With many farmers being forced to drive huge distances for groceries and everyday items, the convenience of a local agribusiness becomes perfectly clear, says Stefan Oberholzer, CEO of OVK. Oberholzer’s agribusiness group owns 51 retail stores across three provinces, many of them in rural towns.
Often, these stores are the sole suppliers of everyday essentials, stocking not only groceries, but everything from fuel and hardware to agricultural supplies such as chemicals and herbicides.
Because of the retail product profile of these outlets, and their location in small rural towns, farmers need little convincing of their importance. This, says Oberholzer, is why farmers are keen to become shareholders in OVK.
The group, whose headquarters are in Ladybrand close to the border of Lesotho, opened new retail outlets in Somerset East, Barkly East, Elliot and Prieska in its 2013/2014 financial year.
On 1 December, it opened a branch in Brandfort. “For us, it’s about the sustainability of the rural towns of the country,” says Oberholzer, who has been with the company for 19 years and held the position of CEO for two.
“OVK’s board of directors is adamant that there should be a branch in towns such as Jamestown and Paul Roux. If there’s no branch, where will local consumers go to?”
In the 2012/2013 and 2013/2014 financial years, the company returned more than R320 million to its shareholders through dividends, its loyalty scheme and the growth in the share price.
“Now that we see the share prices are gaining, our farmers realise more and more what their investments are worth,” Oberholzer says. “As the value of their investment increases, the value of farmers’ security with OVK rises. Their balance sheets are getting better.”
OVK’s loyalty scheme means that farmers get discounted prices for purchases, and shares are then bought with that accumulated discount. It is up to the farmers whether to hold or sell their shares. Oberholzer emphasises that their strategy is focused wholly on agriculture. “We’re a straightforward agribusiness. We want to be the one-stop shop of the farmer,” he says.
An extensive offering – and still growing
In addition to retail, OVK’s divisions include wool and mohair, mills, livestock, grain storage and trading, insurance, mechanisation, motor retail and agricultural and financial services to farmers.
The company’s turnover in the fiscal year 2013/2014 jumped 28% to R4,57 billion, while its net asset value rose to R12,14 per share, compared with less than R8 four years previously.
Even its mechanisation unit, which in 2012/2013 saw a loss of R4,2 million, slashed this deficit to R300 000 in 2013/2014.
Agri machinery and equipment
In a bid to expand its offering to farmers, OVK now has the agency for Massey Ferguson and Challenger for the Eastern Free State, covering an area from Bethlehem to Aliwal North. International equipment supplier Barloworld acts as the principal for Massey Ferguson in South Africa.
“The support we get from Barloworld is unbelievable. You’re only as strong as your principal and the support you get from them,” stresses Oberholzer.
OVK plans to construct a new agency building for its Massey Ferguson dealership in Bethlehem.
The company also has two CLAAS dealerships in Cradock and Hopetown respectively, and owns two Toyota dealerships in Ficksburg and Ladybrand respectively. The Ficksburg outfit was upgraded at a cost of R3,1 million during the 2013/2014 financial year.
CMW: mohair giant
In 2010, OVK bought a share in wool-and-mohair company CMW and increased its stake to 100% during the 2013/2014 fiscal year. “We’re now importing a high-density press that can press two or three wool bales together. This is a first for South Africa. It’s important for us to be at the forefront of new technology and development,” explains Oberholzer.
Wool and mohair are doing “extremely well”, he says, and CMW is experiencing a jump in the volume of fibre traded. This is evident in the relative scarcity of Angora ewes available in the open market for slaughter, amongst other uses. CMW, with operations in South Africa and Lesotho, is the world’s largest mohair broker. Lesotho’s largely smallholder farmers are experiencing a jump in both mohair and wool prices.
Oberholzer stresses that the company has a strong drive to continue growing: “Every agribusiness only has a certain percentage of the farmer’s operations, and the goal is to maximise that.” \
