Food security is a key theme globally and there has been increased interest in SA Food Producers from large foreign multi-national food companies (Pioneer Foods acquired by Pepsico, Distell’s proposed acquisition by Heineken, and the failed Mondelez-AVI Snacks deal). In this note, we explore the broader SA Food producer landscape, with a specific focus on the agriculture input and service providers.
Agricultural Co-operatives started converting into publicly traded companies from the late 1990s, but recently we have noticed more corporate action from these former agriculture cooperatives (agri-businesses) ranging from mergers and acquisitions to listings on alternative stock exchanges.
The Cape Town Stock Exchange (CTSE) was launched in 2021 along with the listing of TWK Investments (TWK), an agri-business based in Mpumalanga. The CTSE launch was the rebranding and repositioning of the 4AX exchange. NWK Holdings (NWK), an agri-business from the North West was already listed on the 4AX and continues to be listed on the CTSE. BKB Limited (BKB) is the most recent agri-business listing on the CTSE. Senwes Ltd, also from the North West, was listed on the ZARX exchange, but now trades over the counter (OTC). Acorn Agri & Food (AAF), based in the Western Cape, currently trades over the counter (OTC), but is considering a listing on the CTSE in 2022.
Although agricultural inputs and services to farmers (the producers) remain the core focus of agri-businesses, investments have diversified into the rest of the food value chain, which includes popular brands such as B-Well (mayonnaise & canola oil) and Montagu Snacks.
Several agri-businesses own fruit or timber export operations that provide foreign earnings to protect against rand weakness. To hedge against the volatile nature of agriculture, there has been a noticeable trend of investments into agri-tech, pet retail, animal health, and outdoor and convenience retail.
Although some of the companies are listed on the CTSE, trading volumes have been low, and it could take some time to increase the liquidity in these counters.