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DRIVING RETURNS IN AGRICULTURE

The South African agricultural industry has a reputation for being an industry best practice producer and is a major player in many of the world agricultural commodity markets. The competitive advantage of the industry has been achieved in (often) challenging and adverse climatic conditions. Perhaps as a result of these hurdles, South African top performing producers are known for innovation and staying ahead of the game, in terms of continually striving for productivity growth and value enhancement in their agricultural assets.

The PCE’s management experience and systems had its origins in South Africa so we have had the benefit of that country’s experience. By combining this South African experience with our experience gained overseas and the natural advantages and resources of other countries, PCE is able to deliver on investor’s return objectives with respect to a range of agricultural investments across the globe. We consider that South Africa is well positioned to continue to lead many productivity gains in agriculture and that this applies equally to other major agricultural producing countries.

   

SCALE

Globally, farm surveys show that productivity growth in the agricultural industry is closely related to size, with the largest one third of farming businesses enjoying strong productivity growth, in contrast to the smaller two thirds who have had little or no improvement. Critical scale can be improved through expansion and/or consolidation of a portfolio of properties in a regional cluster or the development of a portfolio of farming properties in geographically diverse locations. The former model can enable more efficient utilisation of labour and farming plant and equipment, while the latter model can assist greatly in the management of climatic risk.

 

At a threshold scale of operation, corporate agricultural businesses can afford to employ
specialist expertise in a myriad of disciplines such as livestock husbandry, agronomy, land
development, irrigation design and development, marketing and investment planning, to cite just a few examples. Access to this range of specialist skills can only be achieved cost effectively through scale and it is these specialist skills that contribute to above average industry performance.


The PCE management model captures both the innovation that drives productivity growth and scale benefits that drive efficiencies and effectiveness. The following sections summarises the PCE management system.

 

ELEMENTS OF THE PCE MANAGEMENT SYSTEM

PCE provides clients with holistic solutions backed by unparalleled agricultural expertise, proven quality assured systems and procedures, an active management approach and rewards based fee structure.

 

PCE’S PHILOSOPHY

PCE’s management model delivers on: Strategic thinking, combined with rigorous analysis and evaluation, to develop the appropriate strategy, operations plans and budgets:

• How is the business performing?
• Why is it performing at this level?
• How can it improve?
• What strategies are required to achieve significant improvements in performance?
• Strategies are converted into realistic and workable plans and targets.
• Execution of the plan, and getting it done, this requires:

  • Active, “hands on” management;
  •  Extensive experience in the agricultural industry, both at the corporate and operations level; and
  • Corporate processes and systems that enable the operations to be managed cost effectively and in a manner that can be monitored, measured, reviewed and reported.

Combined with active leadership that: 
• Leads and manages the diverse farming programs that are required to lift returns;
• Is a change agent – i.e. is committed to the necessary changes to management and
operations to facilitate the improvements to production performance for example; and
• Is committed to the term of the fund/project that is required for the investor to achieve
its returns.

 

MANAGEMENT MODEL

 

When a client engages PCE to manage its agricultural investments, the client gains access to
a dedicated team who will:

  • Actively lead the management and decision making regarding the agricultural
    investment portfolio; and
  • Ensure that the agricultural investment portfolio delivers in accordance with the
    client’s investment objectives.