Despite the relative unfavourable agricultural conditions and weaker economic climate in especially neighbouring countries, the financial results of Agra prove that the firm continues to grow.
The turnover of the group increased with 7.3% and operating profit increased from N$45.9 million in 2014 to N$60.1 million in 2015, Ryno van der Merwe said in the chairperson’s annual report of Agra, released yesterday.
He says large areas of the country received below average rainfall during the past rainy season, which has put pressure on production and harvest yields. The poor grazing conditions forced some producers to sell animals, while dryland agronomic producers have had below average to zero harvest.
The stricter export regulations for livestock to South Africa have not been finalised yet, but should it be implemented, would put tremendous pressure on the livestock industry in Namibia. Emergency marketing, below average grazing capacity and increasing input costs have put a lot of pressure on the profitability of producers and their ability to invest and develop.
These trends, as well as the uncertainty over what will happen in the coming rainy season, contain certain risks for Agra as an agricultural business.
He noted that the debt burden and negative trade balances of governments in southern Africa affect the growth potential of the economy negatively, while the decreasing value of the Namibian dollar against overseas currencies is causing the prices of imported products to rise.
Agra experienced an exciting year in terms of the upgrading of the Auas Valley Shopping Mall and retail branches, as well as the development of the new Agra retail branch at Agra Hyper in the Lafrenz Industrial Area of Windhoek. The establishment of a retail branch in Rundu has also started and Agra looks forward to it becoming operational in the first quarter of 2016.
These investments are made to serve Agra’s growing clientele and provide a pleasant shopping atmosphere and shopping convenience with good product and customer service offerings.
“In order to be a sustainable business, Agra needs to grow. We can thus not become complacent and continue to do business as usual, but need to engage creative and innovative thinking to identify new opportunities and make it reality through proper planning. New developments need to be managed with prudence to maintain the correct balance between growth and upholding of established business and market share,” he said.
Agriculture as industry is of strategic and great importance as food production worldwide becomes more prominent.
Governments worldwide are becoming more aware of food security and the important role and function of the agricultural producer. Governments, however, also have responsibilities to create a favourable political and economic climate for optimal production, he noted.
Agra supports the Namibian government’s objectives as set out in Vision 2030, as well as the current efforts to create jobs and address poverty. Agra currently has about 753 employees in its service and is committed to creating prosperity and improving quality of life.
“The board of directors of Agra and management are aware of the competitive environment in which Agra must operate, grow and remain profitable. We are keenly aware of the responsibility to protect and enhance the interests of our shareholders”, added Van der Merwe.
He continued that Agra would take note of the unfavourable factors in agriculture that put pressure on the profitability of producers and clients and investigate new opportunities to add onto the business. Also, cash flow should be managed prudently, market share should be extended further and there is a consensus that Agra’s trademark should be strengthened.
After 20 years of service at Agra as chief executive officer, Peter Kazmaier retired in October. Under his guidance the Group has grown from a net turnover of N$413 million and a net loss before tax of N$2.3 million for the 15-month period ending July 31, 1996 to a turnover of N$1.3 billion and a net profit before tax of N$55 million for the year ended July 31. 2015.