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Food for thought: Russell du Preez

Russell du Preez candidly admits that he was merely following the money when he first dipped his toes into agricultural investment almost 20 years ago. “I’m not from a rich family,” he says. “I only wanted to make money, to make something of my life. So I started trading anything I could.”

Russell du Preez, Group Chairman of RussellStone

It started with oil cakes – the by-products that remain after oils have been pressed out from plant parts such as soybeans and sunflower seeds, and which are often used as animal feed or fertiliser for crops. “I bought the oil cakes on credit, sold them on for a little profit and paid the suppliers who trusted me enough to let me buy on credit,” Russell recalls.

The profits from every trade gradually added up and Russell eventually found himself trading more than oil cakes. Today, the South African-based RussellStone Group is an investment house specialising in agricultural investments, with 26 companies in its portfolio. It’s spread across six countries in a variety of agribusinesses, from pig farms to olive groves.

As Chairman of the group, Russell has arguably found his pot of gold. But money is no longer what’s giving him the biggest satisfaction. “We are all in search of meaning,” he says. “But we can’t get meaning from money. We get meaning from other people and relationships. Without being connected to another person, persons, communities or country, we would have absolutely no relevance.

“I really enjoy the more holistic view of the world I have today. I want to try to make a real difference in Africa, to understand the real problems in Africa and to add value to the region.”

The appeal of agribusinesses to Russell – and what kept him in the sector for so long – is that they exemplify the importance of the human connections he has come to prize. “If we look at history, it’s clear that, without agriculture, communities would not have formed. It started with people planting a few crops and waiting for the rain, before evolving into irrigated planting, which removed some of the volatile effects of the weather. Then came permanent plantings, which is always the first sign of an industrialised economy.”

Even in developed economies, agriculture remains important. “Agriculture has a great multiplier effect,” Russell points out. “Take it away and it’s like removing a pillar. The whole economy will fall flat on its face.”

“Agriculture has a great multiplier effect. Take it away and it’s like removing a pillar. The whole economy will fall flat on its face.”

He illustrated his point by citing economist Craig Richardson’s 2005 study of Zimbabwe. After gaining its independence in 1980, and prior to the year 2000, the country had a thriving economy.

The first signs of trouble began between 2000 and 2003, when the government embarked on widespread land reforms, seizing commercial farms and removing property rights to them.

Following the reform, Zimbabwe’s inflation rose to 500% and the country’s currency lost more than 99% of its real exchange value. Russell explains the impact from the point of view of an investor.

Russell du Preez, Group Chairman of RussellStone

“If I can’t get the title deed on a piece of land, I will not put in capital planting trees and building a dam or an irrigation system that will last me 50 years. I will not invest in the country unless there is stability in the country’s institutions. I need to know that I have security on my capital.”

Craig mentioned much the same in his study of the country, observing that although Zimbabwe had several large dams and a network of irrigation systems, its farmlands still suffered widespread droughts. Without title deeds, people were unable to borrow from banks.

The banking sector took a hit, entrepreneurial activity came to a halt and land plots were left in ruins. Despite his more philosophical take on the value of his work today, it is clear that Russell remains pragmatic at heart. “I may have been in the agricultural sector for a long time, but I’m not an agriculturalist,” he admits.

“I’m a businessman who operates in an industry that I think has got the most potential out of all the different industries.”

He believes that developments in the industry will intensify in the coming years. “Agriculture is a derivative of technology,” he says. “Twenty years ago, a sow was producing about six to nine piglets every litter. Today, it can produce up to 12. In 1900, America was averaging 45 bushels of crops per acre. Today, it’s 185 bushels per acre. There have been huge improvements in technology and gene selection.

“A company is only relevant if it can solve a problem for someone else.”

“What Thomas Robert Malthus, the economist from the 1800s, predicted about us running out of food is completely wrong because agriculture is now enhanced by technology. It is the most technology-hungry industry in the world and, within the next 20 years, there’s going to be an explosion in the technology that is available.”

Russell certainly intends to stick around long enough to enjoy a slice of that pie. “I want to build a company that will last 100 years or more,” he says proudly. “To do that, I need to have principles. I can’t burn bridges; I need to build them, and to build relationships.

“For me, trust and solving problems for other people are the two most important things in running a business. A company is only relevant if it can solve a problem for someone else. I have a huge responsibility managing other people’s money – the shareholders’ money and the life savings of the farmers and producers. These people need to be able to trust me.”

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