Transcript Agro-processing Sector

Agro-processing Sector
Presented to the National Council of Provinces
(NCOP)
27th October 2015
DDG Elaine Alexander
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PRESENTATION OUTLINE
 Macro economic statistics
 Performance of the agro-processing sector in SA Economy
 Strategic intervention pillars
 Opportunity for growth and investment
 Conclusion
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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
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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:
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
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Food and beverages – focal area;
Tobacco products;
Paper and wood products
Textiles, footwear and apparel;
Leather products; and
Rubber products
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Relative performance of the agro-processing industry
Comparison year
Agriculture
Mining
Manufacturing
Services
% share in Gross Domestic Product (GDP)
1970
2013
7.1
2.2
Manufacturing (2014)
Food, beverages and tobacco
Textiles, clothing and leather
goods
Wood and paper; publishing and
printing
Petroleum products, chemicals,
and plastic
Other non-metal mineral
products
Metals, machinery and equipment
10.6
9.2
37.1
28.2
% share of
Employment (‘000)
total
20.5
251
3.2
114
8.6
155
24.4
162
4.7
19.6
73
334
43.2
60.2
Contribution of
industry (‘000)
520 (32.3%)
Source: Stats SA
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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%
Relative contribution of agro-processing to the total manufacturing
sector in 2013
Agro-processing
GDP
Employment
Investment
28,7%
39,3%
16,2%
NDP sets economic growth target of at-least 5% by 2019
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Agricultural trade ratio (BFAP)
Ratio Exports:Imports
4
3.5
3
2.5
2
1.5
1
0.5
0
8
Opportunity for growth continued
Growth opportunity
NDP postulates a positive trade balance of primary and processed
agricultural products
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Trade balance by value 2013/14 (BFAP)
12
10
Exports
Imports
8
6
Billions
(R)
4
2
0
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Output: Agro-processing
400,000
R million (2005 prices)
350,000
300,000
250,000
200,000
150,000
100,000
50,000
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
NDP states that rural economy should be revived through increase in
production and subsequently processing of primary products
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Population growth (BFAP)
55
1.8
54
1.6
53
1.4
1.2
51
1
50
0.8
49
0.6
48
47
0.4
46
0.2
45
0
2005
2007
2009
2011
2013
SA population
2015
2017
2019
2021
2023
% Growth
12
% growth
Millions
52
Employment: Agro-processing
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
Informal
Formal
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Total
Agro-processing identified by NDP as having potential
to significantly create jobs. IPAP further depicts agro-processing as
having highest employment multiplier
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Problem statement
National economic development, employment and
food security potential under-realised
Access to
finance
High post-harvest loss
Limited participation of
SMEs in agro-processing
Lack of
appropriate
technology
Lack of
technical and
entrepreneurial
skills
Noncompliance of
market
standards
Inadequate
infrastructur
e
Limited market access
Market concentration
Raw
material
supply
challenges
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High post-harvest loses translates to raw material for processing
Agro-processing
segment
Category
Range of percentage
loss
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%
Food and
beverage
Smallholder producers
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Plans, policies and strategy for intervention
NDP
MTSF
Revive rural
economies
through greater
economic
potential
industries such as
agro-processing Outcomes
4, 5 and 7
Maintain positive
trade balance for
primary and
processed
agricultural
products
Creation of jobs
and reduction of
poverty
IPAP
Developing
emerging
broiler
producers
Developing
small scale
dry and wet
milling
industry
APAP
Support to
poultry/soybean/m
aize integrated
value chain
Enhancement Support to fruit and
of fruit and
vegetable value
vegetable
chain
canning
industry
Commercialis
ation of the
industrial
cassava and
moringa
SONA (9 Point Plan)
Revitalization of
agriculture and agroprocessing 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.
Strategy
Support and
development
of small and
medium
agroprocessing
enterprises
Support through
agricultural
research through
ARC & DST
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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.
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Hierarchy of implementation
Pillar 1
Entrepreneurial
Support
Coach-Lab for
entrepreneurs
with EDD &
Innovation HUB
Pillar 2&3
Enterprise
development
and R&D
Supplier
Development
Programme with
Tiger Brands and
Massmart
Pillar 4
Infrastructure
investment
Christy et.al, 2009
Bulk
infrastructure via
SIP 11
Processing
infrastructure via
thedti incentive
schemes
Christy et.al, 2009
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Integrated decision-making approach
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Opportunity for investment and growth
International demand
Demand-side
Local food demand
Other
Small & medium
agro processing
enterprises
•
•
•
•
BRIC
Rest of Africa
Global supply chains
International brands
• Support demographic food demand
trends
Opportunities
for exploitation
• Niche products
• New products
Agroindustrialization
Value addition
Supply-side
Improved
competitiveness
Import replacement
• Focus on surplus production
• Low value products
• Upgrading oftechnology & skills
Intervention
channels
• Replace imported raw materials
• Replace imported final product
• Source products from Africa instead
of further abroad
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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.

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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.
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Thank you
END
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