Bunge and Senwes target South African vegetable and protein market

23-Feb-2012 - Last updated on 23-Feb-2012 at 12:13 GMT

Related tags Supply and demand Africa

Bunge and Senwes taking fire at lucrative South African vegetable oil and protein market with new facility

Vegetable oil and protein demand is strong in South Africa driven by a burgeoning population and rising incomes, and global oilseed player Bunge will target these lucrative markets through a new joint venture crushing facility.

Bunge EMEA (Europe, Middle East and Africa) and local South African agribusiness player Senwes, are jointly investigating the logistics of building the new oilseed crushing facility and have flagged several locations, but not yet secured land.

Henri Rieux, VP corporate affairs of Bunge EMEA, said that analysis into business and logistical issues involved in building the oilseed crushing facility in South Africa is underway and both companies have the “willingness to do it.”

The vegetable oil and protein sectors in the country hold many opportunities, Rieux told FoodNavigator.com, “it’s a growing market and we want to be part of it.”

The markets are predominantly being driven by domestic demand, but “it is not only South Africa, it’s the region. The countries that border South Africa, such as Mozambique, are also driving growth.”

This project is about “combining the strengths of two companies who are willing to develop a food and feed chain, starting with the origin through to customers,” he said.

Overseeing the entire supply chain from origin to consumer is a key focus for this project, he added.

“To be efficient and sustainable, you need to be a part of the entire supply chain,” he said.

Plant plans

The location of the plant is extremely important for this reason as being closer to the origin and farmers lowers costs and increases efficiency, he said, but reiterated that a site has not yet been secured.

Rieux said that the new crushing plant will be dedicated to soybean and sunseed, catering to both the domestic food market and feed industry with vegetable oils and protein-rich meals.

The target customers will be local companies and specialists in the South African food industry, he said, “they are not bit international companies.”

The plant will operate at a capacity of crushing 2,000 tonnes per day to begin with, he said, but there will be the ability to increase this.

However, Rieux added that the capacity will not be increased within the first year; “we want a sustainable business, so we will be working step by step.”

While a budget has not yet been confirmed, he said that the anticipated cost will be €100m-€110m for a facility of this size.

Utilising business strengths

The partnership between Bunge and Senwes has been on-going for just over a year, Rieux said, and it is a unique partnership whereby both companies have different yet complementary strengths.

Senwes has “great knowledge and expertise on the local agricultural market and strong links with farmers; something we think is crucial,” as well as ties with local authorities and customers.

Bunge has a “large and very deep knowledge of international markets, we have expertise in risk management which is important as there are big fluctuations in terms of price, which is a risk element for farmers. Bunge is also strong in supplying goods and optimising distribution.”

The market will grow rapidly, Rieux said, and the joint business venture will have increased presence, and “in five years, I’m sure we will have other developments.”