After entering administration last year, Agrexco is back on the international scene with a new owner that has high ambitions for the business. The difference now is that, with many growers having changed sides, there is far more competition in the market.
In its former permutation, Agrexco was, to all intents and purposes, controlled by the Israeli government. It was also a non-profit company that shared its proceeds with the growers, so growers were happy with Agrexco and that the government was supporting it. It was the top exporter in Israel and, according to its new chairman Gideon Bickel, continued to be until it “stopped working” in June 2011.
According to Bickel, there came a point when the government decided enough was enough, with the government eventually declaring Agrexco bankrupt. It was then that he saw an opportunity to enter a bid.
“I said ‘I’m ready to buy out all the activities, the name Carmel, the name Agrexco, to take the good people’. I gave an obligation in court to take a minimum of 50 employees and in fact we took 60 in Israel and 20 abroad. We changed the whole structure,” he explains. It was also agreed Bickel Group could choose which parts of the business to take and which to leave for the bankruptcy receivers.
In Israel, the company has taken all the logistics, including the three-hectare harbour known as the Carmel Co fruit terminal. In France, Agrexco had 30 people but has now cut that to two. In the UK, the company is in the process of selling its Carmel House terminal in Heathrow and, while that site employed 40 people, a new site in Hayes, Middlesex has a team of six, which is set to rise to nine people in the near future.
Bickel has also made the decision to merge the activity of Bickel Flowers, Bickel Export Group and all it had bought from Agrexco into one unit called Agrexco Carmel Agricultural Export Company Limited. “Now we say ‘with Agrexco Carmel one plus one is more than two’,” Bickel says.
The activity of the combined company began long after the start of the season on 20 November 2011. “We succeeded in a very short time to get different products from growers all over Israel who were eager to see that Agrexco was back in power,” Bickel says. “Growers that were forced to stop working with Agrexco because of this process were happy to come back. Step by step they are coming back and within a short time we are coming to nearly £2m per week. That is far below what Agrexco was but it’s on the way.
“I think the coming season, starting 1 October 2012 to 30 September 2013, will be more or less 50 per cent what Agrexco was in the past. The year after we will come back to normal power.It looks like a miracle. For us it’s normal.”
Agrexco Carmel is now supplying the British market with fresh herbs and flowers and, come summer, it will export grapes to UK supermarkets as well as stonefruit, mango, lychees, figs, melons and dates.
The struggles at Agrexco over the past year have been to the gain of other big suppliers in the country.
At Mehadrin, for instance, the company sees opportunity to benefit from the many changes taking place, and has gained a number of growers over the past year. UK general manager Marius du Plessis says Mehadrin picked up around 10-12 per cent of new citrus growers who were looking for a market and as many as 40 per cent of avocado growers.
As a result of its tie-up with major avocado producer Granot, Mehadrin now has some 65 per cent of Israeli avocado production, adding to its 70 per cent share of citrus. As a whole, Mehadrin farms on 8,500ha of land, producing a wide range of fruit and vegetables as diverse as grapefruit, dates, sweet potatoes and carrots.
Mehadrin sees itself as having “a big responsibility for getting all of those growers returns”, du Plessis says, but admits some growers have had something of a reality check since coming out of the Agrexco system.
“It’s been a big adjustment for growers in Israel,” he explains. “For us the thing is to calm the expectations and ensure the operation is running smoothly. We have a big responsibility in the Israeli agriculture industry.”
The focus at present is on stability, operational efficiency and establishing a good base for future growth, according to du Plessis.
Managing director Guy Binshtok has overseen a major growth in the company’s turnover, which has risen from 250 million shekels six years ago to over one billion shekels today. That drive has helped push Mehadrin to be a leader or major challenger in every product group in which it continues to operate, and has backed this with investment in 350 areas of agricultural land every year, with a particular focus on avocado, vegetables, citrus and other exotics.
Other producers have also been expanding as a result of the changes taking place in Israel. Exporter Agriver has recruited former Agrexco herb manager Bezalel Madmon, with a number of growers also following him in a move that significantly boosts Agriver’s clout in that sector.
As well as increasing the quantity of winter lines, the company is also adding a number of products to its summer lineup to give it a portfolio that includes products as diverse as figs, passionfruit, lychees, pomegranate and even chillies.
But integrating the new growers isn’t an easy process as many joined after the season start, and the weather hasn’t helped. “A number of growers that had only previously worked with Agrexco lost a lot of money and don’t know if they’ll ever get it back,” says Agriver’s Shiri Silagi. “They are not so trusting now and some have decided to split their business between several exporters to spread the risk.”
Another supplier, Adafresh, has also reported picking up a number of Agrexco growers and says it will have a much higher volume of crops available this year.
It’s clear that it’s not going to be easy, either for growers or exporters, but the changes taking place have given opportunity to a wider spread of suppliers to take a bigger role on the exporting stage. It’s a fast-evolving picture, and there seems to be plenty more to come. -
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