NAMC Annual Report Presentation 2008/09

Presentation to the Parliament’s Portfolio Committee: Agriculture, Forestry and Fisheries

10 November 2009Mrs Ntombi Msimang - Chairperson: NAMCMr TR Ramabulana - CEO: NAMC Mrs K Mahlathi- Acting CFO: NAMC

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Documents to be tabled

Thank you for affording the NAMC the opportunity to present its 2008/09 Annual Report

The NAMC will also take this opportunity to present the Annual Food Cost Review for 2008 as well as the Status of Statutory Measures Report for 2008

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The NAMC in brief

Established in terms of an Act of Parliament (MAPA, 1996) to advise the Minister and other Directly Affected Groups on agricultural marketing policy

Four main objectives: Increasing of market access for all participants Promotion of efficiency of the marketing of agricultural

products Optimization of export earnings Enhancement of the viability of the agricultural industry

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Members of the NAMC Council

The current members are: Mrs NM Msimang (Chairperson) Dr ASM Karaan (Vice-Chairperson) Prof HD van Schalkwyk Mr AD Young Prof JF Kirsten Mrs SE Moolman Mrs C Molo Mr DB Montshwe Mrs M Mannya Mrs M Gill

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Council Committees

Human Resources

Mr A Young (Chairperson) Mrs L Moolman Mrs M Mannya

Audit Committee

Mr Victor Nondabula (Chairperson)

Ms Mathebe Moja Mr Raymond Matlou Ms Gina Mill Prof H van Schalkwyk

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Employment Equity

Senior Managers 2 Female African 3 Male African 2 Male White

Total Staff 12 Female Black 10 Female White 12 Male Black 3 Male White

NAMC Divisions

The NAMC does its work through he following Divisions: Agribusiness Development Statutory Measures Agricultural Trusts Markets and Economic Research Centre

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This programme is threefold:1. Training component, which is export oriented

Emerging farmers that are export ready are trained on the following topics Supply chain and logistics training, Contract negotiations training, Compliance (social codes, company codes, sector codes, manufacturing codes

and Generic codes) The purpose of this course is to prepare emerging farmers that are export ready for

the challenges that they have to face when entering an export market

2. AgriMatch Trips Emerging producers that are export ready will be supported to participate on

exposure AgriMatch trips to a European country The objective of the trip is to afford the emerging producers to experience the

challenges that have to meet when exporting through engagement with importers

Export Promotions

Export Promotions 3. Farmers compliance to private standards: ComMark/NAMC

Small-Grant Fund A small grants scheme to assist emerging farmers achieve private

standards certification and thereby increase their agricultural exports It provides the means to lower the transaction costs associated with

private standards certification GlobalGAP, Tesco’s Natures Choice, and/or Fair Trade

Project involves: Supply side assessment: ID export ready farmers Demand side assessment: ID potential service providers Pre-audits: Conduct pre-audits on farms to assess action necessary to

obtain certification.

Results on the programme

Training 35 agribusinesses participated

Agrimatch trip 15 agribusinesses participated visited international

markets 20 agribusinesses participated in other export

promotion activities Farmers compliance to private standards

20 agribusinesses participated

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Agricultural Schemes The main purpose of the schemes are to uplift the black producers in the

agricultural sector and to encourage their integration into the commercial mainstream

Development and implementation with industry partners

Current schemes: Grain development scheme - through Grain farmer development association Livestock scheme - Eastern Cape Red Meat Project (ECRMP)

New schemes Wine and brandy schemes

The NAMC has since established 2 new trusts in an effort to raise additional funding required to ensure meaning impact of the programme

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Making Markets Matter Training Course It’s an intensive 5 day business development training workshop for African

agribusinesses In partnership with University of Stellenbosch and Cornell University 80 agribusinesses attended the course The farmers were trained on the following issues

Cash flow management, marketing strategy, financial analysis AgriBiz Training course for Women

As a follow up to the above training course, the NAMC in partnership with University of Stellenbosch and Cornell University designed a 3 day training course specifically for women that are involved in agriculture

The course offers training in marketing, financial and strategic management 30 women entrepreneurs attended The NAMC is conducting an after care programme so that participants can

implement what they have learnt from the course into their businesses 

NAMC Marketing Training Courses

Transformation Guidelines The NAMC is in the position to influence the manner in which

levy funds should be spent by industries In an attempt to influence how statutory fund (R222 million in

2008) should be spent, the following guidelines has been adopted 10 % for administration purposes 70 % for research, market information, market development, etc. 20 % for transformation purposes

The NAMC further developed transformation guidelines to guide the industries how to utilize the 20 % portion of transformation

The NAMC was guided by the transformation charter when developing those guidelines

Transformation Guidelines Through the transformation guidelines, the NAMC proposed the activities

below to industries as a means of contributing towards transformation taking place within the respective industries. Enterprise Development /Development Schemes

Industries should design and implement initiatives to assist and accelerate the development of black owned agribusinesses

Skills Development and Training Industries should design and implement initiatives that will capacitate

black entrepreneurs in their respective industries Management Control

Industries should facilitate, within their membership, incorporation of black people at management positions in enterprises and industry structures

Transformation Monitoring Industries should develop a database of black agribusiness, indicating

their business size and production

Statutory Measures

The MAP Act provides for the following statutory measures: Levies Records and returns Conducting of pools Control of exports Registrations Appointment of inspectors

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Statutory Measures applicable during the 2008/09 financial year

Industry Administrating body Statutory Measures

Levy Registration Records & Returns

Citrus (export only) Citrus Growers Association

Cotton Cotton SA

Dairy Milk SA

Deciduous fruit • Pome fruit• Stone fruit•Plum export promotion•Sterile Insect Technique

Deciduous Fruit Producers Trust

Dried fruit Deciduous Fruit Producers Trust

Grains (Maize, Oilseeds, Sorghum, and Winter Cereals)

The South African Grains and Information Services (SAGIS)

Lucerne Lucerne Seed Organisation

Milk Milk Producers’ Organisation

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Statutory Measures Applicable During the 2008/09 Financial Year... Continued

Industry Administrating body Statutory Measures

Levy Registration Records & Returns

Potato Potatoes SA

Red meat Red Meat Levy Admin

Sorghum Sorghum Trust

Table Grapes SA Table Grape Industry

Wine SAWIS (information)Winetech (research)Wosa (export promotion)WIDA (transformation)

Winter Cereals Winter Cereal Trust

Wool Cape Wools SA

Mohair Mohair SA

Pork SA Pork Producers’ Organisation

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Functions financed through Statutory Levies 2007/2008 financial year

Functions Amount spentR

Percentage of total levy expenditure %

Administration 15 727 636 7

Transformation 51 224 661 23

Export Promotion 25 777 992 12

Research 70 680 630 32

Information 36 861 025 17

Production development 2 154 024 1

Plant improvement 2 526 287 1

Quality control 5 299 026 2

Consumer education 12 008 719 5

TOTAL 222 260 000 100

New Applications

Poultry industry R 20 794 523 Wine industry R 50 million Sorghum industry R 2 million Red meat industry R 30 million Pork industry R 10 million Winter cereal industry R 30 million Market development (Apples, pears, apricots, nectarines, peaches) R20 million Market Development (Grape fruit Japan) R12 million

Trusts available fundsTRUST NAME FUNDS AVAILABLE(R) Oil and Protein Seeds Trust 178 057 076 Winter Cereal Trust 42 000 000 Meat Industry Trust 27 992 849 Deciduous Fruit Ind.Dev. Trust 13 000 000 Maize Trust 670 175 940 Wool Trust 247 595 220 Sorghum Trust 9 278 562 Mohair Trust 188 792 761 Citrus Industry Trust 16 462 196Cotton Trust 7 452 016Wine Trust 79 840 839Lucerne Trust 77 559

____________ TOTAL 1 480 725 018

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Food and input cost monitoring

In 2004 the Cabinet approved establishment of a national food price monitoring system

Two publications, namely: Quarterly Food Price Monitor (Urban &

Rural) Annual Food Cost Review

Done in collaboration with DAFF and Stats SA

Monitor and review trends in food prices

NAMC was mandated to coordinate input cost monitoring on behalf of the whole agricultural industry (DoA and DAG workshop in 2006)

Several Input Cost Monitor reports since 2007

Monitor and review trends in input costs in agro-value chains

Trade related research

The NAMC in collaboration with the Directorate International Trade of the DoA published 11 TradeProbes. The aim of the TradeProbe is to create knowledge of trade-related topics Topics covered include trade profiles, trade relations and trade gap analysis

Collaborative research on selected topics For example: “South Africa’s way ahead: looking east” together with Tralac

Trade related workshops (Trade Reference Group activity) Workshop on “Dispute settlement mechanism of the WTO” at the 2008 AEASA

conference. Workshop on “Non-tariff measures”

Currently Funded Projects SA Fruit and Wine Export Sector to deal with Climate Change: Carbon

Footprint Study of the Indian marketing for a range of SA produced fruit products SA’s trading relationship with Brazil and Argentina Investigation into Farmer Controlled Businesses in South Africa: Options and

lessons learnt Mapping, Understanding and Quantifying the SA Ostrich Value Chain The role of transport in logistics cost for agriculture Agribenchmark: Beef and grain sub-sectors Assessment of contractual agreements for agricultural market access in South

Africa: A smallholders' perspective Exploring the impact of local alternative food quality dynamics on small scale

farmers' access to markets Marketing strategy development for Sharon Fruit in the informal sector Emerging Farmers to comply with private standards: ComMark/NAMC Small-

Grant Pilot Fund Fruit trade flow

Study of the Indian marketing for a range of SA produced fruit products

Aim: Understand the Indian fruit

market from a consumer and supplier perspective in order to evaluate the potential of establishing a sustainable and profitable export market to India

Project intends to : Understanding the attitude of

Indian importers and traders on doing business with South African suppliers;

An analysis of the market structures and promotional culture in India and;

The development of the market SWOT analysis

Recommendations on market entry strategies for South African exporters will be formulated

• Marketing strategy development for Sharon Fruit in the informal sector

• Aim:– Develop a strategy to address the

smaller trade and informal Sharon fruit sectors

• Project intends to:– Developing a good understanding

of the perceptions towards Sharon Fruit in these sectors visa vie competing products and implementing strategies to address them.

– Developing a good understanding of the supply needs of traders in these sectors.

– Developing supply structures that will give optimum service to these sectors.

– Developing merchandizing and marketing supports systems for these sectors.

Market development activities

Plum Promotions in the UK and Germany

4 years project Year 1 increased volumes of

sales by 41%

Other fruit kinds promotions in UK and Germany

Grape fruit promotion in Japan

Local market for Sharon fruit

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Statement of Financial PerformanceYear Ended 31 March 2009

2008/09R’000

2007/08R’000

Revenue 24,361 17,138

Grants and transfersOther Income

22,459 1,902

17,020 118

Expenses 24,695 17,451

Administrative expensesStaff costsOther Operating expensesDepreciation and amortisationLoss on disposal of fixed assets

2,92411,610 9,743 388 30

2,066 9,069 6,049 254 13

Deficit from operating activities

(334) (313)

Net interest received 1,614 336

Net Surplus for the year 1,280 23

Irregular Expenditure

Incident Action Taken R’000

Failure to follow the tender process

Measures have been put in place to ensure that SCM Policy is followed and understood by all

R1,051