Tiger Brands packaged goods
JSE-listed packaged goods company Tiger Brands has decided to extend operations at its deciduous fruit business for a further season.
The company in May 2020 announced its intention sell the business, called Langeberg & Ashton Foods (L&AF), owing to efforts to better align the group’s portfolio to future growth aspirations.
The continuance of the business for another season sprouted from a social compact agreed upon by Tiger Brands, organised labour, employees of the deciduous fruit business and members of the Canning Fruit Producers Association, allowing Tiger Brands to undertake the significant risk to operate the business for a while longer.
While the company continues to engage with stakeholders on the possible acquisition of L&AF or otherwise reasonable transactions, no transaction would have taken place in time for processing the upcoming 2022/23 season’s crop, and thereby necessitated negotiations with key partners to continue operating the business.
Without the extension, at least 250 permanent jobs and 4 300 seasonal jobs were at risk.
Tiger Brands CEO Noel Doyle says the flexibility and good faith shown by all parties in reaching this compact will allow for the rigorous exploration of any new proposals in respect of L&AF.
“While the processing and marketing of deciduous fruit remain subject to the vagaries of weather, exchange rates and global pricing dynamics, the compact meaningfully contributes to mitigating the risk of significant operating losses in the forthcoming season,” he adds.
L&AF's canning factory is based in Ashton, in the Western Cape and produces canned fruit and fruit purees for the export market. It also supplies Tiger Brands’ Culinary division with purees and canned fruit under the Koo, All Gold, Hugo’s and Purity brands.
Meanwhile, industry body Agri SA has welcomed the extended operations of the canning factory, saying the decision is a vital reprieve for the sector and for the communities that rely on the facility for their livelihoods. It will also provide time for potential buyers to secure the necessary funding to save the factory.
Agri SA deems it essential that national and provincial governments support the producers and workers related to the facility to find an effective solution, as R200-million to R300-million is a significant investment to be made to take over the factory.
Should the factory close, Agri SA laments, it will impact on 300 farmers, leaving them with no alternative market for their produce. The factory is also the single-biggest source of income for the Langeberg municipality.
Trade, Industry and Competition Minister Ebrahim Patel has been part of discussions on the way forward for the canning facility, and, in the meantime, expresses his appreciation of the efforts of all the stakeholders to save jobs at the facility and at supporting farmers and businesses in the area.
He does, however, warn that more work will need to be done to address the challenges identified in the discussions and says he looks forward to the stakeholders finding a durable solution to keep the facility operational and exporting products.