REVITALIZATION OF THE AGRICULTURE AND AGRO-PROCESSING VALUE CHAIN 24 JUNE 2015 By Department of Agriculture, Forestry and Fisheries Department of Rural.

REVITALIZATION OF THE AGRICULTURE AND AGRO-PROCESSING VALUE CHAIN

24 JUNE 2015

By Department of Agriculture, Forestry and Fisheries

Department of Rural Development and Land Reform

INTRODUCTIONThe purpose is to update the Portfolio Committee on Rural Development and Land Reform onthe status of the State of the Nation Address (SONA) priorities on Revitalization of agriculture and agro-processing value chains and Agri-parks.the integration of Agricultural Policy Action Plan (APAP) and Agri-parks.

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Contents

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Strategic Overview

Governmental initiatives

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Strategic Overview

GROWTH TARGET: Annual increase of 0.5% (Current contribution to GDP: 2.5%)

Key

Gro

wth

Co

nst

rain

ts

Challenges

1. Agri-Parks

2. Fast Tracking Land Reform

3. Producer Support

4. Nine (9) Strategic Value Chains

5.Research and Innovation

6.Market Access and Trade Dev

CurrentStatus (Jun.15’)

Index of productionoutput in agro-processing, 2014-15unchanged 103.9 (unadjusted)

Gross value add for Agriculture;Forestry &Fisheries increasedby 5.6% in 2014.

Total jobs in Agriculture increased by 183 000, between 2014 and 2015 (total of 891 000)\

Key Interventions

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Enablers

1. Policy Certainty2. 122 million ha of land (10% arable of which 1.5% is high potential) 3. Agriculture and agro-processing labour intensive4.Growing demand for food and agro-products

Strategic Overview… Multiplier Effects

R1 million investment on job creation

R1 investment on fiscal revenue

R1 investment on export receipts

R1 investment on increase in GDP

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Government initiatives: - No critical challenges , and on schedule or completed.

- No critical challenges, but behind

schedule. - Critical challenges, and behind schedule

- Undetermined

Contents

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Strategic Overview

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Activity Start date

End date

36 of the 44 districts have confirmed sites

Feb-15 May-15

Prototypical agri-park completed; evaluation criteria developed

Feb-15 May 2015

KEY DECISIONS

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Agri-Parks

Strategic Scope:

Crowding in private sector investment in agro-processing; local economic development and job creation

Target (2016/17)

Establish Agri-Parks in 44 districts

Jobs target (2019)

Detailed calculations will be based on business plans per site

Gross Value Add (2019)

Detailed calculations will be based on business plans per site

Target or catalytic effectCHALLENGES PROPOSAL

Technical capacity at District level

Project Management Support Unit established

Fast Track regulatory approvals

Utilise multi-sectoral team established to deal with EIA’s; water approvals; etc to reduce time

PROGRESS TIME

LEAD: DRDLR

Free State Agri-ParksFree State Agri-Parks

Activity Start date

End date

Farmer and stakeholder consultation Feb 2015

June 2015

Business plans being developed (agro processing; market access) (all Provinces)

June 2015

August 2015

Production plans and capacity building plans underway for all sites (quickwin projects fully costed); •projects started to increase production

June 2015

July 2015

Infrastructure plans; designs; approvals; construction (commence August 2015); •construction started in NW

May 2015

July 2015

Market Access•DAFF to lead in opening up market opportunities, and providing market access.•Provinces busy with market plans both domestically and internationally

August 2015

September, 2015

Training and capacity building•DAFF to lead in providing all required training, both through extension services, and private public partnerships with the private sector.

April 2015

March 2016

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Agri-Parks

PROGRESS TIME

LEAD: DRDLRPrototype Agri-Park Completed

Prototype Agri-Park Completed

36 of 44 Agri-Park sites selected

Province Site (district municipality)

Eastern Cape Ncora (Chris Hani), Mtata (OR Tambo), Matatiele (Alfred Nzo), Lady Grey/

Sterkspruit (Joe Gqabi), Butterworth (Amatole) Springfontein (Xhariep), Phuthaditjhaba (Thabo Mofutsanyane),

Thabanchu (Mangaung), Wesselsbron (Lejwelephutsa)Free State

Randfontein (West Rand)Gauteng

Tzaneen (Mopani), Groblersdal (Sekhukhune), Modimolle (Waterberg), Aganang (Capricorn), Nwanedi (Vhembe)

Limpopo

KwaDukuza (Ilembe), Umgeni LM area (Umgungundlovu), Horseshoe Farm -Izingqoleni area (Ugu) Dundee (uMzinyathi), Vryheid (Zululand), Dannhauser (Amajuba), Ebutha farm (state land), Umzimkhulu (Harry Gwala), Eshowe (Uthungulu), Okhahlamba LM area (uThukela), Mkhuze (Umkhanyakude), KwaDukuza (Ilembe)

KwaZulu Natal

Bushbuckridge (Ehlanzeni); Mkhondo (Gert Sibande; JS Moroka (Nkangala)

Mpumalanga

Kuruman (John Toalo Gaetsewe), Springbok (Namakwa) Northern Cape

Springbokpan (Ngaka Modiri Molema), Vryburg (Ruth Segomotsi Mompati), Makapanstad (Bojanala)

North West

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Activity Start date

End date

100 submissions received for piloting 50:50 policy, from which 10 properties will be selected.

February, 2015

September, 2015

Of the 242 074 ha, 100% are acquired, and 100% are transferred.

April 2015

March 2016

KEY DECISIONS

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Fast tracking Land Reform

Strategic Scope:

• New policy framework for Land Reform piloted and finalised.

• Agrarian transformation;

Target (2019)

• 50:50 Policy Framework piloted with 10 properties;

Production Target (2019)

• 2 million hectares of strategically located high-value agricultural land acquired for key APAP commodities

Target or catalytic effectCHALLENGES PROPOSAL

Protracted process of acquiring land in variuos provinces

Expedite the completion of revising business process of acquiring land to established uniformity across provinces

PROGRESS TIME

LEAD: DRDLR

Activity Start date

End date

Comprehensive Producer Support Policy Framework & Integrated Agriculture Development Finance Policy, finalised for cabinet submission.

Feb 2015

Aug. 15

Implementation of AET strategy for training of smallholder farmers.

Aprl-15

Mar-16

Cofimvaba agricultural school revitalisation (DST funded)

Aprl-15

Mar-16

Total number of farmers supported through CASP and Ilema: ~ 60 943 farmers, R2.1 bil

Aprl-15

Mar-16

KEY DECISIONS

11 Improving Producer Support

Strategic Scope:

South Africa’s Producer Support Estimate is currently 3,2%, versus 4,6% for Brazil, 7,1% for the US, and 18,6% for the OECD average. Improved producer support will create an enabling environment improve comparative advantage.

Target (2019)

• To increase Producer Support Estimate from 3,2% to 5%.

Target or catalytic effect

PROGRESS TIME

LEAD: DAFF

Challenge ProposalIneffective models of producer support. Absence of uniform criteria and definitions. Unable to effectively plan, invest or measure smallholders

A new policy and model for Producer Support (with particular emphasise on smallholder) supported by a review of the existing financial instruments

Slow pace in the issuing of water licences

Proposed Incentive Programme for Climate Smart Agriculture (CSA) remains unfunded.

To submit a list of strategic projects to DWS for fast tracking

To submit a proposal to the Green Fund.

Competing demands of land

PDALF & SPLUMA to deal with protection of Agric. Land. In consultation with DMR & DRDLR, to finalise how deal with co-existence with mining.

Break Down of National Training Programme

ProvinceBeneficiaries for Credit

Bearing Training

Beneficiaries for Non Credit

Bearing Training

Total Beneficiaries

To Be Trained

Eastern Cape 310 1930 2240

Free State 2010 855 2865

Gauteng 535 2770 3305

KwaZulu

Natal765 196 961

Limpopo 9789 71 9860

Mpumalanga 0 3249 3249

Northern

Cape0 1718 1718

North West 350 0 350

Western Cape 140 2924 3064

TOTAL 13 899 13 713 27 612

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Activity Start date

End date

Private Sector Invest: To plant 687,300 hectares, producing 942,850 tons soya beans (↑36,7%)

Apr-15

Mar-16

Public Sector Invest.•Land under acquisition = 1 536ha•Hectares of soya:3 647ha[-44,053ha]•[Production in tons and total value add to be determined ]

Apr-15

Mar-16

KEY DECISIONS

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Production: Poultry

Strategic Scope:

• To contribute to 1 million hectares of under-utilised land in communal areas

• To contribute to 2% annual growth in Gross Value Add in Agriculture.

Target (2019)

• Add 14 481 jobs to the current 107 784 jobs through increased poultry production of 663,500t by 2019.

• Add 14 173 jobs through expansion of 238 500 hectares of soya production.

• Increased contribution to gross value of Agriculture GDP from R32.9 bil (21.8%) to 41.13 (25%) by 2019.

Target or catalytic effect

Challenge Proposal

• Ready-to- roll projects blocked

• Political intervention in LP Project: 2000 jobs + revitalise disused broilers

• Import (dumping) e.g., AGOA

• Provinces to cluster projects e.g. 5 GP poultry projects into bankable poultry

• High input costs

• PPP with DTI, EDD around IDC investment in crushing facilities.

• Agri-Park to deal with high input costs

Limpopo: Lebowakgomo Chicken AbattoirLimpopo: Lebowakgomo Chicken Abattoir

PROGRESS TIME

LEAD: DAFF

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Activity Start date

End date

Private Sector Invest (2014): No. of livestock: 13,896 cattle (↑0.25%); 24,048 sheep (↓1.96%).

April 2015

March 2016

Public Sector Invest.•Land under acquisition = 11 890ha (size of farms)•Total hectares for livestock production = 1.3 million ha (farm size) [Production output in tons and total value add to be determined]•140 Veterinarians will be deployed by Q4

April 2015

March 2016

KEY DECISIONS

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Production: Red Meat

Strategic Scope:

• To contribute to 1 million hectares of underutilised land in communal areas

• To contribute to 2% annual growth in Gross Value Add in Agriculture.

Target (2019)

Targeting 75 448 jobs (41 100 jobs in beef and 34 348 jobs for mutton) translated from expanded production of 286 200t (BFAP).

Target or catalytic effectChallenge Proposal

20% growth in consumer demand, met by 10% imports

Import replacement through the commercialisation of communal herds

Veterinary services inadequate and I in accessible

Funding proposal to implement OIE gap report recommendation

Commercialisation of communal herd owning 40% of national herd.

Buy-in and PPP with traditional authorities for effective expansion of the communal herd.

PROGRESS TIME

LEAD: DAFF

Free State: construction of the 14 animal handling facilitiesFree State: construction of the 14 animal handling facilities

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Activity Start date

End date

Private Sector Invest (2014): The sector is projected to plant 481,300 hectares of wheat (↑1% ).

Apr-15

Mar-16

Public Sector Invest.•Total hectares for Wheat (CASP and Ilima Letsema) = 150 hectares (farm size) [- 96,110ha p.a]

April 2015

March 2016

KEY DECISIONS

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Production: Wheat and other crops

Strategic Scope:

• To contribute to 1 million hectares of under-utilised land in communal areas

• To contribute to 2% annual growth in Gross Value Add in Agriculture.

Target (2019)

• To increase production from 1,2 mil tons by an additional 200 000 tons by 2019.

• To create an additional 8,000 new jobs to the existing 28,000 by 2019.

• To expand areas planted by an additional 61,000 hectares .

Target or catalytic effect

PROGRESS TIME

LEAD: DAFF

Challenge Proposal

Import 50% of wheat . Progressive replacement of wheat by canola and soya

Research on suitable wheat cultivars

40% of input cost is from fertilizer.

DMR, DTI and DAFF to review feasibility of SA becoming self reliant in fertilizer and in agricultural mechanisation.

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Activity Start date

End date

Private Sector Invest: To put 64 510 ha under production, with an expected export volume of 1,7 million tons, a total production ~2.6 million tons.

Apr-15

Mar-16

Public Sector Invest.•Total hectares under production for Fruit and Vegetables = 31 059 ha (farm size)

o Orange River Vineyard Project, female smallholders, 500ha

•Wolfberg Fruit Processors – Agri Hub (DST)

Apr-15

Mar-16

KEY DECISIONS

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Production: Fruit and Vegetables

Strategic Scope:

• To contribute to 1 million hectares of under-utilised land in communal areas

• To contribute to 2% annual growth in Gross Value Add in Agriculture.

Target (2019)

• Currently, over 50% of fruit produced is exported, and less than 20% of fruit and 46% of vegetables are sold through National Fresh Produce Markets (NFPM).

• To increase the output of NFPM by 10% and exports by 20%.

Target or catalytic effect

PROGRESS TIME

LEAD: DAFF

Western Cape: Hortgro tree planting project – CeresWestern Cape: Hortgro tree planting project – Ceres

Challenge Proposal

• SPS matters (CBS)

• 19 Fresh Produce markets derelict

Infrastructure investment in NFPM in collaboration with CoGTA

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Activity Start date

End date

Private Sector Invest (2015): The sector is projected to plant 3 900 hectares of sugar cane and 18 million tons of cane crushed.

April 2015

Mar-16

Public Sector Invest.•Total hectares under sugarcane production = 2 957 hectares (farm size) - ↓2776ha p.a.•Production in tons to be determined

April 2015

March 2016

KEY DECISIONS

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Production: Sugar

Strategic Scope:

• To contribute to 1 million hectares of under-utilised land in communal areas

• To contribute to 2% annual growth in Gross Value Add in Agriculture.

Target (2019)

• Expand small scale grower production in communal areas by 28 655 hectares by 2019

• 8000 jobs preserved, 34 303 new jobs created through the renewable energy and biofuels interventions.

• 2% biofuels penetration about 400 million litres per annum) into national liquid.

Target or catalytic effect

PROGRESS TIME

LEAD: DAFF

Challenge

Proposal

Land claims

To encourage that all sugar plantations under land claims are kept under sugar production through strategic partnerships.

Activity Start date

End date

Private Sector Invest (2014): The sector is projected to plant a little over 100,000 hectares of vineyards, a total of 2 000ha of new plantings, and about 1.5 million tons of wine grapes.

April 2015

March 2016

Public Sector Invest: Total hectares: 1 544 ha (farm size) RECAP and Enterprise Dev. •Production in tons to be determined

April 2015

March 2016

KEY DECISIONS

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Production: Wine

Strategic Scope:

• To contribute to 1 million hectares of under-utilised land in communal areas

• To contribute to 2% annual growth in Gross Value Add in Agriculture.

Target (2019)

• There is currently 99 463 ha under vineyard production and there is a potential to increase by 4 707 ha by 2019.

• Wine industry employs 289 151 people and will expand by 10 000 to a total of 282 625 by 2019.

• Wine industry contributes R30 billion to South African GDP there is a potential to increase up to R32 billion in 2019.

Target or catalytic effect

PROGRESS TIME

Western Cape: De Goree (Robertsons)Western Cape: De Goree (Robertsons)

Challenge Proposal

Greatest's contributor to agricultural exports/trade but is the least transformed sector

PPP agreement, and charter for the industry to address transformation

LEAD: DAFF

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Activity Start date

End date

Status

• Model for R&D governance structures developed with clear TORs completed

Apr-15 Mar-16

• RFP for R&D projects issued• 15 post graduates funded (DAFF) and 135

students (post graduate + interns) by DST

Apr-15 Mar-16

• E-agriculture - DST-funded initiative at ARC. Apr-15 Mar-16

• Manufacture and distribute WEMA drought resistant maize seed

Apr-15 Mar-16

KEY DECISIONS

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Technology Dev. and Innovation

Strategic Scope:

• To contribute to 1% annual growth in Gross Value Add in Agriculture.

• R&D agenda linked to key sectoral interventions and Value-chains:

Target (2019)

• 2–3 % of Agriculture GDP invested in R&D annually

• An effective integrated sector R & D governance system

• Critical mass of competent and appropriately skilled and placed researchers and extension personnel.

Target or catalytic effect

PROGRESS TIME

Challenge Proposal

• Under investment (-0.1%) in R&Do Capacity: no’s,

expertiseo Infrastructure

• Inability to apply/integrate innovation

• Aging senior researchers

Proposal (cost benefit anaflysis) for investment in the research and innovation value chain

LEAD: DSTKwazulu Natal: Post-graduates in Agric. Engineering at the Univ. of Kwazulu NatalKwazulu Natal: Post-graduates in Agric. Engineering at the Univ. of Kwazulu Natal

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Activity Activity Start date

End date

SADC-EU-EPA•SA will be allowed, for the first time to export 150 000 tons of sugar into the EU duty-free on an annual basis.•Wine will be allowed into EU on a duty free basis, up from 47 million litres to 110 million litres.Tripartite Free trade area (COMESA; SADC and EAC)

• 20 Farms are identified for final audits and SA-GAP certification.

• Negotiations initiated with Fort Cox College to expand existing MOU to offer record keeping workshops nationally to support for PPECB’s SA-GAP certification programme.

April 15’

March 16’

KEY DECISIONS

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Market Access and Trade

Strategic Scope:

• To increase market access for agriculture, forestry and fisheries products, both domestically and internationally (increased export trade and import replacement)

• Equitable and active participation by SMMEs and smallholders across the value chain.

Target (2019)

• 200 GAP certified smallholders• Implementation of 75% local procurement

specific to smallholder producers.

Target or catalytic effect

PROGRESS TIME

LEAD: DTI

Challenge Proposal75% of local procurement under discussion between National Treasury and Department of Small Business Development

DAFF to apply for designation of certain products for smallholders.

Greater synergy between IPAP and APAP

IPAP and APAP 2016/17 to determine common commodities to support and strategic approach.

RECOMMENDATIONS

It is recommended that the Portfolio Committee Take note of the status of the SONA priorities on Revitalization of agriculture and agro-processing value chains and Agri-parks.Take note of the integration of APAP and Agri-parks.

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KE YA LEBOGA

THANK YOU