“A huge loss” and “a travesty” is how insiders have described the demise of Alexandria’s single biggest employer, chicory farming and processing. Brought to its knees by cheap imports and financial difficulties, the 130-year-old local industry could see an estimated 1000 people in work-scarce Alexandria lose their jobs as agri-processor Chicory SA looks set to close its doors at the end of this month.
Chicory is an important ingredient in instant coffee and health drinks. Chicory SA also provided vital ingredients for products made by several top brands. At the industry’s peak, South Africa produced 18 000 to 20 000 tons of chicory a year, according to farming handbook Agribook. Chicory SA in Alexandria bought harvested chicory root from farmers, dried, roasted and sold it to big-brand companies.
“Nestle, National Brands, Spar, OK Foods, Pick n Pay, Shoprite Checkers and Dis-Chem all stock chicory products,” Agribook recorded at the time of the undated entry on chicory. Chicory SA’s operations incorporated the production, marketing and distribution of dried chicory, roasted chicory, chicory powder and Woody Cape Chicory products for consumer markets.
The bulk of chicory was produced in Alexandria, where the first chicory for commercial use was introduced to the area in 1895 and the chicory industry became a crucial driver of the local economy. One insider estimates that the chicory industry’s various components – from growing to logistics, processing and distribution – feed 10 000 people in the Ndlambe municipal area.
Chicory SA was bought by Humansdorp based The Co-op in 2020.
The Co-op has not confirmed that Chicory SA is closing down; however, they have confirmed that they are busy with Section 189 engagements, commonly understood to be the retrenchment process.
A separate source with knowledge of the industry said the factory was set to close its doors at the end of this month.
“Chicory SA has been the biggest employer in the area for decades,” said the Alexandria businessperson who asked not to be named. “From seasonal and permanent workers on the farms and in the factory, to all the services and logistics providers, the effect on the local economy is massive.”
Census 2022 puts Alexandria’s total population (including KwaNonqubela and Wentzel Park) at around 10 000. In total, according to Stats SA, there are 2 917 households, 1 348 of them female headed.
Chicory industry roleplayers say the only thing that could turn the tide is government support for agriprocessing, and import tariffs to protect local production.
The bitter irony is that both the National Development Plan 2030 and its 10-year review recognise agro-processing as key to an inclusive rural economy. The NDP 2030’s objective was an additional 643 000 direct jobs and 326 000 indirect jobs in the agriculture, agroprocessing and related sectors by 2030.
In addition, the Department of Trade and Industry’s (now also Competition) 2017/18-2019/20 Industrial Policy Action Plan reported on what was seen as a long-term commitment between big-brand role players and the dti to curb imports and promote local procurement in South Africa.
Value chain
Mark Lake put his lands under chicory 20 years ago. At peak, he had 115 ha planted and supplied 2700 tons a year to Chicory SA for processing.
“Chicory was half of our farming turnover,” Lake said. “So it’s a big loss. We’re all trying to deal with losing that income.”
Lake and other commercial farmers have the depth to be able to pivot and switch focus. “Beef farming is more profitable now,” he said.
Input costs are high for chicory. First, it’s labour intensive (which is why it’s been a major job creator). With weeding and harvesting, there were six months of seasonal work a year for 70 people on Lake’s farm alone. Most of them were women.
“That’s in addition to the farm’s permanent staff,” Lake said.
“Chicory has to be grown meticulously: about two weeks of every month that it’s growing, it has to be tended and weeded.”
Even if help does come from the government, it will probably be too late. “You can’t grow a crop that is expensive to cultivate and not know if you’re going to get paid for it,” he said.
“Also, the factory needs a minimum of 15 000 tons a year to be viable and there aren’t enough farmers left who can grow that quantity of chicory.”
Lake said if there were a tariff on imports, local farmers would stand a chance.
Talk of the Town understands that while there was some production directly for local consumers, Chicory SA effectively had one very big customer.
“That company could import chicory from India more cheaply than it cost us to produce it,” Lake said. “So they did.
“This is an entire value chain that’s gone,” Lake said. “From the guy that supplied the tyres for the farm machinery, to the man who recruited and transported seasonal workers, and the permanent and seasonal workers themselves – they’re all feeling it. I don’t know what those people will do now.”
‘Missing a lot of money’
Transport operator Mthuthuzeli Fulela, 67, had done so well from the industry that he’d bought his own vehicle, and then a second one. One was used to transport seasonal workers from along the Sunshine Coast; the other he had converted to a tipper truck, so he could transport the chicory harvest to the factory.
“That was my main, main, main work,” he said. “Both of those 8-ton trucks are standing now and I’m missing a lot of money.”
Sinethemba Tshintshitiki, 36, lives in kwaNonqubela, Alexandria. She’s worked on different chicory farms in the area for the past six years to support herself and her two children, who are 13 and 4. Her last employment was in November.
“There is no other work here,” she said. “We are still suffering because now there is no chicory. There is no food in my home at the moment. I have to empty rubbish bins to find cans that I collect and sell for money to buy food for my children.”
Retrenchment process
Freek Meyer, secretary for both The Co-op / Die Koöperasie and Chicory SA, did not confirm that Chicory SA is closing. However, he said, “We are busy with the Section 189 process with Chicory SA. I can’t comment until that is finalised.”
Section 189 of the Labour Relations Act lays down the procedure for employers to follow when they are considering dismissals based on their operational requirements.
Meyer said Chicory SA employs 28 permanent staff and a number of seasonal workers.
Meyer did, however, confirm that Chicory SA had been in financial difficulty. He also acknowledged that cheap chicory imports had been an issue.
“There are other factors too,” Meyer said.
Confidentiality
Several roleplayers said among the major brands, Nestle had been a particularly significant customer of Chicory SA until recently and so TOTT asked Nestle questions including:
- What has Nestlé’s relationship been with the chicory growing and processing industry in the Alexandria area of Ndlambe, Eastern Cape, South Africa, and for how long?
- Please confirm the extent to which Chicory SA used to supply Nestlé (quantity per annum) and in what form.
- How many tons of chicory a year does Nestlé SA require for its SA-manufactured products? Where does this chicory come from currently?
Mota Mota, Head: External Communications/Spokesperson, Corporate Communications & Public Affairs for Nestlé East and Southern Africa Region, responded as follows:
“Nestlé is not in a position to comment on business relationships under its confidentiality clause.”
Government
While there has been no intervention from national or provincial government, Ndlambe Municipality fully understands the importance of the chicory industry to the region, particularly to Alexandria. Around 16 years ago, Ndlambe began discussions with commercial chicory farmers aimed at empowering emerging farmers.
“Chicory SA has always been an anchor employer in Alexandria,” municipal manager Rolly Dumezweni told Talk of the Town. “And 80% of those employed were women.”
Without directly saying so, he suggested that Chicory SA had worked so well for so long because it was directly invested in the local community – which in turn was invested in it.
“It used to be owned by people who lived in Alexandria,” Dumezweni said.
Fifteen years ago, Ndlambe Municipality and local commercial farmers piloted a visionary empowerment project.
“Ndlambe had land in the area which we made available to emerging farmers. Most of those farmers were women, who were trained by the commercial farmers and their staff to grow chicory. Because we had the land, it was easy to involve local people. We set up channels for them to receive the right inputs – seed, fertiliser, the use of tractors and other machinery.
“It was ideal: the skills and support were available and willing; there was no need to worry about marketing and logistics – the factory was right there.”
Six months ago, in an attempt to rescue the situation, Dumezweni led efforts to engage the political heads of agriculture and finance in the province (then Nonkqubela Pieters and Mlungisi Mvoko) to assist in keeping Chicory SA afloat.
“We knew we could not afford for Chicory SA to go down because Alexandria would become a ghost town.”
Despite several meetings, that support hadn’t been forthcoming.
“The core business of government is not to run a business, so our proposal was to bring in a business entity to take over the operation and run it, with the government as collateral.“
Dumezweni emphasised the point that other stakeholders had made: while it’s a loss for commercial farmers, they can shift; emerging farmers don’t have that capacity.
“All their resources were focused on producing chicory.”
Dumezweni said Ndlambe Mayor Khululwa Ncamiso was engaging with the new MEC for agriculture in an attempt to rescue Alexandria’s economic engine.
- This article was first published in Talk of the Town, September 19, 2024. The newspaper serving the communities of Ndlambe and the Sunshine Coast, with a weekly wrap of Makhanda news, is available at stores from early on Thursdays.
