A group of Eastern Cape emerging farmers are set to expand their business by 85 percent within five years, after getting a contract to supply sorghum to the makers of Chibuku, a traditional sorghum beer.
Nondobo Agricultural Cooperative started growing sorghum in 2016 following a collaboration with LM Holdings (LMH), a black female-owned company. The partnership created a win-win situation, with Nondobo bringing funding and plenty of land to the table and LMH contributing an uptake agreement for the supply of sorghum.
Luleka Mbete, of LMH, is a graduate of both the University of Johannesburg (corporate governance) and the Institute of Chartered Secretaries (finance and law).
She became interested in farming in 2008. Research in the sorghum industry and its market led her to United National Breweries (UNB), the makers of Chibuku.
“I got an off-take agreement from UNB but at the time it was difficult to get funding because of the global financial crisis, so I put that dream on ice and got a job. In 2016, I tried again because sorghum fascinated me and I thought there was large scope for growth in the market,” she said.
An offtake agreement is an agreement between a producer and a buyer to purchase or sell portions of the producer's future production. UNB again gave her another off-take agreement, along with seeds and fertiliser.
“I needed a tractor and labour so I joined forces with Nondobo Co-operative. At the time, they had R500 000 in grant funding from Eastern Cape Development Corporation to plant sorghum but they had no contract to supply anyone. So we worked together and planted 90 hectares in Dutywa,” said Mbete.
Diageo, which owned UNB and distributes top beverage brands, provided support through its empowerment trust.
Today, Nondobo Agricultural Co-operative has all the equipment needed to farm efficiently and is set to plant 2 000 hectares this year, after another 10 land-owning co-operatives joined the partnership.
“Our target is 12 000 hectares in five years,” said Mbete, adding that challenges they still face are narrow roads not suitable to their machinery and a need for additional fencing.
A secondary co-operative is being formed to ensure the necessary mechanisation, which will reduce the costs associated with hiring contractors.
The collaboration will have an impact on 400 families in the Dutywa area, said Mbete.