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CORTINA FARM BUSINESS PLAN

FOR

DAFF FUND APPLICATION

15 August 2013

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BACKGROUND

Hortgro (www.hortgro.co.za), the fruit commodity body, in conjunction with the

Western Cape Department of Agriculture in Caledon, handled this project. Mr.

Richard Myburgh (100% BEE owner) is the owner of Cortina farm and has more than

40 years’ experience in the marketing and distribution of deciduous fruit in the

domestic and export market.

Cortina farm is a 54ha production unit that was purchased in 2001 by means of a

mortgage loan which was acquired from ABSA. The Myburgh family has however

settled the mortgage in 2009 and has not received any assistance with the

settlement of the mortgage. They did it on their own.

The core production activities on the farm consist of apple

and pear production, and the produce are packed for the

export market through Melsette Group, under the Melbeck

marketing banner. Cortina’s fruit is marketed to various chain

stores in the European countries, while the local strategy is to

provide to both formal and the informal market.

Cortina farm is situated in the Vyeboom area, between Grabouw and Villiersdorp.

The property is described as Portion 26 of the farm Fortuin nr.83, in the Overberg

Municipality, division of Caledon, Western Cape Province.

1. INTRODUCTION

The main purpose of this business plan is to apply for AgriBEE funding towards the

expansion of Existing Processing / value adding fruit packing businesses which

requiring expansion capital in the Agro processing field.

2. STRATEGIC INTENT

Vision

Cortina must deliver and distribute the highest quality fruit in the correct quantities to

the desired markets at the right time, and therefore be the supplier of first choice to

our clients.

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Mission

Deliver quality fruit to our clients

Satisfy the need of our clientele

Our suppliers are part of our business

Ensuring an affordable product, yet not compromising on our standards and

quality

Values

Honesty, integrity, openness, humbleness, understanding and ubuntu

Moto

We will never forget where we came from, but we surely aren’t going back there.

3. SWOT ANALYSIS

Internal Aspects

Strengths Access to the latest fruit

production technical technology and assistance from the Techways Group

Mentorship provided by Keith Bradley

Excellent soil with plenty water. Mr. Richard Myburgh has 40

years’ experience in the agricultural and marketing sector

Expansion of CA cold storage

Weaknesses The required refurbishment of

orchards have an huge impact on the cash flow of the farming operations.

Not enough cold rooms to sustain the packing business.

Opportunities Expansion of CA cold storage

would lengthen the packing season , and thus could supply customer for an extended period

In addition, more working opportunities will be created and the current work force would be secured of work for most of the year

Threats Global warming, especially

current weather conditions with special reference to the sunburn experienced

Escalating input cost On-going unavailability of

seasonal workers, during the season

External Aspects

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4. RISK ANALYSIS

Theft, security measures are place to combat the theft experienced on the

farm.

Ecological Factors and Climate Change – drought, sunburn, wind, water

shortage, fire, hail, etc.

Pest control, managed effectively.

Crop Loss, which is a relative high risk and since it is insurable the necessary

insurance measures are in place.

If adequate funding is not available, the W & R Myburgh Trust will have to opt for

external funding in the form of loan facilities.

The farming business is of the opinion to replant 2-4 ha each year. And therefore it

appreciated the CASP financial assistance up to this point in providing help with the

replacement of orchards as well as assets like new tractors ect.

5. PREVIOUS GOVERNMENT ASSISTANCE RECEIVED

2003 – One Landini tractor and a spray pump plus poles and wires for 2 ha.

2010 – Plant material and irrigation equipment for 1.792 ha.

2011 – One Landini orchard tractor and a spray pump.

2012 – The received 4,7ha under Hortgro Tree project plus R500 000

production inputs cost under the CASP program of the Western Cape

Department of Agriculture.

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6. COMPANY STRUCTURE

Company Structure

The W & R Myburgh Trust is a family trust which belonged to Myburgh brothers, of

which Mr.William Myburgh passed away and the only living member is Mr. Richard

Myburgh. Ever since Mrs. Yvette Myburgh and the couples 3 three children formed

part of the W & R Myburgh Trust. The Cortina farm is registered in the W& R

Myburgh Trust, which is the lawfull owner of the land.

The Starking Fruit Packers CC, the family fruit company has a lease agreement with

the W & R Myburgh Trust and therefore pays the trust annual rental income of R 462

MR.RICHARD MYBURGH MANAGING DIRECTOR

MRS.YVETTE MYBURGH ADMINISTRATION

MR.KEITH BRADLEY MENTOR AND FARM MANAGER

MR.RICARD MYBURGH ASSISTANT FARM MANAGER

15 X PERMANT WORKERS 60 X SEASONAL WORKERS

W & R MYBURGH TRUST (LAND OWNER)

STARKING FRUIT PACKERS CC (FRUIT COMPANY)

W&R Myburgh Trust

Cortina Transport

Starking Fruit packers cc/Farming

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000 per annum as agreed upon. The Cortina Transport business also belongs to the

W&R Myburgh Trust. The business is a separate entity with its own sets of financial

statements and books. Mr Myburgh uses Cortina Transport to transport his fruit to

markets all across South Africa. The fleet consist of 6 interlinks (30 ton trucks). Each

of them will do at least 6 long distance trips to markets such as Durban and

Johannesburg per month.

Mr.Richard Myburgh is the managing director as illustrated above. His wife, Yvette

Myburgh provides the family business with administrative support. While Mr.Keith

Bradley acts as a mentor and farm manager with the support of the assistant farm

manager, Mr.Otto Lück. In total the family farming business provides 15 permanent

job opportunities and approximately 60 seasonal job opportunities.

7. MENTORSHIP ASPECTS

Mentorship support is provided by Mr.Keith Bradley from Bradpak Orchards (Pty) Ltd

which is a fruit distributers company. Mentorship covers an array of agricultural

activities related to the production practices of pome fruit, strategic planning and

financial planning. The mentorship started in 2001 and is still ongoing at present and

is conducted throughout the year.

8. GENERAL SUPPORT AND INPUTS

Kaap-Agri Grabouw

JS Finansiёle Dienste CC (Book keepers)

Villiersdorp Co-op Ltd

Mellsetter Group - Techways

Elgin Learning Foundation

Agricultural Consultors International CC

9. ENVIROMENTAL ASPECTS

Land

Cortina is situated in the Vyeboom area near Villiersdorp. The property is

described as Portion 26 of the Farm Fortuin nr.83, in the Overberg Municipality,

division of Caledon, Province Western Cape.

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The 54 ha land can be classified as;

35.08 ha apple orchard,

3.14 ha pear orchard ,

15.78 ha other which include the pack house, cold rooms, offices, labour

houses, the farm house, dams ect. .

Climate

In the Vyeboom area high temperatures are experienced during the summer

months when harvesting of fruit commences. Winter temperatures are relatively

low. However the chilling units are not sufficient for apple and pear production

and therefore the spraying of winter soils are critical.

Strong winds are experienced during daytime in spring and summer months,

which has a huge impact on overtime wages due to the huge chemical spraying

that has to be done at night. Wind directions vary northwest to south east. The

average rainfall for the Villiersdorp area is 700 mm per year.

Water

A water analysis report is attached in this economic feasibility study for further

reference on the suitability of the water for deciduous fruit farming. 163 300 cubic

meters of water is extracted from the Vyeboom Irrigation Board into the Goudmyn

dam with a holding capacity of 470 000 cubic meters. Furthermore 172 530 cubic

meters of water is also extracted from the Waterkloof river. The current water

allocation is sufficient to allocate 24 per hectare.

Soil

According to the soil survey conducted in September 2010 by the Agricultural

Consulters International CC on block 19 A which would be newly planted in 2011,

the soil in this specific portion of Cortina is Tukulu (Tu) and Glenrosa (Gs) top

soil.

Furthermore, the report also acknowledges that in general Cortina has bleached

top soil with a fair water holding capacity. Furthermore, the soil has fair water

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movement capacity. In addition the soil has effective depth, wetness and coarse

fragment which make it suitable for deciduous fruit production. Lastly, soil

preparation, drainage, plant material, block layout, cover crop and re-plant

specifications are provided to ensure that the soil is used to its maximum

potential.

10. INFRASTRUCTURE ASSESSMENT INCL. INVENTORY ASSEST LIST

The general condition of the assets is relatively fair, although it should be considered

that most of the assets is 15 years and older. And this asset replacement should also

be strongly considered as this will heavily impact on the effective operations of the

farm. Refer to the attached asset list of Cortina.

11. MARKETING ASPECTS and LOGISTICS

All local produce are marketed through Starking Fruit Packers CC, while all

export produce are marketed through the Melsetter Group (Fruitways) to various

European marketers.

12. CURRENT AND PLANNED PRODUCTION ACTIVITIES (2012)

Crop Area (ha) % of total

Pears 3.14 8%

Apples 35.08 92%

Total 38.22 100%

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The fruit production on Cortina mainly consists of apple production which amounts to

92 %, whereas pear production amounts to a mere 8 % of the 38.22 ha plantings.

Off the 38.77 ha planted, 8,77 ha are still non-bearing. That means that they are

younger than 3 years.

Orchard age distribution on Cortina Farms

Crop < 3

years 3-5

years 6-9

years 10-20 years > 20 years Total

Pears 1.32 1.82 3.14 ha

Apples 5.39 5.48 8.28 11.21 4.72 35.08 ha

There is 1.82 ha of pear orchards which are between 0- 20 years old. They still

produce above average production yields and these orchards can still provide a very

good yield over the existing life span.

On the other hand, the apple orchards are relatively disbursed in age. 15.4% of the

apple orchards are less than 3 years, 15.6% of the apple orchard is between the

ages 3-5, 23.6% of the apple orchards is between 6-9 years, 33.0% of the orchard is

between the age 10-20 years and 13.5 % of the apple orchards is older than 20

years of age.

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This is a very health distribution of fruit orchards on a fruit farm. On Cortina farms

54% of the trees are less than 10 years old.

Current fruit tree cultivars per ha planted on Cortina farm.

Cortina farm cultivars ha planted

Royal Gala 5.84

Golden Delicious 4.4

Granny Smith 2.76

Top Red 0.37

Braeburn 0.44

Pink Lady 1.38

Panorama Golden 10.14

Fuji 3.64

Sundowner 2.22

Cripps Red 1.86

African Carmine 2.03

Below: Apple cultivars in graphic format.

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The apple cultivar distribution is a mixture of various cultivars, of which the following

is the major players Panaorama Golden 29%, Royal Gala is 16.6%, Golden

Delicious 12.5% and the Granny Smith 8% of the total apple produces.

13. CROP BUDGETS

Average industry figures can be applied, and according to this the farming enterprise

would require **R 192 000 per hectares for the establishment of new apple orchards.

(**Refer to DFPT Statistics Book)

14. PROJECTED PRODUCTION YIELDS AND CASH FLOW PROJECTS

Please find attached the projected production yield and cash flow for Corina farm.

15. AUDITED FINANCIAL STATEMENTS

Financial Statement of the W & R Trust is provided for February 2009, 2010,

2011 and 2012.

Financial Statements of Starking Fruit Packers CC is provided for February

2009, 2010, 2011 and 2012

(Please find them attached)

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Cortina Farms - Harvest totals - 20102012

Appels

Blok nr Kultivar Ha Melpack(Uitvoer) Klas 2 (plaas) Klas 1 + 2 Klas 3 (Sap) Total Bins Aantal kg t/ha

1a Fuji 1.25 173 82 255 28 283 106125 84.90

1b Granny S 0.57 47 17 64 5 69 25875 45.39

2 Sundowner 1.7 176 89 265 21 286 107250 63.09

3a Fuji 0.29 22 35 57 13 70 26250 90.52

3b Pink Lady 0.29 44 32 76 10 86 32250 111.21

4a Golden D. 0.36 106 106 11 117 43875 121.88

4b Braeburn 0.44 51 40 91 25 116 43500 98.86

8a Royal gala 0.91 108 59 167 10 177 66375 72.94

8b Granny S 1.08 146 52 198 16 214 80250 74.31

8c Golden D. 1.51 270 270 14 284 106500 70.53

9 Pan G 3.25 113 113 5 118 44250 13.62

15a Royal gala 1.27 160 125 285 31 316 118500 93.31

15b Golden D. 1.98 265 262 527 49 576 216000 109.09

16 Royal gala 2.4 210 243 453 52 505 189375 78.91

17 Panarama G 2.36 23 76 99 4 103 38625 16.37

18 Panarama G 3.51 217 271 488 72 560 210000 59.83

20a Top Red 0.37 35 35 6 41 15375 41.55

20b Golden D. 0.55 109 109 18 127 47625 86.59

0

20d Granny S 0.6 64 29 93 31 124 46500 77.50

25a Pink Lady 1.09 149 106 255 50 305 114375 104.93

25c Sundowner 0.65 75 50 125 14 139 52125 80.19

26 Panarama G 1.32 112 106 218 22 240 90000 68.18

27.75 2042 2307 4349 507 4856 1821000

Pere

Blok nr Kultivar Ha Melpack(Uitvoer) Klas 2 (plaas) Klas 1 + 2 Klas 3 (Sap) Aantal bins Aantal kg t/ha

5 Packhams T 1.12 88 59 147 9 156 62400 55.71

EBC 0.68 0 106 106 7 113 45200 66.47

1.8 165 253 16 269 107600

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BUSINESS DESCRIPTION

Nature of business

Type of farming being conducted: Fruit farming.

Farming activity (Detail) Number of units / Extent (ha)

Fruit farming in the Villiersdorp arae,

Western Cape.

The farm are planted with 38 ha of

mainly apples and a little bit of pears.

Apples = 35 ha

Pears = 3 ha

Fruit packing on the farm. The farm

packs its own Class 2 fruit plus they buy-

in a lot of fruit to supply the local markets

all accross South Africa

At least 1000 tons of fruit are being

packed and transported per month.

Properties on which farming is conducted – leased/own/PTO (size and division)

AS explain above: the farm size is 54 ha and can be classified as 35.08 ha apple

orchard, 3.14 ha pear orchard and 15.78 ha other which include the pack house,

cold rooms, offices, labour houses, the farm house, dams ect.

The W&R Myburgh Trust owns the farm 100%. The farm has been paid –off and

don’t have a mortgaged.

Long term goal and strategies (five year plan)

To give you a broad overview of planned initiatives to our current situation on our

farming enterprise it’s important to understand our business. Cortina farm are

actually a small farm and we therefore needs to expand our fruit marketing business

to make our whole operation more viable.

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For this AgriBEE application it is important to know that we want to expand our pack

house business by adding 3 x 600 fruit bins CA cold rooms to our operation.

MARKET OVERVIEW Service/Market

Where are produce currently sold, to whom?

All Cortina farms class 1 fruit are packed and marketed via Fruitways as export fruit

to international markets around the globe.

The rest of the fruit are packed and processed on the farm for distributions via

Cortina Transport group to the big markets of Durban, Johannesburg, Pretoria and

Bloemfontein. This is done via Starking Fruit Packers CC

Starking Fruit Packers have long standing relationships with many customers that

come over many, many years. One such clients is Mr de Silva from “Pick ‘n Take”

(supermark) in Whiteriver, Mpumalanga.

Geographic factors

Distance from markets?

Cortina farms are about 120 km from Cape Town and 30 km from Villiersdorp. The

distance from the markets doenst worry Mr Myburgh that much because he have his

own transport company to help him with the logistics

Agri-BEE fund application

This application for Cortina Farms:

Agro processing Projects

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Enterprise Development will be pursued under Agreo processing projects to be

funded under the AgriBEE Fund. This will fall under the following types of Projects:

Existing Processing / value adding businesses requiring expansion capital: The

following classifications are for consideration:

Up-scaling operations; enterprises are successful and doing well, they however need

some support to expand operations towards generation of more output, jobs and

income.

Cortina farms are in urgent need to expand their fruit packing business by creation

more cold storage capacity in the form of Controled Atmosphere (CA) cold rooms.

The business needs are for three more CA rooms with an capacity of 600 fruitbins

each. An preliminary quotation on the three CA rooms shows that the cost will be

around R4,218 million (vat included).

For Starking Fruit Packers to process more fruit they need an extra 1000 fruit bins.

Those bins cost around R600 each.

The Pack house also needs to be upgraded to Global-Gap and HACCAP standards

to be able to pack for exports markets. The pack house as seen in the pictures in

Addendum B needs a ceiling and the floor must be painted.

Requested funding for:

Items Budgeted amounts

1000 Wooden bins for packing R 680 000.00

3 x CA Cold Rooms for processing R 4 500 000.00

Ceiling for the pack house R 461 370.00

Paint for the pack house floor. R 80 000.00

Total (including VAT) R 5 721 370.00

It is further VERY important to note that the expansion of the cold storage capacity

will ensure that the packhouse will increase it productivity by almost four months.

Currently Mr Myburgh only use its R1,6 million pack line for two months of the year,

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employing 45 people. With the additional 1 800 CA cold rooms bins he can operate

the pack line for up to 6 months of the year. That is an xstra 4 months per year.

This is an increase on labour of 4 months x 45 workers x 22 days per month = 3960

labour days per year.

Pack house workers Gender

Women packers 35

Male packers 10

Total 45

This will have a huge impact on JOB CREATION.

With the new Pack house capacity, Mr Myburgh’s dream is to buy a second farm

which will give him more access fruit of his own. It is therefore very important to

expand and built his own capacity in the upgrading of his processing facility on the

farm.

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Addendum A

Section A: Questions to Applicants and related declarations

What is the name of your enterprise for which funding is required?

Starking Fruit Packers cc

Where is the business enterprise located? Between Vyeboom and Villiersdorp, Western Cape

Who is the contact person for the business and what are his/her contact details (tel; cell;email;postal address)?

Richard Myburgh, Cell 082 825 1239, Email: richard.cortina@gmail.com, Cortina Farms,PO Box 63, Vyeboom, 7171

What is the name of the envisaged / identified business partner?

No business partners involved. This application is for an existing fruit processing / value adding businesses which requiring expansion capital.

Have you applied to us before? - If yes, what was the outcome?

No

Describe enterprise activities and products. Fruit packers and cold room mamangement via CA and RA cold rooms as well as the transportation of the fruit.

How many staff members and volunteers do you have (both management and operational)?

Management = 2 Operational =15 X permanent workers 60 X Seasonal workers

Who is in your management committee? Richard Myburgh, Yvette Myburgh and Mr Keith Bradley and Otto Luck.

How much funding are you applying for? [E.g. a contribution of Rand X towards a total budget of Rand Y].

R 5 309 370.00

What do you need the money for? The construction of three CA coldrooms, ceiling for the packhouse and painting of the packhouse floor plus 1000 wooden bins to process the fruit in.

When do you need the funds? As soon as posible.

Have you applied to other sources, including banks? - If so give details and outcomes.

No we havent apply to other sources.

Is this a one off grant or are you expecting our support on an annual basis?

An one-off grant.

What % of each of the funds contributed goes to your projects?

100%

How much of own contribution have you secured for this funding?

Between 10 and 20%

Are you employed by government, holding a public office either administratively or politically?

No.

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Checking the basics

Have you... Yes/No?

Read an understood the guidelines about what the AgriBEE fund will support?

YES

Contacted the province within which the enterprise is located for support towards functionality? What assistance have been secured and have they compiled the economics report with your consultation?

YES. WE have received some CASP funding prevouisly for primary agricuulture inputs only.

Included any supporting information requested on separate sheets?

YES

Completed the declaration section with authorised signatures?

YES

Provided full contact information for someone who can answer questions from the DAFF?

YES

The 5 ‘C’s test The 5 ‘C’s test provides an easy to remember framework covering the main areas to consider: compliance, criteria, content, clarity, and competition. We have questions under each heading which must be answered;

Area Key questions Do we pass the test? (If not, what do we need to do?)

Compliance Are you eligible to apply as per information provided?

Yes

Criteria Does your business proposal meet the main criteria of the fund? Is it equity acquisition or Agroprocessing support?

Yes, its Agroprocessing support

Content Have you answered all the questions on the form? Have you included your supporting documents?

Yes all the questions were answered. Yes documents was inluded.

Clarity Is it clear what you want to do, and how you plan to do it? Is it clear what any partner’s roles and contributions will be? Have you explained any technical terms and spelled-out any acronyms used?

Absolutely clear. No other partners involved. Yes all was explained.

Competition Have you got a clear Unique Selling Point or business idea? Have you attarched any offtake agreements or standing contracts with existing cusomers? Explain. Have you thought about how you

Yes Yes the Mpumalanga school feeding contracts

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might look in comparison with potential competition? What limitations does your entity face towards improvement of performance?

We need CA rooms to sustain our packing lines.

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Section B: Instructions to DAFF official

Item Yes No Comments

1. What is the value proposition: EQUITY FUNDING or AGRO PROCESSING PROJECT FUNDING

AGRO PROCESSING PROJECT FUNDING

a. With equity deals the following options should be considered:

N/A

i. New equity deals

ii. Increasing equity ownership and interest acquisition

iii. Other interest in measured sector entity

b. With Agro processing, options considerations are:

i. Evaluation using the funding options under start up projects which will be support under; clusters, incubation and niche export product support needs options.

N/A

ii. Existing Projects support requiring support to pursue the following options; a) Up-scaling operations - enterprises are successful and doing well, however, they need some support to expand operations towards generation of more output, jobs and income; b) Struggling enterprises – these need support in various areas of their operation such as: technology, training, marketing, additional equity, etc; c) Quick wins projects – need little support to revamp their operations.

Yes Up-scaling the Starking Fruit Packers operations – the enterprises are successful and doing well, however, they need coldroom support and upgrading of their pack house to became HACCAP compliant to expand operations towards generation of more output, jobs and income

2. Impact and or contributions to seven elements of Empowerment (does the deal indicate direct contributions to the elements of empowerment)

Yes 100% in this case.

3. Who are the applicants?

(Beneficiaries of the fund should be members of the designated groups, viz; Women, black youth, black farm workers, and black people living with disabilities as well as black beneficiaries

One black male and one black women. They will provide many jobs for their black workers.

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Item Yes No Comments

in general.

4. Is the project a legal entity

(Registration documents copies should be attached)

Yes it is.

5. The business plan and detailed

business profile with members ID copies and CVs (with clear indication of long term sustainability should be attached)

Mr Myburgh’s CV is attached.

6. Constitutional and founding

documents should be attached (articles of association, incorporation documents, etc).

Yes, they are attached

7. Excluded individuals: (Government

employees, Land Bank employees and political office bearers will not be eligible for the grant and/or support from the AgriBEE fund. Indication where excluded participants have an interest, their names and identity.)

N/A

8. Additional documents:

Where a deal involves acquisition of

equity in existing sector enterprise:

N/A

A) Documented structured deal as

agreed upon between the emerging and established businesses.

B) Enterprise support factors; e.g.

off take agreements, mentorship plans, and roles to be played by designated groups in management or board roles as well as Corporate Social Investment undertakings.

C) Three year Audited Financial

Statements of the established business (This is to indicate historical performance and provide assurance that the deal is not a

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Item Yes No Comments

rescue mission).

D) A detailed profile of the

established enterprise, shares or equity dedicated for BEE acquisition and the share price together with the net worth of the entity.

E) Commodity linkage (Proposals should be linked to a commodity strategy of a specific commodity group. Commodity linkage should be visible).

F) Identified support requirements

(for the emerging small enterprise for optimal functioning).

G) Supporting Provincial official’s details: Name and Surname: Zyta Soomar Email address: ZytaS@elsenburg.com Telephone: 021-8085111 Directorate/Component : Office of the Deputy Director General, Agricultural Development and Support Services

Supervisor:

Supervisor’s contact details:

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Addendum B

The two existing CA cold-rooms.

Door to one of the CA rooms.

This old shed will be removed to make space for the three new CA cold rooms.

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The pack house on Cortina farm.

The pack line.

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Part of the packing machine.