GrainCore — Revenue Model
The revenue build-up by product line, the revenue assumptions and the grain procurement and price-risk management underpinning GrainCore.
Section 14 · Business Plan
Revenue Model
The revenue build-up by product line, the revenue assumptions and the grain procurement and price-risk management underpinning GrainCore.
GrainCore generates revenue from three streams: branded and bulk
maize products, wheat flour products, and milling by-products. Revenue
is a function of throughput (driven by capacity utilisation), product
yields, and price (escalated at approximately 5.5% per annum to reflect
inflation). The model deliberately separates volume and price drivers so
that lenders can stress each independently.
14.1 Revenue Build-Up by Product Line
| Revenue stream (R’m) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Maize meal & samp | 838 | 1,125 | 1,390 | 1,603 | 1,720 |
| Wheat flour | 0 | 553 | 794 | 981 | 1,094 |
| Bran & by-products | 24 | 79 | 107 | 129 | 142 |
| Total revenue | 861 | 1,757 | 2,291 | 2,713 | 2,956 |
Table 14.1 — Revenue build-up by product line.
14.2 Revenue Assumptions
- Maize line commissions in Year 1; wheat line in Year 2 — hence
zero wheat revenue in Year 1. - Selling prices anchored to current market levels: ~R9,200/t
blended maize meal, ~R11,500/t blended wheat flour, ~R3,400/t
by-products (Year 1 basis). - Prices escalate at ~5.5% per annum, broadly in line with food
inflation; volume growth is driven by the utilisation ramp, not
price. - By-product revenue scales with total throughput at ~7% (maize)
and ~22% (wheat) yields.
14.3 Grain Procurement & Price-Risk Management
Raw grain represents approximately 72–78% of the Company’s cost of
sales, so procurement discipline and price-risk management are the
central determinants of margin stability. Maize and wheat prices in
South Africa are set on the JSE’s SAFEX commodity derivatives market and
are influenced by the rand/dollar exchange rate, import parity (South
Africa is structurally short of wheat), regional drought cycles, and
global grain prices. White-maize spot prices crossed R7,000 per tonne in
early 2025 on drought concerns, illustrating the volatility the business
must manage.
The Company’s procurement strategy is therefore built on three
pillars. First, physical sourcing is diversified across commercial
farmers, grain co-operatives (including the large VKB and Senwes
networks), and silo operators, supported by forward-contracting a
portion of seasonal requirements directly with producers at harvest.
Second, the balance of exposure is hedged on SAFEX using futures and
options so that grain input costs are substantially locked in against
the forward order book, protecting gross margin from short-term price
spikes. Third, the Company maintains strategic grain inventory —
budgeted at roughly six to eight weeks of throughput — to buffer supply
disruptions and capture favourable buying windows.
This hedging-led model mirrors the practice of established millers
and is a specific area of lender due diligence. A dedicated
grain-procurement function, led by an experienced agri-commodities
trader, will operate within a board-approved risk-management policy that
caps open (unhedged) positions and mandates regular mark-to-market
reporting to the Audit & Risk Committee. The cost model assumes
blended grain input costs rather than spot prices, with a sensitivity to
a sustained 10% grain-price movement quantified in Section 19.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of GrainCore Milling & Foods (Pty) Ltd.