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Presentation to Portfolio Committee

17 September 2010Mrs Ntombi MsimangChairperson

Introduction

The brief was to limit the presentation to NAMC transformation activities

The Marketing of Agricultural Products Act highlights the NAMC’s role as advisor to the Minister. The “Act” is under review

In response to the challenges faced by black farmers, Council created a unit, Agribusiness Development Division, within the NAMC dedicated to transformation The division gets 20% of the NAMC budget The NAMC through the regulations on statutory levies is able to

leverage 20% of all levies for transformation. The funding is collected and managed by levies collecting bodies and Trusts

In 2009, the funds raised from private sector were R61,8 million.

Levy Income and Amount Spent on Transformation: 2009

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Industry Total amount of levy income

R

Amount spent on transformation projects

R

Citrus 28 377 458 3 456 187

Cotton 1 927 902 1 188 867

Dairy 29 622 451 4 713 923

Deciduous fruit 35 532 881 6 470 408

Dried fruit 1 869 855 434 910

Pork 13 459 122 2 042 994

Potatoes 22 181 627 4 764 494

Red meat 19 173 183 6 575 974

Sorghum 1 547 820 312 445

Table grapes 17 396 490 1 291 405

Wine 62 011 156 24 580 355

Winter cereal 30 296 604 6 000 193

TOTAL 263 396 549 61 832 155

Problem statement –”Limited Market Access”

The emerging producers in SA find it difficult to integrate into the formal supply chains

In addition to supplying the local markets, the producers are also finding it extremely difficult in entering the export markets

This is mainly due to lack of, Marketing infrastructure, Lack of market knowledge, pack houses, lack of volumes, Access to certification and little understanding of the highly sophisticated export environment.

Access to Market

In recognition of these challenges, the NAMC continues developing programmes that support the emerging producers with their endeavours to supply markets

locally and Internationally

The NAMC strive to increase market access for all market participants in particular the emerging producers.

Red Meat Development scheme This scheme is implemented in conjunction with WBHO and NERPO Eastern Cape.

Previously funded by DFID Objective:

to increase income earned by developing farmers from raising cattle, through greater, more beneficial participation in formal and informal red meat markets

Activities: building farmers’ understanding of structure, operation, requirements of formal

markets broadening, deepening and reducing distance to markets in developing farming

areas by (re-)establishing auction pens; ‘custom feeding programmes’ (CFPs)/feedlots (farmers pay feed+veterinary costs)

(with EC Dept of Agric. and Rural Dev.) training, practical assistance to reshape herd age/gender/genetic composition in order to begin to increase calving rate/quality weaner production

surveys (planned) to assess impact of project on herd profiles, livestock marketing practices, income earned, etc.

Achievements: auctions: +/-R5m earned from sale of +/-1 650 animals on 50+ auctions since 2005;

at most recent auction (Fort Cox College) 50% of animals on offer were weaners – 93% sold at average R14,06/kg (live)

Red Meat Project CFPs/feedlots: 3 operating (Mount Frere, Fort Cox, Ngqushwa); +/-350 animals

marketed since 2008; capacity 40-80 animals; demand to enter animals now greater than capacity; farmers in 22 local municipalities have asked for help to set up CFPs

ave. net carcass price at abattoirs +/-R3 700; ave. net informal market (live) price +/-R7 500 (mostly older, heavier animals);

estimated net increase in farmers’ earnings for animals prepared by CFPs: 15-20%

attractive marketing channels established for both weaners and older animals should gradually help increase calving rate, weaner marketing, income from livestock production

Funding R5 million a year (NAMC and WBHO on a Rand to Rand basis)

Grain development scheme Funded through funds in the Maize trust funds. The main purpose of the schemes are to uplift the black producers

in the agricultural sector and to encourage their integration into the commercial mainstream

The grain crop scheme is currently being implemented in North West by MGK Co-op and in Free State by OVK Co-op

The objective is to promote production and market access for grain for emerging farmers through, crop insurance, initial soil preparation, provision of better extension services and provision of temporary storage.

The trust spends in access of R20 million per year on this project

Grape development Schemes The scheme was designed to integrate the emerging

producers into the commercial mainstream of the wine industry

Beneficiary of this scheme – emerging producers along the orange river in Northern Cape (Upington) and Free State province

Emerging farmers produces grapes that are suited grape juice concentration and distilling wine

Wine cellars around the area have agreed to procure the products produced by the producers

The scheme is funded by the Northern Cape Provincial Department of agricultur

TUGELA FERRY (MSINGA) IRRIGATION SCHEME FARMERS

This project is to link approximately 2000 small-scale farmers in the Tugela Ferry (Msinga) in KwaZulu-Natal.

These farmers have secure tenure to irrigated land that was part of scheme started many years ago.

The irrigation water is from the uThukela (Tugela) river. These farmers produce a variety of products, mainly tomatoes, green mealies and maize.

Over 1400 women and about 600 men Our focus is on Linking these farmers to markets and business skills

training

Export Programme The NAMC has partnered with local and international organisations

in an attempt to support these farmers. Emerging farmers that are export ready are trained on the

following topics Supply chain and logistics training, Contract negotiations training, Compliance (social codes, company codes, sector codes,

manufacturing codes and Generic codes) The purpose of this course is to prepare emerging farmers that are

export ready for the challenges that they have to face when entering an export market

The NAMC collaborated with an Agency of the Dutch government, the Centre for Promoting Imports from Developing Countries

Export Programme PPECB is also participating in the programme to assist fruit farmers

to comply with food safety standards, which is a prerequisite for export markets

Under this programme training on export quality standards was conducted to 50 producers (August 2010)

The training held for producers in Limpopo, Mpumalanga, Free State, Eastern Cape and Western Cape

The training was held in Limpopo (Tzaneen) and Eastern Cape (Port Elizabeth.

12 female and 38 male that are currently exporting through agents participated in the training programme.

Export Programme The NAMC in collaboration with an Agency of the United Nations

(ITC) are helping emerging farmers in Limpopo, Eastern Cape and Western Cape to improve the quality of their products for export market.

The project in Limpopo are the restitution farms in Levubu area involving communities around the area

In the Eastern Cape, the NAMC is supporting the citrus farmers in Fort Beaufort. Three females are involved and ten farmers are male

In the Western Cape, the NAMC is supporting deciduous fruit farmers in Ceres. All the producers are male.

The NAMC is also supporting a cooperative in the Northern Cape (Upington), Eksteenskuil Cooperatives that is exporting its raisins on a Fair Trade market to UK

The co-op has 15 females and 60 males

Training Programme Training was identified as one of the factors that contribute to lack

of access to markets by the emerging sector In responding to the training needs, the NAMC facilitate a number

of training programme for the producers in the past The objectives of these training course was to capacitate the black

producers to operate their businesses successfully The challenge is that beneficiaries of the training do not have

access to funding, enough land and proper technical production skills A training course was sponsored which was attended by over 70 emerging

producers from 11 other African countries (Making Market Matter in collaboration with Cornel University and Stellenbosch University)

A training course tailor-made for women entrepreneurs was organised and was attended by 38 women entrepreneurs representing all the provinces (Agbiz Training)

Engagement with Trusts leadership

• The Council of the NAMC council meets with the Trust

Chairpersons / administrators to discuss issues that affect various

statutory measures, with specific focus on agricultural

transformation.

• The meetings are also used to focus the various trusts

transformation strategies

INDUSTRY TRUST

Post Graduate Bursary Funding

• All the 14 Trusts run a similar bursary programme that support a

large number of black post graduate students

• Citrus trusts is currently providing funding to 54 students –in 2010

(47 in 2009).

• The Meat trusts is currently funding 12 PHD students

• Assist students to find internships and workplace experience

placements

• Assist students to find internships and workplace experience

placements

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WOOL TRUST

Transformation programmes focuses on the following areas:

•The competitiveness and profitability of woolled sheep farming in communal areas

•Upgrade of shearing sheds in communal areas.

•Shearer training

•Shearer competitions

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In closing, as the NAMC we sit with the challenge of :

1.Ensuring market access while the backward linkages to product certainty in quality and quantity are riddled with potholes and outside of our intervention2.Agricultural strategies and focus that are ignorant of the local and dynamic African continental market which is more accessible for the majority of farmers than Europe, China and the USA3.Getting timely and decisive response from the Department for pressing agricultural issues; and4.Finalization of the review of the Marketing Act

I thank the Portfolio Committee for inviting our stakeholders today. The Trusts always express a wish to see and speak to the ultimate agricultural shareholder.

Thank you