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Thulamela Horticultural Development Plan (2017)

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Thulamela Horticultural Development Plan (2017) Horticultural Development Plan for the Thulamela Local Municipality HORTICULTURAL DEVELOPMENT PLAN FOR THE THULAMELA LOCAL MUNICIPALITY Final Report OABS Development (Pty) Ltd Compiled by: Dr Daan Louw (Managing Director: OABS Development) as Project Leader, in conjunction with Mr Clifford Flandorp (Project Coordinator) November 2017 258 Main Street, PO Box 3426, Paarl, 7622 Tel: +27 (0) 87 095 2108 Fax: +27 (0) 86 616 4970 Contact person: Dr Daan Louw (Project Leader) Cell: 082 857 3458 Email: [email protected] Horticultural Development Plan for the Thulamela Local Municipality EXECUTIVE SUMMARY The Post-Harvest Innovation Programme (PHI) is a public-private partnership between the Department of Science and Technology (DST) and the Fresh Produce Exporters’ Forum (FPEF). PHI’s mandate is to build a competitive and sustainable fresh horticultural industry across the country by addressing the technological challenges faced by the industry. The horticultural industry in Thulamela plays a vital role in sustaining rural livelihoods. It is therefore essential to ensure that it remains profitable and sustainable, as well as locally viable and internationally competitive. However, many of the residents have not yet been petitioned to unlock the agricultural potential of the area entirely. The purpose of this project is to compile a Horticultural Development Plan for the Thulamela Local Municipality (TLM) to provide a scientific foundation for determining the qualitative and quantitative development needs of the range of farmers/farming communities and agricultural pre – and postharvest service providers. In December 2016, OABS Development (Pty) Ltd, was appointed through an open tender process, to undertake the study. Although some small-scale farmers in TLM already produce agricultural products, the produce is not necessarily what the market wants. It was, therefore, necessary to do a market and value chain analysis to identify the horticultural opportunities for small- scale farmers (commercially orientated). It is important to note that there are three necessary components to any agricultural market (in fact for most commodity markets). These include: • The supply side. • Transaction costs. • The demand side. It is therefore appropriate for the design of a horticultural development plan for Thulamela to consider all these elements to ensure efficient market access for small- scale commercial farmers. It should be clear that it is convenient from a practical point of view to address the horticultural development plan on three levels, i.e.: • Market readiness (mainly agricultural products supply and transaction costs). • Activities or actions to reduce transaction costs. • Market access (demand by markets). The Agri-park model promoted by the DRDLR is in principle an excellent concept to address the challenges of smallholder farmers. However, it is crucial that all the elements for success (land, water, infrastructure, equipment, mentorship and training, financing and market access) are addressed during implementation and that the private sector operates the park. The Nwanedi/Timbali Agri-park is an excellent example of the concept (See Section 3.2.8.1). From the comprehensive overview of the demography and socio-economic status of the project-area provided in Chapter 2 indicated the need for job creation to reduce i Horticultural Development Plan for the Thulamela Local Municipality the dependency ratio, the need to empower the youth and women and some obstacles to achieve these objectives. Any attempt to come up with a practical and sustainable horticultural development plan will have to overcome constraints of access to land and water by involving tribal authorities as co-implementers and beneficiaries alongside with the targeted communities and individual emerging farmers. The status quo analysis in Chapter 3 highlights several of the comparative advantages for Thulamela to produce horticultural projects and the challenges to unlock these opportunities. In general, the climate in Thulamela is conducive to the production of subtropical fruit and vegetables. However, it is important to take cognisance of the impact of climate change. Certain areas in Thulamela have a much higher dryland potential compared to irrigation potential since access to irrigation water is limited. In estimation, the maximum area of high potential land that can be irrigated is about 4 000 ha (considering soil quality and water availability). The northern and south-eastern regions of Thulamela have the highest soil suitability for irrigation. It is evident from the baseline data disseminated that the overall situation of smallholder farmers appears to be less than favourable regarding the inputs provided by the groups of respondents representing their specific commodities. In general, there is a lack of access to natural resources, infrastructure, equipment, technical support and access to finance. Existing irrigation infrastructure and infield systems are in poor condition, and a number of the schemes are not operational. Based on the data supplied, the majority of the fruit produced is considered to be either class 2 or even class 3 fruit (to a large extent linked to a lack of irrigation water and other inputs). Based on the available data, it is clear that some intervention is required to attract more youth and women to irrigation agriculture. The assessment of marketing arrangements in TLM is of significant concern. A market failure exists for semi-commercial and small-scale producers. Unless the TLM horticulture development plan addresses the complexities caused by market failure, the future outlook for small-scale producers as well as semi-commercial producers will remain negative. Also, financing small-scale commercial farmers should be a vital element of the proposed Thulamela Horticultural Development Plan (THDP). It should be clear from all the background information that there are significant socio- economic challenges in the Thulamela Municipal area. However, the region is endowed with natural resources in some parts which are conducive to grow high-value horticultural crops. The environmental analysis in Chapter 4 indicates several ecological issues for consideration in the THDP. These include issues such as water quality, soil erosion, biodiversity loss, habitat fragmentation, waste management, spatial settlement patterns and Climate Change. ii Horticultural Development Plan for the Thulamela Local Municipality The market analysis in Chapter 5 indicates that the local market will continue to show strong growth due to: • Continuous growth of the middle class – both in population and disposable income; • General population growth and associated rise in food demand; and • Increase in demand for certain food types from Africa - particularly from South Africa. Such a scenario will benefit any future horticulture production in South Africa. Internationally, retailers are an essential driver of changing global dynamics in agro- food trade, production and employment. A major obstacle for smallholder producers is compliance to supply these retailers. The assessment shows that the following fruit types can maintain stable industry growth at both production- and processing levels: • Macadamia • Avocado • Citrus – oranges and lemons • Mango • Banana As far as the vegetable types are concerned, the assessment shows that the following vegetable types have potential to become influential industries in the TLM area: • Potato – although not known in the area, it needs a second consideration. • Onions • Tomato Black tea (currently 1 077 ha – Tshivhase and Mukumbani) was not considered since, according to DAFF (2015), black tea production in South Africa has been uneconomic and under severe financial strain since 2003/04. Most of the tea estates were established in areas of high unemployment during the 1970s and 1980s to dissuade people from migrating to urban areas. At the beginning of 2003 most of the tea estates in the country went out of production, and those that remain (only 3 out of 12) are in a very precarious financial position, and party survive because they produce a product of high quality but mainly because they receive funding from the state. The key reasons for the uncompetitive price of the black tea industry are the following: Relatively high production costs ascribed mainly to the introduction of minimum wages in the agricultural sector; • Low world market prices for black tea and the fact that black tea is a US dollar traded commodity; • The dominance of tea packers; two major tea packaging companies dominate more than 80% of the Southern African black tea market; • The difference between the producer prices and retail prices for black tea is alarmingly higher than most other agricultural commodities; • Black tea producers in South Africa have no mechanism to negotiate better rates with tea packers; they are price takers as the packers determine the rates. South African tea packers use the South African tea price as a negotiating iii Horticultural Development Plan for the Thulamela Local Municipality position when negotiating tea prices with our SADC partners. As a result, South African tea packers seem to be the only ones who benefited from the abolishment of the Trade-Related Investment Measure (TRIM) and the phasing out of tariffs regarding the SADC Free Trade Agreement. With a R74 million injection from the Limpopo provincial government, Tshivhase and Mukumbani tea estates in the Vhembe district of Limpopo Province were resuscitated
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