Building a successful business from sugarcane farming right now in South Africa, according to new generation farmer Dirk Novais, requires a fine balancing act between diversification, cash flow management and growth, while keeping debt levels as low as possible.
At the height of one of the worst droughts in living memory, Dirk Novais set out to build his dream of becoming a farmer by buying a 112ha farm on the banks of the Pongola River in Northern KwaZulu-Natal.
With his wife Jolani, a degree in economics and risk management, a diploma in business management, and perhaps most valuable of all, a two-year stint with one of South Africa’s biggest commercial farmers, BP Greyling, the youngster started out just three years ago on what he calls his “piece-by-piece” expansion of the farm business.
“When I arrived on the farm there were 78has under irrigated sugarcane. The rest of it was lying fallow,” Novais said.
Today the farm boasts 20ha under macadamia orchards, 70ha planted to sugarcane and 2ha under vegetables, with plans for further expansion as cashflow allows.
Cane yields have increased from an average of 80 tons a hectare to between 100 and 110 tons a hectare.
Novais grew up in Pongola and attended boarding school in Ermelo, and said when he graduated from university, he just knew that going to work in the city wasn’t what he wanted to do.
It was in discussion with an old school friend that the pair came up with a plan. “I was at school with Ghini Greyling. His dad is BP Greyling – one of South Africa’s mega-farmers – and he agreed to take me under his wing and teach me about farming. The experience I gained there was invaluable,” Novais said.
The next step was to raise enough money for a sizeable deposit for a property. As luck would have it his mother owned a piece of land under timber, which Novais undertook to sell.
“My mom had tried to sell the land for a long time. I struck a deal with her that if I sold it, I could use the money as a deposit on a farm for myself. My mother is an accountant and she helps me now as bookkeeper for the farm. She is fantastic, and we work really closely together,” he said.
That he is able to expand his business without servicing high levels of debt is a massive plus. “If you don’t have debt and you farm well, then 50ha of land is enough to live on. The other important aspect to keep in mind is not to grow too much too soon, but to manage the growth while balancing cash flow at the same time. There are some months where I don’t draw a salary at all. My tractors are old and my bakkie is paid off. I have a long view of what I want this farm to look like, so I am prepared to make those sacrifices,” he said.
With scheduled water from the Bivane Dam, about 80% of the farm made up of rich, red soils and the rest “pure rock”, the young farmer first set about replacing all of the pumps to ensure water pressure was consistent. He installed a centre pivot irrigation system. He pulled out the sugarcane that was worst affected by the drought and replanted with some of the newer varieties, like N49 and N57: the rest are still the older varieties, such as N36 and N23.
“My endgame is to have 40ha planted to macadamia trees. It is a balancing act because I also have to manage my water allocation. At the moment my macadamia trees are small, so they use about 5% of the water that is used for the sugarcane. As the macadamia trees mature and take up more water I will pull out more sugarcane,” he said.
With an “I don’t give up until I succeed” attitude, Novais said his progress thus far could be attributed to the support and assistance of other successful farmers in the district, the fact that he bought a going concern with potential, and his attitude towards hard work.
“I knew nothing about sugarcane when I arrived here. But before I started I was privileged to have farmed for Andre Barnard at Mhlati Farms. Also, I had learned about crop farming from my time with BP Greyling, so I just applied those basic principles here. The farmers in the district were so helpful and supportive. But, to be honest, I just jumped in. It was sink or swim.”
By 2030, Novais says, his aim is to have doubled the value of his asset and within five years, to have halved his debt.
“It is hard getting into farming: the risks are high and it’s big money. But my focus now is to prioritise those activities that make money and then later think about things like new tractors. Land is very scarce here in Pongola and very expensive. But I am not scared to struggle and one of my strengths is to persevere until I get a thing right.”
And despite the challenges, which include the crisis in the sugar industry and the massive hike in input costs, particularly fertiliser, labour and electricity, Novais says he has no regrets.
“I could move overseas like so many others have done, but South Africa is my home. I am not prepared to focus on the negatives and I am not someone who is prepared to give up either.”