with specific reference to the National Development Plan (NDP) John - - PowerPoint PPT Presentation

Government’s Agricultural Plan, with specific reference to the National Development Plan (NDP)

John Purchase 12 February 2015

National Develop- ment Plan (NDP) MTSF (2014-2019) of 14 Outcomes

Outcome 4 – Decent Employment through inclusive growth 6 Job Drivers Outcome 7 - Comprehensive rural development and food security NDP: Chapter 6 Outcome 10 - Protect and enhance our environmental assets and natural resources

New Growth Path (NGP)

Agriculture Productive Sector Forum Infrastr.

• Pres. Infra.
• Co. Comm.

(PICC)

• ury

Agric Policy Action Plan

(APAP 5 yr iterative plan)

IGDP

(Policy Framework)

Mining (Mining Policy Action Plan) Manufacturing Industrial Policy Action Plan (IPAP) Tourism Green Economy SIP 11 Source: DAFF, 2014

National Development Plan

• Developed by the National Planning Commission
• Originates from 2009 ANC election Manifesto: “The developmental

state will play a central and strategic role in the economy. We will ensure a more effective government; improve the coordination and planning efforts of the developmental state by means of a planning entity to ensure faster change’’.

• Medium Term Strategic Framework (MTSF) for 2014-2019, the first five-

year building block of the National Development Plan.

• The MTSF will also include key targets from the New Growth Path, the

Industrial Policy Action Plan, the Agricultural Policy Action Plan, and the national infrastructure plan.

• 1. Expand irrigated agriculture
• 2. Convert under-used land in communal areas and land

reform projects to commercial production

• 3. Pick and support sectors with highest potential for

growth and jobs

• 4. Support job creation in up- and downstream industries
• 5. Find creative combinations between opportunities
• 6. Develop strategies that give access to product value chains

Recommendations

To expand agriculture and create 1 million jobs in the sector, the Commission makes the following recommendations:

• 1. Substantially increase investment in water and irrigation

infrastructure

• 2. Invest in market linkages for small-scale farmers
• 3. Preferential procurement mechanisms to allow market

access to new entrants

• 4. Create tenure security for communal farmers
• 5. Investigate different forms of financing and vesting of

property rights for land reform beneficiaries

• 6. Greater support for Public-Private Partnerships
• 7. Increase and refocus investment in R&D in sector
• 8. Improve and extend skills development and training
• 9. Innovative means of extension and training in

partnership with industries

IG IGDP Fundamentals: Development

• IGDP takes its cue from 14 outcomes in the MTSF (2014 – 2019) to

address key challenges:

• Outcome 4: Decent employment through inclusive

economic growth

• Outcome 7: Vibrant, equitable and sustainable rural

communities contributing towards food security for all

• Outcome 10: Protect and enhance our environmental

assets and natural resources

• IGDP National Reference Group established (Agbiz involvement)
• ‘Alignment’ with other key government processes (Land Reform

Green Paper, NGP, NPC, etc.)

• Not yet officially adopted by Cabinet.

Structure of f IG IGDP:

• Situation Analysis
• Sector profile
• Policy Framework
• Current Realities and Challenges: 4 key pillars
• Equity and Transformation
• Equitable growth and competitiveness
• Ecological sustainability
• Governance
• IGDP Implementation Plan
• Costs and financing
• Monitoring and evaluation

• A detailed analysis of challenges is given in the IGDP. Based on

this analysis, the IGDP also outlines appropriate responses.

• APAP seeks to translate the high-level responses offered in the

IGDP, into tangible, concrete steps.

• However, this first iteration of APAP is not offered as a fully

comprehensive plan.

• The APAP, for its medium to long term goal as set out in the IGDP,

is planned over a five year period, and will be updated on an annual basis.

• Over-arching objectives of APAP are to
• promote labour absorption and
• broaden market participation.
• Value Chain approach, but still to be finalized.

Agricultural Policy Action Plan

Medium Term Strategic Framework (M (MTSF)

The 2014 – 2019 MTSF for the rural sector will focus primarily on 7 imperatives that are a core foundation for an inclusive and integrated rural economy, and are as follows:

• 1. Improved land administration and spatial planning for integrated

development, with a bias towards rural areas (SPLUMA).

• 2. Improved and sustainable agrarian reform and food security.
• 3. Smallholder farmer development and support (technical, financial,

infrastructure).

• 4. Increased access to quality basic infrastructure and services,

particularly in education, healthcare and public transport.

• 5. Sustainable rural enterprises and industries characterised by strong

rural-urban linkages, increased investment in agro-processing, trade development and access to markets and financial services

• 6. Reduce rural unemployment.
• 7. Improved integration and coordination of rural development across

all spheres of government and between government departments as a result of implementation of synchronised rural development strategies.

Agri ribusin iness

Agri-business comprises largely agricultural input suppliers and the agro-processing

• sector. Trend data for agro-processors suggests that over the past two decades it has

followed a similar pattern to primary agriculture – modest real growth coupled with declines in formal sector jobs. The development trajectory of both input suppliers and agro-processors resembles that of many other countries, namely a trend to towards s hig higher levels of

• f industry

try concentration.

Concentration ratios by total income for top 5 and top 10 enterprises, 2008

CR5 CR10

Agro-processors Food products and beverages 30% 40% Prodn, processing & preserving of meat, fish, fruit, vegetables, oils & fats 30% 43% Dairy products 71% 81% Grain mill products, starches, starch products and prepared animal feeds 70% 79% Bakery products, sugar, chocolate, etc. 58% 84% Beverages 80% 86% Textiles, clothing, leather and footwear 17% 23% Wood, wood products, paper, publishing and printing 30% 41% Agro-input manufacturers Fertilisers, nitrogen compounds, plastics and synthetic rubber 87% 92% Agricultural and forestry machinery 23% 33%

Trends in formal and informal employment in agro-processing, 1970-2010

Poultry/Soybeans/Maize Integrated Value Chain

Poultry/soybeans/maize integrated value chain: The broiler industry is South Africa’s largest agricultural subsector in terms of value

• f production. The industry is also a complex integrated industry with different commodities (soya beans and yellow maize) feeding

into it. The industry is seen as a medium performer in terms of labour absorption. Although the industry grew above inflation for the past decade, for the past several years it has been in distress due to high feed cost and imports. Product Labour indicator Real average growth (10 years) Market share Volatility index Trade balance Import substitution Broilers Medium Performer Medium growth industry Top 15 Low volatility Net importer Yes Soybeans Medium Performer High growth industry Middle 15 Moderate volatility Net importer Yes Yellow maize Medium Performer Low growth industry Top 15 Moderate volatility Net exporter NA Main challenges and constraints:

• The increasing cost of production, especially feed and energy
• The increasing cost of day old chicks, and variable quality of day old chick supply in the market
• Oversupply of imports from the EU & South America
• Variable control of poultry diseases
• Underdevelopment of consumption in neighbouring countries
• High initial investment for start up
• Need for R&D to improve production systems and feed conversion ratio
• Undependable electricity supply
• Monopolistic behaviour of processors and retailers
• Lack of official information in the market, stock population etc.
• Inadequate market access for small-scale producers

COMPLETION DATE Quarter Year KEY MILESTONES LEAD DEPT./AGENCY SUPPORTING DEPTS./AGENCIES

Q2 2014/15 Develop a R&D programme on energy efficiency in poultry production ARC DAFF Q4 2015/16 Partner with private sector seed companies in order to develop higher yielding soybean varieties DAFF (CD Plant Production and Health) ARC, universities, Protein Research Trust, private seed comp’s Q4 2014/15 Amend soybean grading regulations to align with industry requirements DAFF (CD Inspections and Quarantine Services) Grain SA Q4 2015/16 Develop and implement regulations on retention of protected soybean seeds DAFF (CD Plant Production and Health) Grain SA Q2 2014/15 Develop and implement a National Management Plan for Sclerotinia (a fungal pathogen affecting soybean, sunflower) DAFF (CD Plant Production and Health) ARC Q3 2014/15 Refine and expand smallholder training programmes on primary production and post-harvest practices for soybean and yellow maize DAFF (CD Sector Capacity Dev; CD Extension Support) Provincial departments

• f agriculture, ARC,

Grain SA Q1 2015/16 Develop and deliver standardised and targeted input supply package for smallholder soybean and maize producers by means of reprioritisation of the Ilima/Letsema programme DAFF (CD Plant Production and Health) Provincial departments

• f agriculture, ARC

Q1 2015/16 Develop and implement a national Poultry support programme inclusive of:  communication system to support extension staff with technical and advisory support services for plant production;  training programmes in production systems and farm management DAFF (CD Plant Production and Health) SAPA, Provincial departments of agriculture, ARC, Grain SA Q4 2015/16 Support smallholder and mixed-size farmer coops establish off-take agreements with feed companies DAFF (CD Agro- processing and Marketing) dti, SAPA, Provincial departments of agriculture, Grain SA

• Dairy
• Red meat
• Wheat
• Horticulture (including wine industry)
• Biofuels
• Forestry
• Aquaculture
• Small Scale Fisheries

Others

• Fetsa Tlala
• Research and Innovation
• Promoting Climate Smart Agriculture
• Trade, Agribusiness Development and Support
• Strategic Infrastructure Projects (SIP 11)
• Biosecurity
• Land Reform

Transversal interventions

Perform ance reports per KAP e.g. food s ecurity i.t.o projected deliverables

• PA

Perform ance reports per KAP e.g. food s ecurity i.t.o projected deliverable - QT

An n u al KAP perform an ce reports 2 / MTS F period

• Nat. s

ituational Analys is / Policy R eview

Qtly KAP perform an ce reports 2 / MT S F period

• Prov. s

ituational Analys is / Policy R eview 2 / MT S F S IT UAT IONAL ANAL YS IS + ANNUAL KAP PE RF ORMANCE RE PORT S Perform ance reports per project related to provincial program m es e.g. food s ecurity projects i.t.o projected deliverable - MO General res earch ques tions form ulated to guide a national s ituational Participating in providing inform ation to ans wering form ulated res earch ques tions J UL Y Provinc ial KAPs formulated or reviewed F

• rmulated s

elec tion c riteria for projec ts per KAP J UNE F

• rmulate new, or

Review exis ting KAPs .

• R

elevant directorates to interact with provinces

• n

propos ed KAP e.g. L ives tock Developm ent

SEPTEMBER

PROPOS E D OR RE VIE W E D KAPSS UB MIT T E D F OR INCL US ION INT O APAP CONT E xtens ion offices receives applications and Bus ines s Cas es for Candidate Projects (clients , farm ers , other departm ents etc.) CONT Spatial Developm ent F ram eworks (SDPF s ) Dis trict Com m ittees further recom m ends projects through a provincially determ ined s elec tion c riteria of projec ts .

• Commodity -bas

ed projec t management c

• ordinating interventions

along a value c hain. CONT

• E

xtens ion offices s creens applications bas ed on com pliance i.e. com pleted bus ines s cas es and application form s .

• Pre-feas

ibility s tudies are com pleted on applications ; and the res t receives regret letters CONT

• L
• c

al multi-s takeholder forums receives and rec

• mmends (L

M, com m

• dity groups

, L and R eform ) projects bas ed on recom m endations by extens ion offices in turn;

• Projec

t teams are s et per projec t approved by provinc e. AUGUS T Provincial Com m ittees approves projects s ubm itted by dis tricts , bas ed on approved s election criteria per program m e; and s ituational analys is .

• Cater for s

trategic projects by other departm ents , internally etc.) + farm ers with s trategic partners hips / initiatives etc. L

• c

al multi s takehol der forum Projec t S upport S ervic es mus t be in plan at loc al level Dis tric t Commi ttees Provin c ial Commi ttees Provin c ial Commi ttees

A B A C1 C2 C3 C4 C5 D D

Comm

• dity

F

• rum

s

APAP Planning, Monitoring and Evaluation

• 1. Land Reform
• 2. National Water Policy Review (NWPR)
• 3. Minor policy areas:
• Labour
• Energy
• B-BBEE
• MAPA, etc.

Two other major policy areas impacting

• n Agriculture & Agribusiness

On Land Reform, for today…..

Acknowledgement that Land Reform in South Africa is necessary, even though a complex and emotive

• subject. The question is: How do we do it?

In effect two approaches/models by government:

• 1. DRDLR Green Paper and National Reference Group

(NAREG) Process.

• 2. National Development Plan (NDP) model on Land

Reform.

• 1. DRDLR Green Paper and National

Reference Group (NAREG) Process.

GP: Principles underlying Land Reform

(a) De-racialising the rural economy; (b) Democratic and equitable land allocation and use across race, gender and class; and, (c) Sustained production discipline for food security The Goal is to promote social cohesion and development, based

• n shared growth and prosperity, relative income equality, full

employment and cultural progress.

NAREG Process

• National Reference Group established, and Agbiz part

thereof

• 6 NAREG Workstreams established for consultation:
• Group 1: Land Management Commission (LMC)
• Group 2: Land Rights Management Board (LRMB)
• Group 3: Office of the Valuer General (OVG)
• Group 4: 3-Tier Land Tenure System
• Group 5: Communal Tenure
• Group 6: Legislation
• Considerable interaction over past 2-year period
• 14 policy positions developed

Policy Type

Foundation Redistributive Development and Support

Actual Policies

1. Spatial Planning and Land Use Management (SPLUM Act finalized) 2. Rural Development Policy Framework – CRDP approach 3. Agricultural Land Holdings Framework Policy – Private land with limited extent + Regulation of Foreign Ownership of Land 4. Land Management Commission (Draft Bill to Parliament soon?) 5. Property valuations - Just and equitable compensation - Property Valuation Act assented 6. Pro-active land acquisition policy (PLAS) 7. Re-opening of Restitution - Restitution of Land Rights Amendment Act assented 8. Land tenure reform in commercial farming areas (Strengthening the relative rights of those that work the land) 9. Communal land tenure policy and redistributive arm to decongest communal areas 10. Rural Development Framework (RDA, RIDFF, AVMP, etc.) 11. Recapitalisation and Development Policy 12. State Land Lease and Disposal Policy 13. Communal Property Associations Policy 14. MTSF developed between DRDLR and DAFF

Strategic Correlation amongst the various Policy Instruments and Institutions

33

New Land Reform Legislation

• Spatial Planning and Land Use Management Act (SPLUMA)
• Property Valuation Act assented 1 July 2014
• Restitution of Land Rights Amendment Act assented 1 July 2014
• Land Commission Bill (With DRDLR after gazetted for comment)
• Expropriation Bill (In Parliament now)
• Extension of Security of Tenure Amendment Bill (Signed off at

NEDLAC in 2014, to Cabinet and Parliament in 2015).

Expected New Land Reform Legislation

Electronic Deeds Registration Bill February 201 5 Communal Property Associations Amendment Bill March 2015 Communal Land Tenure Bill February 2015 Regulation of Land Holdings Bill March 2015

Restitution of Land Rights Amendment Act

• Conditional support for certain policies/legislation
• Right of First Refusal (RoFR)
• Namibia model
• Variation thereof with term conditions, etc.
• Farm Equity Schemes (FES)
• Implemented, then suspended by DRDLR
• Being reviewed
• Considerable potential and in line with AgriBEE

Sector Code

Agbiz alternatives in NAREG Process

• 2. National Development Plan (NDP)

model on Land Reform.

NDP Model on Land Reform

Chapter 6: An Integrated and Inclusive Rural Economy

NPC’s proposed model for workable and pragmatic land reform based on following principles:

NDP Model on Land Reform

Chapter 6: An Integrated and Inclusive Rural Economy

NPC’s proposed model for workable and pragmatic land reform based on following principles:

NDP Model on Land Reform

Chapter 6: An Integrated and Inclusive Rural Economy

NPC’s proposed model :

NDP Model on Land Reform

Chapter 6: An Integrated and Inclusive Rural Economy

• District land committees – stakeholders important!
• Identify 20% of commercial agricultural land in district
• Funding model critical (WG by Agbiz and Banking Assoc)
• Stepped programme of financing + new financing

instruments ( Land Bank role NB – additional mandate from government?)

• Commercial financing model needs to be developed.
• Protection from uncertainty for farmers, if participating.

Developments

Agbiz/BASA initiative

• Government adoption of NDP and its Land Reform model – Agbiz

endorsement

• Financing deficiencies – lack of technical detail major shortcoming
• Implementation capacity at 3rd-Tier Government a major concern
• 14 July Workshop with NPC and key financiers – Working Group

established

• Key principles of engagement and proposal developed

Commercial Financing Proposal

Methodology

• Currently still an internal working document.
• It reflects the collective views of the Agbiz/BASA Task

Team.

• It will serve as the basis for a submission to the NPC and

the DRDLR.

• Following slides provide just basic outline of proposal.

Commercial Financing Proposal

Rationale:

• Need to play an active and collaborative role in addressing

land reform

• Agbiz/BASA Task Team response to NPC request.
• Commercial lenders have very strong credit and business

case approval processes in order to protect their depositors’ funds from lending losses.

• Provide Government with a high level of comfort, esp. on

viability and market value.

• Agbiz and BASA do not view these proposals as the answer

to all land reform objectives.

The BASA/Agbiz Task Team proposal

• 1. This proposal suggests a mechanism and process for the commercial financing
• f the land reform model as detailed in chapter six of the NDP.
• 2. Tangible land reform results are the measure of success of the financing

process.

• 3. In this proposal, the Task Team representing the South African banking and

agricultural business sectors, offers a commercial banking solution for land reform.

• 4. Land reform as per NDP is a national imperative for ensuring the country’s stability,

food security, rural development and security of tenure via housing. The NDP model on Land Reform is essentially a proposed framework for land reform and not a “one size fits all” model or plan. It does however provide a number of principles for orderly land reform implementation.

5. The active participation of the commercial sector in the financing of land reform and establishment of a viable Black commercial farming sector is a critical success factor. This sector offers commercial acumen and skills to enable the financing process. Its client base will be used for originating normal credit processes to ensure viability. 6. Commercial farmers need to be incentivised to participate in these joint ventures with measures such as protection from risks i.e. land claims and exemption from further land reform obligation, and benefit from incentives such as access to grants and BEE rating and

• recognition. All existing and future land claims on projects in this financing scheme will have

to be settled through financial restitution.

• 7. The proposal is premised on the retention of competition between lenders.

8. Farmers must have the right to choose or select partner beneficiaries – demand driven, i.e. selection must be apolitical and voluntary. 10. Normal commercial lending criteria principles – including business plans, market-related valuation of property, vetting of partners, etc – will apply. Freedom of choice of financier is endorsed.

The BASA/Agbiz Task Team proposal

1. Transfer of title into any legally accepted entity, for example a trust or company, which is no less than 50% + 1 Black-owned, is a prerequisite. 2. State-owned and communal land is excluded but a model for its management needs to be developed separately from this proposal. 3. A Land Audit is an imperative and all available knowledge on whom owns what, needs to be consolidated and maintained in one database by the Deeds Office. This includes State and Para-State entities, as well as municipalities. 4. All existing and future land claims on projects in this financing scheme will have to be settled through restitution. 5. Speed of decision-making relating to the grant approval process is critical and should happen within two weeks to allow funds to flow within 30 days.

Proposal informed by following principles

• 6. The grant allocation committee will operate according to its own terms of

reference relating to funding decisions as well as membership which must be specified by BASA and Agbiz.

• 7. Incentivisation is required to ensure participation by a critical mass of

commercial farmers.

• 8. A social benefit option such as security of tenure in various forms is also

essential to the success of the land reform process, provided it is separately financed, monitored and managed.

• 9. Normal recovery processes under the Insolvency Act will apply.
• 10. Close co-operation between private sector and government technical task

teams is essential.

Proposal informed by following principles

Agbiz position on proposed limitations to ownership and use of agricultural landholdings.

This Agbiz position is with specific reference to the Deparetment of Rural Development and Land Reform (DRDLR) policy document entitled: “Agricultural Landholding Policy framework: Setting upper and lower bands for the ownership and use of agricultural landholdings”. This policy postion was highlighted during the week with statements emanating from the ANC Lekgotla that land ownership would be limited to two farms per owner, as well as to a maximum of 12 000 hectares. Agbiz does not support this policy as the imposition of limitations to landholdings in an open land market compromises the principle of a competitive and efficiency–driven agro-food system that ensures food security for this country. If you compromise on this universally accepted economic principle, the setting of so-called bands or ceilings becomes arbitrary and such decisions are then ultimately taken by government with potentially dire consequences. But it is not just an important economic principle that would be compromised, the effective practical implementation thereof is highly questionable.

Gross Capital Formation and Net Farm Income: 1971-2012

Graph: BFAP, 2014

Real value of agricultural assets: 1971-2012

(2005 Constant prices)

Graph: BFAP, 2013

Real agriculture debt

Source: 11th BFAP Baseline, 2014

SA economic growth: Tradable goods sectors lag the non-tradable goods sectors

Source: StatsSA Graph: Agbiz

50 100 150 200 250 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Index of % GDP growth of economic sectors

GDP Agric Mining Manuf Construction Trade Transport Finance 2014 = estimate

Take home message…….

• Land Reform necessary, but complex and emotive issue
• Still considerable policy uncertainty in terms of targets,

timelines, processes to be followed, etc.

• Now an investment inhibitor in agricultural sector.
• Major progress on Agbiz/BASA Proposal for Commercial

Financing of Land Reform, but will need government buy-in and support.

• Certainly not doom and gloom, but considerable policy

pressure to bear on commercial agriculture.

• Be aware of changing circumstances.

Thank you

www.agbiz.co.za