Existing and prospective
farmers in sub-Saharan
Africa could benefit from
PepsiCo’s Sustainable Farming
Program if the multibillion-
dollar international foods and
beverages company achieves
the necessary shareholder and
regulatory approvals to acquire
Pioneer Foods in South Africa.
According to a recent
statement by the two companies,
PepsiCo intended to acquire
all outstanding shares in the
Pioneer Foods Group for around
US$1,7 billion (about R23,7 billion).
This would be funded through
a combination of debt and cash,
and was expected to be closed
in the first quarter of 2020.
Chairperson of PepsiCo,
Ramon Laguarta, said the
acquisition of Pioneer Foods
would allow the company
to immediately scale up its
business in sub-Saharan Africa.
A new subsidiary, to be named
PepsiCo Sub-Saharan Africa,
would spearhead the process.
The statement added that
the transaction would also
enable PepsiCo to expand its
Sustainable Farming Program in
Africa and “with local farmers
in Pioneer Foods’ communities
to help boost yields, improve
livelihoods, and preserve
precious natural resources”.
“PepsiCo is keenly aware of
the importance of economictransformation through
broad-based black economic
empowerment [B-BBEE] and
intends to support Pioneer
Foods’ B-BBEE programme,”
the statement said.
PepsiCo’s Sustainable Farming
Program was aimed at guiding
and assisting producers of
agricultural raw materials used
in PepsiCo’s products to grow
these using best practice. “Our
products depend on a safe, high-
quality and affordable supply of
agricultural raw materials to meet
the demands of our business,
as well as the expectations
of consumers, customers
and other stakeholders.”
The programme rules outlined
the farm-level principles and
practices that embodied PepsiCo’s
sustainable agriculture policy.
“These principles span a
comprehensive array of topics
across the three widely recognised
pillars of sustainability:
environmental, social and
economic,” the statement said.
Pioneer Foods’ CEO, Tertius
Carstens, welcomed PepsiCo’s
acquisition intention and
described the announcement
as a “very exciting milestone”
for the company and its staff.
He said that once part of
PepsiCo, Pioneer Foods would
have greater scale to expand its
brands, access to greater capital
to invest in local agriculture,
and increased access to
leading global capabilities.
PepsiCo’s Sustainable
Farming Program rules said
that farmers targeted by the
programme were thereafter
expected to show continual
improvement in their production
principles and processes.
As it was a global programme,
the rules were designed to
have enough flexibility to
accommodate the differing
circumstances in PepsiCo’s supply
chain, it said. – Lloyd PhillipsThe preliminary figures for
milk production in May came
as a surprise to the Milk
Producers’ Organisation (MPO),
as it indicated an increase
in production of 3,92%.
This was according to Bertus
van Heerden, chief economist
at the MPO, who provided
an update on the supply of
unprocessed milk, which was
about 256 million litres in May.
“The MPO’s appraisal of the
market situation in the primary
dairy sector in April was that
milk production was under
pressure. However, with the
latest available data, it seems
that the MPO underestimated
the production buoyancy level
present in the primary industry
that could lead to the type of
production growth seen in May.”
Important factors taken into
account by the MPO during
April were higher grain and
oilseed prices, as well as the
poor climatic conditions
experienced in parts of the
country. The data released
in April had indicated a
3,8% decline in production
year-on-year, he said.
“However, the available
data [for] May indicates that
the price increase in March
improved the milk-to-feed cost
price ratio to such an extent that
producing became favourable.
“It’s important for role players
to note that in two of the previous
three years, milk production
decreased in June. Cumulative
milk production until the end
of May 2019 is 1,29 billion litres,
which is only 0,1% more than
for the same period in 2018.”
At R4,60/ℓ, South Africa had
one of the lowest milk prices
for producers, Van Heerden
said. – Pieter Dempsey
BusinessPepsiCo’s Pioneer
acquisition welcomed
milk
Milk production
figures for May
better than
expected
BELOW:
It is expected that
the prospective
acquisition of
Pioneer Foods by
PepsiCo will benefit
local farmers.
FW ARCHIVE2 August 2019 farmer’sweekly 15