Got no money? Here’s how to pull a rabbit out of a hat
Entrepreneur and CEO of P349 shows how breeding the little bunnies can create new hope for those seeking jobs
Thanks to a tax-saving scheme called 12J, a rabbit production business was saved from business rescue, then revived, and is now on the road to expansion.
The Coniglio abattoir at Carletonville on the West rand had been supporting 110 small-scale rabbit farmers when it was liquidated in October 2019, owing those farmers more than R16m. Entrepreneur Hennie Viljoen, CEO of P349, hopped to the rescue, having already established the Commercial Rabbit Producers association (Corpa) in September 2019.
About 80 producers signed up as members of Corpa, according to Viljoen, who now runs the rabbit business. As a result, 244 direct jobs have been saved.
Rabbits are best at one thing — breeding. So room is needed for rapid expansion, almost as fast as the rabbits can breed. Corpa is encouraging this expansion by enlarging the existing abattoir and establishing five regional agricultural development centres around the country.
As well as rabbit meat, the business can also produce rabbit pelts. Meanwhile, the rabbit droppings are an excellent fertiliser and can be used to help establish vegetable production, diversifying the benefits and opportunities for small farmers. Australia has a successful industry producing hats from rabbit fur. Why not in SA?
Hester Bibbey, who markets rabbit meat under the label Good Rabbit Meat, says there is strong demand offshore, in countries where eating rabbit meat is well established. Go to any good bistro in France and there is a strong chance that a rabbit dish will be on the menu, also in places such as China and in the Middle East.
Rabbits produced in SA can be prepared to order, after which they are frozen and packaged for the export market. The company hopes to soon have its rabbit meat products on the shelves in Spar supermarkets, and to secure higher demand, do cooking demonstrations and offer tastings. Among other health benefits, rabbit meat is high in protein, low in fat, high in vitamins and free of antibiotics or growth hormones.
Our venture capital business, which attracts capital for a range of carefully chosen projects designed to bring value to investors and support wider development goals, funded the revival of the rabbit enterprise by linking investors to the benefits of the 12J incentive.
Section 12J of the income tax act allows the investor to deduct the full capital amount of their investment from their income, for income tax assessment purposes, in the tax year the investment is made. It has proved pretty successful.
The rabbit production business can help educate and equip young, inexperienced farmers in rural areas, many of whom are currently unemployed, thereby stimulating small and medium-sized (SME) development, ownership and job creation in the communities where they farm. It is also scalable and repeatable — and hence can generate growth in economic activity in our stagnant economy.
It empowers ambitious and capable employees to themselves become fully-fledged business owners with a clear career growth path — even for junior staff, giving them the potential to own a profitable SME farming operation in the future.
This is more than a theory. These are real jobs benefiting real people. Abattoir supervisor Bongani Mogopodi, for instance, had been unemployed for three months before he landed a job at the facility . Now, not only can he plan a future, but he is developing a taste for rabbit meat.
The same business model is being considered for rabbit production in Botswana, and then for further expansion into Africa. New investors are being sought who want to cut their tax bill and support similar worthy, job-creating, projects.
The government is targeting agro-processing — which includes rabbit production — as a priority sector because of its potential for empowerment and job creation. And, however unusual it may sound, rabbit production is far from being mickey mouse. The Good Abattoir, as it is now named, has won several awards, including a recent accolade from the agriculture department, which chose it as the best abattoir in Gauteng.
The rabbit industry has a strong, compelling business case: the capital required to set up a rabbit producer is relatively small; not a lot of space is required for a production facility; operations are fairly simple because a producer does not need high-level qualifications; security is relatively cheap due to the small area involved; and disease risk is relatively low and containable should any outbreak occur.
Rabbit breeding is prolific, so rabbit meat is highly competitive; predator risks can be reduced with security measures; the SA market is underdeveloped and there is high domestic growth-potential with appropriate marketing campaigns; export markets are available; a certified rabbit abattoir ensures access to these export markets; the cost-benefit ratio is good, with high margins against relatively low risk; and the project quickly generates cash.
With all of this going for the industry, before long all of SA could be gobbling down bunny chow made from the real bunny.
• Hart is executive chair of Impact Investment Management.