“Dynamics of Rural Transformation in Emerging Economies”

New Delhi, India, 14-16 April 2010.

Mr. Lucky P. KhumaloActing Chief Director: Technology for Social Impact Programme

Ministry of Science and Technology, South Africa

Lucky.khumalo@dst.gov.za

Success Stories for Rural Development in

Agro-processing in South Africa

Structure of Presentation

Mandate of Ministry of Science &

Technology

National Policy Framework

DST Policy Responses

Discussion of CASE REPORTS

Mosquito Repellent (Indigenous Plant)

Essential Oils

Small-Scale Aquaculture

Science & Technology

Vision :To create a PROSPEROUS society that derives enduring and equitable benefits from Science & Technology.

Mission :To Develop, Coordinate and Manage a National System of Innovation (NSI) that will bring about

» Science Councils (R&D), e.g. CSIR, ARC, MRC, MINTEK, CGS etc)

» Higher Education Institutions (Universities & Univ of Technologies)

» Private Sector (industry & Firms)» Government Departments & NGO’s

maximum human capital – [knowledge development (R&D)] , sustainable economic growth and improved quality of Life .

The ability of a country to sustain rapid economic growth in the long run , is highly dependent on the effectiveness with which its institutions & policie s support knowledge generation, technological transformation and innovativeness of its enterprise s.

The Ministry of Science & Technology

Custodian for Research & Development

Funds Research and DevelopmentNational Research Agencies (8)

The CSIR (Council for Scientific and Industrial Research)

The ARC (Agricultural Research Council)

The MRC (Medical Research Council)

University ResearchThe NRF (National Research Foundation)

Collaboration with IndustryTIA (Technology Innovation Agency) T

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“It is only by standing on the shoulders of giants that I have been able to see further”

- Sir Isaac Newton, 1642–1727 Isaac Newton, Letter to Robert Hooke, February 5, 1675”

Quo Vardis . . . ?

Economy shift from production to manufacturing (beneficiation) &servicesGreen-Consumerism, i.e. drive to replace synthetics with organic constituents, and organic

molecules and products.

Climate Change challengesHow do we stimulate the uptake of novel technology solutions?

Creation of Wealth and Job Opportunities

What are the areas that lend themselves to post-harvest science & technology solutions?

Agro-processing

Bio-prospecting in indigenous bio-diversityIndigenous Medicinal Plants (scientifically-proven)

Essential Oils (aroma-therapeutic oils)

Aquaculture

“There is only one reliable pathway to economic pro sperity, and that‘s to be over-concentrated in

knowledge-based industries.” -Lou Glazer, President of Michigan Future-

National Policy Framework

Macro-Economic Reform Strategy (MERS) - 2002“processes that transform natural products into manufactured products & all associated processes… include the extraction of raw materials and procurement of inputs, production of intermediate goods and final products, packaging, marketing, distribution & retail”

Accelerated Shared Growth Initiative (ASGISA) - 2005“promoting opportunities for participation of marginalized communities in economic activity, & improving the quality of livelihoods of the poor”

Medium Term Strategic Framework (MTSF) - 2009Ensuring more inclusive economic growth, decent work and sustainable livelihoodsEconomic and social infrastructureRural development, food security and land reform

Industrial Policy Action Plan II (IPAP) - 2010Inclusive & Diversified Economic Growth, and Agro-processing

DST Policy Framework on

Development

White Paper on Science & Technology (1996)“Enhancing the Quality of Life (Chapter 2: 2.3); environmental sustainability, health provision, meeting basic community needs and reducing the cost of infrastructure provision”.

DST, National Research & Development Strategy (2002 )“establish a mission, technology for poverty reduction, to address one of the scourges of our age”

DST: Farmer to Pharma Strategy (F2Ph) (2007)“become a world leader in biotechnology & pharmaceuticals, based on the nation’s indigenous resources & expanding knowledge base”

“. people centred society, freedom from want, freedom from hunger, freedom from deprivation”. - President Nelson. R Mandela, May 1994 -

DST’s Response to Policy

(2000) Established the Poverty Relief ProgrammeProjects were in the disaster management / emergenc y relief modeagro-processing (beekeeping, leather, animal & plant fibre, crafts & paper making) .Developmental Project looking at low technologies

(2002) Technology for Development programme Improve quality of life by creating (directed) acce ss to technology, skills & know-how for Poverty Reduction in order to improv e Quality of Life (IQL).

(2005) Technology for Social Impact ProgrammeMandate: Demonstrate and implement innovation & Tec hnology transfer, for wealth & Job Creation and IQL.S&T for Sustainable Livelihoods & Human Settlement technology areas.Develop MODELS for anti-poverty strategies,

“There is only one reliable pathway to economic prosperity, and that‘s to be over-

concentrated in knowledge-based industries.” -Lou Glazer, President of Michigan Future-

DST’s: Farmer to Pharma Strategy

SA has the 3rd largest biodiversity in the worlda rich plant biodiversity,

one of the 6 plant kingdoms in the world and

almost 10% of all plants known to humankind occur exclusively within our borders

Wealth of indigenous knowledge

Wealth of “new” knowledge, research & IP

Drive to grow the bio-economy

Increasing Social Imbalances

“South Africa must become a world leader in biotechnology and the pharmaceuticals, based on

the nation’s indigenous resources and expanding knowledge base”

How DST we work?

Reformulated under the bio-economy banner &linkages to the DST 10yr Innovation Plan to harvest from the National System of Innovation (NSI) undertake demonstration & introduction of Technology Solutions, that addresses market failures, enhances quality of life; create jobs and wealth opportunities

Diversified and Inclusive Economic GrowthFood Security

Technology transfer of above-ground Post-Harvest beneficiation, (value-addition) technologies, & value-chain development of natural resources.Source, package & demonstrate innovative technology solutions inpartnership with the NSI (Universities, Science Councils, Industry, etc)

wealth creation through SMME’s and job creationHuman Capital developmentCluster Technologies (3 thrust areas):

Demonstration AgronomyDiversified Post-Harvest Beneficiation, andAquaculture (marine & fresh H2O; cold & warm ToC)

Placement of Economic Infrastructure in proximity to communities

Three THRUST Technology Areas for Livelihoods

Demonstration Agronomy Science5 – 10Ha proof of concept for agronomy (Med Plants, Food Cultivars)

Expansion from Demonstration to proof of BusinessBrown fields: expansion from Demonstration Agronomy to commercial

AquacultureAbalone Development Programme

Fin fish Development Programme (Fresh Water & Marine)

Beneficiation of Wild Harvested CommoditiesWild-Harvested Commodities (not Medicinal Plants)

Beneficiation of Farmed Produce(POST-farm gate) Value-Addition of Cultivated Commodities

Beneficiation of Waste Streams from Early ProcessingAgricultural Waste from pack houses, fresh produce markets, factories

Collaboration with (Rural Based) Universities & Science CouncilsDemo-Agronomy in Experimental Farms, Processing Facilities, and HCD development

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AQUACULTURE

TECHNOLOGIES

Support to Bio-Economy (Bio prospecting)

National POLICY work on EO:NEDLAC (National Economic Development & Labour Council)

– FRIDGE Study (Fund for Research into Industrial

Development, Growth Equity;

DTI Study on Essential OilsIdentified 20 Essential Oil herbs with economic potential and market in SA.

DTI - Cosmetics SMME Development Programme (CSDP)

DST – CSIR technology development (R&D) into final technology solutions.

Linkages to local market with international linksPerfume, flavor, pharmaceuticals and cosmetics & wellness industries

DEMO AGRONOMY

Steam distillation Extracted oil Candle making Finished Product

PLANT PROPAGATION

POST-HARVEST VALUE-ADDITION

commercially producing indigenous herbs, scientifically-proven to possess medicinal properties & to upscale to

post-harvest primary processing to manufacture supplementary medicines, nutritional supplements, and provide

raw materials for R&D, leading to further product development. [Community –Based SMME’s]

On-Site Development

30 Ha propagation site developed:Cuttings nursery5 Ha of Lemon grass25 Ha of Lippia javanica (high-value crops)Infrastructure: Irrigation (centre pivot); change & ablution facilities; office & lab & storage areas) and equipment

Steam distillation factory completed in 2005, extract & purify the oil (lemon grass & lippia)Community participants trained, in various skills areas, from basic literacy to oil purification.A mosquito repellent candle-making facility established Can produce 400 000 (250g) candles p.a. @ gross retail of R8million (US$120 000)[1US$ = ZAR7.5]

Burns for up to 50Hrs

Community SMME is being established, and Market Partnership for sales developed & product in the market.40 full-time jobs, 70% women

Essential Oils TechnologyDemonstration

R&D work by CSIR developed a turn-key hydro-distillation factory.

Agronomy ScienceSteam distillation Industry-standard technology, with over 70H, p.a.

Economic Model for Essential Oils (rose geranium)Minimum 30Ha, with 35 000 – 40 000 plants/ha Drip irrigation & water use rights

Human Capital Development (training)Accredited & Non-Accredited Training

Plant Propagation & Care & Good Agronomic practicesFactory Management (still, and plantation)

Oil separation, and bottling

Expansion Model & Optimization (5km)Land to expand & Out-growers

high-value, low-volume volatile aromatic constituents typically extracted from plants, and distinguishable by

their distinct aroma & volatile nature which causes them to evaporate when exposed to air.

Site 3

(30Ha)

30Haestablished

30Ha

Site 2

(30Ha)

Site 1

(30Ha)

Factory

70Ha(8 – 5am)

Essential Oils Model

Minimum 30Ha suitable land (expandable)

Density of 35 – 40 000 plants/ha

Drip irrigation & water use rights

Expansion Model & Optimization (5km)

Equipment & Infrastructure

Can TRIPPLE land under propagation [90Ha more]

1.5 f/t jobs/ha & 1 p/t Job/ hectare

Install irrigation,

Two work shifts @ Distillation factory (6AM – 2PM & 2 – 10PM)

Additional Jobs

Increased Oil Yields

AQUACULTURE

FISH FARMING TECHNOLOGY

POST-HARVEST BENEFICIATION

feeding harvesting

slaughtering processing & packaging facilities

“Aquaculture, not the Internet, represents the most promising investment opportunity of the 21st Century.”(Peter Drucker, Economist).

Aquaculture

Demonstrate technical and commercial viabilityCage Grow-Out (Trout Small-Scale)Fresh Water Fin Fish (tilapia, catfish, [carp and t routMarine Fin Fish (yellowtail, dusky & Silver Cob) , andShell fish (Abalone)

Introduce industry-standard affordable low -tech cage-culture

HDPE (High Density Poly-Ethylene) Cages

Technology TransferIndigenous species (abalone, tilapia, catfish, silv er kob) carp & troutSkills, Know-How, equipment

Enterprise Creation(SMME, PPP, Co-Op’s and Joint-Ventures etc)

“ controlled cultivation ” of a variety of fish, crustaceans, molluscs, and aq uatic plants in marine and freshwater mainly for human consumption , industrial use, and recreational purposes. . . “implies some form of intervention in the rearing process to enhance production, such as regular stocking, feeding, and protection from predators etc. [It] also implie s ownership of the stock being cultivated…”- FAO

Aquaculture Pilots

Ascertain the commercial potential of cage culture for indigenous species;

technical, economic and environmental feasibility

Develop a basis for commercial aquaculture development directed at Black Economic Empowerment (BEE), participation of rural communities; product beneficiation andBuild local capacity through tech transfer, training and skills development

provide an opportunity for socio-economic developme nt and beneficiation of rural resources and communities through the sustainable non-consumptiveutilization of water resources. Utilizes State-Owne d or privately-owned dams.

provide access to open water systems in a manner th at minimizes operational risks, reduce operational cost, exclude advance ski lls & technologies as entry barriers to participation.

The Small-Scale Trout Farmer Project

Partnership with Stellenbosch UniversityTechnology Transfer, Training, Business ModelFingerlings (200g) supply; and Business Incubation

Established 35 SMME ’sFormed into a Co-Operative: Hands-On Small Scale Trout Farmer Project

Woolworths Accredited, Bulk Services

Supply Agreement with Three Streams Smokehouse

Smoked Trout Products for Woolworths and Pick n PayAnnual Production 100 – 200tonnes per annum (2009)

2010 Establishing a Primary Processing Factory

Production Cage

Production Cages

10mx10mx5m floating cages with HDPE netsproduces 6 – 8 tonnes Grade A Rainbow Trout444 tonnes produced thus far

180 tonnes in 2009, (third of W. Cape Production )Proximity of on farm dams within a 25km radius, forming a cluster

Capacity for over 400 tonnes of trout per farming seasonNot replicable in other parts of the country, where large dams exists

New Model for large inland irrigation dams developed

Social Impacts

Direct JOB opportunities sustained298 Direct Job Opportunities establishedSecondary benefits to families

Human Capital DevelopmentNon-Accredited Training

Life Skills, ABET,

Accredited TrainingAquaculture Orientation ProgrammeAquaculture Certificate Course

Wealth CreationProcessing Factory to expand benefits

Model for Aquaculture

50-100 tonCompany (Pty) Ltd

<25% BEE

Core Commercial Unit

(Phase III)

Pilot Project(Phase II)

Developmental Model

Technology exchange

Economic beneficiation

10-20 tons>75% BEE

BEE / SMME Development

(Phase IV) 10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

50-100 tonCompany (Pty) Ltd

<25% BEE

Core Commercial Unit

(Phase III)

Pilot Project(Phase II)

Developmental Model

Technology exchange

Economic beneficiation

10-20 tons>75% BEE

BEE / SMME Development

(Phase IV) 10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

10-20 tons>75% BEE

Example of an HDPE Cage

provide access to open water systems in a manner th at minimizes operational risks , reduce operational cost, exclude advance skills & technologies as entry barriers to participation.

Thank You

Q & A