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Looming shutdown of Tiger Brands’s canning factory ‘disastrous’ – Agri SA

Placing 4 500 jobs on the line should potential new investors fail to raise the funds to take over the operations.
The factory which supplies fruit for Tiger Brands's Koo brand could be shutdown, affecting thousands of jobs. Image: Moneyweb

Agricultural association Agri SA is warning that the closure of Tiger Brands’s Langeberg and Ashton Foods fruit canning factory in the Western Cape will have disastrous implications for the province’s farming communities, threatening more than 4 500 jobs and disrupting crucial value chains.

According to a statement by Agri SA’s executive director Christo van der Rheede, the food producer has given notice to stakeholders of its intentions to close the 70-year-old fruit canning factory located in the small town of Ashton.

The Langeberg and Ashton factory supplies fruit for Tiger Brands’s well-known Koo brand.

“The impact of the announcement is already being felt as labour brokers report that their teams are sitting at home as producers stopped pruning after the announcement,” Rheede says

“The factory is the life support of the Ashton community and without it the community faces socioeconomic disaster. The Langeberg and Ashton factory is also the biggest single source of income for the Langeberg Municipality.”

The move to shut down the factory – if successful – will reportedly leave about 300 peach, apricot and pear farmers without a market to sell their produce.

In a statement to Moneyweb the food producer says it is currently in consultation with affected permanent and seasonal workers regarding the future of the factory.

It is anticipated that the consultation process with affected employees will be completed within 60 days in accordance with the requirements of the Labour Relations Act, 1995 at which point we will be able to communicate the outcome and the way forward on the future of the Langeberg & Ashton Foods Division,” Tiger Brands says.

Tiger Brands further added that it is also engaging with both provincial and national government departments to explore possible solutions that will protect the country’s deciduous fruit canning industry as well as one that will support growers.

A 60-day deadline for potential buyers

Initially, in 2020, Tiger Brands had decided to divest from the factory, and a consortium of 160 producers expressed their interest in buying the business. However, with the factory’s price tag reportedly set between R200 and 300 million, raising the funds has been a challenge for the consortium.

Tiger Brands has, according to Rheede, given the consortium 60 days to raise the necessary funds or the food producer will continue with its plans, jeopardising the jobs of 250 permanent workers and about 4 300 seasonal workers.

“The producers have made urgent requests to the Western Cape and national governments to intervene in this matter,” Rheede says.

“Given the essential contribution of this facility to the national and provincial economies, government needs to provide assistance by partnering with the parties to facilitate investment in the facility,” he adds.

The food producer’s decision to exit the business aligns with its strategic plan to optimize operations and better position Tiger Brands for future growth. Tiger Brands say it has now set its sights on “manufacturing, marketing and  distributing everyday branded food and beverages.”

Largely servicing export markets beyond the African continent, the deciduous fruit business operates in an industry where trade barriers impact the competitiveness of local produce. Fluctuations in exchange rates and global crop yields add further volatility,” Tiger Brands says.

Read: Tiger Brands reports muted interims, anticipates significant price increases in H2

A call to resume negotiations

Agri SA says Tiger Brands and government need to come together along with the consortium of food producers to find a solution to the problem before jobs are lost.

“At a time when job creation and economic growth are desperately needed for the maintenance and recovery of the national economy, the agro-processing sector cannot afford this closure.”

“It is essential that Tiger Brands comes to the negotiating table with the producers and workers at its factory to find the best possible solution for all the affected stakeholders.

“With the Agriculture and Agro-Processing Masterplan now in place, it is also vital that government take up its role in supporting the growth of this important employer for the Western Cape,” Rheede says.

Listen: Food producers struggling under input inflation

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This is a disaster which simply cannot be allowed to happen. If the Western Cape government cannot raise these funds and save this industry, they do not deserve their positions. I note that the directors and board of Tiger are being very nicely paid though.

I think MW should interview Premier Alan Winde on this.

Once they close the factory it will become a lot cheaper to purchase and can then be re staffed at a competitive rate !!

If a combination of communist labour unions plus a communist government causes the cost of labour to rise faster than the price of apricots, they will inevitably create unemployment. If a socialist dispensation allows municipal rates and taxes and other administered inputs like electricity to rise faster than the price of pears, it will lead to unemployment.

South Africa has the most redistributive policies on earth. That is why our unemployment levels are the highest on earth and rising. Although 80% of the youth are unemployed, they can at least boast of a nice minimum wage that the government organized for them. They haven’t got bread on the table, but they have a “living” minimum wage and workers’ rights if they can find a job.

As we have said before, unemployment is a manmade disaster. The market mechanism is basically telling the government that their political-economic policies are a disastrous joke. This government dreams that it is superior to the markets. Well, when they wake up, it will be too late. the jobs and the taxpayers will be gone.

There is absolutely nothing the DA in the Western Cape can do about this. Administered costs, taxes, labour laws and the minimum wage are forced upon them by Luthuli House. The situation can only change if the DA and FF+ are in charge of economic policy.

Seen from a distance, and explained from a cause and effect perspective, it is clear that socialist labour laws enabled the factory workers to consume their job opportunities and to turn the capital value of the factory into sewage.

Is this really a largely export business as that paragraph from the company in the article implies? Never imagined we were that big in canned fruit exports. Producers will have to pivot to fresh, and fast.

End of comments.

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