Risk Management

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. Why Limpopo
• 3. The Market and the Commission Problem
• 4. Water: The Binding Constraint
• 5. Open Field Versus Tunnels
• 6. Crop Plan and Rotation
• 7. SWOT and Competitive Position
• 8. Route to Market
• 9. Unit Economics
• 10. The Five-Year Build and Its Gates
• 11. Funding
• 12. People and Operations
• 13. Certification and Compliance
• 14. Financial Projections
• 15. Break-Even
• 16. Sensitivity and Scenarios
• 17. Risk Management
• 18. Implementation Timeline
• 19. Returns
• 20. Key Performance Indicators
• 21. Key Assumptions
• 22. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

17.1 The risks that matter

A price collapse is the risk that removes the business case. A 25 per cent fall takes Year 5 EBITDA from plus R3.42 million to minus R1.78 million, because packaging, transport, labour and the fixed base do not fall with the price. It is managed by shifting volume to negotiated direct channels, by staggering plantings across market windows, by holding no crop above 30 per cent of area, and by facilities that can defer amortisation for a season.

Water failure is the risk that stops production entirely. A borehole that delivers in March and not in September does not reduce yield proportionally, it damages the whole planted area, because irrigation is rationed rather than switched off in blocks. It is managed by a lawful authorisation established before the lease, a dry-season pump test, storage holding several days of demand, and confirmed water as the first gate at every expansion.

Yield shortfall from heat, hail or disease costs R3.12 million on a 15 per cent movement and is more likely in any given season than a price crash. It is managed by tunnels for the high-value lines, by rotation that keeps soil-borne disease pressure down, by an agronomist from Year 2, and by scouting rather than calendar spraying.

Grant funding not obtained is the risk to the capital structure. R3.50 million of the programme is competitive Blended Finance money against a scheme Parliament reported as materially oversubscribed. It is managed by applying a full year ahead through more than one participating institution, and by holding the planted area at 24 hectares rather than over-borrowing if the second tranche does not arrive.

Certification failure closes the only channel offering contracts. A residue failure or a failed audit ends a retail relationship permanently and cannot be repaired within a season. It is managed by traceability records from the first planting, registered products at label rates with withholding periods observed and recorded, and certified spray operators.

17.2 Risks sized against the plan

17.3 Controls

• No expansion proceeds without lawful, seasonally-tested water confirmed in writing for the area about to be planted.
• Gross margin per hectare reported by block and by system every season, not total revenue in aggregate.
• The channel mix reported monthly: share by volume through market agents against direct, with the premium achieved.
• Plantings staggered every two to three weeks; no single harvest concentrated into one market week.
• Rotation held as a fixed constraint on the calendar; no brassica or solanaceous crop follows itself.
• Every input application recorded by block against the traceability record from the first planting.
• Registered products only, at label rates, with withholding periods observed and documented.
• No area expansion drawn if the preceding gate on water, yield or channel share has been missed.
• No distribution to the founder beyond budgeted owner remuneration until debt service cover has exceeded 1.30 times for two consecutive years.