Grower-driven UCL on massive growth path one hundred years on

UCL’s success is without doubt primarily due to strong relations with its growers because growers benefit from the full value chain, they recognise that what is good for UCL is good for them. The company sets strategy based on grower welfare. In return, growers support the business through disciplined and quality raw material supply, representation and long-term planning. This allows UCL to focus on operations to make sure the job gets done as effectively and reliably as possible.” UCL CEO, Rolf Lütge

Established a century ago by farmers for farmers in the heartland of the KwaZulu-Natal Midlands, the Union Co-operative Bark Milling Company, now UCL Company (Pty) Ltd, is driven by growth, family ties and a deep connection to its German heritage.

Permission to set up three mission stations in the highlands of the KwaZulu-Natal Midlands by Zulu king Mpande kaSenzangakhona in 1854 started what has become a rich vein of German influence which persists in the region even to this day.

This initial migration was further boosted when skilled German artisans, farmers and businessmen fled the depravations of a post war Germany in the 1920s and 30s and the imminent invasion of Russian forces at the end of WWII.

“There was also an inheritance law where only the oldest son could inherit a farm. If there were brothers, they could stay but as workers. First the missionaries with their “Fachleute” or professionals such as carpenters and blacksmiths arrived. They were then followed by others who were corresponding with those who had left,” UCL board chairman, Conrad Klipp said.

This story resonates with many German farming families in the UCL shareholding. “We share a common history, a common culture and a common set of values and ethics. We are a family of likeminded farmers who subscribe to the same norms and standards. Excellence underpins everything we do,” he said.

An imposing honours board in the UCL head office foyer reveals a long list of names  carefully inscribed in gold, all reflecting their Germanic lineage.

For example, current UCL representative on the SA Canegrowers’ Congress and Mill Group Board chairman, Neil Wittig’s family tree reads like a who’s who of the UCL leadership across time. “My great grandfather, my grandfather and my father were all chairmen of the board. Even Conrad is a distant cousin. This is what makes this place as special as it is. UCL is in the blood of the community,” Wittig said.

And while cultural affiliation may have underscored shareholding in the past, today its more about whether an investor can deliver sugarcane, pine, avocados or wattle bark to the mill on a consistent and sustainable basis.

Klipp said UCL’s current-day prosperity and success was built on years of sacrifice and commitment by its members. “There were times when the company faced financial difficulties. Farmers dipped into their own pockets to keep it afloat. And there was no guarantee they would get their money back,” he said.

On employment, Klipp said the company creates space to provide opportunities for locals. “We are a community-led company that believes in providing employment for the local people. Training and skills development are a top priority. Because we have such high standards and expectations, our staff undergo continuous and rigorous training to meet those standards. We do not accept mediocrity and people who are hired from outside the area quickly embrace the culture,” he added.

In 1924 UCL Ltd started out as a wattle mill processing bark under the auspices of the Union Co-operative Bark Milling Company.  Wattle tannin was exported all over the world with a substantial order from Germany. “That was before the Second World War. There was a good demand for the product which was used in the manufacture of belts, shoes and harnesses in the main. I guess also military equipment such as bandoliers,” Klipp said.

However, the company’s balance sheet failed to strengthen – in short, a sizeable cash injection was needed. “The only way we could get onto a growth path was if we could secure a loan from the Land Bank,” Klipp said.

At that time South Africa was under British colonial rule. A company so heavily influenced by German-speaking ownership was always going to find such an application tough to negotiate. “We did finally get a loan, but it took a really long time before it was approved,” Klipp said.

After WWII, alternative methods of tanning came into vogue, which forced UCL to diversify its operation.

Sugarcane was successfully under production along the KwaZulu-Natal coast but planting it further inland was untried. JC Koch, a local farmer, planted the crop as fodder for his cattle as a trial. Remarkably it thrived, the quality was considered “very good”, and the farmer set about expanding his fields. His first crop was delivered to the Illovo mill at Darnall.

Unlike today, sugarcane was so lucrative that Illovo Sugar then moved to build a mill at Noodsberg.

UCL followed with its own development just a stone’s throw up the road crushing its first load of cane in 1966.

Adding sugarcane production and processing to the company’s balance sheet was a seminal moment in the company’s history.

Klipp said some shareholders were convinced the UCL endeavour would fail and tried to persuade members to get behind the Illovo mill. “Up until then everyone was a member of the Union Co-op., I think there may have been political interference. It divided the community for a long time. There was a lot of animosity. But that’s not the case anymore. Now we support each other regardless of which mill we use,” he said.

Looking ahead, Wittig said the focus was on aggressive and diverse growth. “The goal is to keep this area as strong as it is today. To continue to grow the company as much as possible while embracing as many diverse revenue streams as possible. For example, we have just completed the construction on a multi-million-rand state-of-the-art avocado packing house,” Wittig said.

Klipp described the modern-day UCL as “forward looking”, driven by aggressive and diverse growth with the backing of a healthy balance sheet. “When I took over as Chairman, I was very clear that we needed a plan and a clear goal that would take the company into the next 100 years in a position of strength. We want to carry on creating jobs for the local people. We live in a great community where everyone supports each other, we come from a similar culture and that’s our strength. The company has faced some tough times, but we stood together and even in the good times, we are standing together. That hopefully will never change,” he said.