Mpumalanga macadamia farmer Cobus Kok has launched a Macadamia Services Management (MSM) platform that he says will revolutionise the nut trade by providing real-time and accurate data for improved marketing and sales decisions by registered users.
The platform is designed to expedite kernel trade while steering away from nut-in-shell which is traded directly from farms.
Why do you think the platform is necessary for the sector’s growth?
It is now common the world over for traders in any commodity to have access to real time data to inform decision-making. The MSM platform allows for exactly that. While age-old one-on-one contact or relationship marketing is still critically important, e-commerce is evolving at such a pace it poses a real and viable challenge to existing marketing models. E-commerce allows buyers and sellers to gather all of the information they might need to make a buying or selling decision from any device. On the MSM platform, the information is trustworthy, and the buy or sell process is secure and easy.
As a trading platform, it makes it possible for all stakeholders in the value chain – from the farmer to the consumer and anyone in-between – to access pricing information. Each player can work out the value of their contribution. I believe this leads to fairer compensation at all levels. Exorbitant price mark-ups become easily visible, allowing users to navigate their way around those. Statistics have proved this eventually leads to higher farm gate prices and lower consumer prices. Lower consumer prices stimulate demand, resulting in increased macadamia consumption.
How did you come up with the idea for the MSM platform?
One of the issues affecting me most as a small-scale farmer and processor was the lack of information and transparency around price determination.
The South African Grain Information Services (SAGIS) is a perfect example of how information and transparency has resulted in price stability in an agri-sector. The outcome is that farmers, processors and traders can factor in cost versus revenue in their future planning and investment decisions. We haven’t had that in the macadamia industry to date. Farmers and processors are mostly at the mercy of speculative forces characterised by volatile trade cycles.
With my own experience as an exporter and the challenges I faced when negotiating with international dealers, I realised I had to have access to a level legal playing field, pricing transparency, and accurate and reliable market intelligence. The answer was clearly e-commerce, where the rules of engagement are set out before trading. I have also discovered that e-commerce is an effective way to narrow the gap between farm gate prices and consumer prices.
The MSM platform is designed to provide transparency, and users can view price, volume and trends in real-time. Armed with this information a farmer has the tools to evaluate his or her position before incurring risk. Our platform affords the macadamia industry an opportunity to move into the e-commerce world – similar to other agricultural industries – to reap the benefits of modern consumer behaviour, marketing and trade trends.
It goes without saying that the growth of e-commerce is exponential and pervasive. Our industry cannot afford to lag.
Where do processors fit?
We do not regard marketing divisions at processing facilities as middlemen, but rather as intermediaries between the processor and retailers. Retailers add a lot to the cost of macadamias for the consumer. Platforms like MSM have a moderating effect on this trend, offering an alternative for marketers as they get access to product at a much-reduced cost. It is a statistical fact that marketing success is directly proportionate to how many avenues a marketer explores.
MSM offers highly effective, cost-efficient access to marketing and sales personnel, which I believe will ultimately result in reducing costs.
What about shipping?
Because we only made initial provision for trading in kernel, shipping is handled by processors as agreed to by the contracted parties via the platform. Unless a farmer has his own processing facility or a contract to conduct toll-cracking through a processor, we do not expect them to get involved in trading at this stage We think that will be left to the processors – who have always had to guarantee that their product meets international quality standards. They will have to deal with any quality disputes between parties.
How will quality be handled on the MSM platform?
Quality assurance is guaranteed through third-party validation by MSM’s food safety quality management unit, which is staffed with contracted food science experts. We will keep physical samples of all products sold on the platform. These samples are for reference in case of a dispute. They will be available for analysis by independent accredited laboratories that wish to determine to what degree the results correspond with the original certificate of analysis, the factory’s retention sample, and the analysis of the product received by the customer. This is the basis of a process we believe can be managed via mediation, arbitration, or litigation, depending on the stance of the different parties.
In short, all of the usual rules and regulation are in place, with the added safeguard of third-party validation and arms’-length dispute resolution rules. This means all required high standards are met. I believe these safeguards provide peace of mind for buyers and processors.
How will you standardise quality and styles when there are no existing industry standards?
MSM has set up its quality and product specifications in line with the World Macadamia Organisation (WMO) requirements. The seller and buyer will agree to these standards when they accept the platform’s terms and conditions as part of their registration process. That means both parties would have agreed to the product quality and standards, as stated on the platform, prior to trading.
How do you feel about the future of South Africa’s macadamia industry as production volumes rise and prices fall?
There is, without doubt, a profitable future in macadamia farming. But our industry must adopt the right marketing strategies. And that means, by sheer necessity, including e-commerce and digital marketing in our toolbox. Currently macadamias are just 2% of the global nut basket. That shows how vast the scope is for a profitable enterprise into the future.
What is the one thing you wish all macadamia farmers knew about?
Forewarned is forearmed! Stay thoroughly informed on every aspect of the value chain – starting at the farm gate and ending with the consumer. Get involved in the collaborative management of the industry by participating in study groups, processor affiliations and SAMAC. Don’t wait for someone else to do something about a problem or issue. In my view, that is the best way to stay ahead of the game and to secure a viable and sustainable future for our farmers.
How does the platform work?
- Buyers and sellers are required to register on the MSM platform. Once registration is received their credentials are checked – only legitimate buyers and sellers are eligible to trade on the platform.
- If the credentials are acceptable, a trading license is issued to the buyer or seller.
- The identity of buyers and sellers remains confidential. Once the transaction is concluded the buyer and seller are introduced to each other.
- When sellers upload product – with their asking price – the listing is available to all buyers to view. Food safety and quality requirements are met by disclosing the required safety and quality data for the listing on the platform on a positive release basis. This is done two weeks before shipping.
- The interested buyer can then accept the asking price for the listed product or put in a bid at a lower price. This bidding process is visible to other buyers who may also be interested in the product.
- Once a seller accepts a bid, the transaction is concluded. A system-generated contract is made available to both parties.
- When a buyer is looking to fill an order, the system automatically searches for and pairs the closest offer or order with the request. Similarly, a seller can fulfil the listing created by a buyer.
- Buyers and sellers can filter listings according to their requirements to make sure they only view offers/orders which are of interest to them.
- Those who register are only billed when they use the platform.
- The price of any product is reflected on an Ex-Works basis in American dollars, but once a transaction is concluded, payment can be made in any world currency. Payments will not flow through the platform. Payment terms are agreed between the contracted parties within the provisions of a concluded deal.
Cobus Kok
Second-generation farmer and now the force behind the Macadamia Services Management platform Cobus Kok says his love for the land and farming began when he was a boy at his father’s knee.
“My father, Louis, was initially involved with the steel industry in South Africa, but his longing for the farm life never left him. As a child, born in the Free State, he fell in love with the Lowveld when he first visited the iconic Kruger National Park. In 1970 he realised his dream by buying a farm close to the Numbi Gate as a part-time endeavour while continuing with his business interests in the industrial town of Middleburg.
“At that time little was known about growing macadamia trees. It was through his friendship with Professor Cas Holtzhauzen from the Faculty of Agriculture Sciences at the University of Pretoria that he decided to plant the crop. The two of them, along with macadamia expert Philip Lee, were instrumental in setting up the country’s macadamia member body, SAMAC. He wrote the organisation’s first constitution, in fact.
“As a child, I spent weekends with my father on the farm and in the orchards, and my love for nature and macadamia farming grew from there.
“I joined the South African National Defence Force as a permanent member when I finished school and rose to the rank of captain after completing a degree in Military Science (B.Mil) from the University of Stellenbosch.
“My father retired from the steel industry in 1990 due to ill-health and in 1996 asked me to take up the reins.
“As someone who had worked with steel, my father had his own idea of what drying, de-husking and cracking equipment should look like, and when he couldn’t find equipment that met his standard, he simply designed and developed his own. This meant we developed and built our own processing plant for kernel in 2000. The production of our ‘pilot’ factory grew steadily until, in 2002, we felt we had exhausted all of our local marketing options and started marketing and exporting our own product.
“My father’s death in 2009 has allowed me the privilege to continue the journey he and our family began in 1975.
“My involvement in the macadamia industry for the past 25 years has ranged from farmer and processor to exporter and marketer. The immense potential of this sector has always attracted me, and I believe it is ripe with opportunities for innovation and growth.”
