1

THE IMPACT OF FOCUSED AGRICULTURAL SUPPORT IN LED - By Robson Zimuto [CEO]

2

PROGRAMME FOR THE REGIONAL AND LOCAL ECONOMIC DEVELOPMENT SUMMIT 2012

ADA PresentationThe impact of focused agricultural support in

LEDSpecial focus on Middelrus/Midlands Out-

growers Project 30th October 2012

ICC Durban

3

PRESENTATION BRIEF1. ADA Establishment2. Mission, Vision, Strategic Goals & Objectives3. ADA Models 4. ADA & Dept. of Agriculture5. Basic achievements to date6. Focus on Middelrus/Midlands Out grower 7. Design of the project8. The support9. Strategic Partners in planning & implementation10. Current status [ Challenges and opportunities to excel]11. Future Plans12. Expected Impact13. Lessons to date

WHO ARE WE??• ADA is public entity that provides integrated development support

to previously disadvantaged entrant commercial farmers involved in small and large scale agribusiness operations from farm production businesses, value addition and marketing

• The main focus of ADA is: – Capacity building and skills development– Technical support– Infrastructure development– Enterprise and Value chain development– Access to markets– Leverage of funds

4

ADA ESTABLISHMENT

HISTORICAL BACKGROUND

1. At the Cabinet Indaba of June 2009 the DAE (Dept of Agriculture and Environmental Affairs) presentation included a proposal for the SPV as an option.

2. Importantly the SPV section of the presentation was linked to the initial 36 Land Bank Distressed farms.

3. ADA dealt with the 36 farms & assessed more farmers.4. Assessment resulted; a. 170 farmers b. Over 90% are in sugar due to various factors. c. Turnaround strategy put in place

5

ADA Establishment .....continued

6

CHALLENGES IN THE LAND REFORM

The following were identified as challenges facing the Land Reform Programme.

i) Funding for farmer settlement support lacked substantially behind the investment in land acquisition.

ii) Lack of co-ordination and integration in the planning and implementation of farmer settlement support services to land reform beneficiaries.

iii) Furthermore, support problems included:- lack of a comprehensive capacity building & training programme;- Poor co-ordination of available resources;- Poor and uncoordinated financial support; - Limited extension support;- Lack of access to commodity expertise; - Unsupported market access and no value chain access; - Supply of inappropriate technology; and- Limited access to inputs and technical support services at the appropriate time.

ADA Establishment .....continued

7

Mandate: To provide agricultural support services to entrant black commercialfarmers who have acquired land through the government’s Land ReformProgramme and on a private basis.

Vision:”A vibrant and sustainable agribusiness sector in KwaZulu-Natal province”.

Mission: The mission of the Agency is to lead and manage the delivery ofappropriate services to enable the agribusiness sector to achievesustainable success through partnerships and innovative knowledge.

OUR MANDATE, VISION AND MISSION

STRATEGIC GOALS STRATEGIC OBJECTIVES

Improve agricultural productivity and competitiveness of black commercial farmers

Provide business, technical, production and marketing support to black commercial farmers Facilitate the provision and development of infrastructure for commercial agriculture production Leverage funding for development from government, the private sector and donors Facilitate access to opportunities in the agribusiness value chain

Improve the knowledge and skills base of black commercial farmers

Link black commercial farmers to markets Create employment opportunities for youth, women, the physically challenged and broader rural community

An effective and efficient administration that promotes sound corporate governance and responsive service delivery

A fully capacitated human resource able to deliver on its mandate

Promote good governance and a legally sound organisation

Sound and stringent financial management and control

Build and broaden ADA’s brand visibility and brand positioning Implement ADA wide information and communication system

8

STRATEGIC GOALS AND OBJECTIVES

9

CURRENT EMPHASIS• Complete legislation process• Complete the database [now at 985 farmers]• Taking full responsibility of the provincial catalytic projects in

terms of planning & implementation.• Develop partnerships with authorities and like minded

organizations.• Value chain studies• Formalize & fine tuning systems & procedures

• Plan the commercialization of indigenous cattle & goats.

10

Farm production/

businessValue

addition

Marketing

0 5yrs

THE WHOLE

GRANTS/donations

Feasibility StudiesBusiness Plans

Market ResearchCapacity BuildingTechnical SupportLoan guaranteeInfrastructureLegal aspects

Social Facilitation

Farmer’s contributionGovernment departments

Donors

Capital itemsWorking Capital

Information technology

Developmentetc

Development Finance Institutions

Joint ventures.Investors etc

ExpansionChange of Product

Marketing CostsFurther investments

etc

Banks, Investors,Money markets

SOFT LOAN & OTHERS BANK LOANS

0 5yrs

PROPOSED FARMER FUNDING MODEL

ADA PLANNING, MONITORING & EVALUATION

EVAL

UAT

ION

(Im

pact

)

SCRE

ENIN

G &

SEL

ECTI

ON

Eval

uatio

n

Eval

uatio

n

11

AGRI-HUB CENTRE1. Marketing2. Processing and packaging3. Branding4. Quality Control5. Research & development6. Information &

dissemination[market, technology]7. Warehouse & distribution.8. Training/skills development9. Organizing Loans10.Inputs11.Production/demonstration

Local Market

Export MarketMarketing Agencies

Vegetables

LivestockProducts

Mushrooms

Grain

Feedback

Uni

vers

ities

Tr

aini

ng

Insti

tutio

ns

Gov

ernm

ent

&M

unic

ipal

ities

Indu

stry

Fina

ncia

l In

stitu

tions

Don

ors

THE PROPOSED AGRI-HUB CONCEPT

Off ShorePartners

Techn. Markets & fundraising

ClusTERSOut

Growers

Inputs

Fruits

Information

Loans

Machinery hire

Satellite centres

12

• It links farmers to the markets• It becomes a pool of services to the farmers for marketing

and inputs.• Job creation is increased at the out grower level and at the

agri-hub.• The farmer has a say in the value chain• More benefits to the farmer• Market driven• More land is put under production

13

Advantages of the Agri-Hub Model

ADA and Dept of Agriculture

• Major funding principal [our mother department to be]• ADA compliments and not competing• ADA focuses on business development from farm and into

the value chain. • ADA focuses on black commercial farmers in the land reform.• ADA will promote agri-hubs to compliment efforts of DAE and

other departments.

14

SOME EXAMPLES OF PROJECTS

15

Cluster Examples

Livestock Makhoba, Besters, Inkululeko,

Sugar, Fruits and ForestGledhow, illovo, TSB, Nkhumbuleni

Grain and Vegetables Siyathokoza, Middlerus,

Others Essential oils, Chicory

Livestock Cluster

16

17

VEGETABLE/IRRIGATION PROJECTS

SUGARCANE and CITRUS

18

EMPLOYMENT CREATED

From 2010/11 and 2011/12 ADA has created 2058 permanent jobs on different commercial farms, processing centers and in the market in addition to incomes raised, skills transferred and infrastructures developed

19

...Successes

20

BACKGROUND OF MIDDLERUS AGRICULTURAL HISTORY OF AREA

• Middelrus – Potatoes, vegetables, fruit (citrus, stone fruit and apples), soya and oats

• Weenen / Tugela Estates – Potatoes, vegetables & fruit (citrus, stone fruit and apples), soya and oats

• Muden – Sugar Cane, Pecan, Fruit (citrus stone fruit), soya, oats and vegetables

• Escourt – Summer veg, potatoes, maize, soya• Mooi-river – summer veg, seed potatoes, maize, soya• Craigie Burn – summer veg, seed, com potatoes, maize,

soya

21

DEVELOPMENT VISION ECONOMIC OBJECTIVES

• Increased income (roughly R15000/ha of veg and R30000/ha for fruit) and 70 jobs per 50ha of fruit ( 3 months) => Total +/- 1600 jobs p.a.

• Establish Economic HUB of Midlands • Arable Land back into agricultural production• Increased agricultural technical & management skills• Organised access by black farmers and landowners to

vegetable and fruit value chains • Development of small scale agriculture support system

22

COLLABORATION IN PLANNING & IMPLEMENTATION

Departments. Entities Private sector

DRD ADA Vrystaat

DAE Municipality Cliffie Egbrink

DEDT Siyathuthuka

COGTA Market

Premier’s office Fruit breeder

Insurance co.

KGB

Farmers

DEVELOPMENTAL VISION PROJECT STRUCTURE

Market Market Market

Oversight AGRI PROCESSING Equity

SUPPORT Supply Agreements 3 CO-OPInstitutional / Technical Bulk Buying / Equip

OUT-GROWERS 40% Commercial 60% Emerging

24

LAND REFORM GROUPS IN MIDDELRUS VALLEY

Basic information Hlanganani Emketeni Phumelelani Thembanani Ngwazini Gugulethu Zamokuhle Ebuhleni Igqumusha DoornkloofLegal body owning land CPA Trust Trust CPA Trust CPA CPA Trust Trust TrustNo. of families 47 12 40 28 36 44 26 100 45 10No. hectares 1035.09 333.46 443.17 355.04 253.60 344.14 121.41 1050.56 182.11

PROJECT DETAIL – Current Phase 1Middelrus VEGETABLE joint venture

Emketeni Emketeni GugulethuGugulethu PhumelelaniPhumelelani ThembananiThembanani NgwaziniNgwazini HlangananiHlanganani

Vrystaat farming Vrystaat farming

SIYATHUTHUKA Pty Ltd (Prozimax) Farming (Pty) Ltd – Community Pty Ltd

SIYATHUTHUKA Pty Ltd (Prozimax) Farming (Pty) Ltd – Community Pty Ltd

KwaGezubuso Pty LtdJOINT VENTURE

KwaGezubuso Pty LtdJOINT VENTURE

70%70%

30%30%

Management service – help resolve institutional issues of land owners, support implementation of development plans, and support active participation in & understanding of JV

Management service – help resolve institutional issues of land owners, support implementation of development plans, and support active participation in & understanding of JV

Each Community leases arable land to the Joint Venture and receives commercial rent

Each Community leases arable land to the Joint Venture and receives commercial rent

26

MIDLANDS VEGETABLE PROPOSALPHASE 2 – OUT-GROWER EXPANSION PLAN

• Increase pack shed capacity in valley• Encourage similar joint venture or partnership arrangements for est.

production:– – Craigie Burn 400ha soya, 500ha maize, 100ha vegetables– Weenen 100ha vegetables– Muden 100ha vegetables– Tugela estates 100ha vegetables– Estcourt 50ha vegetables– Mooi river 50ha vegetables– TOTAL (approx) 2000Ha 2500 Jobs

• Requires co-ordination of planting plans for effective marketing• Requires assessment of and expenditure on agricultural infrastructure –

Irrigation, fencing, operational costs @ avg of R75000/ha• Requires planning and institutional set up and maintenance support –

R700 000.00 per area or per 8 groups per annum for 5 years (R3m)

27

WHAT ARE THE EXPERIENCES FROM COLLABORATION?

• If there is no one lead agent, there is so much waste of time, can be pulling in different directions, sitting back, not sure of the next step, poor planning, no synchronization, costly, in accurate reports, mistimed activities etc

• Resources & experiences may become available easily• Confidence is built & bottlenecks are identified and attended

to easily.• Networking is enhanced• Implementation moves faster

28

COMPLETE BUSINESS PLAN

1. To focus on identifying more agribusiness opportunities e.g.. Livestock

2. To focus at farm level3. Funding plan4. Identify investors and more markets5. Management of the whole project6. Capacity building & social facilitation7. Reach more farms to participate in the agri-hub.8. Encourage maximum utilization of land.

29

CHALLENGES IN MIDLANDS OUT GROWERS & BEYOND

• Lacked single management for long.• Effects of climate change• Delays in planning & funding• Inadequate budgets• Social issues• Mixed farming nature presents complex problems –need for

holistic planning• Collective approach in commercial farming• Different expectations at all levels. [the process is naturally

slow]

LESSONS LEARNED• Need to identify lead department/organization from the start.• Conditional grants should not be used in isolation.• Due to the long historical disadvantages, there is a need for holistic

approach in support of the new commercial farmers.• More efforts should be put in integration of entrant farmers to

established groups of commercial farmers such as commodity associations and those in the value chain.

• Working with established commercial farmers brings markets & skills.

• Working with groups of farmers is a slow process & should involve the community at large.

• Needs at the level of the family should be considered and performance at the end should be measured at that level.

30

CONCLUSION

We believe that the future prosperity and sustainability of the agribusiness sub-sector rests on how well the entrant commercial farmers are developed to enable

them to participate in the mainstream of the economy.

31

Thank you

32