David Osborne, one of South Africa’s most successful agri businessmen, runs his agri group from his office on the Queenstown farm he calls home. The secret to his success: good people.
With a miniature gold pig earring in his left ear and a super-active mind, David Osborne is no ordinary farmer. This is a man, who in 1971 at the age of 18, came to South Africa from England, with stars in his eyes but nothing to his name, and created a pork, milk and beef empire.
Every detail of his ‘Number Two Piggeries’ agri group is at his fingertips, recorded in the files lying on the desk of his expansive office on his Queenstown farm – one of several he owns and leases in the Queenstown, Tarkastad, Indwe and Dordrecht regions of the Eastern Cape, spanning 30 000ha.
Ask him to quote the current cost of feed on any of his farms, piggeries and dairies, and he’ll whip through the files and answer in a flash, down to the last gram and cent. Ask him the stock market prices and he’ll do the same.
“It’s all about keeping an eye on the rands and cents, and at the same time keeping an eye on the macro agri picture, including economic and political trends,” he explains.
“But none of this means anything if you don’t have good partners, good managers and good staff at the heart of your farming business, and in whom you need to invest. This includes advancing their skills, promoting them when they show initiative and commitment, and paying them decently. I cannot emphasise enough the value of good people,” says David whose agri group currently employs 1000 people, including 60 managers. That’s a far cry from where he was 38 years ago when he first recognised his future lay in farming.
“I started farming in the Queenstown area in 1976 when I set up a piggery business and abattoir in partnership with a Queenstown farmer and businessman, David Miles. We did it on a handshake and we are still partners as well as personal friends. The same goes for my other partners in the group, Philip von Memerty and Mark Schulpfort,” says David who also pays tribute to his late wife, Anne Osborne, whom he met and married in South Africa, and who played a significant role in his achievements.
The success of the first piggery business was based on a by-product of cheese making called whey, which, in the 1970s, was regarded as a waste product in South Africa.
“Having worked on farms in England I knew we could use whey to feed pigs, which we started doing in Queenstown, sourcing whey from the local DairyBelle factory, which we then piped to the piggery. This gave us a competitive advantage over other pork producers who were not using whey as a feed source at the time.”
As their piggery grew they sourced more whey, and combined it with other foodstuffs, such as mayonnaise, noodles and maize meal.
Today, Number Two Piggeries, of which Dave is CEO, has piggeries all over South Africa, as well as one in Namibia, with a total of 20 000 sows, representing over 20% of national pork production. The group also has its own abattoirs, with 25% of pork production in South Africa slaughtered in their abattoirs.
“You have to constantly be looking around the next corner to remain profitable in this business,” he explains.
“In South Africa, pork has to be produced to international trading standards, therefore you have to be able to produce a better, cheaper local product than its imported counterpart from Brazil, Canada, Germany and Spain. This means looking at new technology and production methods all the time, which many of the smaller piggeries cannot afford.”
Number Two Piggeries has bought some piggeries from smaller-scale farmers, several of whom are now affiliates in the expanded business.
The group has also pioneered new developments, the latest being the high-tech Chalala piggery between Malmesbury and Darling in the Western Cape. The group bought two farms here, on which the brand new R200million piggery has been built, spanning 52 800m2, about the size of 10 rugby fields. Construction started in 2012 and it is now completed and productive, housing 4800 sows. This number will be increased to 9 000 sows in phase two over the next couple of years.
A multi-site production unit, it includes a breeding unit where pigs are bred. At 28 days the progeny is moved to a weaning unit for six weeks. They are then moved to the fattening unit for approximately 13 weeks. Each unit functions as a separate entity, with its own staff, operating procedures and bio-security rules. The entire piggery is run by 20 staff members, compared to traditional piggeries where 20 staff members manage 500 sows.
“It’s all about sustainability, and cost reduction, including the feed conversion ratio,” David explains. “Pig farms are measured by the amount of feed consumed to produce 1kg of meat. A decade ago this ratio was 4kgs of feed to produce 1kg of meat but we are down to 3.4kgs and we can still go down to 3.2kgs. It’s all about improvements in the quality of the feed and genetics.
“Today we still use whey but it is incorporated in professional, scientific feed formulations which have enabled us to make the value of the whey even more valuable,” he explains.
Electricity is a major cost, and one of the limiting factors for all pig farmers. David is looking into biogas as a future energy source for intensive livestock production.
On the expansive livestock production or beef cattle side, from 1980 David started buying in 600 to 700 Brahman cross weaners annually and growing them out to oxen on leased veld in the greater Queenstown area. “It was profitable in those days and it meant I did not need the capital outlay to buy land or breeding cows.”
This changed in the late 1980s when he had accrued enough capital to start buying farms and investing in breeding cows. Today he has approximately 10 000 head of cattle running on farms in the Queenstown, Tarkastad, Indwe and Dordrecht regions. Of these, 3800 are breeding cows.
“In 1989 I started breeding my own calves. Three years later, based on the invaluable advice and assistance from an outstanding local Hereford breeder, Lawrence Moorcroft, I started a three-way cross.
“We put Brahman bulls onto Hereford cows and the Brahman heifers were then mated with Santa Gertrudis bulls (we chose Santa Gertrudis so that we could grow out big oxen). The Santa Gertrudis x Brahman cows were then bred to Hereford bulls and the Herford x Santa cows went back to the Brahman bulls. We have been doing this three-way cross since 1992 with great success and without using any other breeds,” says David who runs nine herds, including heifer herds, first calf herds and breeding cowherds for each breed, with the bulls rotating through the herds.
He has 170 bulls and buys good, purebred commercial bulls at the local Eastern Cape sales. He has a four-month breeding season from November to the end of February, and mates his first time heifers at 24 months.
This year he sold approximately 800 weaners to the feedlots and he continues to breed oxen, which is still profitable, but is slowly reducing his oxen herd.
“The value of B-grade meat has decreased over the years, and there is more money in selling weaners to the feedlots at the current prices. There is a R4 to R5 per kg difference between what is being paid for A-grade pre-two-tooth weaners and AB or B grade two-to-four tooth cattle,” he explains.
“I will still run oxen on my least accessible veld but I’m increasing my cow herd on my good veld to produce more weaners.”
For optimal production, David gives his cattle a phosphate lick in summer and a Dundee-type lick in winter. He is constantly working on improving his veld, including ripping capped tracts of soil and sowing palatable grass seed harvested on his farms, notably Themeda triandra or red grass/rooigras.
He weans in April and keeps meticulous weaning records. “For every 100 cows mated I get an average of 71.4% weaned,” he explains. “Other farmers quote much higher figures, but this is what we achieve and we have excellent very hands-on managers running our farms.”
At present he sends all weaners to the local feedlots while his B-grade oxen and C-grade cows to the Meat Traders Abattoir in Queenstown, in which he is a partner with David Miles and his son Jack Miles who now runs the abattoir. The oxen are sent to the abattoir at 3.5 years of age and achieve a carcass weight of approximately 350kgs.
C-grades in the Eastern Cape do well, he adds, because there is a high demand for them in the province, and they therefore achieve a similar price to B-grades.
“The meat price is all about the consumer’s purchasing power,” he explains. “Which is why the supermarkets today generally prefer smaller carcasses of between 230 – 240kgs, from which they can package smaller cuts of meat per tray. The consumer is generally looking at the price per tray rather than the price per kg. For example, three smaller t-bones can be packaged in a tray, and can feed a family at less cost than one large t-bone in a tray.”
David believes that farmers need to think far more strategically about meat, and start being smarter and more efficient about controlling the supply chain to increase their profits. “That’s why we invested in abattoirs. This way we don’t have middlemen taking their slice,” he says.
He also advises farmers to make sure they have a buyer and a market for their product before up-scaling production. “For example, a dairy farmer might invest in another pivot on his farm to produce another 5000L of milk per day because he believes this will make his operation economically viable. But what he should do is first set up a contract with a buyer before he does this to create a market for it. This way, his supply chain is assured.”
The Number Two Piggeries group’s dairy business ‘Just Milk’ is the perfect example of good supply chain management. All their milk – 45million litres annually from 8500 dairy cows – goes to the DairyBelle cheese factory in Cookhouse.
The cows – Jersey x Friesland – graze on pastures owned by the group and are milked at six rotary parlours owned by the group in Tsitsikamma, Cookhouse and Queenstown.
Number Two Piggeries formed a partnership with dairy farmers Edgar and Lynda Brotherton eleven years ago and together grew it from 1000 cows. Edgar and Lynda are share farmers in three of the dairy business units, they have an equity share in one of them, and they own half the cows.
“Dave has been highly supportive and we have enormous respect and trust for one another,” says Edgar. “In my personal capacity I would never have been able to afford all the dairies I now manage for the group.
“It has also afforded us a lot of opportunity to grow the business, which I am happy to say, is profitable – we’re having an especially good run at the moment due to good pricing and excellent on farm management.”
Edgar and Lynda’s home is in Kenton-on-Sea in the Eastern Cape but they move between all the farms on a weekly basis.
The combination of pig production and dairy has worked well for the group. The whey from the DairyBelle cheese factory in Cookhouse is used in the pig feed mix at the nearby piggery that Number Two Piggeries owns. The pig manure is spread on dairy cow pastures.
And so the wheel turns, with David keeping an ever-watchful eye on what to do next to ensure the group remains profitable. This includes diversification and expansion, despite the land reform scare.
“My attitude to this is that we need to organise a meeting between Mr Nkwinti and the leaders in banking and business in South Africa, including agri business,” says David. “Big business and the banks need to get behind the farmers, as does the Department of Trade and Industry. It is not a farmer versus land reform issue, it is a national economic issue and it has to be treated as such.
“I am trying to meet with Mr Nkwinti to discuss all this because what he is saying is not sustainable. It is not economically sound, it will not stimulate growth and it does not recognise that developing a farm is complex, hard work.
“As a matter of urgency we need to embrace negotiation that will achieve political stability, economic stability and future growth for all South Africans in agriculture, as opposed to widespread economic collapse.”
