Dr Steven Cornelius, chief executive of OBP, said the grant given by Treasury would be paid out over a five-year period, allowing OBP to modernise its facilities. This, however, would take six years to complete and, in the meantime, OBP was at a disadvantage in the vaccine market, because the lack of access to new technology hindered its ability to develop new products.
Presenting OBP’s strategic plan for the year ahead in parliament this week to the portfolio committee for agriculture, forestry and fisheries, Cornelius said that although OBP was state-owned, it received little financial support from government. Apart from the grant from Treasury, the last operational funding received was R9 million in 2001. OBP’s main revenue stream came from vaccine sales to commercial farmers.
“We depend on commercial white farmers to buy our products. That is a problem because of the decline in the number of commercial farmers,” said Cornelius. The number of commercial farmers in South Africa has declined from around 66 000 in 1990 to around 37 000 currently.
Cornelius added that with many private companies also now manufacturing and/or supplying vaccine stock to farmers in South Africa, the business environment in which OBP operated was becoming increasingly competitive.
He said OBP was keen to explore a more sustainable business model that would see it provide more services for the Department of Agriculture, Forestry and Fisheries’ (DAFF) smallholder and emerging farmer support programmes, in exchange for budgetary support from the state.
Services could include training programmes for smallholder farmers about the prevention and treatment of animal diseases, said Cornelius.
By engaging more with the smallholder and emerging farming sector OBP hoped to strengthen its market share among these farmers.
“Our income from smallholder farmers is less than R1 million per year, out of a total annual revenue of roughly R150 million. But we hope to gradually tap into this market, because this is where the growth potential lies,” said Cornelius.