agro-processing sector presented to the national council of provinces (ncop) 27 th october 2015 ddg...
TRANSCRIPT
Agro-processing Sector
Presented to the National Council of Provinces (NCOP)
27th October 2015
DDG Elaine Alexander
1
PRESENTATION OUTLINE
Macro economic statistics
Performance of the agro-processing sector in SA Economy
Strategic intervention pillars
Opportunity for growth and investment
Conclusion
2
List of abbreviations
• APAP - Agricultural Policy Action Plan
• BFAP -Bureau for Food and Agricultural Policy
• GDP -Gross Domestic Product
• IPAP -Industrial Policy Action Plan
• MTSF -Medium Term Strategic Framework
• NDP - National Development Plan
• SIC - Standard Industrial Classification
• SONA - State of the Nation Address by the President
3
Classification
The wide-ranging nature of agro-processing sector implies a
wide range and heterogeneity of activities. United Nations
International Standard Industrial Classification (ISIC, 2013)
categorises agro-processing as follows: Food and beverages – focal area; Tobacco products; Paper and wood products Textiles, footwear and apparel; Leather products; and Rubber products
4
Relative performance of the agro-processing industry
Comparison year Agriculture Mining Manufacturing Services % share in Gross Domestic Product (GDP)
1970 7.1 10.6 37.1 43.22013 2.2 9.2 28.2 60.2
Manufacturing (2014) % share of total Employment (‘000)
Contribution of industry (‘000)
Food, beverages and tobacco 20.5 251Textiles, clothing and leather goods 3.2 114Wood and paper; publishing and printing 8.6 155Petroleum products, chemicals, and plastic 24.4 162
Other non-metal mineral products 4.7 73Metals, machinery and equipment 19.6 334
Source: Stats SA
520 (32.3%)
5
Significance of agro-processing sector (2013) Sector GDP Employment Investment
Agriculture, forestry and fisheries
2,4% 5,8% 1,9%
Manufacturing sector 16,9% 9,2% 19,1%
Agro-processing 4,8% 3,6% 3,1%
GDP Employment Investment
Agro-processing 28,7% 39,3% 16,2%
Relative contribution of agro-processing to the total manufacturing sector in 2013
NDP sets economic growth target of at-least 5% by 2019
6
7
Agricultural trade ratio (BFAP)
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
0
0.5
1
1.5
2
2.5
3
3.5
4Ratio Exports:Imports
8
Opportunity for growth continued
Growth opportunity
NDP postulates a positive trade balance of primary and processed agricultural products
9
Trade balance by value 2013/14 (BFAP)
Citrus fruit
Wine
Grapes
Maize
Apples and pears
Fruit &
vegetable juices
Wool
Nuts
Tobacco
Spirits, liqueurs etc
Soya-bean oil-cake
Poultry meat
Palm oil
Rice
Wheat
0
2
4
6
8
10
12
Exports Imports
Billions (R)
10
Output: Agro-processing
NDP states that rural economy should be revived through increase in production and subsequently processing of primary products
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000R million (200
5 prices)
11
Population growth (BFAP)
200520062007200820092010201120122013201420152016201720182019202020212022202345
46
47
48
49
50
51
52
53
54
55
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
SA population % Growth
Millions
% growth
12
Employment: Agro-processing
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Informal Formal Total
Agro-processing identified by NDP as having potentialto significantly create jobs. IPAP further depicts agro-processing as
having highest employment multiplier13
14
Problem statement
14
Market concentration
Limited participation of SMEs in agro-processing
Access to finance
Lack of appropriate technology
Lack of technical and
entrepreneurial skills
Raw material supply
challenges
Non-compliance of
market standards
National economic development, employment and food security potential under-realised
Limited market access
Inadequate infrastructur
e
High post-harvest loss
High post-harvest loses translates to raw material for processing
Agro-processing
segmentCategory
Range of percentage
loss
Food and
beverage
Roots and tubers 10 - 40%
Milk 8 - 16%
Fruits and vegetables 15 - 44%
Cereals, oil seeds and pulses 15 - 30%
Fish and sea food 10 - 40%
Meat 6 - 8%
Smallholder producers
15
Plans, policies and strategy for intervention NDP MTSF IPAP APAP SONA (9 Point Plan) Strategy
Revive rural economies
through greater economic potential
industries such as agro-processing
Maintain positive trade balance for primary and processed agricultural products
Creation of jobs and reduction of
poverty
Outcomes 4, 5 and 7
Developing emerging broiler
producers Support to
poultry/soybean/maize integrated value chain
Revitalization of agriculture and agro-processing value
chains prioritised as a result of their huge potential to promote economic growth, create jobs; attract
investment as well as promotion reduction of import bill on
processed products.
Developing small scale dry and wet
milling industry
Enhancement of fruit and vegetable canning industry
Support to fruit and vegetable value
chain
Commercialisation of the industrial cassava and moringa
Support through agricultural
research through ARC & DST
Support and development of small and medium agro-
processing enterprises
16
Strategic intervention pillars
Pillar 1 Entrepreneurial support.
Pillar 2− Enterprise development through provision of access to finance,
access to markets and incubation.
Pillar 3 Industry research and technology transfer.
Pillar 4 Agro-processing infrastructure investment.
17
Hierarchy of implementation
Christy et.al, 2009
Christy et.al, 2009
Pillar 1Entrepreneurial
Support
Pillar 2&3Enterprise
development and R&D
Pillar 4Infrastructure investment
Coach-Lab for entrepreneurs with EDD &
Innovation HUB
Supplier Development
Programme with Tiger Brands and
Massmart
Bulk infrastructure via
SIP 11Processing
infrastructure via thedti incentive
schemes
18
Integrated decision-making approach
19
Opportunity for investment and growth
Intervention channels
Agro-industrialization
Small & mediumagro processing-
enterprises
Demand-side
Supply-side
International demand
Local food demand
Other
Value addition
Improved competitiveness
Import replacement
• BRIC• Rest of Africa• Global supply chains• International brands
• Support demographic food demand trends
• Niche products• New products
• Focus on surplus production • Low value products
• Upgrading of technology & skills
• Replace imported raw materials• Replace imported final product• Source products from Africa instead
of further abroad
Opportunities for exploitation
20
Recapitalisation of Valley Farms Fruit Processing Facility
• Valley Farms Processing Company is the only black owned agro-processor of fruit purees and concentrated an dried fruit in South Africa. The fruit processing facility is situated under a 4000 sq.m. roof company in Levubu, Limpopo Province. Recapitalised by R4.7million
• Currently Valley Farms is owned by 7 Community Property Association (CPA’s) whose shares are held in a trust.
• Valley Farms processes Litchi, Mango, Guava, Pawpaw, Peach and Tomato. • The company currently employs 10 permanent employee and 60 seasonal employees
depending on the production season.
• The company exports 90% of its production (Europe, Israel, UAE, USA) and 10% locally.
• The recapitalising of the facility ensured that the efficiency and competitiveness of the facility is significantly improved resulting in sustenance of jobs
• The dti is currently assisting the facility to expand exports Malaysia, China, Japan, Indonesia, Australia and New Zealand.
21
Conclusion Agro-processing plays a leading and marked role in terms of output,
investment and export contribution by the manufacturing sector.
The trend of most economic variables is declining especially since 2008 (due to the recession). However, there is an opportunity for growth due to high demand of processed AFF products.
To reverse the trends & exploit processing opportunities, promoting investment in agro-processing and improving competitiveness of the industry is critical.
Promoting participation of start-up enterprises in agro processing activities is crucial to realise the policy imperatives of employment generation, rural development and food security and address the issue of concentration.
22
23
Thank you
END
24