Farm management: Expand or diversify?


By Digital team | 7 February 2019
cheaper; agent; branding; expand
A sea of tomatoes from ZZ2, the largest producer of tomatoes in South Africa. Photo: Provided

A common decision farmers must make is whether to expand their farming operations or diversify them. Here are some basic rules.

A sustainable farming business should never stop changing, evolving, adapting and growing. The easy part is saying all that in one sentence. The difficult part is making it a reality.

All farmers, large or small, have to face such decisions – and the secret is to make the correct choices.

What does expanding a farming operation mean?

Here are just 3 examples of what expanding your business could mean.

  • Do I buy more land?
  • Do I open up more land on my existing farm and increase the area under production?
  • Do I add more infrastructure or equipment?

What does diversify mean?

These are 3 examples of diversifying.

  • Do I add a new cash crop or crops to my farming operations?
  • Do I take on something completely different, such as including
    cattle?
  • Do I plant some fruit trees, which are a long-term investment?

To answer these questions, I want to tell you a story told to me by one of South Africa’s great farmers – the late Bertie van Zyl, who, with his ZZ2 brand, became the biggest growers of tomatoes in this country, and probably in the southern hemisphere. I believe we can all learn from his story.

“When I joined my father on his farm, I was young and wanted to grow tomatoes. My father was a potato man and at first refused to let me grow tomatoes. But one day he relented, agreeing to let me plant 1 ha of tomatoes. I was lucky, market prices were high, and I made good money. I was very excited and decided to double my plantings to 2 ha.

“This time the market went down and I nearly lost all my money. I also struggled to look after the tomatoes properly, because I hadn’t planned for double of everything. I didn’t have enough people or infrastructure, and it cost me dearly.

“The lesson I learnt was to grow my farming business one step at a time, that it is better to expand in a manageable way than to go ‘big’ from the start.”

Also read: ‘What I learnt from the greatest tomato farmer in the southern hemisphere’

These are the lessons to be learnt from Bertie van Zyl’s story:

Patience. After the second year Bertie learnt how true is the expression, “Rome wasn’t built in a day”. He realised that he wouldn’t be doing it all in a year or two; success would take time.

Choice. He wasn’t crazy about potatoes, but he liked tomatoes, he believed in them. So, he chose tomatoes as “his” crop and was therefore prepared to put in extra effort and learn as much as he could about growing tomatoes.

Start small. Bertie started small, tried doubling his crop in the second year and almost lost everything. He learnt that to grow his business he would need more funds, equipment, people, seedlings, fertiliser, chemicals, packaging and other inputs required to grow tomatoes. He realised he had to match his expansion plans with available income and resources.

Focus. He stayed with tomatoes, irrespective of whether the prices went up or down, and focused on growing them to the best of his ability. He didn’t allow himself to be distracted by stories of high prices for other crops. And in staying focused, he was able to manage his crops better and attend to potential problems before they got out of hand.

Learn. From the outset, Bertie applied himself to learning as much as he could about tomatoes. Over the years he tried different varieties, production methods and marketing techniques, but he never lost sight of the basics of growing tomatoes and only made changes if he was convinced they would be for the better.

Quality. He knew from the beginning that if he wanted to make money from tomatoes he would need to produce the best, so he concentrated his production and marketing efforts on doing just that.
Funding. Bertie learnt the hard way that to expand your business you need money. So, he set about generating his own financing from the profits he made and stayed away from borrowing money – which was another reason he needed patience.

Marketing. He decided to supply fresh produce markets; that would be his marketing channel and that is where he would build his reputation.

Branding. Having decided on how to market his products, he started building his ZZ2 brand among buyers on the markets by consistently supplying excellent quality tomatoes. Today, when most South Africans think tomatoes, they think ZZ2.

So, should you expand or diversify? The answer lies in the important lessons Bertie learnt.

Each farmer has to consider his or her situation and decide on what’s best for the circumstances.

Bertie van Zyl chose the option to expand but took it slowly and made sure he built solid foundations for his farming business. He stuck with what he knew best – tomatoes – and made sure they were the basis for everything else. Only later did ZZ2 add the diversify option, introducing crops such as avocados and onions.

An important aspect of ZZ2 tomatoes is that everything they do has to be thoroughly researched and tested before being integrated into farming operations. And this is what you should do too.

  • This article was written by Michael Cordes and first appeared in Farming SA.