The decision to keep the Tiger Brands food-processing factory Langeberg-Ashton Foods open for another year was welcome news at a time when the economy was facing strain, Minister of Trade, Industry and Competition Ebrahim Patel said yesterday.
Tiger Brands announced yesterday that it will extend operations at its deciduous fruit business Langeberg & Ashton Foods (L&AF) for a further season.
It said the decision was taken after a compact was agreed with organised labour, L&AF employees and members of the Canning Fruit Producers Association, which allowed the company to undertake the significant risk required to operate the business for the forthcoming season.
Tiger Brands said it would continue to engage with interested parties towards executing a transaction that could provide for the continuation of a sustainable deciduous fruit processing operation, beyond the 2022/3 season.
Last month, Tiger Brands said it would close the business in the absence of any reasonable prospects of a viable transaction, at the end of a two-year process to find a buyer.
In recent weeks, a significant number of parties however had expressed an interest in further discussions on the possible acquisition of L&AF.
However, the conclusion of any transaction would not have taken place in time for any successful buyer to put the required preparations in place to process the upcoming 2022/3 season’s crop. The company, therefore, had engaged its key partners on an urgent basis.
Tiger Brands CE Noel Doyle said the flexibility, open-mindedness and good faith shown by all parties in reaching this compact would allow for the exploration of any new proposals, while securing the jobs of 250 permanent employees and 4 300 seasonal workers directly employed by L&AF, for a further season.
He said while the processing and marketing of deciduous fruit remain subject to weather, exchange rates and global pricing dynamics, the compact mitigated against the risk of significant operating losses in the forthcoming season.
He said they would explore all options while assessing the viability of current interest in the facility. In parallel processes, Tiger Brands would also continue engagements with the relevant provincial and national government departments, as well as talks with potential buyers who were able to meet the working capital requirements of the business, and have a long-term commitment to ensure the sustainability of the South African deciduous fruit processing industry.
Patel said a high-level team of officials had been set up to consider alternatives to closure of the factory and they had been engaging the company and potential investors.
“I wish to appreciate the efforts of all the stakeholders to save jobs. More work will need to be done to address the challenges identified in the discussions and we look forward to the company and its stakeholders finding a durable solution that can keep South African canned fruit on local and global shelves. The Langeberg operation is a significant exporter of canned fruit, particularly to Asian markets,” Patel said.
Christo van der Rheede, executive director at Agri SA, also welcomed the announcement by Tiger Brands, and said it was a vital reprieve for the sector and for the communities that relied on the facility for their livelihoods.
He said it would also provide time for potential buyers to secure the necessary funding to save the factory.
“But the threat is not over; this is a temporary reprieve, not a permanent solution as of yet,” Van der Rheede said.
Agri-SA said the factory was the biggest of its type in the country and its products occupied a niche position in the world market, bringing in hundreds of millions of rand in foreign currency.
It said the factory sustained the Ashton community and if it were to close, approximately 300 farmers would have no alternative market for their produce
The factory was also the biggest single source of income for the Langeberg Municipality.
BUSINESS REPORT