What are the traits of a great farmer? What makes an award-winning farmer? According to Santam Agriculture, one of the main sponsors of the Agricultural Writers SA Farmer of the Year competition, it is the ability to envision the business as a crucial link in the food value chain – and then to put your money where your mouth is. This is exactly what Nick Serfontein and his team did.

There is a certain sense of symmetry between the Free State town of Edenville and Agricultural Writers SA’s 2019 Farmer of the Year, Nick Serfontein. Nick grew up on the farm Liebenbergstroom approximately 8km out of town and matriculated at the local high school.

The town was home to and played an integral role in his early development. Today, some seven decades later, Nick, through his Sernick Group, plays an important role in his old hometown, both in terms of infrastructure maintenance as well as job creation. In 2019 the Sernick Group recorded a turnover of R1,5 billion, providing jobs to 615 people. The Group has a direct and indirect impact on the lives of 14 500 people.

The management team of the Sernick Goup. In front from the left are Patrick Sekwatlakwatla, head of the emerging farmers project, Sara-Lea van Eeden, PR consultant, Nick Serfontein, chairman of the Sernick Group, Pieter Booysen, Sernick Bonsmara stud manager, and Phillip Oosthuizen, head of research and economy at Sernick. At the back from the left are Christo Faasen, managing director of animal feeds, Diederik Erasmus, financial director, and David Nieman, managing director of the abattoir and Kroonstad retail section.

From engineer to farmer

Nick was born in 1948 and enjoyed a typical rural upbringing of that time on the farm. When it became time to choose a career, his parents persuaded him to not go into agriculture – instead, he studied engineering at the University of Pretoria. Over the years he built a very successful career as a consulting engineer, but in his heart he remained a farmer. In 1983 he bought his first farm, Vredeverwag, together with 30 commercial Bonsmara heifers and a bull. In the same year he registered the Sernick Bonsmara stud.

It did not take him long, however, to realise that in order for his farming venture to survive, given the ever-increasing gap between input costs and commodity prices, he would have to change his approach and restructure his operation. The options, he realised, were either to buy more land, produce more on the same land, diversify, or to add value.

Taking the bull by the horns

He chose to do all four, and major restructuring commenced in the mid 1990s. Today, the Sernick Group controls its entire meat value chain through various strategically placed operations, including:

  • A stud of 700 cows.
  • A commercial cow herd of 1 000 cows.
  • A Phase C performance testing centre where some 600 bulls are tested every year.
  • Two feedlots with room for 20 000 steers.
  • A feed factory with the capacity to produce 12 000 tons per month.
  • An abattoir with the capacity to slaughter 6 000 cattle and 1 000 sheep per month.
  • A wholesale unit focusing on wholesale, exports, hotels, restaurants and caterers.
  • Four butcheries with plans to open several more.

Over the years Nick bought several neighbouring farms as they became available. The result is that today, the Sernick Group farms on more than 11 000 hectares, which consist of numerous farms in close proximity to one another. 

Impressive indeed, but was it plain sailing all the way? Certainly not, says Nick. The school fees paid along the way were high.

Cattle production demands efficiency

Next to fertility, Nick believes, feed efficiency is the single most important economic trait in modern cattle farming. The Sernick herd today boasts an intercalving period of 386 days, whereas its feed efficiency is 22% better than the Bonsmara average.

While price is not always a fair reflection of the quality of a specific stud, the fact is that when the prices fetched by a stud are consistently high, fellow cattle farmers by implication see something worthwhile in animals from that stud. The fact that Sernick has been achieving the highest average prices on its annual production sales for the past several years, should therefore be regarded as something of great significance. At its 2019 production sale the Sernick bulls fetched a staggering average price of R105 000!

Over the years the Sernick stud recorded several significant awards. Here are a few:

•    1996: Gold for its percentage Phase C tested bulls in the ARC Performance Testing Scheme.

•    1996: Silver for its percentage best producing cows in the ARC Performance Testing Scheme.

•    1997: Silver in the ARC performance test herd of the year competition.

•    2008: The ARC award for most improved herd of the year.

•    2016: Sernick’s contribution to the Bonsmara Highveld Club.

•    2017: SA Stud Book mentor breeder of the year.

•    2018: SA Stud Book double gold Elite Stud Herd of the Year.

•    2019: SA Stud Book gold Elite Stud Herd of the Year.

•    1996 to 2019: A total of 22 SA Stud Book Platinum Bull awards.

Phase C testing

Feed efficiency and growth, as mentioned before, are becoming the most critical economic traits that feedlots are focusing on. Without genetic improvement in these particular traits, feedlots will come under increasing pressure to survive. This was precisely why the Phase C bull testing station became the first area of expansion at Sernick in 1990. Since then, more than 10 000 bulls have been tested at the facility, 5 000 of which were Sernick’s own bulls.

The improvement since those early days has been phenomenal: feed efficiency improved with just under 1,8kg of feed for every 1kg of meat produced. This means that less than 300kg feed is needed to put 200kg on a steer in the feedlot. At a feed price of R2 000 per ton, this translates into a saving of R600 per steer.

As for growth, the improvement was 200g/day. This translates into 20,9kg more meat per steer over a feeding period of 110 days. At a dressing percentage of 59% and a price of R32/kg, this represents an additional R395. If feed efficiency and improved growth are combined, the overall benefit translates into a staggering R995 per steer.

The Sernick feedlot model

In order to add as much value as possible to the animals produced on the farm, apart from genetic improvement, Nick started his own feedlot in 1996. The feedlot expanded over the years to a current capacity of 20 000 steers. Some three years ago a research section was added in which various experiments are being conducted, among others the now famous study in which the optimal feeding time of various breeds was determined with a view to optimum financial benefit.

Knowing full well that the feedlot industry can be extremely risky, every possible measure is implemented to keep costs at bay and gain maximum profit.

Some of these measures include:

  • Favouring the weaners of Sernick bull buyers.
  • Backgrounding weaners in three phases – an adaptation phase of five days, a veld phase of 25 days and a final preparation phase of 14 days during which the feedlot ration is offered at 2% of body mass.
  • Feeding fresh feed three times a day.
  • Feeding different breeds according to their optimal feeding potential.

The feed factory is central to Sernick’s ability to supply its feedlot, but has also developed an external market. From its initial humble beginnings, the feed factory today boasts a range of rations for the beef, dairy, game, chicken, pork and sheep industries, with the capacity to store most of the raw material on site. A specific advantage is that the factory remains on the leading edge of changing demands in the feed industry, due to the research facility on its doorstep.  

Connecting with the consumer

One of the crucial aspects of Sernick’s value addition model, is connecting with the end consumer. This was done through its ability to supply its end product directly to the consumer. The abattoir in Kroonstad is export certified and boasts a state-of-the-art deboning and processing plant which increases economic viability. The aim is to have a sound mix of markets, including exports (20%), wholesale (10%), value added products (20%), restaurants, hotels and caterers (10%) and retail (40%).

To this end, the retail section currently consists of four butcheries, three of which operate under the trade name Country Meat and one ‘Roots’ franchise, which serves the lower income market. One Country Meat butchery is situated in Kroonstad with another two in Gauteng. A further four Country Meat outlets are being planned for Bloemfontein, Welkom, Potchefstroom and Bethlehem with another two Roots outlets in the pipeline.

Retail is the point of direct contact with the consumer. It is crucial that this experience surpasses all expectations.

The quality of service and products are reflected in several Cleaver awards that these Country Meat outlets have already received over the past few years. Cleaver awards recognise excellence in the butchery industry and nominations come directly from butchery customers.

“Retail,” says Nick, “is the point of direct contact with the consumer. It is crucial that this experience surpasses all expectations. Continued research into consumer preferences is therefore an integral part of our approach.”

Closely linked to this was the launch of the brand, Sernick Certified Bonsmara. This brand is fast becoming a household name. 

Continued research

Maintaining a leading edge in the industry is an integral part of Nick’s vision. This vision is what led to the establishment of a research and development section in 2015. The aim is to optimise the red meat value chain, focusing on technology, systems, processes and business models.

The team responsible for research and innovation. From the left are Dr Piet Swiegers, Phillip Oosthuizen, Christo Faasen, and the operational manager of the experimental feedlot unit, Dawid Smit.

Research results, he believes, should be realistic, practical and implementable. “It should lead to added value, development, increased profitability and sustainability.”

Nick also believes strongly in local involvement through sponsorships of local schools, sports teams, cultural activities, churches and welfare organisations. In addition, Sernick is actively involved in infrastructure maintenance, notably the maintenance of an 8km stretch of provincial road from Edenville to Lindley, the Edenville main street as well as fences and wind pumps in the communal area of the town. In addition, Sernick regularly hosts youth visits to the farm.

Focus on emerging farmers

Based on the amount of calls for help from emerging farmers, Nick realised that there was a dire need for guidance and assistance. This led him to start presenting farmers’ days, workshops and even a carcass competition, combined with the opportunity for emerging farmers to custom feed their entries in the Sernick feedlot. 

A major landmark was reached when a formal co-operation agreement with the Jobs Fund resulted in the formal Sernick Emerging Farmer Programme. Since then numerous emerging farmers have received training in various aspects of livestock farming. The pilot project was called the Serlaff Cooperative, consisting of 59 black emerging farmers.

Sernick Group
A group of emerging farmers receiving their certificates after completion of their course.

“The Serlaff Cooperative stands to serve as the benchmark of what existing farmers and the agricultural community can do to successfully assist emerging farmers in South Africa,” says Nick. Through such projects the Sernick Group hopes to sustainably uplift communities, empower emerging farmers and stabilise both the local and foreign perception of the agricultural landscape within the country’s current political climate.

Losses and wins

In its first year Serlaff was granted a R25 million loan from the Land Bank through Sernick’s Wholesale Funding Facility (WFF) and in 2017 the tranche was increased to R50 million. In 2016 the drought caused feed prices to skyrocket and as a result, Serlaff recorded a loss of approximately R589 000. However, the loan was repaid in full to the Land Bank within the year and valuable lessons were learnt during this time.

In 2017 the Serlaff Cooperative recorded a profit of approximately R2,1 million. Having recognised the loss incurred in the first year, a total of R1,5 million was paid out to the Serlaff Cooperative after the second loan was repaid in full to the Land Bank.

The loan was used to acquire weaners for the Serlaff Cooperative. The weaners entered a custom feeding programme at the Sernick Feedlot in Edenville with active participation from Serlaff members. The feeding programme consisted of one month’s background feeding on the veld at Sernick, where the animals received their first rations to grow accustomed to the feed that they would receive in the feedlot. They were then placed in the feedlot for at least five months to realise maximum growth, after which they were sold to the abattoir for slaughter.

A core group of Serlaff farmers were trained at the Sernick farm through Sernick’s Emerging Farmers Programme while also attending and participating in regular farmers’ information days and annual carcass competitions. At last year’s annual Sernick auction, Serlaff purchased 42 pregnant three-in-one cows to bolster their breeding stock as a co-operative. The total cost of this investment by Serlaff was just under R1,5 million.

The Serlaff success story forms the model on which the successful Sernick application to the Jobs Fund through the National Treasury was made. Some 300 emerging farmers will benefit from custom feeding in the next three years. Through this programme Sernick will assist 660 existing emerging farmers to grow into commercial farmers, which will take place over a longer period. A revolving fund was created to ensure that the fund assists as many farmers as possible. The Sernick Group hopes to create over 1 400 jobs over the next three years.

Future Farmers Foundation

In August 2019 Sernick opened the first so-called Future Farmers office in Kroonstad. Future Farmers now has offices in KwaZulu-Natal, the Western Cape and the Free State.

The Future Farmers Foundation was launched by Judy Stuart from Howick in 2006 and aims to create job opportunities in agriculture for the youth. The model is based on an apprenticeship programme in which candidates are sent overseas to gain practical experience after having completed a two-year training period.  

“These farmers are part of our future. One day they will be our clients and we would like to do everything in our power to assist them and help them succeed. Their success is our success,” concludes Nick.

For more information, contact Nick Serfontein on email nick@sernick.co.za. – Izak Hofmeyr, FarmBiz