NAMC Strategic Plan Presentation 2011/12

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

11 March 2011

Mrs Ntombi Msimang - Chairperson: NAMCMr TR Ramabulana- CEO: NAMC Mrs S Muvhulawa- CFO: NAMC

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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) 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 Paul Slack (Chairperson) Ms Mathebe Moja Mr Raymond Matlou Ms Mina Gill Prof J Kirsten

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Employment Equity Senior Managers

2 Female African (5 %) 4 Male African (10 %) 2 Male White (5 %)

Total Staff 13 Female African (28 %) 11 Female White (28 %) 14 Male African (36 %) 4 Male White (8 %)

Realities in Agriculture

The situation…Employment !!!

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Trends in employment by sector between 2001 and 2010

Source: DAFF, 2010

Trends in the agricultural sector’s share of the total employment between September 2000

and March 2010

Source: DAFF, 2010

Key realities Current market structure shaped to largely

cater for existing mainstream market participants Market structure at the processing and retail level

highly concentrated Inherited from previous regulated marketing regime and

government support incentives Provides a breeding ground for a non-optimal

competitive environment High entry barriers for smallholder farmers

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Key actions Important paradigm shift (1) – Import Substitution

Industries that could benefit include grain industry, meat industry, cotton industry, fish processing, forestry

Important paradigm shift (2) – Increase the size of the cake Review biofuel policy Realignment of export promotion policy and tools “Buying local is lekker”

Leverage potential of quick wins Develop new and expand existing development/incentive

schemes Leverage contributions by private sector

Leverage potential of institutional markets

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Facts on Administered prices Agriculture

Electricity tariff increase compared to CPI

Tariff increase for 2008, 2009

and 2010 higher than the

Headline CPI

CPI higher than the electricity tariff increase

Source: Eskom, 2011

TOLL FEES - CLASS 3 VEHICLE ONE WAY

Own calculations based on SANRAL, 2011

R551 in 2010; 34.1% increase from 2006 to 2010

R516 in 2010; 39.1% increase from 2006 to 2010

R487 in 2010; 36.8% increase from 2006 to 2010

R366 in 2010; 37.1% increase from 2006 to 2010

Average % contribution of regulated fuel, labour and electricity cost to total production cost of animal feed

Own calculations based on data from AFMA, 2011

Regulated fuel, labour and electricity cost for the production of a kilogram poultry

Own calculations based on data from role players in the industry, 2011

2008 to 2009 up 6.2%

2009 to 2010 down 2.4%

2008 to 2009 up 28.2%

2009 to 2010 up 18.6%

2008 to 2009 up 16%

2009 to 2010 up 33.9%

Up 52%

Up 3.6%

Job Creation (NAMC, Statutory Measure And

Agricultural Trusts)

Major projects to drive job creation Project Investment

Value R

Total Employment opportunities 2011/12

Total Employment Opportunities 2012 - 2014

Critical reforms required to realise the jobs

National Red Meat Development Project (NRMDP)

R42 million over 5 years

Project team12 people Project Manager, Project Implementation manager, Livestock Coordinators/Field Officers, Admin Assistant, Auctioneer-ing programme

6 Custom feeding programmes18 herdsmen

Local level organisers/representa-tives20 people

5 Auctioneering companies20 people

Farmers benefitting5000

Project team4 Additional Livestock Coordinators/Field Officers

14 Additional custom feeding programmes42 herdsmen

Local level organisers/representa-tives40 people

Add. auctioneering companies30 people

Farmers benefitting12-13000

1. Funding must be secured2. Baseline study3. Infrastructure4. Market information5. Training6. Designing tailor made

programmes per custom feeding programme

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Major projects to drive job creation Project` Company

/SOE/Go-vernment

Investment Value R

Total Employment opportunities 2011/12

Total Employment Opportunities 2012 - 2014

Critical reforms required to realise the jobs

Vineyard development scheme

NAMC (in collaboration with the wine industry and department of agriculture in the Northern Cape and Free State)

R62 million for 570 ha of vineyard

Permanent – 61 Seasonal – 100

Permanent – 124 Seasonal – 200

Funding required for:1. Infrastructure2. Operating capital3. Training and extension

services4. Market linkages

Grain crop development scheme

NAMC (in collaboration with the grain industry and cooperatives/agribusiness)

R140 million Permanent – 200 Seasonal – 300

Permanent – 200 Seasonal – 300

Funding required for:1. Operational and

risk mitigation funding

2. Training and extensions services

3. On farm storage4. Mechanisation

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JOB CREATION Deciduous Fruit Trust- tree planting project, +- R5,1 million CASP funds

administered in 2010 Total = R12,2 million. 1st Phase = 1,000 Ha by 2014 – 600 Ha in the Western Cape in partnership with WCDA.

Winter Cereal Trust- Commercialisation of and promotion of wheat production amongst developing farmers in the Free State, Western and Southern Cape. Total expenditure for the development project is R4 067 549.

Maize trusts- funding to the grain farmer development association to assist small holder farmers in soil preparation, input costs, harvesting and storage of grain.

Oil and protein seed trust- assist 165 emerging farmers to plant 15 100ha of sunflower. A total of 1250 temporary job opportunities will created during the season.

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TradeProbes (6 annually) Product and country profiles Trade related topics

Publication on Fruit Trade Flows (weekly’s) and Fruit Flow reports

Collaborative trade studies, e.g. Determining the scope and

nature of Non-tariff Measures prevalent in selected international markets

South Africa’s way ahead: Cape to Cairo?

Comparative analysis…: European markets for SA emerging table grape growers

Export promotion activities Hong Kong, Singapore, Malaysia

Trade

Users and uses Users: Government Departments, NGO’s,

Industry Associations, Companies, Press Uses: Export promotion, lowering

transactions costs, policy guidelines, better informed exporters, increased exports

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Background Promotional activities in three countries, namely Hong Kong, Singapore, Malaysia Several Hyper- and Supermarkets participated, e.g. Giant , Shop N Save, Cold Storage In total 499 Hyper- and Supermarkets participated

Objectives Increase sales and awareness of the total range of South African fruit and vegetables available at the

time of the World Cup in particular during the last 2 weeks of the World Cup. Grow sales and the range of South African product from after the World Cup till end of October.

Actions In store displays In store competitions Press advertising Point of sale material Aggressive bulk displays Hard and soft copies of newspaper adverts, copies of pictures of displays and point of sale materials

and some of the winning displays

Trade - Export promotion activities

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Results The total U$ purchases for the group from South Africa, for 2010 vs the purchases for 2009, grew from

± U$14 million to ± U$18 million in 2010 A 28.5% sales growth in U$ terms Total Container Volume for 2010: +108 Containers Vs 2009 Volume A 48% increase in volume

Trade - Export promotion activities

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Export promotion through statutory levy funding.. (Wine) WOSA (Wines of South Africa) promotes South African

wines, mainly in EU, but also in USA, Canada, key African countries such as Angola and Nigeria, as well as India, China, Japan and South Korea

In 2008, SA exported over 400 mil litres, Export strategy –

Enhancing SA’s image Developing new markets Assisting in building capacity Improved infrastructure for exports via Wine-on-line

Current budget app R37 mill / annum

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Export promotion through statutory levy funding .. (Deciduous Fruit) Deciduous fruit

Apples, pears, plums, apricots, peaches and nectarines

A Market Development Campaign in the UK and Germany

Producer funded (R20 mil / annum) as well as grant from DTI (R10 mil / annum)

Volume growth target of 10-15 % over 5 years has been set

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Export promotion through statutory levy funding .. (Grapefruit) Citrus Growers Association

Consumer campaign in UK and Japan“South African Grapefruit’

Beautiful country, beautiful fruit” Funded by statutory levies – app R9 mil / annum

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Background Several companies found guilty for non-compliance Competition Act Thereafter some of these companies pulled out of industry associations This amongst others mean they are not willing so share information Problem: This information necessary to, for example, calculate GDP, Consumer

Spending, Logistics Planning,, Employment Numbers, etc

This is a complex issue due to the structure of the primary and secondary agricultural sector No case law in South Africa to provide guidance

The road ahead Compile document for the Competition Commission spelling out detailed needs at the

industry and country level Workshop the document with Competition Commission Set guidelines for industry on information exchange Work on proper public agricultural information system

MERC focus areasInformation Exchange

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Training

Making Markets Matter Training Course Its 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 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

Statutory Measures

The MAPA 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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Existing statutory measures

INDUSTRY Administrating body Statutory Measures

Levy Registration Records & Returns

Citrus (export only) Citrus Growers Association

Cotton Cotton SA

Dairy Milk SA

Deciduous fruit (pome & stone) 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

Mangoes Subtrop

Milk Milk Producers’ Organisation

Mohair Mohair SA

Pork SA Pork Producers’ Organisation

Potato Potatoes SA

Poultry and eggs Southern African Poultry Association

Red meat Red Meat Industry Forum

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Existing statutory measures (cont...)

INDUSTRY Administrating body Statutory Measures

Levy Registration Records & Returns

Sorghum Sorghum Trust

Table Grapes SA Table Grape Industry

Wine SAWIS, Winetech and Wosa

Winter Cereals Winter Cereal Trust

Wool Cape Wools SA

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FUNCTIONS FINANCED THROUGH STATUTORY LEVIES

Functions Amount spentR

Percentage of total levy

expenditure%

Administration 16 759 976 6

Transformation 61 832 155 22

Export Promotion 33 114 219 12

Research 90 169 729 33

Information 24 264 856 9

Production development 2 832 839 1

Plant improvement 2 658 981 1

Local promotion 39 319 855 14

Quality control 5 924 738 2

TOTAL 276 877 338 100

New applications

Bee / honey industry Proteas Pecan nuts Olives Rooibos tea Maize

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Budget Allocation: 2011/12 – 2013/14 The NAMC has received an MTEF budget

allocation letter for the period from DAFF. The budget allocations are as follows:

2011/12: R 35 899 000 2012/13: R 30 115 000 2013/14: R 32 220 000

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Budget Allocation Cont’ This resulted in the following percentage fluctuation for the period:

From 2010/11 – 2011/12: 15% increase From 2011/12 – 2012/13: 16% decrease From 2012/13 – 2013/14: 7% increase.

The decrease of R5 million in 2012/13 is due to the following:

The NAMC has in the previous financial year received additional funding to expand the export promotion programme that will afford 100 emerging agribusinesses the opportunity to participate in international trade.

This funding was for the MTEF period 2009/10 – 2011/12 only.

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Budget Allocation Cont’ Other source of Income

The NAMC is anticipating to generate income from the investment of the grants to be received from DAFF at the beginning of the financial year 2011/12. The following are the projected interest to be generated:

2011/12: R 1 350 000 2012/13: R 1 200 000 2013/14: R 1 400 000  Total Income for the MTEF period then results in:   2011/12: R 37 249 000 2012/13: R 31 315 000 2013/14: R 33 620 000

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