Sdemane Farming is a producer, packer, and exporter of baby vegetables and other high value horticulture crops. The business owns and is headquartered upon a 26 hectare (~60 acres) plot in the Hhohho region of Swaziland. Sdemane leases additional properties totaling another 10 hectares (~25 acres).
Sdemane cultivates its own land and contracts with outgrowers to meet the needs of South African distributors which in turn supply premium grocery stores and restaurants in local (South Africa) and export (Europe) markets. Primary crops include baby vegetables (baby squash, cabbages, corn, and eggplant), beans, and peas. Demand exists for various other horticulture crops which may be considered in the future. Swaziland’s climate diversity (temperate and semitropical climates within a very small area) facilitates the year-round production of crops, which enables consistent production that suppliers in other geographies struggle to match.
Since the onset of a liquidity crisis in early 2008, Sdemane had been unable to obtain financing from local sources of commercial finance or from international investors. SDC identified the business as having great potential and was able to both refinance two existing credit facilities and also provide fresh capital to fund the resumption of operations.
» Efficient, low-cost production: Sdemane is well-positioned to be a supplier of labor-intensive horticulture products, as Swaziland’s minimum wage is only half of South Africa’s. Swaziland has an excellent infrastructure, offering easy access to Johannesburg’s markets and international airport.
» Strong customer base: Sdemane has long-term relationships with two large South African exporters, and has recently undertaken a growing program for a major new customer (a key supplier of fresh produce to Woolworth’s, which - with 300 locations - is South Africa’s largest upscale grocery store chain). With the current disruptions in the supply of agricultural products from Zimbabwe (economic collapse) and South Africa (reduced output due to Black Economic Empowerment policies), demand for consistent production from Swaziland is particularly high.
» Significant growth potential: Supplier agreements with only Sdemane’s historical customers would be sufficient to sustain the business, but the Woolworth’s supplier is interested in sourcing substantially larger amounts of product. Sdemane has developed a three-phase plan under which it will be able to meet this need in the near term. With excess capacity in its packhouse and access to nearby land for expansion, Sdemane is well-positioned to increase scale and achieve greater operating leverage.
» Outstanding manager: Themba Dlamini, the farm’s manager of operations, is extremely committed to the success of the business. Highly regarded within the community, he has the presence and the personality required to motivate employees, suppliers, and customers to support the creation of a strong business. Themba is a shareholder and Director of Sdemane, and SDC is excited to be partnering with him in this venture.
» External support: Sdemane will be receiving operational support from TechnoServe, an international NGO which facilitates private sector development in emerging economies. The TechnoServe-Sdemane relationship goes back several years, and the Swazi office is fully committed to helping commercialize the business. Additionally, SDC will continue to be deeply involved in strategic decision-making and data analysis.