Industry NSTF IDC · Chain Critical Industry Outcomes Outcome Measured by Baseline 1. Reduce the...

Agro-Processing and Agriculture value chain – Industry

Development Goals and industry development strategies

Pulses and Food Security Discussion Forum – NSTF

3 June 2016

Ms. U.Speirs

HEAD: Agro-industry

IDC

2

A competitive processed food, beverage, and other derived product industry that optimally utilises and develops local resources and/or regional resources to supply domestic demand and increase participation in international trade

Agro-Processing and Agriculture Value Chain and Industry Development Goals

Promote value adding expansionary agro processing activities to primary agricultural production that fosters economic

transformation and inclusivity

Value chain goal

Industry development

goal

3

Industry impact

A globally competitive processed food, beverage, and other derived products industry that optimally utilises and develops local resources and/or regional

resources to supply domestic demand and increase participation in international trade


goal

Increase GDP for agro-processing and agriculture above baseline forecasts

Improved trade balance for agro-processing and

agriculture above baseline forecasts

Increased levels of employment for agro-

processing and agriculture above baseline forecasts

Measured through

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2000 to 2004 2005 to 2009 2010 to 2014

Avg

. An

nu

al G

row

th (

%)

GDP Growth: Agriculture, food and beverages

-400 000

-300 000

-200 000

-100 000

0

100 000

200 000

300 000

400 000

500 000

2000 to 2004 2005 to 2009 2010 to 2014

R'm

-To

tal o

ver

5 y

ear

sTrade: Agriculture, food and beverages

Imports

Exports

Balance

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

1 800 000

End-2004 End-2009 End-2014

Nu

mb

er

Employment: Agriculture, food and beverages

4



Planned industry mpact on GDP




goal

Measured through




2.6%

4.5%

1.1%

2.3%2.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2000 to 2004 2005 to 2009 2010 to 2014 2015 to 2025

Avg

. An

nu

al G

row

th (

%)

Avg

. An

nu

al G

row

th (

%)

GDP Growth: Agriculture, food and beverages

History

55

1.6%

5.0%

2.0% 2.0%

2.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2000 to 2004 2005 to 2009 2010 to 2014 2015 to 2025

GDP Growth: Agriculture

History

Baseline

Target

3.3%

2.6%

0.8%

2.4% 2.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000 to 2004 2005 to 2009 2010 to 2014 2015 to 2025

GDP Growth: Food & Beverages

History

Baseline

Target

Planned industry impact on GDP-Cont

6






Planned impact on Trade




goal

Measured through

59 199

67 062

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

2000 to 2004 2005 to 2009 2010 to 2014 2025

R'm

R'm

Trade balance: Agriculture, food and beverages (average per year)

77

Planned impact on Trade-Cont

4 322

-1 517

-3 853

7 098

12 737

-6 000

-1 000

4 000

9 000

14 000

2000 to 2004 2005 to 2009 2010 to 2014 2025

R'm

Trade Balance: Food & Bev

History

Baseline

Target

10 204 11 526

26 060

52 10154 325

0

10 000

20 000

30 000

40 000

50 000

60 000

2000 to 2004 2005 to 2009 2010 to 2014 2025

R'm

Trade Balance: Agriculture

History

Target

Target

8






Planned impact on employment




goal

Measured through

1 592

1 080 1 0681 161

1 296

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

End-2004 End-2009 End-2014 End-2025

Nu

mb

er

(th

ou

san

ds)

Nu

mb

er

(th

ou

san

ds)

Employment: Agriculture, food and beverages

History Baseline forecast Target forecast

99

Planned impact on employment - cont

1 352 972

834 240 818 898 847 190928 026

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

End-2004 End-2009 End-2014 End-2025

Employment: Agriculture

History

Baseline

Target239 005 246 115 249 374

313 676

368 223

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

End-2004 End-2009 End-2014 End-2025

Employment: Food & Bev

History

Baseline

Target

10

Field Crop Processing Value ChainValued at R54bn

11

National Objectives related to the Field Crop Processing Value Chain

1. Increase the primary production of soy beans, sorghum and barley largely to:

• Encourage further local production of soy beans to reduce importation soy bean and soy

meal;

• Stimulate local production of sorghum in support of the emerging Bio-fuels industry; and

• Stimulate local production of barley in support of the malting industry.

2. IDC to partner with processors to support emerging farmers to grow into commercial scale.

3. Support the development of storage facilities in suitable rural areas.

4. Support the development of new, disease resistant and adaptable varieties of seed.

12

Description • The industry includes the following sectors: maize, wheat, sugar, sunflower seeds, soya beans, tobacco, barley, sorghum and others

• Encouraging the primary field crop production for processing in South Africa.• Support and Develop Emerging Farmers• SA only self-sufficient with regards to maize and net importer of others.

Contribution to industry development goals

• Still to be determined

Constraints and challenges in the industry

• High Input Costs• Dominated by large scale commercial farmers• Cheap Imports• No subsidies to support the primary production• No finance and skills development for emerging black farmers• Uncertainty on land policy • Access to water rights

External requirements for success

• Clarity / finalisation of agricultural and policy• Lower inputs costs or provision of subsidies• Lowering the cost of financing• Promulgation of the National Bio-Fuels Implementation Strategy

Requirements for industry interventions from within IDC

• Lower cost of financing / Special Schemes• Influence government to provide subsidies and incentives.• Lobby for and/or provide grant funding• Influence national policy• Support and funding industries that lower the cost of farming inputs

Investment required from IDC over 10 year period

R 2-5 billion

Field Crop Processing

Overview

13

Outcome Measured by Baseline

Reduce the cost of inputs • Tracking of fertilizer, fuel and electricity costs.

• To be determined

Increase production hectares • Increase in hectares • Soy 680 000 ha• Sorghum 70 500 ha• Barley 85 125 ha

Improve market access • Less reliance on large Co-Operatives to purchase produce.

• To be determined

Reduction of Imports of Soy Cake • Tons imported • 600 000 tons

Support research and development • Increase yield • See above

Development and Support of emerging black farmers

• Investment • To be determined

Building of Storage Facilities • Growth in Storage Capacities • To be determined

Game changing opportunities – Field Crop Processing VC1

Critical Industry Outcomes

14

Value chain mapping – Field Crop Processing

1515

• Financial intervention in

production will improve

operating capacity at

processing level, in turn

putting downward

pressure on the prices

of both final product and

that of the by-product

for the benefit of

consumers and related

industries such as

poultry.

Soyabean as example

1616

Soyabean complex

1717

• Investment to increase primary soya beans production;

• Policy intervention with a view to increase domestic wheat production (SA a net

importer);

• Finalisation of the biofuel industry direction to unlock value within sorghum

value chain

• Partnerships with the beer companies operating in SA with regards to barley

productions

Game Changing Opportunities

18

Horticulture Value ChainValued at R59bn

19

National objectives related to the Horticulture Value Chain VC2

What are the current national objectives (if any) related to the value chain. Refer to the National Development Plan, New Growth Path, IPAP or others where relevant.

Expand production for export to increase foreign exchange earnings

Increasing South Africa’s competitiveness in terms of Processing (adding value to primary

products)

Diversification of export markets

Protecting and enhancing SA’s competitiveness in the export markets

Adapting to dynamic market conditions (local and international)

Fully exploiting South Africa’s counter cyclical production window

Developing under-used irrigation land

Broadening the involvement of black farmers

Increasing research & development to drive innovation

20

Horticultural value chain: example Citrus

21

Opportunities to reach IDGs

• Horticulture Value Chain Goal and Industry Development Goals (IDGs)

• Identification of opportunities to reach IDGs

Cultivar development, IP protection

Nursery development / modernisation / standards

Engagement with key stakeholders determining potential out grower supplier base for

example: Fruits Unlimited, Karsten Holdings, Capespan, Westfalia, ZZ2.

Continuous interaction with rural smallholder groups evaluating potential projects to bring

black farmers into the commercial value chain

Increase exports of local production and identifying co-funding opportunities for example

Landbank, Coops, PIC etc.

Looking for opportunities to decrease input costs

•

22

Game Changing Opportunities: Overview of Horticulture

Description Unlocking the potential value within the Horticultural Value Chain

Constraints and Challenges in the Industry

• Rising input costs: Electricity, chemicals, labour, fuel, packaging• Industry Transformation: economy of scale limits participation by

small scale black farmers• High start-up costs are a huge barrier to entry


• Improved engagement with international phyto-sanitary regulating authorities

• Incentives from government for success for example a tax incentive for orchard development or transformation

• Government support with foreign African governments to enhance and develop trade


• The IDC, in order to play a more central role in the Agro – industries, will actively engage with a wider group of stakeholders from primary production right through to exports remove relevant bottlenecks.

23

Game Changing Opportunities Horticulture Value Chain

Critical Industry Outcomes


1. Reduce the cost of inputs • Using benchmarking companies, buyers groups and study groups

Cost of fertilizers, electricity, labour, packaging and fuelsrepresent on average 73% of total costs

2. Improve Market access • New destinations and new products

• Year-on-year industry statistics

3. Exports • Increased exports • Year-on-year industry statistics

4. Sustainability of out growers • Number of black farmers reaching commercial status

• Membership of commercialfarmers unions/coops/companies

24

Game Changing Opportunities: Horticulture Value Chain

IDC Deliverables

Outcome 2015/16 2016/17 2017/18 2018/19

1. Reduced cost of inputs

Support benchmarking initiatives; berries, nuts and avocados

Support building of a second nitrogen fertilizer manufacturer

2. Improve Market access

On-goingcollaboration with exporters and processors

On-going collaboration with exporters and processors



3. Exports Collaboration with industry bodies and government departments: CGI, Subtrop, Hortgro, SATI, PPECB: monitoring export growth rate.

4. Sustainability of out growers

Funding schemes for bodies funding out growers: one funding/investment per annum of R50 – R200m p.a.

25

Poultry Value ChainValued at R37bn and the largest of the animal

protein

26

Description The unlocking of potential value within the poultry value chain (i.e. Broiler Industry / Egg –laying)



• Rising feed costs which represents ca. 70% of total costs;• Imports negatively impacting the industry;• Industry transformation;• Economies of scale;• The potential for new disease outbreaks continues to be a downside risk;• Inadequate market access for small-holder independent producers


• Engagement with the International Trade Administration Commission (‘ITAC’) in respect of the motivation for continued tariff protection;

• The funding opportunities of ‘Energy efficient’ plant solutions for the poultry value chain;• Monitoring of illegal imports (SARS).• Engage with relevant organizations (SAPA, DTI, Agricultural Research Council (‘ARC’)) in

determining the viability of establishing a Research and Development facility within South Africa that would be able to produce its own genetic material (i.e. day old chick supply)


It is noted that the IDC Strategic Intervention would not necessarily be entirely limited to theprovision of IDC financial support (inclusive of bespoke funding schemes); however it may serveto facilitate on-going collaboration between key stakeholders (i.e. DAFF, SAPA, BFAP, Retailers) inensuring that relevant bottlenecks can be removed.


R500 – R800 million

Game changing opportunities – Poultry Industry

Overview

Gross Value Contribution to Rank within year-on-year

of Industry Agri GDP Agri Sector Direct Total (incl. Indirect) growth to Sept 2014 Imports Domestic

R33bn 16.40% 1 48000 * 108000 10.40% 62% 38%

Employment % Growth in Supply

27

Poultry Value Chain Mapping

Legend: BROILER INDUSTRY

IDC Opportunities for IDC

to play a strategic

intervention role

ANIMAL FEED MANUFACTURING

Grand Parents

imported from Parent Farms Broiler Farms AbattoirsAbattoirs

Genetic Suppliers

21 weeks Rearing 21 weeks Rearing 35 Days Distribution

22 weeks Breeding 22 weeks Breeding

62 weeks 62 weeks Market

3 weeks Hatchery 3 weeks Hatchery Secondary

Fresh Products Products Frozen Products

28

National objectives related to the Poultry Industry

• Poultry Value Chain Goal and Industry Development Goals (IDGs)

Identification of opportunities to reach IDG’s:

Assisting broiler out-growers in building capacity and gaining market access – In essence, determine where and

how can Black emerging small scale farmers best enter the commercial supply chain and thereby boost industry

transformation;

Engagement with key stakeholders (i.e. Astral, Rainbow Chickens (‘RCL’) etc.) in determining potential linkage

areas with out-growers. These initiatives may also involve facilitation of equity buy-in transactions by experienced

HDI into established holding companies;

Given IDC’s Inclusive Value Chain Strategy and MOU’s that have been signed with retailers (i.e. PnP, Massmart),

continue to collaborate with retailers in ensuring that all poultry products (i.e. duck/ostrich and further value–added

products) gain market access;

Increase exports of local production and identify co-funding opportunities in ROA.

Decreasing the cost of feed (e.g. stimulation of investment in soybean). In essence, the viability of further

investment within the local soybean value chain may partially alleviate the dependence on internationally procured

soybean meal.

SOYA BEAN PRODUCTION

• Estimated 938 000 tons of soya

bean produced in SA.

• Around 87% converted into oil and

oilcake for livestock feed.

• SA imports over 620 tons of soya

oilcake.

MAIZE PRODUCTION

• 14.9 million tons of maize on

average produced in SA

annually.

• Around 39% for feed use.

• Annual trade balance averaged

USD 410.9 million surplus

between 2005 and 2014.

ANIMAL FEED MANUFACTURING

COMMERCIAL BROILER MAJOR FEED PRODUCERS

Major producers in broiler feed industry in order of size:

• Meadow Feeds (owned by Astral Foods),

• Epol (owned by RCL Foods),

• Afgri Feeds (owned by Afgri),

• Nova Feeds (owned by Quantum Foods) Nutri Feeds

(owned by Country Bird Holdings).

High feed costs are a major factor

affecting the poultry value chain’s

competitiveness. SA is a net

importer of soya bean cake oilcake

despite increased production of

soya bean. This is due to historic

lack of crushing capacity.

However, crushing capacity has

expanded rapidly, and there is a

need to increase soya bean

production. IDC could look at

neighbouring countries for more

competitive production of soya

bean and integration with the SA

poultry value chain, with the aim of

reducing high feed costs.

Under normal

weather

conditions, SA is

self-sufficient in

maize production.

SA exports only a

small quantity of

animal feed.

Chemicals:

Pesticides and other agro-

chemicals products, dominated

by manufacturers such as BASF

SA, Syngenta SA, DOW

Agrosciences Southern Africa,

Plaaskem and Monsanto SA.

Equipment:

Most commercial farmers

employ mechanized equipment

to prepare land and to harvest,

especially soya beans . Most of

the equipment is usually

imported.

Constraints and challenges in this segment

• Climatic and physical constraints (e.g. soils) in the arid to

semi-arid production regions prevent SA from achieving

yields attained in the temperate regions of the northern

hemisphere.

• Drought conditions at presently and possible El Nino

impact.

• Lack of land allocated to soybean.

• Land reform related issues.

• Constant and reliable electricity supply

Significant entry barriers due to

regulatory requirements, high investment

and set-up costs, as well as research

skills requirements. Opportunities for

IDC strategic intervention include:

partnering with relevant parties (e.g.

ARC) to address some of the above

constraints; work with key companies in

sector to improve price competitiveness

of locally produced chemical inputs;

realise opportunities for import

replacement; support black industrialists.

IDC could

investigate

opportunities for

import

replacement

with respect to

agricultural

equipment to

supply both the

local and

regional

markets.

BREEDING PROCESS

Commercial breedersare imported at greatgrandparent orgrandparent level, asimports of commerciallevel day old chicks orfertile eggs is prohibitedby law. There areopportunities for IDC toplay a strategicintervention role bypartnering with relevantresearch institutionssuch as ARC to developSA improved breeds forlocal conditions.

Grandparent

Rearing

Breeding (22 – 62 weeks)

Hatching (3 weeks)

Day-old parent

Parent farm

Rearing (21 weeks)


Fertile egg

Hatchery

Rearing (21 weeks)


Day-old chick

Live broiler

Constraints and challenges in this

segment

• Constant and reliable electricity

• High breeding costs

• Little support from government for

R&D

Breeding material is generally

imported. It is sourced from Cobb

(Rainbow), Ross (owned by Astral),

Arbour Acres (Country Bird), Hubbard

& Hybro (owned by Pioneer) and is

multiplied before being made available

to integrated grower companies and

outside clients, including further

multipliers. Parent flock (day-old

chicks) in SA in 2014 amounted to 6.6

billion.

Laboratories:

Both state and private laboratories provide

services to the industry, and include:

• State-run: Allerton; Stellenbosch; Poultry

Reference Centre

• University of Pretoria

• Private sector: Deltamune Services,

Henderson, Allwright, Kloriga

Breeds produced in SA include indigenous poultry breeds such as Naked Necks, Venda, Ovambo & Potchefstroom Koekoek.

Good chicken mortality rates in SA relative to peers, as well as competitive growing periods and other breeding indicators.

Broiler grower farms

(integrated firms)

Contract grower s

(integrated firms)

BROILER FARMING OPERATION

Independent broiler

producers

Domestic broiler production – 1billion broilers (1.5 million tons of

meat):

• Established commercial production share - 70%

• Smallholder commercial production – 4%

• Subsistence farming production – 3%

• Breeder flock depletion – 3%

• Imports – 20%

SA does not produce sufficient

quantities to satisfy domestic

demand and there is strong

import penetration. This is due to

high growing demand relative to

local production growth and

competitiveness issues.

Consumption grew at an average

of 8.4% p.a. from 2002 to

2012, while production increased

by less than 5% p.a.

Opportunities exist for IDC to

assist successful small or

medium producers wishing to

augment their supply to the

domestic market and/or to export

to SADC and other African

markets.


• Import costs of Day-Old Chicks (DOC)

• Problems with regularity of supply at times

affect constant supply of inputs.

• Constant and reliable electricity.

Highly concentrated

segment of value

chain, with major

producers being:

• Rainbow 24%

• Astral 22%

• Country Bird 7%

• Tydstroom 6%

• Fouries 6%

• Daybreak 5%

• Rocklands 6%

Hundreds of smaller

producers such as

Elgin Chicken,

Chubby Chicks &

ANCA 25% of broiler

chickens.

Poultry veterinarians:

No more than 50 SA Veterinary Association (SAVA) members specialize in poultry.

Some are employed by major producer companies, some are available via groups

such as Avimune to serve a variety of producers and some are in veterinary supply

companies. Others practice as individual consultants in private capacity for

independent poultry farmers.

Further processing

• Fresh basic products (e.g. whole fresh chicken &

boneless skinless chicken breasts) – major producers

are Astral Operations Limited (which include Goldi,

Country Fair, Festive, Mountain Valley & Early Bird),

Rainbow (which has 4 brands, namely Rainbow, Farmer

Brown, Rainbow Simply Chicken and Rainbow

FoodSolutions), and Country Bird Holdings (which

includes Supreme Chicken & Spring Chicken).

• Secondary products (e.g. necks, feet & intestines) –

major producers in this segment include the same

players as in the fresh basic products segment.

• Frozen products – represent 65% of the domestic

market at final demand stage (e.g. individually quick

frozen (IQF) mixed portions and breast fillets) – major

producers are the same as those in fresh basic products

segment.

• Advanced processed products (canned chicken,

sausage, pre–cooked chicken products, biltong) – this

market segment is still comparatively small in SA, with

major producers being Eskort and Enterprise Foods.

296 abattoirs:

• 46 high throughput

abattoirs.

• 187 low throughput

abattoirs.

• 12 rural abattoirs.

• Others – 55.

PROCESSING

With marketing and exporting of chicken

meat expected to generally move away

from whole birds and portions/ segments

towards more processed products,

opportunities exist for value addition

domestically. IDC could support the industry

in improving its competitiveness with

respect to value addition, expanding and

diversifying product lines (e.g. canned

chicken, minced chicken, bacon, sausages,

pre-cooked products) targeting local and

export markets (not only regionally but

globally).

IDC should engage the relevant authorities

on industry governance and standards

matters for sustainability and growth


• Constant and reliable electricity, rising tariffs.

• Shortages of technical skills.

• Logistics – in most cases grow -out facilities are far

from abattoirs thus raising issues of bio-security.

• Governance and standards (e.g. brining content).

Critical need for improvements in

governance and standards, such as

brining content regulations, HACCP,

as well as labelling laws, so as to

improve local industry’s

competitiveness in the local market

(vis-à-vis imports) and enable entry of

SA products into export markets.

Packaging plays

an important role

in this segment,

with key players

including Global

Packaging

Products, Mpact

Plastic

Containers, and

Nampak Cartons

& Labels

DOMESTIC CONSUMPTION

• Over 2 million tons of poultry meat – 39 kg per capita

Poultry meat imports:

• SA is a net importer of broiler meat, on

average importing 393 303 tons of

poultry meat annually (i.e.. 27% of

domestic consumption)

• Frozen broiler bone-in portions

represent the largest share of total

imports (40%), followed by frozen

mechanically deboned broiler meat

(37%) and frozen broiler offal (9%).

Fresh or chilled meat imports are

negligible.

• Most imports sourced from Brazil (43%

share), the Netherlands (19% share),

UK (11% share), Germany (6% share)

and Argentina (5% share)

Retail

52%

Whole-

sale

35%

Quick service

restaurants (QSR)

7%

Others (including

institutional)

6%

• Shoprite/Checkers – 42%

• Pick ‘n Pay – 35%

• Spar Group – 20%

• Others, such as Woolworths, Score,

OBC Meat & Chicken, and

convenience stores like garage

forecourts - 3%

• Massmart (i.e. Makro)

• Metro Cash & Carry

• Trade Centre

• Shield

• Cold Chain

• I&J

• Weirs

• Mines

• Government institutions

(e.g. prisons, hospitals)

• Tender businesses (incl.

catering firms)

• Nando’s

• KFC

• Chicken Licken

• Barcelos

• etc.

Following

players

purchase

through

centralized

distribution

centres

Large chicken

producers

normally sell

about 50% of

output through

wholesale

groups

QSRs

normally

buy

directly

from

broiler

producers

DISTRIBUTION

Increasing poultry meat imports pose a

threat to the industry. Imports of frozen

mechanically-deboned broiler meat and

frozen broiler bone-in portions have

been flooding the domestic market. IDC

should support players aiming to

improve competitiveness and

successful production expansion /

diversification/value-addition, aiming at

import replacement of these product

groups.


• Local distributors, including retailers and wholesalers seek low-

cost products, with local producer presence providing only limited

advantage.

• Logistical challenges, such as transportation of meat especially

to African markets due to poor infrastructure.

Niche markets include

free range, halaal and

kosher. These

markets are growing

as a result of an

expanding middle

class and higher

LSMs. IDC could

assist local industry in

accommodating these

growth segments,

including the growth

and market

penetration of the

indigenous poultry

industry.

Poultry meat exports:

• Due to lack of self-sufficiency and

competitiveness issues, SA exports a

small quantity of poultry meat (16 500

tons annually - or around 14% of

domestic production – some of these

could actually be re-exports).

• Frozen cuts and offal represent the

largest shares of broiler meat exports,

followed by whole frozen meat. Given

the close proximity of some export

destinations, fresh or chilled products

represent a greater share in export

value than is the case for import value.

• Exports are mainly to Mozambique (62%

share) and Zimbabwe (16%)

34


1. Reduce the cost of feed • Increased investment within the local soybean value chain

• Cost of feed represents ca. 70% of total costs

2. Improved market access for independent broiler out-growers

• Number of abattoirs / retailers that are able to provide access to market for small scale growers

• Baseline still to be determined?

3. Reduction of imports • Ton quota of EU and US bone-in chicken imports into South Africa

• 20% of the local market is supplied by importswhich presents an opportunity for localproducers to ramp up production to ensureself-sufficiency

4. Exports • White meat exports to EU , US and ROA

• Baseline still to be determined – SAPA still remains in negotiation with relevant authorities.

5. Sustainability of Contract and Independent Out-Growers

• Number of out-growers that is contributing to building capacity within SA.

• Baseline still to be determined?

Game changing opportunities – Poultry Value Chain

Critical Industry Outcomes:

35

Outcome 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 onwards

1. Reduce the cost of feed by promoting local production of soybean

Collaboration with soybean producers in building pipeline

IDC investment within soybean production:

Target: One funding investment / Scoping Report

IDC investment within soybean production:

Target: One funding investment / Scoping Report

? ?

2. Improvedmarket access:

On-going collaboration with retailers / abattoirs / key stakeholders







3. Reduction ofimports from the current level of 20%:

On-going collaboration with SAPA, BFAP, DAFF etc. in motivating tariff protection

On-going collaboration.

Target: 19%


Target: 18.5%


Target: 18%


Target: 17.5%


Target: 17%


Target: 17%

4. Sustainability of Broiler out-Growers:

Approval of IDC bespoke fund that will serve to benefit emerging black farmers.

IDC investment / Scoping Report

Size: R50 – R80 million

IDC Investment / Scoping Report


IDC investment/ Scoping Report






IDCinvestment / Scoping

Size: R50 –R80 million

Game changing opportunities – Poultry Value Chain

IDC Deliverables:

36

AQUACULTURE VALUE CHAIN

37

National objectives related to the AquacultureValue Chain VC4

1. Aquaculture is an emerging industry with substantial growth potential both locally and in

the ROA – opportunity for industry development and expansion

2. National objectives– included in APAP, IPAP and Operation Phakisa

3. DAFF – National Aquaculture Policy Framework and National Aquaculture Strategic

Framework

4. Supplement/replace dwindling wild fishery resources with sustainable supply

5. Replacement of imports

6. Development/introduction of suitable species for commercially viable aquaculture

(genetic material) and permits for foreign species

7. Certification & protocols for EU market access

8. Local market development iro farmed fish

9. Local establishment of commercially successful recirculating aquaculture production

systems (RAS)

10. Introduction of renewable energy solutions

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Value chain - Aquaculture

Hatchery &

nurseryGrow out farm

Export & local

Markets

(live & whole)

ProcessingExport & local

markets

Technology

Management

Expertise

Site & facilities

Water source

EIA

Permits

Veterinary service

Utilities

Feed supply

Food service

Wholesale

Retail

Technology

Management

Expertise

Site & location

Facilities

Water source

EIA

Permits

Feed supply

Veterinary service

Utilities

Permits

HACCP

Economies of scale

Distribution

Species

Genetic material

Broodstock

Consumer

Imports

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Description Emerging industry development


Trade balance, employment


Suitable sites, climatic conditions & water sourcesFeed supply – cost and qualityEnergy supply and costSuitable and viable speciesRegulatory & Permit requirementsVeterinary services & supportSupply of juvenilesSkills availability


Government support and improved incentivesAcademic institutions - research and skills developmentReliable and affordable energy supplyAffordable and quality feedPermits for farming of viable foreign species


Suitable long term funding products for capital intensive industryAlign with Operation Phakisa outcomesTake emerging industry risk e.g. abalone ranching, dusky cob farmingProject development with suitable industry partners


R300-400 million

Overview– Aquaculture

Overview

40


Industry growth & supplement of wild fishery supply

Increased aquaculture production Abalone – tpdFinfish – tbd

Import replacement Reduction in farmed aquaculture products imports

Tbd

Local feed supply Reduced import of aquaculture feed

Tbd

Improved efficiencies and competitiveness

Reduced cost / ton produced Tbd

Local introduction/developmentof viable fish species / technologies

Commercially viable local fish farms

Tbd

Critical Industry outcomes– Aquaculture Value Chain

Critical Industry Outcomes:

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Investment in commercial hatcheries for production of juveniles

Investment in quality feed production to reduce costs and improve efficiencies of

the land based systems

Value adding through processing, product and packaging development

Improved veterinary support

Aquaculture skills development and training

Local market development iro farmed fish

Game Changing opportunities-Acquaculture

42

Rural Livestock Value Chain

43

National objectives related to the Livestock Industry (Developing Cattle)

• Livestock(Rural Cattle) Industry Value Chain Goals

Identification of opportunities to reach IDG’s:

Create the market for the ca 40% of cattle in South Africa

Integrate rural cattle into South Africa livestock industry value chain

Improve productivity and the quality of the herd for rural farmers.

Assist rural cattle farmers to understand the market requirements and develop appropriate measures to address

the challenges. Engage key stakeholders(appropriate Government Departments, Research Institutes Industry Players(Abattoirs and Feedlots) ,as well as

Pharmaceutical to determine the key areas of intervention required.

Support the development of infrastructure in selected rural areas for the provision of animal husbandry activities so

as to improve the quality of the cattle.

Support the development of cost effective ways to increase farmers’ access to vaccination, related animal

husbandry including record keeping so as to improve market access

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Description • Unlock the value of the rural cattle as a subset of the South African livestock industry value chain(Commercialising the rural cattle to be integral to livestock industry value chain particularly

processing).• Support and Develop smallholder and emerging Farmers(developing farmers)


• Still to be determined


• Communal land ownership inhibits the application of improved/modern animal husbandry practices.

• High input costs• Inadequate biosecurity control measures for endemic livestock diseases• Lack of access to support services and after care(weak extension support)• Lack of knowledge about the functioning of the market, resulting in disparity between

the players and rural farmers(lack of transformation in the sector),• Lack of market development for rural farmers particularly those from former homeland

areas.• Most of the farmers are communal and mainly overgrazed land• Access to grazing land with water


• Government support coupled with appropriate incentives• Affordable and quality of inputs(feed, vaccines, etc.)• Introduce policy to expedite market access• Appropriate infrastructure and extension support iro of livestock development.


• Engage with wider stakeholders to address bottlenecks.• Suitable funding products or Special Schemes for the sector• Lobby and Influence government to provide subsidies and incentives as well as

infrastructure .

Game changing opportunities – Rural Cattle Processing

Overview

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Item Grapes Citrus Nuts Berries Subtropical & Other fruit

Critical Stakeholders (Industry Bodies)

South African Table Grape Growers Association (SATI) Vine Grape & Wine Makers Association (VinPro)

Citrus Growers Association Biogold (cultivar IP)

South African Pecan Growers Association South African Macadamia Growers Association

South African Berry Growers Association

Subtrop Hortgro (several crops)

Larger role players Karsten Southern Farms Afrifresh Le Roux Group

Bosveld Sitrus Groep 91 SRCC Mahela Group Indigo Group

Green Valley Nuts Rotondo Remhoogte Boerdery GWK SA Pecan

Eurafruit United Exports Haygrove

Westfalia ZZ2 Bavaria Allesbeste

Opportunities Development in Limpopo (arguably earliest area in SA)

Mandarin and other soft citrus development

Almond development Conversion of Rotondo Walnut Project into an industry Macadamia Development in Eastern Cape / Southern KZN

Blueberries: Western & Southern Cape; Limpopo; North West Blackberries: Limpopo, Western Cape Raspberries: Gauteng, Western Cape

Avocado in Limpopo (Makgoba development with ZZ2) Kiwi: Western Cape, Limpopo, KZN Cherries: North West, Western Cape

Key Constraints Water African Wine Market Development Lack of sufficient quantity plant material

Water (allocation & transfer of water rights - especially Limpopo & Mpumalanga) Lack of plant material

Water (allocation & transfer of water rights - especially Limpopo & Mpumalanga) Lack of plant material

Water (allocation & transfer of water rights - especially Limpopo & Mpumalanga) Availability of cultivars

Water (allocation & transfer of water rights - especially Limpopo & Mpumalanga) Community Land Rights: lack of internal cooperation / systems

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• Government - Policy direction, protection and public

investment on public good infrastructure

and enablement of positive investment

climate

• Financial institution - facilitating investment in the industry

– IDC - Selective focus on certain sectors as indicated

• Industry Associations - Overall industry growth

• Farmers - Drivers of investments

•

Critical Stakeholders and their roles

Thank you

Industrial Development Corporation

19 Fredman Drive, Sandown

PO Box 784055, Sandton, 2146

South Africa

Telephone 011 269 3000

Facsimile 011 269 2116

E-mail [email protected]

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