EDITION 13 l AUGUST 2016

The availability and prices of products that we handle every day

are constantly influenced by various factors, such as the fluctuation of the exchange rate and droughts. We have no control over these factors. However, what we can control, is to continuously perform our day-to-day functions in a better and more effective way.

The functions in the supply chain of contracting, hedging, storage and financing, as well as the

logistics of the commodities and products that we handle, are highly specialised. It is therefore essential to have a highly-qualified, well-trained personnel corps to perform these functions professionally and effectively.

At Bester we take the trouble to select and appoint only the best available candidates; thus ensuring outstanding service delivery to our clients. Excellent customer service is also one of our core values and is practised daily by every personnel member. I am confident that our clients constantly experience the efficiency, expertise and high standards of our personnel.

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A WORD FROM GUSTAV

20 YEARS SPECIALISING IN THE MANAGEMENT OF THE SUPPLY CHAIN

RISK MANAGEMENT: HINDSIGHT IS 20/20 VISION

By Rentia Deyzel

The risk factors that a business faces in the current environment can be

overwhelming. These include the increase in fraudulent activities and crime, volatile global forex markets and commodity prices, to name but a few. If not properly managed, these risks can

lead to exposures that can threaten the future existence of a business.

Bester’s sound risk management ensures that risks are effectively managed to establish long-term sustainable business practices. Risks are divided between those that we can control (internal risks) and those that arise from events that are beyond our influence or control (external risks), for example the highly volatile currency market.

On 24 June this year the markets reacted to the news of Britain’s decision to leave the European Union (EU), the move commonly known as “Brexit”. The rand devalued against the USD with 4.58% (R1.2874!) in a single business day. Our forex risk policy is to be 100% hedged on any exposure to the currency market. This proved to be continuously effective to mitigate forex volatility risk around Brexit-type movements. The key to our forex risk management system is to remove any emotion from the decision making process and to hedge back-to-back.

Bester further mitigates risks through the application of good practice; specialised market knowledge; clear policies and procedures; staff training; thorough record keeping and regular reporting.

“Hindsight is 20/20 vision” is not a common expression without reason. Therefore we ensure that innovative risk management is part of the core business management foundation.

Graph 1: Rand per US Dollar historical ratesSource: http://www.resbank.co.za/Research/Rates/Pages/Rates-Home.aspx

By Johann Reinecke

“What is the rand going to do?” I get asked this question every day at

Bester Derivative Trading. It is an important variable to have an opinion on, since the volatility of the USDZAR is so significant, it can have serious consequences on the profitability of a business, especially in the

agricultural market where commodities globally are mostly priced in US dollars.

I expect the US Dollar to appreciate against the other major currencies towards the end of the year. Contrary to what Donald Trump has to say regarding the state of the US economy, the data do not lie and suggest that the US economy is in good shape. Unemployment is low and the S&P500 is historically high. Interest rates in the US need to rise and the Federal Reserve Board (FED) will probably do so by the end of 2016.

Graph 1: US dollar indexSource: Reuters

Graph 1 is the US dollar index, which measures the US dollar against a basket of major currencies. I expect the US dollar to appreciate towards the upper end of the red-lined trading channel by the end of 2016. A weaker dollar trend may, however, follow the announcement of an interest rate hike by the Federal Reserve Board going into 2017.

From 2011 until July 2015 the rand annually dropped on average by 13% against the US dollar, but during the last year the rand devaluated by 36% against the dollar. Since peaking at around R17 to the dollar in January 2016, the rand is currently in a strengthening cycle against the dollar. The R14.15 level has become an important support level.

Graph 2: South African RandSource: www.tradingeconomics.com, OTC Interbank

The South African rand is expected to trade at R15.38 by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. Looking forward, they estimate it to trade at R15.68 in 12 months’ time.

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WHAT IS THE SOUTH AFRICAN RAND GOING TO DO?

SEE YOU AT ALFA 2016Bester is excited to be part of

ALFA 2016 that will be presented in Parys, Free State for the first time this year.

The very nature of ALFA lies in its name: African Livestock Trade Fair. It is a trade expo that wants to showcase the various aspects of

the livestock industry and its value chain from a trading and technology perspective during one week at a venue that is both very central and accessible to the industry.

The local livestock industry is one of the pillars of the South African agricultural industry. Apart from

being the oldest and one of the most profitable sectors in agriculture, it is also the most stabile – keeping farmers on their farms amidst droughts and economic pressure.*

Visit the Livestock Expo tent, stall 128 from 27 September to 1 October 2016, 08:00–17:00.

* Source: ALFA 2016 Marketing Document

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BESTER WILL SOON BRAG ABOUT A NEW HAMMER MILL

By Rika Vollgraaff

Bester Feed and Grain is in the process of erecting a new hammer mill at

the Jan Kempdorp lucerne depot. It will increase the existing capacity to 80 ton per eight-hour working day.

The need for new hammer mill technology arose to specifically increase

productivity to 10 ton per hour; to create a dust-free environment; to prevent any metal pieces from landing in the hammer mill or milled lucerne, and to limit the downtime for exchanging the screens to a minimum.

The mill was developed in conjunction with Hippo Mills to comply with the specific needs of the Bester lucerne depot and lucerne producers.

Some of the unique features of this system are the hydraulic arms feeding the bale crusher and the centrifugal fan that moves the dust from the bale crusher to the dust-control system of the hammer mill. The unmilled lucerne is conveyed over a platform with five rows of magnets

(50 in total) to detect any metal pieces that can cause damage to the mill. It also keeps the bags free from any metal pieces.

After the milling process, a high-pressure fan is used to convey the product to a cyclone with a rotating valve that feeds it into a 20m3 mixer. The cyclone is connected to 62 dust bags, made from Teflon, causing the dust to fall downwards and thus preventing emission into the atmosphere. The dust bags are inside four closed-up containers. The milled and mixed lucerne is then fed into an auger for bagging.

Previously, the milled lucerne industry was characterised by volatility, especially regarding supply, demand and quality. For the past three years Bester has specifically focused on providing milled lucerne of unvarying quality. This ensured continued good prices for producers for their entire crops and protecting consumers from a substandard product in scarce times.

By increasing productivity, Bester creates capacity to investigate more opportunities, e.g. mobile NIR analysis technology. This should make the industry much more streamlined.

Jan Kempdorp lucerne depot

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SOCIAL NEWS

Stellenbosch Office: Tel: +27 (0) 21 809 2500 Fax: +27 (0) 86 618 8925

E-mail: info@bester.co.zaWebsite: www.bester.co.za

Platinum Square, 20 Techno Drive,

Technopark, Stellenbosch, 7600

P.O. Box 7329, Stellenbosch, 7599

FAMILY DAY 2016Bester‘s annual Family Day was celebrated in Cowboy style.

LUCERNE FARMERS DAYBester’s Lucerne Farmers Day at Van der Kloof. Bester Fruit & Nuts’ tour to Prieska, Upington and

Hartswater.

NUTS TOUR

NAMPO 2016The annual NAMPO Harvest Day took place from

16 to 20 May and was once again a highlight with the celebration of NAMPO’s 50th anniversary. The four-day trade fair had a record number of visitors, 75 116, with 685 exhibitors.

Annually staff from various departments represent the company at the Bester exhibition space in the NAMPO hall. Grain producers and customers from all over South Africa and Africa are received daily, while live trading is done on the JSE commodity market between 9-12am.

Next year’s Harvest Day will take place from 16 to 19 May 2017.