AfriAg plc (LSE:AFRI) Executive Chairman David Lenigas caught up with DirectorsTalk for an exclusive interview to discuss their big contract win with Gatsby Foundation.
Q1: I believe there is some interesting news, as far as your company is concerned, today. Could you explain that?
A1: Yes, it’s been a long time in the making. We’ve just secured a massive agro-logistics contract with Lord Sainsbury’s Gatsby Foundation’s big operations in Southern Africa and it requires a big scaling up of the business and it’s already in full-fledged operation. At the moment we’re trucking pretty well daily fresh produce, at the moment its baby corn, chillies and Edamame beans from their big operations in Mozambique. Taking about big, there’s 1400 employees in this operation and we truck it down through Zimbabwe and into South Africa and every British Airways plane that head off from Johannesburg to London has pretty well got our product on board and the next day it’s on the supermarket shelves in the UK.
Q2: We spoke a couple of weeks ago and you were quite bullish about the prospects for AfriAg for 2015. Is this over and above whatever you were saying at that update?
A2: Yes, when we last spoke we’d just broken records for amounts of perishable cargo flowing for AfriAg last year. We did 1.87 million kilos for the last 6 months which is quite a lot of food for people to eat but this contract really is a quantum leap up. This contract is around about 30,000 kilos a week of fresh perishables into the UK and Europe and the Vanduzi operations in Mozambique are looking at expanding into Asia and the UAE so we see a fairly big growth blue chip customer there for us. The other key thing about this contract, and when you’re doing logistics, a lot of companies struggle on one-way traffic but the beautiful thing about this contract is we get two-way traffic. We’re sending 70,000 kilos a week from South Africa back up into Mozambique as a backload so this is probably the ideal sort of contract you would ever want if you were a logistics provider.
Q3: So there’s no wasteful return journey?
A3: No, not at all. We send trucks up, we send trucks down. We’ve now dedicated 5 full time massive refrigerated vehicles to the contract and we’ve now got a situation where we’ve got to look at expanding the fleet further.
Q4: Does this mean that you’re going to upgrade or update your outlook for the company?
A4: The outlook for 2015 was always going to be the year that AfriAg turned from a concept into reality. The guys are working pretty hard on it, our fish exports are rolling out fairly heavy into Asia. We’re doing a lot of transport logistics and airfreight logistics into Europe from many operations, from about 4 countries in South Africa. This is a really big blue chip contract for us. The nice thing about blue chip contracts like this is it brings in more blue chip clients because if the Lord Sainsbury’s Gatsby Foundation is happy to use AfriAg services then we obviously comply with all of the requirements that are needed to ship food products for such a big organisation into supermarkets like Sainsbury’s, Tesco, Marks and Spencer, Lidl, Asda. There’s a huge amount of process required to actually certify yourself to do those sorts of logistic movements for basically stuff you’re going to feed yourself and your kids.
Q5: So basically you’ve become an A-list player and the dirty work in terms of getting that regulatory and logistical sort of back-up and organisation has already been done?
A5: Absolutely. We went on trial for quite some time, we wanted to make sure we could do it. You’re feeding this product to your kids and we are part of their entire growing logistics chain from field-to-fork so it’s a very blue chip contract that we’ve won and we expect quite a few more in the coming 2015.