Development Goals and industry development strategies Pulses and Food - - PowerPoint PPT Presentation

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

Industry development 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. Annual Growth (%)

GDP Growth: Agriculture, food and beverages

• 400 000
• 300 000
• 200 000
• 100 000

100 000 200 000 300 000 400 000 500 000 2000 to 2004 2005 to 2009 2010 to 2014

R'm - Total over 5 years

Trade: Agriculture, food and beverages

Imports Exports Balance 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

Number

Employment: Agriculture, food and beverages

4

Improved trade balance for agro-processing and agriculture above baseline forecasts

Planned industry mpact on GDP

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

Industry development goal

Measured through

Increase GDP for agro- processing and agriculture above baseline forecasts Increased levels of employment for agro- processing and agriculture above baseline forecasts

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. Annual Growth (%)
• Avg. Annual Growth (%)

GDP Growth: Agriculture, food and beverages

History

5 5

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

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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

Planned impact on Trade

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

Industry development goal

Measured through

59 199 67 062 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 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)

7 7

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 52 101 54 325 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

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

Planned impact on employment

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

Industry development goal

Measured through

1 592 1 080 1 068 1 161 1 296 200 400 600 800 1 000 1 200 1 400 1 600 1 800 200 400 600 800 1 000 1 200 1 400 1 600 1 800 End-2004 End-2009 End-2014 End-2025

Number (thousands) Number (thousands)

Employment: Agriculture, food and beverages

History Baseline forecast Target forecast

9 9

Planned impact on employment - cont

1 352 972 834 240 818 898 847 190 928 026 200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 End-2004 End-2009 End-2014 End-2025

Employment: Agriculture

History Baseline Target 239 005 246 115 249 374 313 676 368 223 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

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Field Crop Processing Value Chain Valued at R54bn

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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.

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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

• ver 10 year period

R 2-5 billion

Field Crop Processing

Overview

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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

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Value chain mapping – Field Crop Processing

15 15

• Financial intervention in

production will improve

• perating capacity at

processing level, in turn putting downward pressure on the prices

• f both final product and

that of the by-product for the benefit of consumers and related industries such as poultry.

Soyabean as example

16 16

Soyabean complex

17 17

• 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

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Horticulture Value Chain Valued at R59bn

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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

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Horticultural value chain: example Citrus

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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

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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

External requirements for success

• 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 Requirements for industry interventions from within IDC

• 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.

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Game Changing Opportunities Horticulture Value Chain

Critical Industry Outcomes Outcome Measured by Baseline

• 1. Reduce the cost of inputs
• Using benchmarking

companies, buyers groups and study groups Cost of fertilizers, electricity, labour, packaging and fuels represent 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 commercial

farmers unions/coops/companies

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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-going collaborati

• n with

exporters and processors On-going collaboration with exporters and processors On-going collaboration 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.

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Poultry Value Chain Valued at R37bn and the largest of the animal protein

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Description The unlocking of potential value within the poultry value chain (i.e. Broiler Industry / Egg –laying) Contribution to industry development goals Constraints and challenges in the industry

• 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

External requirements for success

• 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) Requirements for industry interventions from within IDC It is noted that the IDC Strategic Intervention would not necessarily be entirely limited to the provision of IDC financial support (inclusive of bespoke funding schemes); however it may serve to facilitate on-going collaboration between key stakeholders (i.e. DAFF, SAPA, BFAP, Retailers) in ensuring that relevant bottlenecks can be removed. Investment required from IDC over 10 year period R500 – R800 million

Game changing opportunities – Poultry Industry

Overview

Gross Value

Contribution to Rank within year-on-year

• f 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

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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 Abattoirs 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

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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
• ilcake for livestock feed.
• SA imports over 620 tons of soya
• ilcake.

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

• f locally produced chemical inputs;

realise opportunities for import replacement; support black industrialists. IDC could investigate

• pportunities for

import replacement with respect to agricultural equipment to supply both the local and regional markets.

BREEDING PROCESS

Commercial breeders are imported at great grandparent

• r

grandparent level, as imports of commercial level day old chicks or fertile eggs is prohibited by law. There are

• pportunities for IDC to

play a strategic intervention role by partnering with relevant research institutions such as ARC to develop SA improved breeds for local conditions. Grandparent Rearing Breeding (22 – 62 weeks) Hatching (3 weeks) Day-old parent Parent farm Rearing (21 weeks) Breeding (22 – 62 weeks) Fertile egg Hatchery Rearing (21 weeks) Breeding (22 – 62 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

• utside 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

• f 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. Constraints and challenges in this segment

• 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,

• pportunities 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

• n industry governance and standards

matters for sustainability and growth Constraints and challenges in this segment

• 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

• utput 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. Constraints and challenges in this segment

• 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%)

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Outcome Measured by Baseline

• 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 imports

which presents an

• pportunity

for local producers to ramp up production to ensure self-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

• nwards
• 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. Improved

market access: On-going collaboration with retailers / abattoirs / key stakeholders On-going collaboration with retailers / abattoirs / key stakeholders On-going collaboration with retailers / abattoirs / key stakeholders On-going collaboration with retailers / abattoirs / key stakeholders On-going collaboration with retailers / abattoirs / key stakeholders On-going collaboration with retailers / abattoirs / key stakeholders On-going collaboration with retailers / abattoirs / key stakeholders

• 3. Reduction of

imports from the current level of 20%: On-going collaboration with SAPA, BFAP, DAFF etc. in motivating tariff protection On-going collaboration. Target: 19% On-going collaboration. Target: 18.5% On-going collaboration. Target: 18% On-going collaboration. Target: 17.5% On-going collaboration. Target: 17% On-going collaboration. Target: 17%

• 4. Sustainability
• f 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 Size: R50 – R80 million IDC investment/ Scoping Report Size: R50 – R80 million IDC investment / Scoping Report Size: R50 – R80 million IDC investment / Scoping Report Size: R50 – R80 million IDC investment / Scoping Size: R50 – R80 million

Game changing opportunities – Poultry Value Chain

IDC Deliverables:

36

AQUACULTURE VALUE CHAIN

37

National objectives related to the Aquaculture Value 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 & nursery Grow out farm Export & local Markets (live & whole) Processing Export & 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 Contribution to industry development goals Trade balance, employment Constraints and challenges in the industry Suitable sites, climatic conditions & water sources Feed supply – cost and quality Energy supply and cost Suitable and viable species Regulatory & Permit requirements Veterinary services & support Supply of juveniles Skills availability External requirements for success Government support and improved incentives Academic institutions - research and skills development Reliable and affordable energy supply Affordable and quality feed Permits for farming of viable foreign species Requirements for industry interventions from within IDC Suitable long term funding products for capital intensive industry Align with Operation Phakisa outcomes Take emerging industry risk e.g. abalone ranching, dusky cob farming Project development with suitable industry partners Investment required from IDC over 10 year period R300-400 million

Overview– Aquaculture

Overview

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Outcome Measured by Baseline Industry growth & supplement

• f wild fishery supply

Increased aquaculture production Abalone – tpd Finfish – 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/development

• f 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

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Rural Livestock Value Chain

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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)

Contribution to industry development goals

• Still to be determined

Constraints and challenges in the industry

• 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

External requirements for success

• 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.

Requirements for industry interventions from within IDC

• 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

Game changing opportunities – Rural Cattle Processing

Overview

45 45 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

• f water rights - especially

Limpopo & Mpumalanga) Lack of plant material Water (allocation & transfer

• f water rights - especially

Limpopo & Mpumalanga) Lack of plant material Water (allocation & transfer

• f 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 callcentre@idc.co.za