Talking business and exporting to Africa with Entrepreneur of the Year finalist
Johan Eksteen is the owner of Agricon Pelleting, a company that was founded in South Africa over 20 years ago. Agricon manufactures and supplies pelletising machinery and agri-processing equipment to the global market. Pelletising involves processing material into small dry pellets, and is commonly used in the agricultural industry to manufacture animal feed.
While Europe and Asia had been key regions for Agricon’s business in the beginning, since 2008 the African continent has emerged as the company’s largest export market, with countries like Malawi showing strong business growth potential. Eksteen has also managed to reach new markets by adapting equipment to pelletise a range of specific products, such as rooibos tea, tobacco dust, organic fertilisers and vermin compost.
In light of being a finalist for the 2014 Sanlam/Business Partners Entrepreneur of the Year award, How we made it in Africa asks Eksteen about some of his entrepreneurial experiences, and why the African market holds growth potential for his business.
You export your pelletisers globally, but how big is the African continent for Agricon’s business?
The African market is huge and ready for expansion. The big advantage Agricon has is that we are from an African country (South Africa), and we have an understanding of how business is done in our continent and also under what conditions it is done. We pride ourselves in saying that Agricon produces African machines for Africa.
Although we export all over the world, Africa is our main focus market and also our strongest at the time. Why would we allow the Asian and European countries to come and take the money from our continent if we can supply the same and even better quality machines?
The African market has its own set of unique challenges. How have you been innovative in adapting your products to overcome some of these challenges?
One of the major challenges is power supply in the rural regions. People would love to invest in our equipment, but simply cannot because of their power grids. We therefore developed machines which run on single phase (house) power instead of three phase power.
Another challenging fact for us is that agriculture needs a lot of development and work in many African countries. This can be deducted from their lack of sustainable food production. We therefore have to train and mentor various clients to understand the opportunities they have in their markets, and to grow with those customers.
Lastly we find that many African countries have huge gaps between the rich and the poor. As the rich people are in the minority, you have a limited market who can afford new business opportunities. Our aim is to also help grow the small to medium farmer who can be uplifted with the right knowledge and tools. It therefore boils down to the availability of infrastructure, money and knowledge to grow. Having said this, I believe that there are some brilliant people with good educational backgrounds and amazing entrepreneurial potential in Africa who are out there and need to be helped. The nice part in most of the very poor countries is the amazing openness and wonderful attitudes of the people, where survival and success is the main objective.
If you were given a large amount of money to invest into your company right now, what is the first thing you would do?
I would increase my stock levels as we cannot stay ahead with production and build enough stock on the sales floor. We sell as fast as we produce the equipment.
It is always a balancing act to decide where is the most needed area to invest in your business. When investing in one sector, it may lead to the next area in need of development. It is therefore a fluid question based on a specific time. A few months ago the answer would probably have been to spend all the money on advertising.
What’s the strangest thing you’ve ever done as an entrepreneur?
I had to pelletise raw human waste for a customer to demonstrate the machines. They thought that they can use the pellets for fertilisers, and would not listen to reason that the material was basically toxic to plants and animals. Well, we made a ‘shitload’ (excuse the pun) of pellets for them, and they never bought the machine because they could not find a market for their pellets. I must say, I think this was at the height of desperation from my side to secure a sale.
In your opinion, what is the major difference between entrepreneurs and those who work for someone else?
Entrepreneurs have a vested interest in their own existence. They do not have a go-to person when things get hot. Entrepreneurs are therefore very passionate about their ventures and know that they have their own destiny in their hands, and are therefore mostly people with an internal locus of control. I have a saying: “If you are looking for a helping hand, look at the end of your own arm.” This comes down to the fact that you take responsibility and must be prepared to do anything needed to succeed.
I would rather not comment on people working for others, as I believe there must be many entrepreneurs out there still busy learning and planning to become great entrepreneurs. I also had to work for a few companies to afford the luxury to start a business on the sideline in my spare time with no money. But no bank would have touched my idea at the time, so this is a way to start your journey.