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Rod Gravelet-Blondin: Stepping down, but not out

December 2011

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ILANA KOEGELENBERG, SA GRAIN CONTRIBUTOR

After 16 years at the South African Futures Exchange (Safex) and a lifelong passion for agriculture, Mr Rod Gravelet-Blondin (senior general manager: Commodity Derivatives, JSE) is ready to make way for new blood by going into semi-retirement.

Who is the man behind the face of the agricultural market at Safex and how does he see the future of agriculture in South Africa? Catching up with Rod before he gives over the reins at the end of the year, we sat down at the JSE over a cup of coffee…

His journey to the JSE

Rod was born in Pietermaritzburg in 1954 where he completed his schooling as well as his university studies (at the University of KwaZulu-Natal). “I was a very ordinary Natal schoolboy. I enjoyed my sport; played a lot of rugby, did a lot of athletics and I had fun doing it,” he explains.

Initially Rod set out with the idea of studying law after school. “At that stage TV had just started in South Africa and all those law programmes made it seem so interesting.” But, after some dealings with the traffic court while working as a traffic policeman during varsity vacation, Rod realised that law wasn’t quite as exciting as the TV made it out to be. The solution: changing his degree to a BCom in Economics.

Rod’s lifelong interest in agriculture pushed him to take a course in agricultural economics before completing his Economics Honours degree. “I don’t exactly know why agriculture interests me so much; I don’t come from a farm – but to me, agriculture is really where it all begins.”

After the completion of his degree, Rod was unsure what career to pursue, but he liked the idea of agriculture. That’s how he ended up at the Department of Agricultural Economics in Pretoria, sharing an office with former Blue Bull centre Tjokkie van der Merwe.

Three years later, in 1980, with their firstborn only a year old, the Blondins were asked to represent the Department of Agriculture abroad in Brussels. After three years, the department asked if they would be prepared to go to Geneva, Switzerland, to do the negotiations in the Uruguay Round of GATT (now the World Trade Organisation) and it didn’t take much persuasion for them to pack their bags again.

The Blondins stayed in Switzerland for five years, had their third child and according to Rod, probably overstayed their welcome a bit. They went back to Belgium for another two years after that before finally returning home, having represented South African agriculture abroad for a total of ten years.

In 1990, Rod returned to the department where he became involved in agricultural economics, marketing, customs union deliberations and international negotiations. Then in 1995, Safex approached him and asked if he would be prepared to be instrumental in helping to start up the new agricultural market, and that was that.

“I went over to Safex because I fundamentally believed that the free market was the way to go for agriculture in South Africa.”

Working at the JSE

Rod was initially brought on board to do the marketing and the training. “I didn’t know that much about the operation of a futures market when I started, but I learned quickly through self study,” Rod admits.

He explains that people tend to see Safex as an organisation on its own, but in reality it no longer exists. “In especially the rural areas, people think Safex is agriculture and Rod Blondin, but it’s a lot broader than that. Safex was bought over by the Johannesburg Stock Exchange (JSE) lock stock and barrel in 2001...”

According to Rod, assisting with the change of thinking to a certain extent is the highlight of his career. “When I was at university, agricultural economics consisted mainly of learning how the maize board operated and how the price was set. Now, agricultural economics students are taught about instruments like futures and options and how exchanges work. And I like to think that perhaps I contributed to that, even if it’s just a little. The thought of doing my part to make the world a better place, keeps me motivated.”

Life isn’t just ups though and Rod has had quite a bit of bumps along the way. “Being called the ‘antichrist’ at NAMPO once was quite a blow to me.” Abuse of the system also gets to Rod. “When you put your heart and soul into something you believe is good and maybe you inherently believe that everyone else is good, and people attempt to misuse the tools and the market (which I fundamentally believe is a good thing) for money – that is disappointing.”

Working with a bit of a language barrier always makes for a few good laughs. “When we set up the market we had trading seats for our members, correctly translated into Afrikaans as a ‘setel’. But most people just translated it to a ‘stoel’. One day, one of our members went bankrupt and I had the sheriff in my office wanting to take possession of this member’s ‘Safex stoel’. It took quite a while to convince him there was no physical chair!”

Free market and the future

Rod truly believes in the free market. He tells how they are often visited by people from all around the world, especially Africa, wanting their recipe for setting up a similar market. “I find it ironic that many South Africans don’t fully appreciate what we have in this country; our market place is something many people around the world look up to and are envious of, but we often take it for granted.”

Rod emphasises the importance of education in agriculture. “Safex will continue to grow, but there will always be a need for education. There is an enormous amount of misunderstanding and people criticize very easily when they don’t understand.”

His dream is to see the derivatives market grow more and more as people use it for what it’s worth, for the benefit that it brings. Post retirement, Rod will still be involved with the project bringing these benefits to the wider Southern Africa. “I think we have something here that is built on very sound principles and infrastructure that we can take into Africa. The breadbasket of the world is going to be Africa and we have to develop African resources and one of the ways to unlock capital into agriculture, is to have appropriate risk management tools.

“With many of the difficulties that arise now, people talk about the demand side causing problems, but a lot of it comes from the supply side. If people could just realise Africa’s potential, we’d get over a bunch of those difficulties. I would love to see the extension of what we do in South Africa into Africa. It’s a bit of a passion of mine.”

Early retirement

When Rod leaves the JSE at the end of the year, he will still hold a consulting position. “It’s a transition in a sense, semi-retirement only. I’m not walking into the sunset – I cannot afford to.” Rod explains that it’s neither a case of walking away nor being forced to leave, but a mutual agreement with the JSE to provide new opportunities. “I’ve been doing what I’m doing now for the last 16 years and it’s time for new blood; it’s time to move out of the way.

“I’m not stepping away from agriculture. I would like to be able to still contribute to the development of Africa. But I want to spend more time with my family and especially my grandkids.”

When he leaves, Rod would like to be remembered by his co-workers as someone who was part of a team; as someone who had the opportunity and privilege of contributing in a small way to agriculture in South Africa.

The successor

Shortly after starting at Safex, Rod was joined by Chris Sturgess in 1997. Chris will be taking over from Rod at the end of the year. “I’ve invested parts of my values and interests in Chris and to see him grow from a young guy to be able to take over at a relatively young age, is very encouraging to me. He is someone who I have mentored, someone who I have a lot of confidence in and I know he’s absolutely the right person to take over.”

Location differential

The location differential topic is an extremely heated one and Rod especially has received a tremendous amount of criticism surrounding its implementation.

“We brought in location differentials in the first place because we needed to have standardised contracts. I fundamentally believe that a lot of the criticism is as a result of a misunderstanding. We have been criticised widely, but the difficulty we have is that we have to look across the board to the whole agricultural sector, not just the producers. From the production to the usage, we have to take into account everyone’s needs as best we can.

“There has only ever been one research/academic report written on this topic, by Prof Matt Roberts from the USA, about three years back. It found that the location differential system is fundamentally a good system, it works well and if you take it away it could well be to the detriment of especially the South African producers.

“There is a lot of emotion about this topic, but emotion on its own is not a good argument. You cannot dislike a system without reason; you need some justification. We’ve seen no research done, no academic report that says these are the negative consequences of the system. All we have is ‘do away with it and you could cause problems’.

“Banks have indicated that doing away with the system would mean reducing the amount of capital that commercial banks would lend to agriculture. To me that can’t be a good thing.

“In the long term interest of agriculture in South Africa, reports indicate that it’s better to have this system. It is then very difficult to change a system because of emotion.

“Perhaps there is a lot of unhappiness around the misunderstanding that somehow you have these guys in Johannesburg who make a lot of money out of the system. I can assure you that we make no money out of the system. We are here to serve the producer and that gets my goat because some people think we are here to ‘bedonner’ the producers. ‘Ek is die grootste vyand van die boer in Suid-Afrika’ apparently. But it makes no sense. We are a service provider; we are on the same team as the producers!

“We have a skewed economy in this country – that is part of the problem. We have four or five wheat millers, but thousands of producers. The producers claim they can look after themselves, but in the 1930’s that lead to the founding of the board system because the producers ended up being dominated by the millers and needing protection. The location differential assists and helps to level the playing field a little bit in this skewed economy.”

South African producers

Despite a few unpleasant experiences with some, Rod still has a lot of respect for South African producers. “Considering the conditions we have in this country, you have to take your hat off to them for what they achieve. How they’ve adapted to the free market is also admirable. The South African producer should especially be credited for their understanding of free market instruments.”

Rod’s advice to the grain producers of South Africa? “Life is full of opportunities and the market provides opportunities as well as challenges. Learn to best use the instruments that are available and use them for what they were designed for, to manage your price risk…Also, never get caught up in speculation.”

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Family: meet the Blondins

Rod and his wife, Lynette, have been married for 35 years and have three children, each born in a different country. “We have a boerseun, a Brussels sprout and a Swiss roll,” Rod jokes.

His eldest son, Warren (32), was the only of Rod’s kids born in South Africa and is currently working in Pretoria (his birth town) as a graphic designer. He is married, with one child. The eldest daughter, Caryn (30), was born in Belgium and currently lives in Seattle (USA) with her husband, two children and a third on the way. “Having grandchildren halfway across the world is not always easy,” Rod admits. His youngest, Liesl (26), was born in Geneva and got married this year. She works as a schoolteacher in Pretoria. “With all the kids out of the house, it makes early retirement just a little bit easier.”

Publication: December 2011

Section: Wenartikels

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