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NCERA FARMS (PTY) LTD

NCERA FARMS (PTY) LTD. TURNAROUND STRATEGY- PRESENTED BY M.M. TITIMANI 22 MAY 2012. 1 1. INTRODUCTION. The Turnaround Strategy is in reference to the Annual Report and Audit Report of 2010/2011 financial year SECTION 1– BACKGROUND,MR M MANKAZANA (CARETAKER OF THE BOARD)

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NCERA FARMS (PTY) LTD

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  1. NCERA FARMS (PTY) LTD TURNAROUND STRATEGY- PRESENTED BY M.M. TITIMANI 22 MAY 2012 11

  2. INTRODUCTION • The Turnaround Strategy is in reference to the Annual Report and Audit Report of 2010/2011 financial year • SECTION 1– BACKGROUND,MR M MANKAZANA (CARETAKER OF THE BOARD) • SECTION 2–TURN AROUND STRTEGY, MR MM TITIMANI (CEO NCERA FARMS) • SECTION 3–FINANCIALS, MISS K GWAZELA (CFO) NCERA FARMS) 22

  3. SECTION 1 -MANDATE • NCERA Farm (Pty) Ltd is a public company listed in schedule 3B of the Public Finance Management Act, 1999 (Act 1 of 1999) with the Department of Agriculture, Forestry and Fisheries as a sole shareholder. The mandate granted by the shareholders, the objectives of the entity is to provide extension, mechanical services, training and agricultural support services to the farmers settled on Ncera Farmland as well as the neighbouring communities • The entity is surrounded by nine villages. The neighboring villages have a population of ± 18 000 and are under Chief Jongilanga. There are five primary schools and three high schools. The unemployment rate of the area is estimated at 80%. 33

  4. BACKGROUND • The annual report summed up all the challenges at Ncera. ( Profit & Loss Acc. KPI – calving & mortality rates.) • Turnaround Strategy listed all the possible opportunities. Focus was put on the Beef & Goats enterprises. • Training Gap identified – Lack of Agriseta Accreditation. • Infrastructure Gap –identified with water supply and fencing as the main constraints for a meaningful production. • Governance related matters 44

  5. SECTION 2 - FACTORS LEAD TO Turnaround strategy, AS AT 2010 • 1. GOVERNANCE • No Board of Directors • No Audit Committee • No CEO appointed • No Accredited Trainings • No Policies, Procedures and systems within the finance unit • No Strategy, Forensic investigation conducted 55

  6. FACTORS LEAD TO TAS AS AT 2010 CONT. • 2. FARM BUSINESS MANAGEMENT ISSUES • 2.1.Forestation - Invasion of noxious species e.g. wattle • 2.2. Dairy • 2.2.1.Breeding Stock- unhealthy, low milk production • 2.2.2. Milking Parlour - Outdated 2.3. Beef • 2.3.1. Inbreeded stock - loss of conformation 2.4. Poor Fencing and handling facilities 2.5. Inadequate water storage facilities/irrigation and drinking 2.6. Poor veld management 66

  7. Invasion of noxious species e.g. wattle 2.1 forestation 77

  8. Breeding stock unhealthy-low milk production • Milking parlour- Outdated dairy 88

  9. Inbreeded stock • Loss of conformation • Loss of weight • Loss of fertility • Prone to diseases • Weak genotypically 2.3. beef 99

  10. Well breeded livestock • High feed conversion rate • High fertility • Improved calving percentage • High returns R/kg 1010

  11. Poor Fencing and handling facilities • Injury to the handlers and animals • Time consuming • Labour intensive • Un economical Handling facilities 1111

  12. EFFICIENT, ECONOMICAL, MODERN AND PROFESSIONAL HANDLING FACILITY 1212

  13. NCERA FARMS (PTY) LTD AS AT 2010 Cont… • 3. RESPONSES - TURNAROUND STRATEGY • 3.1. June 2011 the CEO was appointed • 3.2. SWOT analysis was developed (refer to next slide) • 3.3. Turnaround Strategy Developed 1313

  14. Noncompliance to corporate governance & poor business management principles (absence of Board of Directors). Lack of well defined governance & policy framework. Production is largely dependent on climatic conditions which can only be partially manipulated by man through irrigation. Collapsing dairy cost centre with high net losses. Poor agricultural infrastructure (fencing, milking parlour and aging dairy cows). Poor proper camping facilities and farm road maintenance. Inadequate access to sufficient water supply (especially for PTO farmers). Mixed breeds of both dairy and beef enterprises. Uncertainty of farmers due to land reform issues (lack of lease agreements). Relatively high input and capital costs. Poor skills and knowledge of the new farmer entrants. Lack of funding for farming operations and investment on new agro-processing ventures SWOT ANALYSIS STRENGTHS WEAKNESSES • Appointment of the new CEO to turn around the fortunes of the entity. • Strategic plan for 2011/12 to 2015/16 has been developed. • Framework for the establishment of a Stakeholder Council has been developed & agreed upon by all relevant stakeholders. • More than 3000ha of high potential agricultural land available for farming purposes (increasing number of tunnels for hydroponics). • The prevailing soil & climatic conditions of the area are generally conducive for cash crops, grain & livestock production (especially beef). • The entity is only 30km from East London which is the economic hub of the area. • Availability of tailor-made farmer support services of training, mechanisation, and vegetable & livestock production. • Ability to produce vegetables throughout the year by making use of hydroponics. • High potential for beef and goat production. 1414

  15. Availability of various stakeholders (traditional leaders, municipalities, Department of Rural Development & Agrarian Reform, East London Industrial Development Zone, etc.) to forge sustainable partnerships. High market demand for vegetable products (3 million people in Mdantsane Township). The East London Fresh Produce Market is about 40km from the Ncera Farms. Alleviation of poverty and decrease unemployment rate of the area. Increasing demand due to the consumers demand for healthy diets. Potential for increased local market consumption. Increased urbanization. Harmonization of the institutional environment SWOT ANALYSIS CONT… THREATS OPPORTUNITIES • Unaccredited & irrelevant training programmes may lead to preference of other training competitors. • Skewed & undefined technical & advisory services • Lack of programmes directed at supporting local & regional economic growth. • Communal land conflicts and possible land invasions. • Lack of mutual respect between stakeholders • Oversupply of vegetables to the East London Fresh Produce Market which will decrease prices per unit. • Availability and cost of irrigation water. • Impact of climate change (global warming). • Inflation rate with regard to cost of labour, costs of general production inputs. 1515

  16. 3.3.1. Closing of the Beef and Dairy Section • Processes – Inspection and selection, TB and CA testing, seven animals reacted positive to the TB test, slaughtered and confirmed negative- Animals were auctioned 07 March 2012 (see annexure A and DVD) • 305 Animals sold at the auction • 197 Dairy animals • 108 Beef animals • 10 Nguni’s selected for breeding • Total Income R1 261 140,33 • 7%COM = R95 011.87 TURNAROUND STRATEGY DEVELOPED 1616

  17. TURNAROUND STRATEGY DEVELOPED CONT....... • FORENSIC INVESTIGATION REPORT, AUDIT REPORT RESPONSES • 3.3.2. Governance • 3.3.2.1.Policies developed (sample available) • 3.3.2.2. Public advert was placed and interviews conducted for prospective candidates of Board (see annexure B) • 3.3.2.3. Application submitted to Agri-seta for training accreditation- (see annexure C) 1717

  18. BEEF PROCESSING, HIGH VALUE COMPARED TO ANIMALS ON HOOVES 1818

  19. PROCESSING VALUE AND LEATHER TANNING 1919

  20. BOER GOAT FARMING ENTERPRISE • Less capital intensive • Breed faster-high fertility, high kidding rate • High demand(meat, milk, customs, rituals) • Disease resistant 2020

  21. TOMATOES AT NCERA TO DATE • GREENPEPPERS AT NCERA TO DATE 2121

  22. EIGHT MORE HYDROPONICS ENTERPRISE • Less labour intensive • All the year round production • Easy pest and disease control • High value crops • Easy picking and packing • No cultural practises. 2222

  23. SUSPENDED UNACCREDITED TRAINING AT NCERA • Unrecognised qualification • Discourages learners 2323

  24. ACCREDITED TRAINING • Recognised qualification • Competitive to job market • Better job opportunities • Improved socio economic life of the communities 2424

  25. IMPROVED MECHANISATION PROGRAM 2525

  26. BENEFITS OF MECHANISATION AND TRAINING PROGRAM-ACCREDITATION • Currently 10 tractors and equipment • Serving 9 villages of ±18 000 people • Increased food security, in the area • Provide job opportunities • Reduce poverty and hunger for community • Training programs on tractor driving,maintanance,plough setting, welding etc. • Fully fledged workshop with modern equipment 2626

  27. Section 3 TURNAROUND STRATEGY BUDGET 2727

  28. TURNAROUND STRATEGY BUDGET cont. 2828

  29. TURNAROUND STRATEGY BUDGET cont. 2929

  30. Bridging budget 3030

  31. Bridging budget – CONT. 3131

  32. Bridging budget – CONT. 3232

  33. Bridging budget – CONT. 3333

  34. ASSUMPTIONS • Beef 50 participates ,Trained for 120 days@R600pp(increased annually) • Goat : 50 participates trained for 120 days@ R600pp(increased annually) • Crop production : 40 participates trained for 60 days@ R600pp(increased annually) • Tractor Maintenance: 30 participates trained for 60 days@ R600pp(increased annually) • Computer Training: 20 participates trained for 60 days@ R600pp(increased annually) • Community Training: 500 participates trained for 80 days@ R100 pp • Breakeven point will be reached in 2017/18 financial year • Net profit as at 2019/20 will be R84 592,000 • Professional fees including accommodation and other administration costs will be R17, 128,000 3434

  35. Training – Prof. and Community 3535

  36. Different categories included in the GRAPH 3636

  37. SUMMARY • Job created – 400 jobs and 66 permanent jobs • This will be contributing to the 80 % of unemployment rate of 18000 people • Organisation will be accredited • Workshop will be upgraded • Good breeding stock for breeding and training • Reduce poverty and hunger • Produce professional and technical trained cadets 3737

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