Wadea Jappie and her husband Achmad Brinkhuis and their sons Nabeel and Tawfeeq of Chamomile Farming Enterprises in Philippi, Cape Town, produce eggs for Nulaid, fresh coriander and radishes all year round, and vegetable soup packs in winter for the Freshmark brand, which supplies Shoprite supermarkets.
By Maile Matsimela, digital editor at African Farming
They started with five chickens and sold eggs to family and friends. Today, they have 35 000 layers in controlled cages, and produce coriander, radishes and soup packs. They rent another 22-hectare farm from the Department of Agriculture, where they grow vegetables for the soup packs. They plan to expand their egg business on that land.
The best advice for aspirant farmers, they say, is to understand the value chain of the product you want to produce and to know to whom you will sell it – in other words, what your market is. “Many people want to farm with chickens but then choose an area with the highest risk, like rearing chickens. Nobody thinks of opening an abattoir, for example. You need to understand the value chain and where you fit in,” Achmad says. If you want to produce eggs, you must know who the grain farmers are who grow the maize and soya that go into chicken feed, and which chickens to buy and whom to buy them from. Before you start, you must also have a market for your eggs.”
Also read: From zero to 18 000 layers: How this Mpumalanga family built an egg empire
A farmer’s finances is never only a matter of rands and cents. It’s also important to have relationships with neighbours, input suppliers, electrical contractors, mechanics, and agricultural industry bodies. Good relationships can help you bridge the many raging rivers a new farmer must cross.
“Relationships with agricultural businesses are important, like the guy who supplies your seed and diesel. That makes the transition easier and saves you time because they know and trust you,” Achmad says.
Government grants usually cover only a part of what a farmer needs. “If the government gives you R2 million to buy a tractor and you don’t have a relationship with the farmer next door to borrow a plough, you’re stuck. That relationship forms part of the whole package.”
Achmad says another relationship that needs to be nurtured is the relationship with your workers. “They are so important, and if you don’t treat them well, they can become your worst enemy and sink your business.”
Invest In Your Business
The Brinkhuis family started very small when they bought 1.6 hectares of land with their savings and a mortgage from a commercial bank in 2002. They bought five chickens at an agricultural fair in Franschhoek and started to sell the surplus eggs to family and friends. Soon, they bought more hens, produced more eggs than they could sell in their neighbourhood, and had to find another buyer.
They now supply Quantum Foods’ Nulaid egg brand. They also buy their correctly formulated chicken feed from Quantum’s Nova Feeds division. It makes sense for them to be associated with such a company because its veterinarians visit their farm to ensure the chickens are healthy and get the correct feed mix at each growth stage.
When they started their farming business, Achmad still had another job. Then he resigned to farm full time. He invested a portion of his pension in the farm. “We put everything we had or owned into this business. It is the only way to survive. When you have money, think of your business first,” Achmad says. “We had to do that because we were first-generation farmers who started from scratch.”
The financial support they’ve received from the government plays a huge role in their business, and has helped them to “realise their dream faster”.
Also read: Auction ‘proof of partnership that works’
Grow For A Market
Wadea, who inherited her entrepreneurial spirit from her father, started planting coriander to sell to butcheries and chillies for a customer. They realised the importance of market research when they discovered that the customer actually wanted red chillies rather than the green ones they were producing. “You can’t just plant something and hope someone will buy it. You must find a buyer and conclude an agreement with them,” Wadea says.
“Everything in agriculture begins with markets. You can have land, water and chickens, but you won’t sell anything without a market,” Achmad says.
They were the first black suppliers of herbs to the Freshmark brand, and grew their business from 100 bunches of coriander and radishes per week to 1 000 bunches per day.
The planting programme that Freshmark supplied as part of the contract helped them plan their output.
Make Tough Choices
Those who want to succeed in farming have to be at their business every day. “When something like a water pump breaks, it has to be repaired as soon as possible because it can affect the functioning of the business.”
Evaluating the results of an intensive farming system, like producing eggs every day, is very important. “Check what the production is, and check the feed, water and temperature. You must be in the cage all day to check the water.”
It is important to understand the key performance areas for your farming operation. For egg production, it is the food conversion rate (FCR), Achmad says. “In other words, how much feed do you give the chickens, and what do you get in return?”
Investing in farming often requires a large initial capital outlay, so it is best to invest in quality. “Don’t be shortsighted with regards to quality. You must understand the value of things and the difference that quality will make in terms of what you get from your investment.”
Get To Grips With Legal Requirements
Delivering the right products is not enough to gain market access. There are many legal requirements that a farmer has to comply with, such as food safety protocols, environmental impact studies, biosecurity issues and water licences.
Wadea says in the beginning it felt like there was a stop street at every turn and that everything was designed to make it difficult for them to enter the farming sector. They have since realised, however, that all these requirements can protect them and their business.
Also read: WATCH | The PALS partnership model that’s solving South Africa’s land reform challenge
Achmad wishes he could chat with every aspirant farmer and explain the things they have learnt along the way.
First, the land that the government buys for farmers often does not have any water rights, or only has rights for a small portion of the land. “I want to sensitise new farmers to this and tell them to work through a list of questions. What is an EIA [environmental impact assessment]? What kind of land use is allowed? For which kind of agriculture is your land suitable?”
It will be difficult for any new small farmer, but when they do an EIA, they must consider the future and how their business may expand. “You need to have a five-year or ten-year plan,” Wadea says.
Also, an EIA can help you understand your business’s risks to the environment and those around you.
Pay The Business Before You Pay Yourself
It is easy to think you have a lot of money in a farming enterprise such as egg production, which has high returns. Yet Achmad and Wadea say a farmer has to put away a portion of the income from every egg for future costs, like chicken feed, replacement of the chickens at the end of their lifespan, electricity, water, packaging material, grading, repairs and maintenance. Only then can you pay yourself.
When they want to embark on a new enterprise, they talk to as many people as they can who are already in that game. “You have to zoom in on that enterprise and find out everything until you understand it; only then can you make an informed decision,” Achmad says. “Don’t start something if you don’t have the knowledge or a market. It is an ongoing educational journey, and you must be open-minded.”
Pay Creditors Regularly
Their advice for new farmers is to know who needs to be paid and what their future obligations are before using any of their farming income. “It’s easy to think you have money, but it takes financial discipline not to use that money before debtors have been paid and you’ve made provision for future production. You have to put money away every month.”
Achmad says that a clever thing they are doing and that other farmers who get a regular income can copy is paying every debtor at least a part of the money they are owed regularly. “We get money every week from selling eggs. Wadea pays every debtor at least part of their invoice every week. By the end of the month, they’ve received the total amount of what they were owed. That way, you keep everybody happy and build a financial relationship of trust.
“That’s your credit line and how you build a reputation of consistency. It will allow you to negotiate with your debtors if you cannot pay for some time.”
Learn From Experience
The Brinkhuis family say insurance and taxes are grudge payments, but you must comply in those departments.
There are many things a new farmer will not understand when they start out, but as they grow, they will learn to understand and see the benefits.
The Western Cape Department of Agriculture officials can be very helpful, but you also must want to help yourself. “It is a mistake to leave all your affairs in the hands of government.”
Financial accounting is essential right from the beginning. “Teach everybody to get an invoice when something is sold and a receipt when something is bought to keep track of your income and expenses.”
As you grow, get your financial affairs audited by a trustworthy accounting firm. “See them once a year to discuss your business’s financial statements and measure its performance.”
Also read: From retrenchment to resilience: Jennifer Modisakeng’s agricultural journey flourishes in Bafokeng
Mistakes And Lessons
Achmad and Wadea say the most intelligent thing they’ve done in their business is to involve two of their children and to make them partners. “We want to leave a legacy, and we know they will continue with the business after we are gone.”
The biggest mistake they’ve made was when they were new to farming and business accounting. They didn’t realise that the accountants they were using were not allocating all the costs correctly. It was not their fault, but they believe ignorance is no excuse.
To ensure the long-term survival of their business, they have learnt the importance of building a credit record, investing in their business, and having at least three months’ money in the bank in case something goes wrong.
That is part of their strategy for managing risk, Achmad says. “You budget, and you save money. Even if there is enough, put more away. That is part of planning, and it means you will have money to fix a problem like a faulty electrical motor that could endanger your business.”
