Johann le Roux, CEO of agribusiness-focused investment holding group Zeder Investments, has warned consumers to brace for rocketing food prices as input costs of fertiliser and fuel leap because of the Russia-Ukraine war.
Le Roux, who has headed the Stellenbosch-based group since 2020, said that even though soft commodity prices were favourable, rising fuel costs, the war and sanctions on Russia, as well as continuing port challenges, would keep up significant pressure on agricultural inputs. These would have to be passed on to the consumer.
Covid-19’s knock-on effects added to the pressure of rising fuel prices. A dip in availability of fertiliser, one of the largest single variable costs of producing crops, has seen prices rise.
“This all leads to higher prices on the shelf, so consumers must be prepared for very high food inflation,” Le Roux told Business Day.
Zeder reported a 67.6% drop in profit for the year to end-February, to R801m, largely due to supply chain constraints and higher costs associated with the Covid pandemic.
Basic headline earnings per share (heps) rose from 39.7c to 52.1c, due to the higher valuation of transport-services business The Logistics Group (TLG) and Western Cape-based agricultural services company Kaap Agri.
Zeder’s portfolio comprises a majority stake in Capespan, Zaad and Agrivision, agribusinesses with a diversified focus from fresh fruit to seed production.
Le Roux said the company was eyeing opportunities for its Turkish May Seed Company, which supplies and exports to Russia and Ukraine, though it does not have any physical operations in either of the two countries.
“We think from this there could be more opportunities in terms of seed production. If a major player is no longer going to produce seed in Russia and Ukraine, maybe Turkey will get the benefit of that,” he said.
Zeder, part of the PSG stable founded by Jannie Mouton, signed a R1.57bn deal to sell its 98.2% stake in TLG in November 2021 to funds managed by African Infrastructure Investment Managers (AIIM).
The board decided on February 28 to unbundle its 42.2% stake in Kaap Agri by giving shareholders one Kaap Agri share for every 49.22692 Zeder shares.
The company declared a special dividend of 92.5c, up more than threefold from the special dividend it declared on May 10 2021. The special dividend will be paid out in May and was funded largely from the sale of TLG.
Zeder’s share price rose the most in two weeks on the JSE on Wednesday, strengthening 7.83% to R3.03.
Updated: April 13 2022
This article has been updated throughout with additional information
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