Portfolio Committee on Agriculture, Forestry
and Fisheries
Role of the dti in supporting the development
of a strong and vibrant agriculture industry
Date : 17 September 2010
Stephen Hanival
Chief Director: Agro-processing
Shanival@thedti.gov.za
+27 12 394 1350
Outline
 Agriculture/agro-processing valuechain
 The dti’s mandate in agro-industries
 Draft Strategic Framework for Agroprocessing
 IPAP2 Priorities
 The dti’s incentives
Agro-Industry Value Chain
Agents
Logistics
Biotechnology
Household
Expenditure
Sector map
Agro - processing
Agriculture
Horticulture
Maize
Deciduous fruit
Wheat
Vegetables
Sugar cane
Citrus
Sunflower seed
Nuts
Tobacco
Grain mill products
Sheep
Bakery products
Poultry
Pigs
Subtropical fruit
Ground nuts
Flower
Tea
Goats
Ostriches
Game
Foodservices
(hotel;
restaurant;
caterers)
Meat processing
Cattle
Viticulture
Grain sorghum
Cotton
Livestock
SECONDARY SECTOR
PRIMARY SECTOR
Field crops
Exports
Wholesale
Retail
Logistics
Tourism
Dairy products
Fruit & vegetable
products
Government
Expenditure
Oils & fats
Animal feed
Beans
Coffee
Sugar & related
Hay
Evergreen
Confectionary products
Fishing
Aquaculture
Other food
Beverages
Distilleries
Intermediate inputs
Energy; Water
Irrigation equipment
Fertilizer; Implements
Packaging; Fencing
Structures; Tools
Pumps & generators;
Medicine
Feeding into other
value chains
Fish products
Fishing
Wineries
Chemicals
Other non
- food
Automotive
Essential oils
Fragrance
Fibres
Textiles
Starch
Malt Beverages
Fuel
Bio - fuels
Soft drinks
Pharmaceutical
Medicinal / Biotech
Other
…
Source: R.Coetzee, IDC
The dti’s Mandate in AgroProcessing
 Manufacturing – production processes that
are not primarily influenced by nature
 Typically off-farm, value addition,
transformative
 Exceptions are:
– High-value agric. such as horticulture
– Aquaculture
– Organic produce
The dti’s Mandate in AgroProcessing
 But reality is that agriculture/agro-processing are part
of same value chain:
 Policy work therefore necessarily extends to primary
agriculture to some extent
 Strategy development cognisant of value-chain
imperatives
 Incentives broadened to include pack-houses,
aquaculture
 Regulatory activities include focus on primary
agriculture
 Trade policy and support (tariffs, export incentives)
Strategic Framework for
Agro-processing
• Global trends:
- World population growing rapidly
- Land under agriculture relatively stable
- Per capita income growth in large economies,
India and China
- Consumer preferences for ‘sustainable food’ in
Developed Economies
- Important opportunities for SA Agro-industries…
Strategic Framework for
Agro-processing
• SA trends:
- Demographic changes as a result of decade of
growth
- Mismatches in demand and supply in certain
products - oilseeds, meat, processed food
- Basic food prices remain stubbornly high
- Rural food production lower than in comparator
countries
- Food security concerning in rural and urban areas
Strategic Framework for
Agro-processing
• SA trends:
- Major portion of agriculture and agro-processing
industries are mature, potential for growth limited
– canning, tea, sugar, grains, industrial crops
- Nascent sectors have tendency to stall before
‘take-off’ phase – ostrich, honeybush tea, proteas,
olives, biofuels
- Flow of new sectors, products, processes low
compared to equivalent countries – Australia,
Brazil
- High concentration levels likely stifling competition
esp. in rural areas
Strategic Framework for
Agro-processing
Trade Balance
Food Processing
14,000
Trade Deficit
10,000
8,000
6,000
4,000
2,000
20
08
20
06
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
0
19
70
Rm Constant Prices
12,000
Exports of goods and service
Imports of goods and services
Linear (Imports of goods and services)
Linear (Exports of goods and service)
IPAP2/Business Plan Priorities
• Food security – small scale milling, CompCom
investigations, enforcement of bread
standards
• Mature sectors – fruit and veg canning,
rooibos tea, food control,
• Nascent sectors – biofuels, organic produce,
aquaculture,
• New sectors – development of Agroprocessing Development Centre concept
Expected Impacts
• Food security – increased affordability, value for money
and rural production
• Mature sectors – stabilisation of at risk sectors, improved
competitiveness positioning through export market
support and product development
• Nascent sectors – accelerated policy and strategy
development
• New sectors – accelerated flow of new products and
process innovations
• Leading to: Demand pull from primary agriculture
combined with new industry opportunities: AgroIndustrial Complex development
Support from the dti Incentives
Enterprise investment Programme (EIP)
•
•
•
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•
•
Grant accessible to local and foreign owned entities investing
in SA.
Objective is to stimulate investment in manufacturing.
Qualifying investment costs: machinery, equipment, land and
buildings, and commercial vehicles.
Priority Sectors: Manufacture of food products,
beverages and tobacco products
Production, processing and preserving of meat, fish, fruit,
vegetables, oils and fats.
Manufacturing of grain mill products, starches/starch products
and prepared animal feeds.
Manufacturing of dairy products, beverages and other food
products.
Support from the dti
Incentives
Cooperative Incentive Scheme (CIS)
•
•
•
•
•
•
•
•
Promote co-ops through the provision of a matching grant.
Improve the viability/competitiveness of co-ops by lowering
the cost of doing business.
Assist co-ops to acquire their start up requirements.
Build an initial asset base for emerging co-ops to enable
leveraging of other support.
Priority sectors in Manufacturing, Retail, Service and
Agricultural Sector.
Offering is a 90:10 matching cash grant for registered co-ops.
The maximum grant is R300 000.
Can be used for business development services.
Support from the dti
Incentives
Export Marketing and Investment Assistance (EMIA)
•
•
•
Partially compensates exporters for costs
incurred in developing export markets and
recruiting new FDI into SA.
Matching grants for primary export marketing
research to develop new export markets.
Agro-processing.
Support from the dti
Incentives
Export Councils
•
•
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Farmed Abalone Export Council (FAEC)
SA Flower Export Council (ASSO Flowers)
SA Ostrich Business Chamber (SAOBC)
Wines of South Africa (WOSA)
Fresh Produce Exporters’ Forum/ Fruit SA
SA Fruit & Vegetable Canners’ Export Council
Meat Exporters of South Africa
SA Dairy Foundation
Support from the dti
Incentives
The Sector Specific Assistance Scheme
•
•
•
•
•
•
•
•
•
•
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Cost-sharing grant scheme to non-profit business organisations
for collective sectoral development.
Agro-processing
Agriculture
Chemical Allied Industries
Electronic Industries
Textile and Clothing
Metals and Allied Industries
Machinery, Allied and Electrical Industries
Motor Industry Components
Creative Industries
ICT
17
THANK YOU
The end