EXPORTS: Mosstrich Is Flying High
Recent Western Cape Business News
The Mosstrich Group of Mossel Bay increased its annual turn-over from R305m to R324m in the 2009 taxable period and profits before tax of R35m was achieved; of this R18.5m came in the shape of production bonuses paid to ostrich producers.
The Mosstrich Group focuses mainly on the supply of ostrich leather- and meat products to international markets, as well as the provision of venison to the European markets. The Mosstrich Group belongs to 190 ostrich producers in the Southern Cape and adjacent Little Karoo regions. The group’s roughly 25- abattoir- and tannery workers also own 6.5% of the Group.
“The Group performed well in the midst of the international financial crisis and various achievements were noteworthy,” said Hendrik Pienaar, Chairman of the Mosstrich Group at their Annual General Meeting.
“Although the downward trend in the luxury goods market affected the export of ostrich leather quite heavily, the export of ostrich meat faired very well. Furthermore it was great that Mosstrich was named the Absa-Cape Chamber of Commerce and Industry’s Exporter of the Year and the Group’s tannery, SCOT, was named as one of the 10 best tanneries in the world by the well-known leather magazine, World Leather. The overall winner will be chosen at the APLF Leather Show taking place in Hong Kong in March. These awards speak to the dedicated personnel and management, but the shareholders and raw material suppliers also deserve good credit,” Pienaar said.
“Those of us who continued in an unabated fashion during the good and lean years with ostrich production and always tried to improve the quality of our raw materials, while at the same time cutting costs, are now reaping the rewards,” Pienaar said.
According to Dr Francois de Wet, Managing Director of the Mosstrich Group, the good results may be attributable to various factors.
“Although the strong Rand negatively affected our income during the second half of 2009, the exchange rate was positive for exports at the start of the year. The price of carcasses were raised to its highest levels in 12 years, but then again, the producers prices for leather are the lowest in 10 years. Ostrich feathers achieved good prices the last year and about 12% of the realisation of profits from the slaughter of ostriches currently derives from feathers. This is significantly higher than a few years ago.”
“The current slow recovery of the luxury goods market, including ostrich leather products, is our single biggest challenge for 2010. In conjunction with that the exchange rate will play a vital role in us achieving acceptable producers prices in 2010.
De Wet said the export of venison went slowly during 2009. The most important factors were that volumes of New Zealand venison exported to Europe increased markedly and that the price of venison in the EU went down significantly. “Maybe the 2010 Soccer World Cup will increase the desire for these markets to showcase our products again and lead to higher prices, which will be to everyone’s benefit.”
The ostrich leather tanned and reworked by SCOT in a great variety of colours and finishes, are used mainly for boots in Western markets and handbags and other articles in Europe and the Far East.
“All exotic leather articles were affected negatively. Sales of crocodile leather for instance also went down dramatically and ostrich leather was thus not alone at drawing the short stick. Today it is clear that the recovery in the desirability will take time and that a tough 2010 lies ahead. Lower US Dollar prices will not stimulate the demand and we will thus have to have patience to build in the future.
“Our biggest challenge in the ostrich industry lies therein, and has always been, to protect our exporter status to the EU and to protect this; without it the ostrich industry is doomed and thousands of job opportunities will be lost. The cost of ostrich products is so high that producers will not have any chance in the long term of survival unless we can export meat to Europe. The ostrich industry recognises its joint responsibility with the Department of Agriculture to maintain this status. We must, however, remember, that the EU looks directly into the eyes of the Department of Agriculture,” De Wet says.
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