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Citrus Growers AssociationStrategic Workshop

Birchwood Hotel and Conference Centre, Brakpan

12-13 June, 2013

Facilitated byL. von Broembsen & Associates

CC Registration No. 2003/029986/2320 Stuartfield Avenue, Trovato Estate, Kenilworth 7708, Cape Town.

Tel.& fax (021) 7627187Cell (083) 250618

1 Prepared by L.von Broembsen, June 2013

http://www.cga.co.za/site/default.asp

Executive Summary……..

This report covers the outcome of a strategic workshop called by the CGA Board in June 2013to review progress on implementation of previously identified strategic projects and recalibrate the industry’s most pressing issues. In particular, it was recognized that there was an urgent need to align industry and government in the pursuit of gaining, retaining and optimizing market access and creating an environment for a harmonious, profitable and globally competeitive citrus industry. An implementation plan for the agreed strategy was also considered critical.

After a series of scene-setting presentations the workshop discussed CGA’s stakeholders, the purpose of its primary customer the grower, and the task that the CGA has in meeting its growers’ expectations and goals.Thereafter the opportunities, threats, strengths and weaknesses were identified and lists were created of what industry and government need/want of each other and how well aligned these issues presently are. The group then identified what the ‘perfect CGA’ would be doing and how it would be structured. This process was used to identify the five top priorities that CGA needed to give attention to immediately and was used to take the first step in structuring project plans for these five most important actions.

The threats listed by participants highlighted technical issues (phyto, biosecurity, food safety, water), government policy and services (land reform, labour and DAFF) infrastructral shortcomings and political instability locally and offshore. These factors all translate into higher production and/or value chain costs, barriers to market penetration or all three. Research and Technical support was seen a key industry strength while CGA’s weaknesses related mainly to issues around relations with government. Opportunities included the leveraging of South Africa’s strong citrus research and technical base to widen market access and retain existing markets through the ability to comply with ever-tightening market standards ; and improving relationships between CGA and government.

Inputs by participants on the alignment of CGA’s and Government’s objectives flagged the need for greater consultation and engagement as a primary requirement and placed emphasis on the CGA becoming a ‘friendly partner’ of government rather than a critic. It was felt that the issues raised could be resolved by dialogue but this would require energy, urgency, resolve and the willingness to engage constructively.

This, together with the issues listed in the SWOT analysis, placed the workshop in a position to catalogue the main issues that CGA has to work on as a matter of urgency to safeguard its future. The five top ranked issues (out of 26 issues raised) are, in order of importance:

1. Relationship with Government2. Structure of the CGA Board3. Transformation and Land Reform4. CGA/Grower Alignment5. Market Access


Each of the participanting groups was then given one of the above issues and requested to generate a project plan and present their project plans to the workshop. The completed project plans are presented as appendices to the report and reflect the collective wisdom of the participants to take the first step in structuring formal project plans for the five most important actions identified during the workshop. Due to limited time the project plans could not be completed in full detail but they will serve as a valuble guideline for taking these projects forward.


Introduction…..

Since 1997, the year the Citrus Growers Association of Southern Africa was established, the Board has held four strategic planning sessions, the most recent being in 2010. In view of the rapidly changing landscape both locally and internationally, the CGA Board requested that a strategic planning workshop be held to review progress, recalibrate the industry’s most pressing issues and provide a roadmap for the way forward. In particular, it was recognized that there was an urgent need to align industry and government in the pursuit of gaining, retaining and optimizing market access and creating an environment for a harmonious, profitable and globally competeitive citrus industry. An implementation plan for the agreed strategy was also considered critical.This report covers the outcome of the workshop.

Attendance……..

CGA Board of Directors:

Pieter Nortje Piet Smit George Hall Graham Piner Antoine Rouillard Paul Bristow Phillip Dempsey Danie Mathewson

Fanie Meyer Bertus Dillman Per Noddeboe Charles Rossouw Hannes Hobbs Israel Nemaorani Cornel van der Merwe Piet Smit (alternate for Ben Vorster)

Stuart Symington/Flip Smit

Chairman (Sundays River)Executive (W Cape)Executive (Boland)Executive (Nelspruit)Director (Pongola)Director (Zimbabwe)Director (Patensie)Director (Vaalharts, N Cape)Director (Hoedspruit)Director (Limpopo)Director (Swaziland)Director (Senwes)Director (PDI – South)Director (PDI – North)Director (Onderberg)

Letsitele

CEO PPECBCGA Audit Committee Chairman

CGA staff and other Attendees

Justin Chadwick

Paul Hardman

Mitchell Brooke

Lukhanyo Nkombisa

Mzo Makhanya

Vaughan Hattingh

Mono Mashaba

Khaya Katoo

Boet Mouton

Jan Louis Pretorius

CEO: CGA

Industry Affairs Manager: CGALogistics Development Manager: CGA

Transformation Manager: CGA

Chairman: Citrus Growers Development Chamber

CEO: CRI

Government Lobbyist: CGAYoung Grower (E Cape)

Young Grower (W


Cape)Young Grower (Letsitele/Hoedspruit)

Process and Programme…………..

The workshop took place from 11:00 on 12th June to 15:00 on 13th June 2013. It consisted of 5 parts:

1. Scene - setting talks

The following five scene- setting addresses, introduced by the Chairman who welcomed participants and outlined the purpose of the workshop, were presented: Elaine Alexander – CEO SA Table Grapes and Fruit SA: Fruit Industry Social CompactLukhanyo Nkombisa – CGA Transformation Manager: Citrus Farmers Support Commodity ApproachPaul Hardman – CGA Industry Affairs Manager: Industry Trends and StatisticsStuart Symington – CEO PPECB: CGA – Lateral ThinkingJustin Chadwick – CGA CEO: CGA Structure and Background.

Copies of the slides used in these presentations are available from the CGA

On day two, Mono Mashaba, CGA’s Government Lobbyist addressed the group on his Background and Aims.

2. Information Collection

In order to effectively harness the collective thinking of the diverse group in the limited time available, the Participlan facilitation method was used for part of the session.This involved participants responding to a few carefully structured questions by presenting their ideas in writing on specific cards (ovals). Participants were placed into one of 5 groups of 5 or 6 individuals per group and the written responses to the questions were generated collectively by each group.The ovals were displayed, clustered, debated and evaluated in open forum. In the process, each participant was given the opportunity to make his initial inputs anonymously yet participate in open discussion. In answering the final question (5) participants were to rank the issues in order of priority. The information gathered in this way constitutes the bulk of this report.


3. An analysis of who CGA’s customers are and what can they expect of CGA

4. Identification of issues to be included in the SWOT analysis

5. The development of project plans for the issues identified as most urgently requiring attention

Findings……..

Who are the customers/stakeholders of CGA? What are the objectives of the members and what are they trying to achieve?

This question was discussed in open forum and the responses captured. It was agreed that CGA has a number of stakeholders (including growers, export agents, importers, government, labour, fruit buyers, etc). However, citrus growers (of all sizes and configurations) who pay their export levies are in fact the first, foremost and only true customers of CGA.It was agreed that the main objective of growers is to be profitable on a sustainable basis. This would lead to many positive spin-offs such as employment and the increased earning of foreign exchange. This being the case the question was asked….

Question 1…

“If the key is enabling our members to achieve their objectives…..what does CGA see as their own objectives?”

Issue ResponsesSupply Information

Provide well-researched technical and market information

Provide relevant information for decision makingInteraction with Government

Facilitate interaction with government Raise political profile of CGA with government Meet government’s transformation goals Influence and engage government to support CGA

objectivesMarket access Create and maintain markets

Create profitable markets Maintain and create market access Easier/safe access to Africa markets Provide means to grow market access


Enabling environment

Create a sustainable supply chain model Create an enabling trading environment

Social Compact

Partner growers, government and labour in a social compact

Facilitate a conducive labour environmentResources Prioritise and direct resourcesCommunication

Develop an internal and external communication master-plan

Levies Add value to grower levies Increase levy to R1.00/carton

Issue ResponsesAssets Control and invest in critical industry assetsStructures Create required/suitable structuresInterventions Understand and prioritise interventionsSustainability Identify drivers of sustainabilityInnovation Promote an environment for innovationStrategic issues

Strategic positioning of industry Offer strategic, proactive guidance

Representing growers

Represent growers in a reputable manner

General vs own affairs

Do stuff collectively that can’t be done individually

The responses listed above re-confirmed the nature and scope of service that participants believed the levy-paying growers can expect of their industry body, the CGA. The next step was to establish from participants what changes, relevant to the CGA, were taking place in the external environment. Participants were given a prompt in the form of the anagram “PESTLED” which stands for Political, Economic, Social, Legal, Environmental and Demographic. The responses were categorised as either Threats or Opportunities.

Question 2: “In your view what are some of the changing

scenarios (opportunities and threats) that could unfold in the next 2-5 years in the space in which the


CGA operates?”“Which factors (current and expected) are necessitating changes being made to CGA’s strategy and the way CGA operates and is structured?”

Threats

Issue Responses - ThreatsPhytosanitary threats

Review of EU Phyto legislation Addressing the FCM issue Phyto threats (FCM, HLB, CBS, BI)

Trade Barriers

Increase in barriers – technical and trade New/existing barriers – trade and phyto Non tariff barriers

Water quality

Water quality and quantity management Water quality and quantity regulations Water quality

EU Protectionism

Is EU still a viable market? Action/Alternatives?

Instability RSA’s Political, Economic and Policy instabilityDAFF Capacity within DAFF in decline

Daff implodingGlobal Economy

Slow recovery of global economy Political instability in ME and EU

Labour Impact of labour unrest, unemployment and povertyCompetition Increasing competition in the marketPlant Protection Products

Tightening of Food Safety and MRL requirements

Biosecurity HLB introduction to RSA Biosecurity

Costs Pressure of rising inflation Input cost pressure = decreasing profit

Social responsibility

Higher levels of social responsibility required (schools , clinics)

Land Reform Changes to land reform policy (X2)


Accelerated land reform (cost)Infrastructure

Lack of suitable infrastructure – roads, rail, ports, power.

Election Election silly season

The threats listed by participants were mainly around technical issues (phyto, biosecurity, food safety, water) political (land reform, labour, DAFF), infrastructral shortcomings and political instability locally and offshore. These factors all translate into higher production costs, barriers to market penetration or both.Predicted changes to the external environment also offer certain opportunities to the CGA. These are listed below.

Opportunities

Issue Responses - OpportunitiesConsumer trends

Comply with requirements of a more discerning consumer base

Changes in consumer trendsBRICS A development opportunity (X2)

BRICS and bilateral agreements Subsidizing Indian access

Citrus industry culture

Ability to adapt

UK leaves EU Creates potential opportunity SIZA All RSA growers to be able to comply with SIZACGA/ Govt Collaboration

Forging enhanced relationships

Mechanization

Solution to labour difficulties

HLB Threat to competing countriesNew Land Reform Policy

Could favour solutions to land transfer difficulties

USA market access

Access to whole of Southern Africa

African Development of African market


marketTransformation

Transformation and social upliftment

Food safety Ability to meet increasing demandsNDP As a cornerstone of policy direction

Opportunities mainly relate to leveraging South Africa’s strong citrus research and technical base to

widen market access and retain existing markets through ability to comply with ever-tightening market standards.

improving relationships between CGA and government.

Question 3: “What things are currently working well/not well in regard to CGA meeting its strategic objectives?”

Not working well - weaknesses

Issue Responses - WeaknessesRelations with government

Government relations not working Difficulty in working with government Government relations management weak Lack of strategic intervention with government Labour relations management not working Insufficient capacity to engage with Govt

Transformation

Half-hearted approach to transformation Transformation ineffective Transformation desk too thinly spread

Board Structure

Board structure clumsy

FSA Value Not extracting value from FSA – lone rangerInfrastructure Infrastructure not supporting objectivesLobbying Insufficient lobbying - internal and externalGrower database

Incomplete grower database


Image Image of industry not good Image not well promoted

Input to DAFF Market access input to DAFFPhyto Phyto registrationsLogistics Logistics interventions (commercial)Research capacity

Horticulture insufficient

Reserve Funds

Management of reserves (financial)

Fundraising Fundraising outside of levyCGA offices Are CGA offices in the right centre?

CGA office in Durban

Working well - strengths

Issue Responses - StrengthsInformation and Communication

Access to information Improvement in communication Information Continuous improvement in market

information Grower communication

Transformation portfolio

Government relations on transformation portfolio

Research Comprehensive research (X2) Research best in the world

River Bioscience and Xsit

Good and growing

CIS Working well but threatenedAdministration Levy admin and corporate governanceMarket access Good but too restrictive - negotiateGrower chamber Formation of the grower chamberCitrus Academy Citrus Academy


Food Safety Food safety assuranceStrong base Good base created to move in the new

direction

Research and Technical support was seen a key industry strength while CGA’s weaknesses related mainly to issues around relations with government. Overall, responses to the last two questions (changing scenarios and what is working well/not so well) effectively spelt out the items for populating a SWOT analysis.

A SWOT table extracted from the responses to the two previous questions is provided hereunder.

Strengths WeaknessesGovt relations in transformation portfolio Not extracting value ex FSA – lone rangerGrower Communication Board Structure clumsyAccess to information Image not well promotedRiver Bioscience & XSIT Market Access inputs to DAFFFood Safety Assurance Logistics interventions (commercial)Citrus Academy Phyto registrationsCRI & CIS Relationship with GovtResearch Labour relations managementMarket Access Alternative measures to cold steriLevy Admin & Corporate Governance Incomplete grower databaseFirm base from which to take new direction Transformation – insufficient attention

Management of reservesInsufficient capacity to engage with GovtLack of Govt CapacityInfrastructure not supporting objectives

Opportunities ThreatsBRICS Developments Water QualityTransformation & Social Upliftment Phyto threats (FCM, CS, BI)Development of African Market EU PhytoprotectionismCitrus Industry Culture Imploding DAFFNDP as cornerstone of policy direction Trade Barriers - Technical Changes in Consumer Trends Political Instability in ME & EULand reform policy changes Diminishing Levy BaseMechanisation Political & Economic Policy InstabilityEnhanced collaboration CGA/Govt Impact of Labour InstabilityCompliance with SIZA Input Cost & InflationUSA Marcket Access (for whole of SA) HLB & BiosecurityHLB affecting competitors Land Reform policy changes

By creating a SWOT matrix, CGA can develop its competitive advantage by identifying a fit between the elements contained in the SWOT as follows:


Strengths WeaknessesOpportunities S-O strategies W-O strategies

Threats S-T strategies W-T strategies

S-O strategies pursue opportunities that fit with the company’s strengths.

W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that CGA can use its strengths to

reduce its vulnerability to external threats. W-T strategies establish a defensive plan to prevent the CGA’s

weaknesses from making it highly susceptible to external threats.

An example of a S-O strategy is where an identified weakness ‘Relationship with Government’ can be pursued through one of its identified strengths, ‘Firm Base from which to take New Direction’ An example of a W-O strategy is where an identified weakness ‘Relationship with Government’ can be overcome so as to seize the identified opportunity ‘Enhance Collaboration with CGA/Govt.Similarly, an example of an S-T strategy is where CRI’s strengths would be used to address Phytosanitary threats, or a W-T strategy where addressing an identified weakness ‘Relationship with Government’ can make CGA less susceptible to the external threat of ‘Labour Instability’In the SWOT analysis the issue of CGA/Government relationships features prominently. Accordingly, Question 4 (below) probed the merits of a closer alignment between CGA and government.

Question 4: “What functions/processes do industry and government need/want of each other? Are these aligned?

Industry Requires from Government

Issue Responses - OpportunitiesImproved Communication

Open communication channel to govt at policy level Access to inter-ministerial committees (land reform,

agriculture) Govt representation at CGA board meetings Consultation on agreed processes Policy certainty Opportunity/platform to engage and contribute to NDP

Market Access

Support market access needs


Assistance/ involvement in bilateral negotiationsInfrastructure Development

Provide enabling environment – ports/infrastructure (X2)

Create an efficient logistical infrastructure Port/Logistics infrastructure/service

DAFF Provide effective, efficient, professional representation A competent authority Sufficient well-trained capacity No more Hollywood (managers in acting capacities)

Subsidies Want subsidies reintroduced Enhance competitiveness by levelling playing field

against highly subsidised competitorsUnderstanding Industry

Understanding and recognition of role and contribution of citrus industry

Govt understanding of industry needs Have a balanced business and social approach Political will required

Attention and Urgency

Attention to problems and requests put in front of them A sense of urgency to address and resolve issues

Fulfilling obligations

Fulfil obligations to trading partners SOPs & other agreements

Leadership Strong leadership Political leadership

Facilitation Facilitate easier export processes (admin) Biosecurity Biosecurity protectionBrand SA Promote and support Brand SATrade Promote favourable trade relations (BRICS)Social Infrastructure

Provide improved social infrastructure services (health, education, etc)

Research Provide effective research supportIncentives Provide incentives for desired actions by growersTransformation

Require a transformation action plan

PPECB Require alternative inspection service to PPECB


Many of the issues listed above are not adequately meeting the needs of industry, some of which are a source of concern and frustration and even threaten the industry’s future. Government also requires various inputs from industry. Consultation with government is required to understand and prioritse their needs/wants but in the meantime paricipants listed the issues they believe are important to government. These are as follows:

Government Requires from Industry

Issue Responses - OpportunitiesTransformation

Support transformation Skills development as part of transformation (X2) Farmer to developing farmer

Job Creation and Security

Job sustainability Create employment (X4) Job security

Social development

A healthy rural economy Support of the NDP Social development

Revenue Revenue generation Earning of Forex

Alignment of industries

Common industries to align with each other (FSA)

Land reform Implementation of land reformCommunication

Want to be informed and educated on special needs and requirements of industry

FSA Uniform fruit industry vision (FSA)Involvement Greater involvement of youth, women and disabled in

industryFood security Ensure on-going food securityStrong industry

A competitive and sustainable citrus industry

Trust Mutual trust and communicationAppreciation Appreciation of what government is actually doingRelations Improvement in relations at all levels by agreeing a

process to achieve thisResearch Research guidance


Image Politically acceptable industry image of governmentPhyto adherence

Adherence of farmers to phyto requirements

Inputs by participants placed emphasis on the CGA becoming a ‘friendly partner’ of government rather than a critic. Several important issues are listed above which need to be and can be resolved by dialogue but this will require energy, urgency, resolve and the willingness to engage constructively.

This, together with the issues listed in the SWOT analysis, placed the workshop in a position to catalogue the main issues that CGA has to work on as a matter of urgency to safeguard its future This is not a strategic plan but more a list of actions that amount to dealing with a burning platform. Long-range strategic planning or scenario planning should follow the resolution of these critical issues. The identification and ranking of the critical issues was achieved by asking and voting on question 5, below:

Question 5: “In 2 years time CGA is hailed as a model organization of its kind. What are we doing and how are we structured to warrant this praise?”

Vote: Rank the 5 issues requiring immediate action plans Vote

Rank Issue Responses

23 1 Relationship with Government

Is a trusted partner of government Has great relationship with government on right

platform CGA Chairman has a face recognized by Govt as

an ally Has effective consultative structures with Govt

& stakeholders CGA has the key into Govt Has excellent Govt relations


15 2 Structure of CGA Board

Has the capacity & structure to execute the strategic objectives of the past 14 years

Has adequate resources for all our needs11 3 Transformati

on and Land Reform

Visible transformation results Progressive land reform initiatives Leaders in agric transformation Has the recipe to integrate emerging farmers

into the industry8 4 Grower

service/ alignment

Caters for interests of all sizes of growers CGA puts the grower first Grower objectives drives CGA structure and

agenda Supportive grower base Good base, best growers Wide-ranging activity base Grower interests are addressed Trusted partner of the grower CGA is connected to its customers/growers

8 5 Market Access

Creates and maintains required export markets Grows market access Has access to all wanted markets.

7 6 Infrastructure development

Driver of efficient logistics system Infrastructure developed

7 7 Incentives Industry receives government incentives6 8 Profitable

growers Creates an environment for its customers to remain

profitable Facilitates profitable and sustainable citrus farming Competitiveness despite strong rand Profitable and expanding industry

6 9 Social Compact Embraces the social compact study (FSA)4 10 Leadership Has visionary, proactive leadership

Has a culture of stewardship Is proactive and long - term vision Has strong leaders

4 11 Communication with

Has an excellent communication system with all stakeholders


stakeholders2 12 Good image Has the right political image2 13 Intelligence

hub Has a market intelligence hub

1 14 Culture Has a people-centred cooperative culture1 15 Relationships Has good stakeholder relations1 17 Labour force Industry has a well paid, productive labour force

Contributes to job and food security1 18 Networking It networks beyond government1 19 Values Is true to its core values0 20 Number 1 Is the number one exporter of citrus in the world 0 21 Goals Achieves the goals it has set itself0 22 Staff Invests in people

Has a competent energised team0 23 DAFF An effective and efficient DAFF supports the industry0 24 Diversified Has diversified products and markets0 25 Innovation Is a driver of innovation0 26 Quality Is quality driven

Project Plans…………….

Each of the participanting groups was then given one of the five highest ranking issues taken from the responses to Question 5 and requested to complete the CGA Project Plan Template and present their project plans to the workshop. The completed project plans are presented in Appendices 1-4 attached to this report.The intention here was to use the collective wisdom of the participants to take the first steps in structuring project plans for the five most important required actions identified during the workshop. Due to limited time the project plans could not be completed in full detail but they serve as a valuble guideline for taking these projects forward.

Conclusion…………..

The scene-setting talks at the start of the session provided valuable context, perspective and information for the contributions required from individual participants during the workshop. The five groupings into which participants


were placed were well balanced in their skills mix and responded energetically to the questions posed and the open discussions that followed.Arising from the workshop there are now several tangible, prioritized projects that have been kick-started and require immediate follow-up. A strategy session to consider Citrus Vision 2020/30 should be undertaken in due course and should include appropriate scenario planning.

End


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