CLOVER’S moving of the country’s biggest cheese factory from Lichtenburg in North West to Queensburgh in Durban, KwaZulu-Natal, because of poor service delivery by the municipality, would have dire consequences for all stakeholders, said the Beefmaster Group.
The supply chain executive at Beefmaster Group, Roelie van Reenen, said this could spell an even greater disaster if other businesses in small towns followed Clover’s example.
“Farming and agribusinesses play a crucial role in sustaining the economies of South Africa’s smaller towns. Not only do they provide employment, but, in many cases, they are also directly responsible for uplifting the socio-economic profile of an area, due to the investment by the businesses in their immediate communities,” said Van Reenen.
“This has a ripple effect on all stakeholders: farmers, smaller businesses and players in the supply chain, community beneficiaries, and, of course, employees, who stand to lose their income source and ability to feed their families.”
Clover provided hundreds of permanent and temporary jobs.
He it was likely that the business offered to relocate many of employees in order to prevent a total loss of income, which would have a devastating impact on households, given that many employees were likely to be the sole income-earners in their families.
Van Reenen said a conservative estimate was that the impact was likely to be felt by more than 1 840 people, representing 7 percent of Lichtenburg’s residents.
Furthermore, the closure of the plant would impact local farmers, as it processed about 350 000 litres of milk a day. About 250 000 litres of this milk was sourced from KwaZulu-Natal and about 100 000 litres from North West farmers.
He said there was growing concern about governance and service delivery failures that were having a major impact on farming and agribusinesses in small towns.
“You cannot operate a business in a town successfully if poor service delivery continues. While the saddest part is that so many people will be losing their jobs, the move also spells doom for the municipality and the investability of the town, given that Clover would no longer be a ratepayer to the municipality.”
According to the National Treasury, 163 municipalities were in financial distress, 40 were battling to deliver basic services, and a growing number were failing to collect revenue from residents and businesses.
Recently, it was reported that Astral, the biggest employer in Standerton, had to slaughter 950 000 birds and fork out R3 million in lost production because of the town’s water crisis and electricity supply interruptions. The power cuts alone had cost the company R39 million over the past five years.
Van Reenen said this was a grave warning that more businesses might follow Clover’s example and move their production plants to other areas.
“Unfortunately, this creates a vicious circle. Less income for a municipality due to its biggest revenue sources no longer being there will ultimately result in even fewer services being delivered. In plain language, the municipality has no money in its coffers to deliver services due to a business relocating. ”
He said municipalities and businesses should find ways to work together to solve common problems.
“We need to ensure that the farming and agricultural industries remain profitable, a stable source of revenue, and continue to provide job security to those who need it most,” said Van Reenen.
Since investing in Kimberley in 2003, the Beefmaster Group said it had created 600 jobs and continued to make an impact in the area. It recently announced that it would scale up its production plant in the town by investing more than R30m into equipment upgrades and creating an estimated 30 new jobs. Furthermore, it said it would spend about R1.2m in improving the socio-economic conditions of impoverished areas in and around Kimberley.
BUSINESS REPORT