LONA GROUP

LONA GROUP

Combining business sustainability and socioeconomic development

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G R O U P

The Citrus

Champion Approaching agriculture in an innovative way, Lona Group is providing a platform for progression across South Africa Writer: Jonathan Dyble | Project Manager: Lewis Bush

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ruit is king when it comes to South Africa’s agricultural economy.

Each year, approximately 4.7 million tonnes of it are produced across the country according to statistics from Fruit South Africa, contributing around R98 billion to national GDP and directly sustaining the jobs of 180,000 people.

Within this, citrus has become the most substantial subsector.

In the half decade since 1965, output has risen from 10 million to 177 million 15-kilogram equivalent cartons, and today well over half of the total produced in South Africa can be categorised as citrus, contributing roughly 30 percent of the total value of the entire national fruit industry.

Lona Group is one company that has not only continued to capitalise on this but has equally helped drive the industry’s growth trajectory upwards.

Founded in 1996 in the wake of the deregulation of South Africa’s agricultural sector, the Group has since established itself as a leading national fruit exportation firm.

“We are one of the top 10 citrus grower/exporters operating within South Africa,” says Derek Sutton, Managing Director of the Group’s export business. “This year we’re expected to produce four and a half million cartons of exported citrus, alongside the products that we sell to the local market.”

An innovative approach

Becoming number one, however, is not top of Lona Group’s agenda.

Instead, the Group places significant strategic emphasis on furthering the impact of its unique business model – a business model that has been key in helping to tackle social problems across South Africa.

“Transformation in the South African agricultural landscape is a

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given,” Sutton explains. “However, in ensuring that this is sustainable we put a lot of effort into assisting emerging farmers, often providing them with an initial platform, helping them to work more productively and making sure they are part of a non-exploitative value chain.”

This philosophy has lasted through the Company’s entire history, having been inspired by the ethos of the previous owners of Lona Group’s primary farm.

Sutton continues: “When we bought Riverside, our first farm, in the Eastern Cape, we understood that the farmers that we bought it from already had a passion for helping the community.

We learnt that he had been lending his own tractors and equipment to the subsistence farmers around him, and we made sure we continued this.

“We lent our own cash to these farmers, helping them to gain the

capital they needed to plant crops, with a back-to-back agreement that we would take a percentage from the sales. This is really from where our structure originates.”

Having expanded on this concept, Lona Group’s business model is not only sustainable but also enables socio economic development through wealth creation for disadvantaged farmers.

Working against the grain when compared to other commercial businesses in the industry, such methods currently account for approximately 40 percent of the firm’s entire export base.

Development-first

Having become renowned for such methods, Lona Group is consequently well regarded by a number of leading national bodies. This has seen government entities including the

ONE GROUP, FOUR COMPANIES Riverside Holdings Riverside Holdings is a shareholder in a number of South Africa’s farming businesses, spanning 11 farming operations and 12 packing houses. These are located in Limpopo, Mpumalanga, Eastern Cape and Western Cape, predominantly producing citrus fruit alongside grapes, plums, pears, sugar cane, mangos, olives and other products.

Lona Citrus Lona Citrus is renowned as one of South Africa’s top citrus exporters.

The business serves a diversified customer base across Europe, the Middle East, North America and Asia.

Grassroots Capital Grassroots Capital provides its customers with financing for seasonal or expansion loans. The business has a R500 million of facilities to be used for both group requirements and for loans to other growers. R200 million of this has been ringfenced for lending to black growers.

African Port Logistics & Infrastructure (APLI) Lona is the majority shareholder in a large cold store facility on the Durban quay where the Company ensures that it maintains leading quality control whilst maintaining low costs. APLI also provides additional logistics services such as container management services and the general transport of fruit.

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PLUSNET

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lusNet is a South African shade cloth manufacturing company which specialises in a wide range of decorative and functional shade cloth products, for all applications in farming and business across South Africa.

Manufacturing specialised agricultural netting from a factory in Gauteng, PlusNet is an ISO registered and BBE certified company with extensive experience in agricultural project development, helping to protect highyield, high-value fruit and vegetables.

PlusNet offers a comprehensive range of shade netting between 20-90 percent shade. Our range is tailored to improve spectral transmittance and provide the optimal lighting and protection for any crop.

Whether you require shade cloth for vegetable tunnels, shade houses, carports or creative ‘green’ initiatives, our wide range of netting offers you great opportunities at the best possible price.

Working with our clients, PlusNet helps to identify and develop the optimum shade cloth infrastructure to ensure successful agricultural businesses are maintained.

Advising on the best application of shade net structures and shade net tunnels, the PlusNet team of netting, infrastructure and design specialists can equally assist clients in planning their structures and netting, providing end to end solutions. After hand-over the team remains available for follow up maintenance and further development when requested.

PlusNet is more than just a shade cloth manufacturing company. We offer a wide range of tailored functional netting products to protect what is important to you.

T +27 11 412 3954 E nets@plusnet.co.za

www.shade-cloth.co.za

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/ Providing flawless & cost effective netting solutions / Ensuring optimal crop yields / Innovation & product development / Professional back-up and support

13 Bussing Road, Aureus, Randfontein, Gauteng T 011 412 3954 | 011 412 1004 E nets@plusnet.co.za www.shade-cloth.co.za

Retailers in other countries know that they’re dealing with ethical produce when they buy from us. They acknowledge we’re trying to provide a solution to social problems” Government Employees Pension Fund, via the Public Investment Corporation (PIC), and the Land Bank investing in the Group, assisting with the acceleration of its continual growth process.

“When the PIC invested in our business, they weren’t just looking for a dividend stream,” Sutton reveals.

“They were looking for a way of boosting employment in rural farming communities – something that we have been able to provide.

“Often the people we’re employing have no jobs or prospects of getting one, but agriculture has allowed us to employ a lot of these people and help tackle the unsustainable figures surrounding unemployment in rural areas.”

This work has earned the Company level 2 B-BBEE certification, recognition that few agricultural businesses across the country can claim to have achieved, and an identity that has

helped to enable the betterment of the business.

Sutton continues: “Retailers in other countries know that they’re dealing with ethical produce when they buy from us. They acknowledge we’re trying to provide a solution to social problems.”

Moreover, Lona Group has become readily involved in various community social investment projects in less privileged, remote areas.

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Asked whether such initiatives are important, Sutton replied: “Yes. We look at what we can do to improve things like health, housing and education, and generally try and make life easier and more enjoyable for the people in these farming communities.”

Taking the initiative

Having firmly established itself as both a successful and admirable business in the domestic market, many of Lona Group’s major challenges come on the international stage.

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South Africa typically exports to the northern hemisphere due to its natural position as a counter-seasonal country.

As such, it’s expected to export up to 2.4 billion tonnes of fruit in the next three to five years to the likes of

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Europe, the Middle East, Asia, North America, and other regions.

“This is a considerable amount of fruit,” Sutton adds In the face of such a competitive climate, Lona Group attempts to

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Lona Group has farms and processing units spread throughout much of South Africa

retain an edge by identifying as many new markets as possible, tailoring its approaches within these and constantly seeking to improve the quality of its product.

“We have to identify what is demanded in different regions to ensure that the potential of each market is maximised,” says Sutton.

“For example, in Russia they prefer to have larger oranges and grapefruits as opposed to the smaller fruits you might find in somewhere like the UK or Middle East.

“Similarly, in general Russia and the Middle East are less concerned about the outward appearance of the fruit compared to the US. If we have had a harsh winter that has led to more of

our fruit becoming scarred, we would be marketing the majority of our products in line with this.”

With farms spread throughout South Africa, from Limpopo to the Western Cape, Lona Group has the advantage of being able to cater to a broad range of differing demands through its expansive product portfolio.

He concludes: “Moving forward, we’re on the drive to embrace the technologies that are out there and available to us to ensure we are better able to manage our product.”

Lona Group Tel: +27 214 81 82 00 info@lona.co.za www.lona.co.za

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No 5 Primrose Avenue, Claremont, Cape Town Tel: +27214818200 info@lona.co.za www.lona.co.za

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