MERLOG FOODS DTI US EMBASSY USAPEEC SEMINAR Importers

MERLOG FOODS

DTI, US EMBASSY & USAPEEC SEMINAR Importers Guide Poultry Meat Importers 1 -3 March 2016, Pretoria Presented by Georg Southey Merlog Foods Presentation

DTI seminar • Background to Merlog • Size of South African Chicken Market • Capital requirements • Import process • HDI (new importer) solution • Questions Merlog Foods Presentation

Background to Merlog • Started from a home office in 1994 (son and father) • Offered logistics services • Grown over 22 years to become one of the largest WHOLESALE, DISTRIBUTION, and IMPORT Businesses in SA • Distributes 7 – 10, 000 metric tons per month • Equivalent to 280 -380 fcl (full container loads) per month • Product make up: 60% frozen chicken Merlog Foods Presentation

Background to Merlog • www. merlogfoods. co. za Merlog Foods Presentation

Automated Cold Store (www. merlogfoods. co. za) Merlog Foods Presentation

DTI Workshop • Merlog operates from 2 warehouses • Head office and warehouse in Cato Ridge; Kwa Zulu Natal • 12, 000 pallet positions • Warehouse Heriotdale; Johannesburg • 2, 800 pallet positions • Fleet of nearly 50 delivery vehicles and trailers Merlog Foods Presentation

SIZE of South African CHICKEN MARKET • Annual Consumption • Imports (all cuts) • Local (all cuts) • Bone in Chicken imports • USA Quota 2, 200, 000 kg’s 250, 000 kg’s 1, 950, 000 kg’s 160, 000 kg’s 65, 000 kg’s • USA Quota as % of current imports +-40 % • Number of containers 650/qtr 2, 600 pa Merlog Foods Presentation

• Importing is not a get rich “scheme” • Successful businesses are built over time: - Through: • Market knowledge, trust, relationships, and reliability Merlog Foods Presentation

Capital required • Estimate cost for 1 container of chicken portions: Product Chicken Leg 1/4 Quantity 27 mt Price 750$/mt Exchange Rate R 16/US$ Product 327, 767 Duties 101, 870 Other 23, 901 Vat 56, 662 Total R Merlog Foods Presentation 510, 200

Process to Access Quota • Quota application to DAFF • DAFF assess applications and allocates Quota • DAFF issues Quota • Importer Applies for Rebate Permit from ITAC • Importer Negotiate to purchase product from Supplier • Importer Applies for Import permit from DAFF • Product is shipped • Import Clearing and customs Merlog Foods Presentation

• Veterinary Inspection and release • Sale of Product • Delivery to customer • Collect Payment from Customer • Repeat, repeat…… Merlog Foods Presentation

• Administration – Negotiate price – Agree shipping period – Currency Hedging – Insurance – Clearing Instructions – Payment terms Supplier (Cash Payment before receipt of Goods (CAD)) – Payment terms Clearing Agent – Customer credit worthiness – Customer payment receipt (14 – 30 days) Merlog Foods Presentation

New Participants need a Coach or Mentor • MERLOG FOODS JV with MFS 51% HDI : 49% MF • MEGA FOOD SUPPLIES • HDI HDI HDI (Quota Holders) Assistance with Sourcing, Logistics, Clearing, Marketing, Working Capital Merlog Foods Presentation

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• QUESTIONS? • Thank You for the opportunity to present today Merlog Foods Presentation

Merlog Foods Presentation

Merlog Foods Presentation