From the Ground Up - McCain Foods Limited

Employees of McCain
South Africa.
people from Irvin & Johnson, and it struck me that they were just dying for information.
It was as if we had opened the windows and doors and let in the light.”
Suddenly, they had all the knowledge of one of the world’s top frozen food companies
available to them. In addition to being able to learn from the various McCain
specialists who travelled to South Africa, a manager could pick up the phone and call
anyone in the worldwide McCain organization whenever advice was needed.
McCain now operates three South African production facilities. The Delmas potato
plant and Springs vegetable-processing plant are both close to Johannesburg. The
third factory, also for vegetables, is in George on the South Coast.
McCain used to operate frozen vegetable plants in Canada, Britain, the Netherlands,
and Belgium but, as of 2007, the only McCain companies producing vegetables were
those in Australia and South Africa. The South African operation benefits from the
expertise of Porteus, who managed the frozen potato and vegetable plant in Smithton,
Tasmania, before coming to South Africa.
“Australia and South Africa are very different markets,” Porteus says. “South Africa
has a small top-end market and a large low-end market. It is both a developed and an
emerging market in one country. So it should be an excellent learning experience for
McCain going into other emerging markets.”
McCain’s South African venture had all the ingredients for success from the beginning.
It was able to buy an existing business that already had the largest market share
and had good local staff. By augmenting the staff and upgrading the plant, McCain
quickly created a profitable business. The South African government welcomed new
investors. And because most South Africans speak English, they could easily benefit
from knowledge that McCain people around the world were happy to share.
On the downside, agriculture in South Africa is often problematic. “We’ve gone
from extreme drought to heavy rains to very cold weather,” says Porteus. “We’ve lost
a lot of crops. If you are looking at countries that are ideal for growing potatoes, this
is not one of them.”
Some farms in South Africa are big, but many have too small a potato acreage to
be effective suppliers, so McCain has to grow some of its potatoes and vegetables
itself. McCain farms twelve hundred hectares on five farming operations around
South Africa. The locations, selected for seasonal growing conditions, produce about
40 percent of the South African company’s potato requirements.
In 2003, the South African government passed the Broad-Based Black Economic
Empowerment Act with the aim of promoting equal opportunity and increasing the
participation of the country’s black majority in the economy. McCain has embraced
this goal in the agricultural sector, says Tim Hedges, vice-president of agriculture for
McCain South Africa. “We are able to do this by supporting newly established black
farming operations. The most successful to date is the Makhatini Cotton farming
project in Northern Kwazulu Natal, where we plant an average of one hundred hectares
of potatoes per year in the frost-free area. The technology transfer, job creation,
and skills development as a result of our involvement has been very beneficial for the
community and the operation. And we are involved in four other farming operations
that have been acquired through redistribution of farming land to help black agricultural
empowerment.”
As of 2007, black farmers were contributing 10 percent of McCain’s potato needs,
but the company expects their contribution to reach 40 percent by 2014. The rest of
the potato supply comes from white farmers and the farms McCain operates.
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Pea harvesting.