Portfolio Committee on Agriculture, Forestry and Fisheries

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 Shanival@thedti.gov.za +27 12 394 1350

Outline
Agriculture/agro-processing valuechain The dtis mandate in agro-industries Draft Strategic Framework for Agroprocessing IPAP2 Priorities The dtis incentives

Agro-Industry Value Chain

Biotechnology Agents Logistics Exports Household Expenditure Agro - processing Livestock Cattle Meat processing Grain mill products Foodservices (hotel; restaurant; caterers) Wholesale Retail Logistics Tourism

Sector map
Field crops Maize Wheat Sugar cane

Agriculture Horticulture Deciduous fruit Vegetables Citrus Nuts Viticulture Subtropical fruit Flower Tea Coffee Evergreen Fishing Fishing Aquaculture Goats Ostriches Game

PRIMARY SECTOR

Poultry Pigs

SECONDARY SECTOR

Sheep

Bakery products Dairy products Fruit & vegetable products Oils & fats Animal feed Sugar & related Confectionary products Fish products Other food Beverages Other non Essential oils - food

Sunflower seed Tobacco Grain sorghum Ground nuts Cotton Beans Hay

Government Expenditure

Feeding into other value chains Chemicals Automotive Fragrance Fibres Textiles Starch Fuel Pharmaceutical Medicinal / Biotech Other

Distilleries Wineries Malt Beverages

Intermediate inputs Energy; Water Irrigation equipment Fertilizer; Implements Packaging; Fencing Structures; Tools Pumps & generators; Medicine

Bio - fuels Soft drinks

Source: R.Coetzee, IDC

The dtis Mandate in AgroProcessing

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 dtis Mandate in AgroProcessing

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-processing

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-processing

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-processing

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-processing

Trade Balance Food Processing
14,000 12,000

Trade Deficit

Rm Constant Prices

10,000 8,000 6,000 4,000 2,000 0

19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08

Exports of goods and service

Linear (Imports of goods and services)

Imports of goods and services

Linear (Exports of goods and service)

IPAP2/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 Agroprocessing Development Centre concept

Expected 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: AgroIndustrial Complex development

Support 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 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 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 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 Incentives

The 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

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THANK YOU

The end