Creating a food industry
July 01, 1998
by Teresa Acklin
Spillers Milling proud of achievements, growth obtained as a result of 18-year partnership with Lesotho.
By Eric Schroeder, Assistant Editor
Spillers Milling, the third largest flour miller in the U.K., recently celebrated its 18-year involvement with the country of Lesotho in grand fashion. With video cameras and live television coverage, representatives of Spillers Milling expressed their gratitude at being able to participate in a program of such magnitude.
Spillers Milling, which was recently acquired by Tompkins P.L.C. from the Kerry Group P.L.C., was a subsidiary of Dalgety Foods Industry (D.F.I.) for the duration of its 18-year involvement in Lesotho. In late January, prior to the Tompkins purchase, Spillers had been sold by Dalgety P.L.C. to the Kerry Group.
For Spillers Milling, the 18-year partnership with Lesotho was an opportunity to develop a program and manage a business that could be of ultimate benefit to the people. For the government of Lesotho, the partnership was a means of creating a financial program that ultimately was responsible for the development of the food industry in Lesotho.
As a result of Spillers Milling's involvement in Lesotho, the country now has two flour mills, two maize mills, a flour packaging plant, an animal feed mill and a sugar installation and packaging plant.
Prior to Spillers Milling's involvement in Lesotho, the country was struggling to overcome problems in maintaining a sufficient food program. In 1979, much of Africa, and particularly South Africa, was under the strains of apartheid. The governments of the South African countries struggled to feed the people, especially those without jobs.
In Lesotho, the decision was made to try to overcome these problems by initiating a program that could develop a food industry for the country, which up to that point had been virtually non-existent. As part of this movement, the U.K. governmental Overseas Development Administration (now known as the Department for International Development) decided that it needed to develop self-sufficiency for the country. As a result, plans were made to hire a company to come in and help construct a solid foundation for the food industry.
Beginning a Tradition.
In 1979, Spillers Milling won a contract to serve Lesotho. Initially, the plan was for Spillers to serve as the managerial presence for a period of three years, at which time the industry could be privatized and Spillers could step aside. However, as the three-year time frame came to a close, both Spillers and the Lesotho government were hesitant to part ways.
For Lesotho, the partnership worked well because they had hired a company that, through its experience in a managerial capacity, was capable of creating jobs and improving the living conditions in the country. For Spillers, the partnership was an excellent opportunity to see the rewards of its actions.
For an additional 14 years, Spillers maintained its relationship with Lesotho, slowly lessening its managerial control with each passing year. By 1995, Spillers had shifted from being a managerial administrator to being a member of the advisory board.
As part of the advisory board, it was Spillers' job to act as an overseeing committee, making sure that projects within the food industry were carried out smoothly and in accordance with the law. Spillers continued in this capacity for another three years until February 1998, when it officially removed itself from all aspects of the Lesotho food industry.
Through organizations such as the World Bank, privatization is taking place across the world, and it is no longer necessary for companies such as Spillers to maintain business relationships for very long, said Andrew Creese, managing director of D.F.I. Mr. Creese joined Spillers Milling in 1990 and served as chief executive officer until the sale of the company in mid-February.
The movement of the food industry into private management was something to be expected, Mr. Creese said. Currently, the government of Lesotho owns 100% of the Lesotho Flour Mills, but has recently auctioned off half of the business to the private sector. “We've built the business, trained the people and created an efficient food industry,” said Mr. Creese recently. “We felt we had done all we could and it was time to move on.” While Mr. Creese and his company have moved on, what they have helped create will remain behind as evidence of the good that can be developed as a result of a solid partnership.
Flour and Maize Mills.
The first flour mill and grain storage complex in Lesotho was built in Maseru, the country's capital. Rapid expansion followed as Spillers sought to create an economically viable cereals processing industry for the region. Along the way, Spillers managed to build an additional flour mill, two maize mills and a flour packaging plant.
The original mill had the capacity to mill 200 tonnes of wheat per day. By 1990, the mill was operating 24 hours a day, 7 days a week. Also in 1990, a new household flour packaging plant was developed, as well as a second flour mill, which had the capability to grind 150 tonnes of wheat per day. A 350-tonne bulk storage facility was added to the site during this same time.
In 1988, Lesotho produced around 10,000 tonnes of flour. Since then, yearly flour production has grown to an average of nearly 70,000 tonnes.
About 900,000 tonnes of flour have been produced at the Lesotho Flour Mills since its inception, not quite full capacity, but enough to supply all of the country's flour needs for its 1.7 million people.
In May of 1986, a maize mill with capacity of 200 tonnes per day was constructed as a way to reduce Lesotho's reliance on imported products and meet demands for maize, which serves as a staple food for the country. A second maize mill, operating at 134 tonnes per day, was added in 1991 to keep up with the rapidly growing maize market.
The development of the maize mills has had a significant impact on the food industry of Lesotho. Currently, maize is grown on about 70% of the arable land in Lesotho, and because the maize industry is so dependent on the weather, it was important for the country to develop a means for maintaining maize supply year round. Normally, when the weather is good, individuals can do all of the maize grinding themselves. However, when the weather turns bad, it is impossible for the maize to be ground manually, meaning the majority of the work must be done in the maize mills.
What the maize mills have meant for the food industry of Lesotho is that regardless of weather, the mills are available to grind. If weather conditions become too bad, there is only a need to import the maize itself, grinding can be done at the facilities. This has cut down on import costs and has made it easier for Lesotho to be more selective in choosing maize sources. Storage space for maize has also increased, enabling the milling industry in Lesotho to keep on hand a large amount of product.
The Lesotho Flour Mills currently supplies half of the maize products consumed in the country. The maize mills, which run at full capacity, operate at a rate of roughly 15 tonnes per hour. About 750,000 tonnes of maize products have been produced since 1979. With rainfall registering below normal for the first part of 1998, forecasts indicate that domestic availability of maize will fall to 88,700 tonnes from 217,400 tonnes, nearly a 60% decrease. As a result, in order to cover the country's requirements of 304,700 tonnes of maize, Lesotho will import nearly 200,000 tonnes of maize in 1998.
Continued growth in regards to maize products is expected in the future thanks to increasing free trade and market liberalization between Lesotho and South Africa. The possibility of opening whole new markets has given Lesotho more reason to be optimistic about its food industry.
In 1989, an animal feed mill capable of operating at a rate of 10 tph was constructed. The feed mill facility offers a complete range of feeds with most of the raw materials coming from Lesotho or from the neighboring country of South Africa.
For the People.
One of the major benefits to come from the 18-year partnership between Spillers and the government of Lesotho has been the opportunities that the facility has opened up for the people. Lesotho's economy is primarily based on agricultural crops, livestock, manufacturing and earnings of laborers who work in South Africa. At any given time, nearly 200,000 people may be absent from Lesotho, working in the neighboring country.
Since 1979, the production facility in Lesotho has grown from a company that employed 10 ex-patriot managers and 85 locals to a company that currently employs 2 ex-patriots and 450 personnel, all of whom are from Lesotho. The growth of the food industry has paved the way for improved living standards and created more jobs in the country that were not available prior to Spillers Milling's involvement. It was also the goal of Spillers Milling to push for the best education and work experience possible in its workers.
Since the onset of the partnership, 24 individuals have received their City and Guilds milling qualification certificates. These certificates give international recognition to individuals who have completed the highest degree of training available in the industry. Many of the workers currently employed at the Lesotho Flour Mills were sent to Spillers Milling in the United Kingdom, while others were sent to the Buhler Milling School in Switzerland or to other milling schools. A sign of the success of the individuals groomed in Lesotho is expressed in the exceptional skills that they have developed and the high level jobs they hold, said Mr. Creese.
Now that the official handing over of the business has been completed, it will be up to the Lesotho government and the company replacing Spillers to maintain the strong foundation that has already been laid.
The handover of the business was particularly important to those involved in the move because it marked the transition of milling from a non-existent entity to the successful industry that it has become today.
For Andrew Creese, the partnership reflects both a personal success as well as a business success. “There is a certain degree of pride,” Mr. Creese said. “Before we came, there was no food industry. Now, the flour mills, maize mills and sugar plant comprise what is probably the biggest, most impressive site in the country. With our help and guidance, this industry was able to survive.”
According to Mr. Creese, when plans were made to develop a milling industry, the aid agencies were hesitant about what companies to hire. They did not want to build capital and then have it poorly managed. This was one of the main reasons that Spillers was so successful. By knowing how to balance capital investment with extensive training programs, Spillers was able to ensure a successful business, something that the Lesotho government hopes its new partner will be able to do as well.
The opportunity to achieve this success in other countries exists, particularly in Eastern Europe, said Mr. Creese. He also said that the company has taken a look into the prospects of trying to achieve this same type of success elsewhere, but because major capital investments are required, the company does not expect to undertake any projects in the foreseeable future.
Lesotho is looking to build its food industry in the coming years by developing a system of liberalized agriculture marketing. Already, maize and sorghum products have been relieved of their import restrictions and price controls. Other agricultural commodities have been targeted for similar changes in 1998.
In addition to lifting import restrictions and price controls, the government has been involved in various programs as a means of increasing agricultural exports in the future. These programs include revitalizing irrigation schemes for high-value horticultural cash crops and the restructuring of canners in the country.
The movement by the government to remove itself from the economy and pave the way for privatization has been done as a means of creating more jobs for the people of Lesotho. In doing so, certain government agencies are responsible for making sure that all privatization is done legally and with transparency and accountability.
Lesotho Flour Mills/Spillers Milling-an 18-year partnership
1979-1980 Spillers Milling won three-year contract to serve Lesotho. First 200-tonne flour mill built in Maseru
1982-1983 As the three-year time frame came to a close, both Spillers and the Lesotho government were hesitant to part ways.
1986-1987 Maize mill with capacity of 200 tonnes per day constructed
1990 New household flour pack-aging plant, second 150-tonne flour mill and 350-tonne bulk storage facility added to the site
1991 Second 134-tonne maize mill added
1995 Spillers shifted from being a managerial administrator to being a member of the advisory board.
1998 Spillers officially removed itself from all aspects of the Lesotho food industry