KWAZULU-NATAL’S Coastal Farmers’ Co-operative has posted a positive set of results for the financial year ending 2016/17 as sugarcane production rebounds following the return of a “more normal” rainy season.
AT the 71st Annual General Meeting held recently in Mount Edgecombe, chairman Mark Gallagher said core trading had exceeded expectations in the period.
“With the rebound in member business, the direct fertiliser, fuel and general division performed excellently. The branch merchandise division also exceeded expectations with the agro-chemical division reporting another stellar set of results,” Gallager said.
Transaction value was up by 3.6%, with profits following good trading results. These coupled with “strong” cost controls, had resulted in a well capitalised balance sheet.
Cash business at the co-operative’s branches increased marginally with competitive pricing a key focus to drive sales on the back of a slowdown in South Africa’s economy.
Gallager said “surprises” over the last 12 months, which included Brexit, President Donald Trump’s election and a cabinet reshuffle in South Africa would most certainly impact on global and domestic markets for “years to come”.
The downgrade of South Africa’s economy to junk status by international rating agencies he said meant a tightening in credit was to be expected resulting in higher pricing.
The domestic economy he said was still characterised by low growth, fragile business confidence as well as household incomes and balance sheets remaining under pressure.
Further impacts on the agriculture sector included the unresolved national minimum wage and the “surprise” announcement by Treasury of the possible introduction of a tax on sugar-sweetened beverages in a bid to reduce sugar consumption by the general population.
“The last few years have indeed been very challenging but most growers have adapted well within reduced budgets, restructured balance sheets and rationalised operations. Those with multiple income streams, including macadamias, have been cushioned to a degree. But we are concerned that constant cost cutting by farmers will result in underinvestment, which could threaten medium and long-term sustainability of farming enterprises. Living in tough times doesn’t mean we should avoid risk, but it is important to manage the risk to remain profitable and sustainable,” Gallager said.
Deputy-chairman of the co-operative, Bernard Rouillard agreed the organisation was going into this uncertain economic period in a position of relative strength which he attributed to a constant focus on the needs of the members. “As we all know one upside of challenging times is the incentive to scrutinise everything we do to make sure of optimal efficiency and effectiveness.”
However critical investments were made during the period under review including the purchase of the Harding branch building from the landlord.
Similarly the Waverley store was bought meaning the co-operative was now “putting down roots” in the Eston/Mid-Illovo districts.
Rouillard said land for a new Port Shepstone branch was also bought which would allow for a modern shopping experience for what he termed the South Coast “flagship” branch.
“In making these decisions, the Board is satisfied that the expansions are low risk and profits over the last couple of years have made buying the buildings possible without any debt,” he said.
Completion on the new property developments was expected by the end of the next financial year.
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