Role of the dti in supporting the development of a strong and vibrant agriculture industry Date : 17 September 2010 Stephen Hanival Chief Director: Agro-processing.

Role of the dti in supporting the development of a strong and vibrant agriculture industry

Date : 17 September 2010Date : 17 September 2010

Stephen HanivalStephen HanivalChief Director: Agro-processingChief Director: [email protected]+27 12 394 1350 +27 12 394 1350

Portfolio Committee on Agriculture, Forestry and Fisheries

OutlineOutline

Agriculture/agro-processing value- chain

The dti’s mandate in agro-industries Draft Strategic Framework for Agro-

processing IPAP2 Priorities The dti’s incentives

Agro-Industry Value ChainAgro-Industry Value Chain

Sector map

Biotechnology

Intermediate inputsEnergy; WaterIrrigation equipmentFertilizer; ImplementsPackaging; FencingStructures; ToolsPumps & generators; Medicine

Maize

Wheat

Hay

Grain sorghum

Sugar cane

Ground nuts

Tobacco

Sunflower seed

Cotton

Viticulture

Citrus

Subtropical fruit

Vegetables

Deciduous fruit

Tea

Coffee

Flower

Game

Ostriches

Pigs

Goats

Sheep

Cattle

Poultry

Beans

Nuts

Field crops Horticulture Livestock

Agriculture

Evergreen

Fishing

Aquaculture

Fishing

Meat processing

Dairy products

Fruit & vegetableproducts

Fish products

Oils & fats

Grain mill products

Bakery products

Sugar & related

Confectionary products

Other food

Animal feed

Agro -processing

Distilleries

Malt Beverages

Soft drinks

Beverages

Wineries

Other non -food

Essential oils

Fibres

Starch

Bio -fuels

Medicinal / Biotech

HouseholdExpenditure

Fragrance

Textiles

Fuel

Pharmaceutical

Feeding into other value chains

Foodservices(hotel; restaurant; caterers)

WholesaleRetailLogisticsTourism

ExportsAgentsLogistics

Automotive

Government Expenditure

Chemicals

Other …

PRIM

ARY S

ECTO

R

SECO

NDARY S

ECTO

R

Sector map

Biotechnology

Intermediate inputsEnergy; WaterIrrigation equipmentFertilizer; ImplementsPackaging; FencingStructures; ToolsPumps & generators; Medicine

Maize

Wheat

Hay

Grain sorghum

Sugar cane

Ground nuts

Tobacco

Sunflower seed

Cotton

Viticulture

Citrus

Subtropical fruit

Vegetables

Deciduous fruit

Tea

Coffee

Flower

Game

Ostriches

Pigs

Goats

Sheep

Cattle

Poultry

Beans

Nuts

Field crops Horticulture Livestock

Agriculture

Evergreen

Fishing

Aquaculture

Fishing

Meat processing

Dairy products

Fruit & vegetableproducts

Fish products

Oils & fats

Grain mill products

Bakery products

Sugar & related

Confectionary products

Other food

Animal feed

Agro -processing

Distilleries

Malt Beverages

Soft drinks

Beverages

Wineries

Other non -food

Essential oils

Fibres

Starch

Bio -fuels

Medicinal / Biotech

HouseholdExpenditure

Fragrance

Textiles

Fuel

Pharmaceutical

Feeding into other value chains

Foodservices(hotel; restaurant; caterers)

WholesaleRetailLogisticsTourism

ExportsAgentsLogistics

Automotive

Government Expenditure

Chemicals

Other …

PRIM

ARY S

ECTO

R

SECO

NDARY S

ECTO

R

Source: R.Coetzee, IDC

The dti’s Mandate in Agro-The dti’s Mandate in Agro-ProcessingProcessing

Manufacturing – production processes that are not primarily influenced by nature

Typically off-farm, value addition, transformative

Exceptions are: – High-value agric. such as horticulture– Aquaculture– Organic produce

The dti’s Mandate in Agro-The dti’s Mandate in Agro-ProcessingProcessing

But reality is that agriculture/agro-processing are part of same value chain: Policy work therefore necessarily extends to primary

agriculture to some extent Strategy development cognisant of value-chain

imperatives Incentives broadened to include pack-houses,

aquaculture Regulatory activities include focus on primary

agriculture Trade policy and support (tariffs, export incentives)

Strategic Framework for Agro-Strategic Framework for Agro-processingprocessing

• Global trends:- World population growing rapidly- Land under agriculture relatively stable- Per capita income growth in large economies,

India and China- Consumer preferences for ‘sustainable food’ in

Developed Economies

- Important opportunities for SA Agro-industries…

Strategic Framework for Agro-Strategic Framework for Agro-processingprocessing

• SA trends:- Demographic changes as a result of decade of

growth- Mismatches in demand and supply in certain

products - oilseeds, meat, processed food- Basic food prices remain stubbornly high- Rural food production lower than in comparator

countries- Food security concerning in rural and urban areas

Strategic Framework for Agro-Strategic Framework for Agro-processingprocessing

• SA trends:- Major portion of agriculture and agro-processing

industries are mature, potential for growth limited – canning, tea, sugar, grains, industrial crops

- Nascent sectors have tendency to stall before ‘take-off’ phase – ostrich, honeybush tea, proteas, olives, biofuels

- Flow of new sectors, products, processes low compared to equivalent countries – Australia, Brazil

- High concentration levels likely stifling competition esp. in rural areas

Strategic Framework for Agro-Strategic Framework for Agro-processingprocessing

Trade BalanceFood Processing

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Rm Co

nstan

t Pric

es

Exports of goods and service Imports of goods and servicesLinear (Imports of goods and services) Linear (Exports of goods and service)

Trad

e Deficit

IPAP2/Business Plan PrioritiesIPAP2/Business Plan Priorities

• Food security – small scale milling, CompCom investigations, enforcement of bread standards

• Mature sectors – fruit and veg canning, rooibos tea, food control,

• Nascent sectors – biofuels, organic produce, aquaculture,

• New sectors – development of Agro-processing Development Centre concept

Expected ImpactsExpected Impacts• Food security – increased affordability, value for money

and rural production• Mature sectors – stabilisation of at risk sectors, improved

competitiveness positioning through export market support and product development

• Nascent sectors – accelerated policy and strategy development

• New sectors – accelerated flow of new products and process innovations

• Leading to: Demand pull from primary agriculture combined with new industry opportunities: Agro-Industrial Complex development

Support from the dti IncentivesSupport from the dti Incentives

Enterprise investment Programme (EIP)• Grant accessible to local and foreign owned entities investing

in SA.• Objective is to stimulate investment in manufacturing.• Qualifying investment costs: machinery, equipment, land and

buildings, and commercial vehicles.

Priority Sectors: Manufacture of food products, beverages and tobacco products

• Production, processing and preserving of meat, fish, fruit, vegetables, oils and fats.

• Manufacturing of grain mill products, starches/starch products and prepared animal feeds.

• Manufacturing of dairy products, beverages and other food products.

Support from the dti IncentivesSupport from the dti Incentives

Cooperative Incentive Scheme (CIS)

• Promote co-ops through the provision of a matching grant. • Improve the viability/competitiveness of co-ops by lowering

the cost of doing business. • Assist co-ops to acquire their start up requirements. • Build an initial asset base for emerging co-ops to enable

leveraging of other support. • Priority sectors in Manufacturing, Retail, Service and

Agricultural Sector.• Offering is a 90:10 matching cash grant for registered co-ops. • The maximum grant is R300 000. • Can be used for business development services.

Support from the dti IncentivesSupport from the dti Incentives

Export Marketing and Investment Assistance (EMIA)

• Partially compensates exporters for costs incurred in developing export markets and recruiting new FDI into SA.

• Matching grants for primary export marketing research to develop new export markets.

• Agro-processing.

Support from the dti IncentivesSupport from the dti Incentives

Export Councils • Farmed Abalone Export Council (FAEC) • SA Flower Export Council (ASSO Flowers)• SA Ostrich Business Chamber (SAOBC) • Wines of South Africa (WOSA) • Fresh Produce Exporters’ Forum/ Fruit SA• SA Fruit & Vegetable Canners’ Export Council • Meat Exporters of South Africa• SA Dairy Foundation

Support from the dti IncentivesSupport from the dti IncentivesThe Sector Specific Assistance Scheme

• Cost-sharing grant scheme to non-profit business organisations for collective sectoral development.

• Agro-processing• Agriculture• Chemical Allied Industries • Electronic Industries • Textile and Clothing • Metals and Allied Industries • Machinery, Allied and Electrical Industries • Motor Industry Components • Creative Industries • ICT

THANK YOU

The end

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