known brands

Afro-Fishing can produce around 20 000 tons annually during the eight-month catching season, having already secured the major portion of the required supply via agreements with its shareholders, with the balance of raw fish purchases being sourced from other quota holders.

Afro-Fishing founder and MD Dewald Lourens said the finished product would be supplied as company brands for three of the industry’s leading companies, who collectively hold 40% of the local market share.

The project creates 320 annualised jobs at full production, predominantly among previously disadvantaged women to benefit 450 people in the Mossel Bay community, recognised for its 40% unemployment levels.

The location on the quayside will play another critical role in the project’s success by enabling Afro-Fishing direct access to the offloading vessels to minimise handling of the fish and time delays – giving the company a competitive advantage within the industry via cost savings, better margins and improved yields.

“This project will have major spin-offs for the economy of this area,” said Lourens. “I would recommend the IDC as development financier to any company looking for a true partner.”

Taking risks, continued growth

Coetzee acknowledged that the industry remained vulnerable to a decreasing total allowable catch with pilchard volumes susceptible to environmental conditions and changes in sea temperature and plankton concentrations.

The total allowable catch for 2008 was reduced considerably and future total allowable catch volumes at the current level were a concern.

“Although the project shows strong economic merit and capital flow from the second year, this investment also demonstrates the IDC’s willingness to take risks when commercial banks may shy away,” he said.

The South African market demand for pilchards remains the highest in the world, consuming around 6-million cartons annually, and Coetzee said demand would continue to show moderate growth, driven by an increasing population and the relatively high price of red meat and chicken as alternative protein sources.

An estimated 89% of the South African population consumes pilchards with the product outselling tuna – often a substitute fish source in line with increasing disposable incomes – by a factor of 9:1.

SAinfo reporter