ENVIRONMENTAL IMPACT ASSESSMENT (EIA) FOR THE PROPOSED NATIONAL ROAD 3 : KEEVERSFONTEIN TO WARDEN (De Beer’s Pass Section) EIA Ref No: 12/12/20/1992
WRITTEN COMMENTS ON DRAFT ENVIRONMENTAL IMPACT ASSESSMENT REPORT (EIR)
Submitted by: PAUL STEYN BOERDERY (PTY) LTD (Registration number 1999/023304/07) (hereinafter referred to as “PSB”)
Contact address and particulars: The farm Vaalbank, Warden, district Harrismith P.O. Box 286, Warden, 9880 Tel. 082 770 1977 (G Steyn) or 082 413 4526 (Office)
Kindly direct all communication to [email protected] and CC to [email protected]
ENVIRONMENTAL IMPACT ASSESSMENT (EIA) FOR THE PROPOSED NATIONAL ROAD 3 : KEEVERSFONTEIN TO WARDEN (De Beer’s Pass Section) EIA Ref No: 12/12/20/1992
WRITTEN COMMENTS ON DRAFT ENVIRONMENTAL IMPACT ASSESSMENT REPORT (EIR)
Submitted by: PAUL STEYN BOERDERY (PTY) LTD (Registration number 1999/023304/07) (hereinafter referred to as “PSB”)
Contact address and particulars: The farm Vaalbank, Warden, district Harrismith P.O. Box 286, Warden, 9880 Tel. 082 770 1977 (G Steyn) or 082 413 4526 (Office)
Kindly direct all communication to [email protected] and CC to [email protected]
1. INTEREST OF PARTY MAKING THIS SUBMISSION
PSB is farming on a number of farms East of Warden and the new planned De Beer’s Pass Section road (hereinafter referred to as “the Road”) will cross over PSB’s farming land in the most sensitive area possible, namely through PSB’s irrigation operations, which form the economical nucleus of the total farming enterprise. The farms are inter alia Leeupoort, Leeukop, Brakwal and Vaalbank, district Harrismith. PSB produces some 70 000 (Seventy Thousand) tons of 2
food per annum in the form of potatoes, maize and meat, which equates to 192 000 kilogram per day, which in turn represent 480 000 (Four Hundred and Eighty Thousand) meals per day, estimated at approximately 400 grams per meal. This means that 160 000 (One Hundred and Sixty Thousand) people are being provided with three meals per day, each and every day, year in and year out, from this farming enterprise. This can also be expressed as 1,752,000,000 (1.75 Billion) meals per annum, produced by PSB. This farming enterprise is a very serious contributor to food security in South Africa. (Refer to Par 8 of the attached Wiese report regarding food security and agriculture as a national priority.)
2. RELEVANT INFORMATION AND ATTACHMENTS
The reader is referred to the attached submission/report prepared by Dr Hein J Wiese (an economist) which provides all details of the land areas involved, the scale of PSB’s operations and the potential negative socio- economic and ecological impact that the new Road will have, if built.
The reader is further referred to the attached List of Proposals (Annexure 2) that is suggested by PSB in order to mitigate the serious negative impact that the new Road will have. It has to be stressed that PSB is totally opposed to the building of the new Road and trust that this submission, together with comments from numerous other stakeholders, will convince SANRAL not to proceed with the construction of the new Road, but should that eventually prove to be inevitable, PSB requests that the attached Proposals are considered to mitigate the negative impacts.
3
3. SUMMARY OF IMPORTANT POINTS
For the convenience of the reader, some of the more important points, that are canvassed fully in the detailed attachments hereto, are summarised here.
3.1 This farming unit (PSB) produces enough food to keep a city with a population of 160 000 (One Hundred and Sixty Thousand) people nourished year in and year out.
3.2 In addition to the food, animal skins and wool are produced for clothing of thousands of people.
3.3 PSB employs a workforce of approximately 500 employees.
3.4 The new Road cuts through the heart of the farming operations as it dissects the most productive parts, namely the irrigation lands.
3.5 Although it may seem as if a relatively limited number of hectares (±60 Ha) are directly affected by the new Road, there is a much larger knock on effect. The irrigation lands are the catalyst that unlocks the potential of many of the other farming divisions. As one example only, the irrigation lands give stability to the total dry land potato production, which would not be attempted by PSB if there was not the security of the irrigation section. Potatoes are very moisture sensitive and if PSB does not have the certainty that a substantial part of the potato crop is secured by irrigation, the risk will become too big to rely upon dry land production only. The cost of moving the current irrigation lands is vast and topographical factors also play a role. PSB will probably find it far too costly to relocate the irrigation lands and the new Road could have the effect that a large part of the irrigation production is lost.
4
There is a tipping point effect in the sense that, with the extremely narrow profit margins in agriculture, the economics of PSB’s enterprise are delicately balanced. To take a substantial number of irrigation lands out of commission, will disturb such balance and could full well press it beyond tipping point with a consequential domino effect.
This multiplication factor is clearly illustrated by a letter issued by PSB’s auditors (Marais & Crowther) on 14 February 2014 (See Annexure D) which explains how PSB’s core business changed since commencing with irrigation. The irrigation lands brought about that “Turnover has increased more than tenfold …”.
Even without the multiplication effect, the direct loss in food production is in itself shocking: Approximately 56 Ha of irrigation lands will be lost. On each hectare 23,000 kg food is produced every year (57,550 meals!), meaning that on 56 Ha the total loss of food is 3,222,800 meals per annum. That is enough food for 3,000 people on a permanent basis. Thus, the Road on PSB’s farms alone, will at the very least, take food permanently off the tables of 3,000 fellow South Africans, unless far reaching mitigating actions are taken. With the knock on effect, as described above, the loss of food is obviously much more.
3.6 If the construction of the Road goes ahead without mitigating intervention, it will have a devastating effect on food security, employment, socio-economical aspects, the local Warden economy and PSB’s ability to sow good deeds into the Warden community, as it is currently doing.
3.7 Quite severe pollution risks are expected, e.g. spillage of chemicals into the nearby irrigation dams; dust and fuel emissions settling on the products, wool and grazing; noise etc.
5
3.8 The ideal would still be that the new Road is not constructed, but should that prove to be inevitable, the PSB operations can still be salvaged to a certain extent, provided that crucial mitigating steps are taken. Such mitigating action will be beyond PSB’s personal financial ability and PSB needs to engage SANRAL on this aspect to discuss and to agree on what steps can be taken and how it will be financed. The different mitigating steps and interventions are canvassed in the Proposals Document (Annexure 2).
4. WHY HAS PSB PROCEEDED TO ESTABLISH THE IRRIGATION LANDS?
The question may arise why PSB went ahead to establish these irrigation lands on the route of the planned road after proclamation thereof. The following should be borne in mind: PSB started with planning of the irrigation operation more than 20 years ago, but PSB could only really get going therewith when the water rights were finalised. This was round about 2007/8. PSB was never 100% certain exactly where the new Road would be constructed. There were many indications that the new Road will not be built and from many quarters, including political office bearers and the ruling Party, the message was constantly conveyed that the other alternatives were so appealing and the cost and negative impacts of the new Road were so vast that the new Road will never be built. As an example, an MEC stated categorically in a public meeting that if he was to pass away the next day, the De Beer’s Pass road could perhaps be built, but if he does not pass away, the new Road will never be built. It was also stated categorically that a situation will not be allowed where an initiative of Free State Province, in the form of the logistical hub at Harrismith, is diluted by another project of a parastatal. PSB fully realises that SANRAL always maintained the opposite view, but one should also place oneself in the shoes of a vibrant and dynamic farmer who has obtained water rights, has access to productive land and who wishes to unlock the huge potential thereof. Most importantly, 6
during the past seven years, PSB has produced more than 12,000,000,000 (12 Billion) meals and these irrigation lands played a major role therein. It was thus absolutely the correct decision to proceed and it was in the best interest of the local economy and of our country. PSB wishes to expand its horizons further, but feels justifiably threatened by the new Road.
The economies of scale principle applied in expanding the farming activities and the impact of the forward and backward linkages to the local economies of Warden and the Eastern Free State enforced market demand for PSB produce. In supporting the National Development Plan’s objectives of job creation and food security, PSB business plan for the near future include further investment in establishing an abattoir in Warden and the cultivation of apples with substantial job opportunities. Approximately another 300 jobs are foreseen including the further beneficiation agro-processing activities.
5. TECHNICAL ASPECTS
5.1 This Submission contains the material and important information, but time was limited for the preparation hereof and PSB is still awaiting some information from SANRAL’s side. It may thus be necessary to add hereto or to vary any of the aspects contained in the submission or any of the attachments.
5.2 Although the Submission is done in English and PSB understands the content fully, PSB requests that if PSB has to give testimony or has to engage in negotiations, that PSB be allowed to do so in Afrikaans, being the first language of the directors.
----- 00000 ----- Annexure 1
A REPRESENTATION
TO
THE SOUTH AFRICAN NATIONAL ROAD AGENCY LIMITED
(SANRAL)
A REPRESENTATION
BY
PAUL STEYN BOERDERY (PSB)
WARDEN DISTRICT
A REPRESENTATION
ON
THE PROPOSED N3 HIGHWAY VIA DE BEER PASS
A REPRESENTATION
BY
DR HEIN J WIESE (LED EXPERT) & JOHANNES S F WESSELS (PROPERTY EXPERT)
FOR
GERRIT STEYN (PAUL STEYN BOERDERY CHIEF EXECUTIVE OFFICER & GENERAL MANAGER)
ON BEHALF OF
PAUL STEYN BOERDERY
27 June 2015
1
Dr Hein Wiese Jannie Wessels WISEIQ Enviro Dimensions P O Box 142 Professional Property & Land Valuations Park South Cell: 082-446-5721 1910 Fax: 086-586-2654 Cell: 082-783-0735 e-mail: [email protected] e-mail: [email protected] SACPVP No: 7316/3
The information contained in this report has been compiled with the utmost care and accuracy within the parameters specified in this document. Any decision based on the contents of this report is, however, the sole responsibility of the decision maker
2
TABLE OF CONTENTS TABLE OF FIGURES ...... 5
LIST OF ABBREVIATIONS ...... 6
1. INTRODUCTION ...... 7
1.1 BACKGROUND ...... 7
1.2 COMPOSITION OF THE REPORT ...... 7
2. SANRAL PROCESS ...... 8
3. WARDEN STUDY AREA DELINEATION AND HISTORY ...... 9
3.1 INTRODUCTION ...... 9
3.2 GENERAL INFORMATION ...... 9
3.3 HISTORICAL VIEW ...... 10
3.4 REGIONAL CONTEXT ...... 10
3.5 SUMMARY ...... 11
4. DEMOGRAPHIC PROFILE ...... 11
4.1 POPULATION, HOUSEHOLDS AND HOUSEHOLD SIZE ...... 12
4.2 EMPLOYMENT STATUS ...... 15
4.3 INCOME AND EXPENDITURE ...... 15
4.4 SOCIO-ECONOMIC PROFILE ...... 16
4.5 SUMMARY ...... 18
4.5.1 PLM CHARACTERISTICS ...... 18
4.5.2 WARDEN CHARACTERISTICS ...... 18
5 ECONOMIC IMPACT OF THE PROPOSED DBPR ON AFFECTED TOWNS IN THE STUDY AREA ...... 19
5.1 INTRODUCTION ...... 19
5.2 GROSS REGIONAL PRODUCT (GRP) ...... 19 3
5.3 FINANCE AND BUSINESS SERVICES ...... 21
5.4 MANUFACTURING ACTIVITIES ...... 22
5.5 ENVISAGED LOGISTICS HUB FACILITY ...... 22
5.6 COMMUNITY, GENERAL GOVERNMENT SERVICES AND INFRASTRUCTURE ...... 23
5.7 TRADE SECTOR ...... 23
5.8 WARDEN ...... 23
5.9 HARRISMITH ...... 25
5.10 SUMMARY ...... 29
6 POTENTIAL IMPACTS ON ECONOMIC SUB-SECTORS ALONG THE ROUTE AND IN THE REGION ...... 29
6.1 INTRODUCTION ...... 30
6.2 THE GENERAL PUBLIC ...... 30
6.3 LAND OWNERS AND OCCUPANTS ...... 31
6.4 SUMMARY ...... 31
7 STRATEGIES...... 32
7.1 NATIONAL DEVELOPMENT PLAN ...... 32
7.2 NATIONAL STRATEGY ...... 34
7.3 INTEGRATED MANUFACTURING STRATEGY ...... 35
7.4 NATIONAL INDUSTRIAL POLICY FRAMEWORK ...... 36
7.5 PROVINCIAL GROWTH AND DEVELOPMENT STRATEGY (PGDS) ...... 36
7.6 FREE STATE INDUSTRIAL STRATEGY ...... 37
7.7 SUMMARY ...... 38
8 FOOD SECURITY ...... 39
8.1 INTRODUCTION ...... 39
8.2 GOVERNMENT’S ROLE IN ENSURING FOOD SECURITY ...... 39
8.3 NATIONAL INDUSTRIAL POLICY FRAMEWORK ...... 40
8.4 ANNUAL REPORT OF DEPARTMENT OF AGRICULTURE ...... 40 4
8.4.1 FOOD SECURITY ...... 40
8.4.2 EMPLOYMENT ...... 40
8.4.3 EXPORTS AND TRADE ...... 40
8.4.4 MEDIUM TO LONG-TERM GOALS ...... 41
8.4.5 INCREASED INPUTS COSTS...... 41
8.5 KEY POLICY ISSUES FOR THE MEDIUM TERM ...... 42
8.6 STATE OF THE PROVINCIAL ADDRESS ...... 43
8.7 SUMMARY ...... 43
9 PAUL STEYN BOERDERY (PSB)...... 45
9.1 INTRODUCTION ...... 45
9.2 BACKGROUND ...... 46
9.3 CURRENT ECONOMIC IMPACT ...... 49
9.4 ECONOMIC IMPACT OF PROPOSED DBPR ALIGNMENT ...... 50
9.5 POTENTIAL NEGATIVE IMPACT OF DBPR ...... 52
9.6 AGRO-ECONOMIC IMPACT ...... 57
9.7 SOCIO-ECONOMIC IMPACT ...... 58
9.8 AGRICULTURAL IMPACT ...... 61
9.9 PRACTICAL IMPACT...... 64
9.10 OTHER IMPACTS ...... 65
9.11 SUMMARY ...... 65
10 CLOSING COMMENTS ...... 65
10.1 INTRODUCTION ...... 65
10.2 SUPPORT PACKAGE ...... 66
10.3 FORWARD AND BACKWARD LINKAGES ...... 67
10.4 CLOSING REMARKS ...... 69
ANNEXURE A: PHOTO PORTFOLIO ...... 71 5
ANNEXURE B: SG NO 1770/2008 ...... 84
ANNEXURE C: SG NO 1769/2008 & 1771/2008...... 91
ANNEXURE D: QUESTIONNAIRE ...... 100
ANNEXURE E: ESTIMATED LOSS TO THE LOCAL ECONOMY ...... 103
______
TABLE OF FIGURES
Table 1: National Spatial Initiatives for Warden ...... 11
Table 2: % Population Distribution, 2000 vs 2010 ...... 12
Table 3: PLM Population, 2000 vs 2010 ...... 12
Table 4: PLM Number of Households, 2000 vs 2010 ...... 12
Table 5: PLM Average Household Size, 2000 vs 2010 ...... 14
Table 6: PLM Township Breakdown, 2011 ...... 14
Table 7: PLM Economically Active Population, 2000 vs 2009 ...... 15
Table 8: Growth trends in PLM, 1995 - 2010 ...... 15
Table 9: PLM & Warden Socio-economic Profile, 2011 ...... 16
Table 10: Gross Regional Product (GRP) (R’000) of town economies (2010 nominal prices, expressed in real 2005 values) ...... 20
Table 11: Size of Trade Sector - Warden ...... 23
Table 12: Size of the Harrismith Trade Sector ...... 26
Table 13: Size of affected Trade Sub-Sectors (Harrismith) ...... 26
Table 14: Economic Impact of Route Alignment on Trade Sub-sectors (Harrismith) . 27
Table 15: Economic Displacement Impact of Route Realignment on Harrismith ...... 28
Table 16: PSB Economic Impact...... 49
Table 17: PSB Economic Impact with NO Support ...... 51
Table 18: Value Chain within Agro-food regime ...... 67 6
______
LIST OF ABBREVIATIONS
DBPR De Beers Pass Route DEA Department of Environmental Affairs EIA Environmental Impact Assessment FSSDF Free State Spatial Development Framework GDP Gross Domestic Product GRP Gross Regional Product IDC Industrial development Corporation N3TC N3 Toll Concession (Pty) Ltd NDP National Development Plan NEPAD New Partnership for Africa’s Development NSDP National Spatial Development Programme. O&M Operations and Maintenance PLM Phumelela Local Municipality PSB Paul Steyn Boerdery ROD Record of Decision SANRAL South African National Roads Agency Ltd TLCs Transitional Local Councils TRCs Transitional Regional Councils Yrs years ______
7
1. INTRODUCTION
1.1 BACKGROUND
The purpose of this report is to discuss the magnitude of the possible economic impacts that may emanate from the proposed De Beers Pass Route (DBPR) project on the agricultural activity of the Paul Steyn Boerdery (PSB).
Figure 1 indicates the location of the PSB activities in the Phumelela Local Municipality area in close proximity of the town of Warden.
Figure 1: A map of Phumelela Local Municipality
1.2 COMPOSITION OF THE REPORT
Section 1 addresses the introduction, background and brief. Section 2 explains the South African National Roads Agency Ltd (SANRAL) process. Section 3 indicates the Warden study area delineation and the sketch the regional context. Section 4 provides information of the demographic profile, employment, income and expenditure and socio-economic profile details. Section 5 depicts the economic impact of the proposed DBPR on the affected towns in the study area. Section 6 refers to potential impacts on the economic sub-sectors. Section refers to national, provincial and local government relevant strategies impacting on the DBPR project. 8
Section 8 refers to the important concept of food security and the policy frameworks in this regard. Section 9 explains in some details on the activities of the PSB and potential impacts of the DBPR construction could have on the farming activities. In Section 10 the concluding comments are submitted with reference to some supporting measures to mitigate the negative impact of the construction of the DBPR.
The following Annexures are attached to the report
A: Photo Portfolio
B: SG Number 1770/2008
C: SG Number 1769/2008 & 1771/2008
D: Questionnaire
E: Estimated loss to the local economy
2. SANRAL PROCESS
Following a public tender process, the SANRAL appointed the N3 Toll Concession (Pty) Ltd (N3TC) as the Concessionaire responsible for the Design, Construction, Financing, Operating and Maintenance of a portion of National Route 3 from Cedara in KwaZulu-Natal to the Heidelberg South Interchange in Gauteng as a Toll Highway with Developments and Associated Facilities. This 415-kilometre section of the N3 is referred to as the N3 Toll Route. The concession is for a thirty-year period that commenced on 2 November 1999. Included in the Concession Contract is the requirement to construct a new DBPR, between Keeversfontein and Warden.
N3TC obtained environmental approval subject to certain conditions, by means of a Record of Decision (ROD), issued on 26 March 1999, authorising the construction and upgrading of the N3 Toll Road System from Heidelberg to Cedara, comprising of the routes, (i) Cedara to Heidelberg (via Van Reenen) and (ii) Keeversfontein to Warden (DBPR). In order to comply with the conditions, N3TC embarked on an analysis process to compare alternative alignments with the DBPR. During this process, N3TC established through the use of new road design software, an alternative geometrically compliant route in the vicinity of the existing Van Reenen’s Pass, with various alternatives to re-join the DBPR at appropriate positions, in addition to which an alternative route up the escarpment near De Beers Pass, avoiding the need for a tunnel and sensitive areas along the DBPR was also identified. A comparison of environmental impacts is thus required. 9
N3TC initiated the formal Environmental Impact Assessment (EIA) process, and to conform to new legislation. In this regard N3TC, on 23 July 2010 submitted an EIA Application to the National Department of Environmental Affairs (DEA) for the construction of the National Road 3: Keeversfontein to Warden (De Beers Pass Section).
Subsequently the Scoping Report for the alternatives was submitted and on its approval (circa April 2011), DEA required that the upgrade of the existing N3 be assessed as a third alternative, namely Alternate C. In addition deviations along the DBPR and a significant deviation referred to as Deviation 4 have also been identified.
3. WARDEN STUDY AREA DELINEATION AND HISTORY1
This Chapter provides information on the Warden study area and some historical information. The Chapter covers aspects of a general nature as well as some spatial development issues in regional context.
The purpose of this Chapter will be to set the current position of Warden against the impact of the PSB later in the report.
3.1 INTRODUCTION
Warden is a town situated in the Free State Province of South Africa on the N3 highway between Johannesburg and Durban. The town has one of the largest Dutch Reformed Churches in South Africa. Warden was named after the former Harrismith magistrate Charles Warden.
The town, located on the N3 between Johannesburg and Durban, was named after a former magistrate of Harrismith. Warden is home to the largest church in the Free State, the magnificent sandstone Dutch Reformed Church. The church has a steeple 45 m high and a seating capacity of 1750. Bushmen paintings are found at various sites in the region.
3.2 GENERAL INFORMATION
i. Position of Warden - Bethlehem 84 km, Harrismith 53 km, on the N3 to Villiers, Heidelberg, Johannesburg and Durban ii. Average Rainfall – 100 mm per annum iii. Average Temperatures – Summer 14°c – 32°c’ Winter 4°c – 22°c
1 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) Market Research Findings & Recommendations. December 2011. 10
iv. Banks in town – Absa, First national Bank, Standard v. Dams – Sterkfontein Dam vi. Mountains – Cornelius and Wilge.
3.3 HISTORICAL VIEW
i. Dutch Reformed Church - It is the largest sandstone church in the southern hemisphere. The church has a steeple 45 m high and can accommodate 1750 people completed in 1924. ii. Granite Target - Used by the Boers during the Anglo Boer War for target practice iii. San Rock Art - On the farm Goedgegeven
iv. Sterkfontein Dam - Situated near Harrismith. The dam offers excellent water sport activities.
v. Cave where horses were hidden during the Anglo Boer War, approximately 12 km on the road to Verkykerskop.
vi. Vaalbank – Paul Steyn’s farm
3.4 REGIONAL CONTEXT
Thabo Mofutsanyana District forms the north eastern part of the Free State Province and is one of five district municipalities in the Free State. With the exception of Xhariep district municipality, it is bordered by three other district municipalities of the province namely, Motheo in the south, Lejweleputswa in the west and Fezile Dabi in the north. Other borders include Lesotho in the south east, Kwa-Zulu Natal in the East and Mpumalanga in the north east.
Thabo Mofutsanyana has been divided into five local municipal areas, with Setsoto forming the south western section, Dihlabeng the south middle section, Nketoana the north middle section and Maluti a Phofung the south eastern section and Phumelela the north eastern section of the district and nineteen urban centres.
Phumelela Local Municipality’s (PLM) urban centres consist of Warden, Vrede and Memel.
PLM is situated in the eastern Free State, to the north east of Bloemfontein. The local municipality area measures 7531km2 in extent and comprises the former Transitional Local Councils (TLCs) of Vrede, Warden and Memel, as well as a part of the former Riemland and Drakensberg Transitional Regional Councils (TRCs). The population is fairly evenly spread across the area. Most of the population (38%) is 11
resident on the rural farm areas, which makes it difficult to service them. Furthermore, there is no definite predominant urban concentration of people. There is a constant increase in migration of people from the rural areas to the towns and this creates pressure on urban infrastructure and services.
The Demacon report2 indicated in 2011 the following national spatial initiatives with the development potential with regards to the different categories of the Warden economy:
Table 1: National Spatial Initiatives for Warden
Spatial initiatives Development potential
NSDP3 categories of development No high development potential or above potential average development potential categories
Combined development potential Limited development potential
Development needs Limited development needs
FSSDF4 spatial initiative Service centre – Attention should be paid to education, health and social infrastructure
3.5 SUMMARY
The analysis clearly indicates the limited spatial development initiatives in Warden and the lack of alternative job creation and investment attraction opportunities.
4. DEMOGRAPHIC PROFILE
This Chapter provides information on the demographic profile of Warden. The Chapter covers aspects of population size, racial distribution, population growth, impact of HIV, employment status, income and expenditure, general living standards and other social-economic indicators.
2 DEMACON, 2011. Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) Market Reasearch Findings & Recommendations. December. 3 NSDP: National Spatial Development Programme. 4 FSSDF: Free State Spatial Development Framework. 12
The purpose of this Chapter will be to indicate the size of the local community of Warden against the impact of the PSB later in the report.
4.1 POPULATION, HOUSEHOLDS AND HOUSEHOLD SIZE
The following table depicts the population order size in 2000 vs the 2010 population between the local municipalities in the area according to the published latest census information:
Table 2: % Population Distribution, 2000 vs 2010
Municipality 2000 2010
Phumelala Local Municipality 9,1% 6,6%
Okhahlamba Local Municipality 24,5% 26,2%
Maluti a Phofung Local Municipality 66,4% 67,2%
Source: Demacon, 2011.
The population of PLM (Warden, Vrede and Memel) reflects the smallest population concentration and declining over the period 2000 to 2010.
The following table depicts the population numbers of the PLM in 2000 and 2010:
Table 3: PLM Population, 2000 vs 2010
Year Population numbers5
2000 50 200
2010 38 700
Source: Demacon, 2011.
The following table indicates the number of households in PLM in 2000 and 2010:
Table 4: PLM Number of Households, 2000 vs 2010
Year Household numbers
2000 11 800
5 Population figures are based on the 1996 and 2001 population census date and the 2007 survey by STATSSA and estimates. 13
2010 12 700
Source: Demacon, 2011.
The following table depicts the average household size in PLM in 2000 and 2010:
14
Table 5: PLM Average Household Size, 2000 vs 2010
Population group Average household size
2000 2010
Black 4.5 3.1
Coloured 4.6 4.4
Asian 3.3 4.0
White 2.8 2.4
Total 4.3 3.0
Source: Demacon, 2011.
The following table indicates the population estimates in the PLM area for 2011 with the breakdown information per specific townships:
Table 6: PLM Township Breakdown, 2011
PLM area Population Households Average household size
Memel 339 193 1,8
Phumelela 15 700 4 311 3,6
Thembalihle 11 784 4 723 2,5
Vrede 1 092 502 2,2
Warden 791 347 2,3
Zamani 3 690 1 236 3,0
Zenzeleni* 4 217 1 557 2,7
TOTAL 37 612 12 870 2,9
Source: Demacon, 2011. * Zenzeleni is the township outside Warden.
15
PLM area has a population of 37 612 people in 2011 with 12 870 households with an average household size of 2,9 person per household. Warden has 791 people with 347 households. Zenzeleni township outside Warden has a population of 4 217 in 1 557 households. In total the population of Warden counts to 5 008 with 1 904 households.
Discussions with a number of local residents and businesses indicated that the population has increased substantially in recent years since the official 2011 population census and will only be reflected in the next official census.
4.2 EMPLOYMENT STATUS
The following table indicates the economically active population structure in the PLM between 2000 and 2009 (2010 information not yet available):
Table 7: PLM Economically Active Population, 2000 vs 2009
Employment category 2000 2009
Employment rate (formal & 71,5% 72,4% informal)
Unemployment rate 28,5% 27,6%
Economically active 56,8% 60,6%
Source: Demacon, 2011.
In summary, the unemployment rate decrease marginally from 28,%% in 2000 to 27,6% in 2009.
4.3 INCOME AND EXPENDITURE
Evaluation of the disposal income growth and final consumption expenditure reflected similar trends over the period 1995 to 2010. The following table depicts the growth trends in the PLM area:
Table 8: Growth trends in PLM, 1995 - 2010
Description 1995 - 2010 2000 - 2010 2005 - 2010 16
Final consumption 12,4% 12,1% 10,9% expenditure6
Disposable income7 12,9% 12,9% 12,6%
Source: Demacon, 2011.
4.4 SOCIO-ECONOMIC PROFILE
The following table describes the socio-economic profile of PLM and the profile of Warden in 2011:
Table 9: PLM & Warden Socio-economic Profile, 2011
Description PLM Warden
Racial profile African Blacks: 93,2% • African Blacks: 39,6%
Coloured: 0,2% • Coloured: 0,3%
Asians: 0,0% • Asians: 1,6%
Whites: 6,6% • Whites: 58,5%
Gender profile Male: 47,3% • Male: 48,5%
Female: 52,7% • Female: 51,5%
Age profile 0 – 14: 3,5% • 0 – 14: 21,6%
15 – 19: 11,6% • 15 – 19: 11,0%
20 – 34: 22,6% • 20 – 34: 20,4%
35 – 64: 25,2% • 35 – 64: 33,4%
65 +: 5,7% • 65 +: 13,7%
6 Final household expenditure: Household final consumption expenditure (formerly private consumption) is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers), purchased by households. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. It also includes payments and fees to governments to obtain permits and licenses. 7 Disposable income: the part of a person's income remaining after deducting personal income taxes. 17
Educational School: 70,2% • School: 88,4% attendance (aged 5 None: 26,4% • None: 3,2% – 24 yrs) Pre-school: 3,0% • College: 1,1%
College: 0,1%
Highest level of Higher: 4,8% Higher: 5,8% education (aged 20 Grade 12: 12,9% Grade 12: 30,0% yrs & older) Some secondary: 22,9% Some secondary: 42,9%
None: 24,8% None: 6,6%
Level of employment EAP8: 60,6% EAP: 53,9%
Employed: 72,4% Employed: 86,1%
Unemployed: 27,6% Unemployed: 13,9%
Manner of Paid employee: 89,7% Paid employee: 69,0% employment Self-employed: 6,8% Self-employed: 24,6%
Employer: 2,4% Employer: 6,3%
Family worker: 1,1%
Occupation profile Elementary occupations: Legislators, senior 42,2% officials & managers: 16,2% Skilled agricultural workers: 40,7% Service workers: 16,2%
Plant & machinery Plant & machine operators: 18,4% operators: 15,2%
Service workers: 11,2% Clerks: 14,9%
Craft & related trades: Elementary occupations: 4,2% 14,5%
8 EAP: Economic Active Population. 18
Industry profile Agriculture: 40,7% Community, social & personal services: 35,8% Community, social & personal services: 16,9% Trade: 28,0%
Private households: 26,9% Finance & business services: 10,7% Trade: 6,9% Transport & Finance & business communication: 10,4% services: 2,4% Agriculture: 10,1%
Weighted average Total market earning an Total market earning an household income income: income:
o R25 579/per o R25 579/per annum annum o R2 130/per month o R2 130/per month
Source: Demacon, 2011.
4.5 SUMMARY
4.5.1 PLM characteristics i. The population of PLM counted approximately 38 700 people in 2010 with 12 700 households. ii. Average annual population growth between 1995 and 2010 is -1,4% and average annual household growth between 1995 and 2010 is 1,6%. iii. The racial composition consisted of 91,2% of black people, 8,2% of whites and smaller numbers of coloured people with only 0,5% and 0,2% of Asian people in 2010. iv. Average household size recorded of 4,3 people per family with the highest for black households of 4,5 persons per household and the lowest of white households of 2,8 persons. v. The HIV positive segment increased from 2,4% in 1995 to 13,4% in 2010. vi. Deaths because of HIV/AIDS increased as percentage of total deaths from a low 5,5% in 1995 to a high 50,9% in 2010.
4.5.2 Warden characteristics i. Approximately 791 people in 347 households. 19
ii. Predominant White (58,5%) and Black population (36,9%). iii. Large mature adult population. iv. Moderate levels of educated adults (20 yrs and older) – 35,8% Grade 12 & higher. v. Lower to middle income consumer market. vi. Predominantly employed in trade, community, social & personal services, finance & business services, transport and agricultural sectors.
5 ECONOMIC IMPACT OF THE PROPOSED DBPR ON
AFFECTED TOWNS IN THE STUDY AREA
This Chapter provides information on the economic impact of the proposed DBPR on the affected towns and specifically Warden, Harrismith and Van Reenen. The Chapter covers aspects of the size and composition of the Gross Regional Product (indication of the size of the local economy), breakdown of the GRP indication the contributions of the different sectors in the economy. The economic structures of the different towns will also be depicted indicating the impact of the road on the local economies. The newly announced Logistical Hub in Harrismith will also be addressed. It is noteworthy to be aware that the information is indicated according to the 2010 available statistics.
The purpose of this Chapter will be to indicate the size of the local economy of Warden against the impact of the PSB later in the report.
5.1 INTRODUCTION
The economic impact that the proposed DBPR will have on three towns in the study area was investigated during the DBPR, however the principle focus of this report will be to indicate the specific impact on Warden, the closest town to the PSB. The towns are: Harrismith, Warden and Van Reenen.
5.2 GROSS REGIONAL PRODUCT (GRP)
Warden contributed 15.3% towards the GRP and 13.4% towards total employment of the local economy of Phumelela. It also reflects much smaller population figures, with no dominant township economies on the town peripheries as is the case with Harrismith.
Harrismith represents the largest town economy to be impacted by the proposed N3 realignment. The town economy contributes 18.2% towards the GRP and 16.0% towards the employment figure of the Maluti-a-Phofung local economy. The local 20
economy is experiencing positive although relatively moderate economic growth (long term growth rate of 2.9% per annum). The dominant economic pillars of the town include Finance and Business Services, Manufacturing, Government and Community Services, Infrastructure and Trade. The largest employment pillars of the town include Community and General Government Services, Manufacturing, Trade and Finance and Business Services.
The town economies of Warden and Van Reenen reflect small economic bases and a dominant service centre function for the surrounding farming communities. The gross regional product (GRP) of the towns is shown in Table 10.
Table 10: Gross Regional Product (GRP) (R’000) of town economies (2010 nominal prices, expressed in real 2005 values)
Town Warden Harrismith Van Reenen
Agriculture and forestry 800 600 3 000
Mining and quarrying 0 0 0
Manufacturing (industrial) 16 900 307 500 800
Trade 26 600 141 900 1 200
Financial services 17 200 333 300 0
Community services 18 000 257 300 400
Infrastructure 16 400 155 000 2 400
Total GRP 95 900 1 195 600 7 800
In-town population (2011) 10 980 35 110 220
Source: Quantec, 2011
Warden, Harrismith and Van Reenen are situated along the existing N3/R103 route. It is expected that after implementation of the proposed new road traffic volumes on the existing N3/R103 at these towns will drop. However, any loss in income in the towns of Warden, Harrismith and Van Reenen will be less than proportional to the percentage traffic diverting to the DBPR. Long distance travellers are not captive 21
purchasers in towns along the present route - their on-route transactions are incidental and voluntary.
The demand for transport is a derived function of other activities. People make use of a road to obtain some benefit at the destination. Users of the new road with trip origins and destinations exclusively outside (north/south of) the study area will make use of the new road for mobility reasons, and probably not wish to gain access to a town in the study area. Although the proposed DBPR will divert traffic from the existing N3/R103 route the road user savings on the proposed road will by far exceed any reduction of business revenue on the existing N3/R103 road section.
The proposed new road will benefit all users on both the new DBPR and the existing N3 road if the principle that the toll fee is less than the road user benefits is applied. Benefits include (1) reductions in road user costs (where road user costs comprise vehicle operating cost, travel time cost, and accident cost) and/or (2) road user revenue increases as a result of new road usage (sometimes called “productivity bonuses” or “road bonuses”). Examples of the latter would be when traffic diversion to the new De Beers Pass road enables local business users on a less congested new traffic situation on the existing N3 route to Harrismith to achieve an extra business or revenue earning visit elsewhere in a given time period, or where new destinations come into reach or where new business is created, for example, new business and tourist venues on the DBPR.
The information in Table 10 contains the GRP (R’000) of the Warden town economy (2010 nominal prices), expressed in real 2005 values. In this context it is useful to express the PSB financial contribution to the regional economy in current values over the time period. In 2008 the PSB generated approximately R30m and compare this to the current financial extent of the farming activities of approximately R130m in 2015. This indicated clearly to extent of the importance of the PSB farming activities in regional perspective.
5.3 FINANCE AND BUSINESS SERVICES
Overall these types of uses locate in areas in proximity to clients, qualified labour force, proximity to similar activities, areas with a specific image, and it should have linkages to other economic activities. The majority of these activities in Harrismith are located in and around the town central business district – characterised by moderate levels of accessibility and visibility. As such it is accessible to the local and 22
regional consumer market and does not rely on direct accessibility and visibility from main roads such as the N3 itself.
This sector can therefore be regarded as location insensitive towards the N3 alignment.
5.4 MANUFACTURING ACTIVITIES
Manufacturing activities in and around Harrismith is predominantly located in two industrial areas – one visible from the N3/R103 and the other from the N5. These manufacturing activities include a range of heavy and light industries, including big brands such as Nestle, Nouwens Carpets, Country Meat Market, etc. In general, these activities do not market themselves in such a way that it is visible from either of the highways, re-enforcing the notion that these industries’ location is driven by regional accessibility, available labour pool and agglomeration advantages. It therefore differs from modern industrial / business parks located within urban settings reliant on direct access and visibility from main roads. The envisaged logistics hub and Chinese Car Manufacturing plant could possibly be located within Industriqwa – an industrial area located approximately 10km outside of Harrismith along the N5. The industrial area is not visible from the N5. In terms of the apparent latest site identification, the new site is situated southeast of Harrismith along the existing N3/R103. Alternative A veers to the north from the existing N3/R103 alignment, just east of the envisaged new logistics hub site.
Overall, the sector is regarded as location insensitive towards the proposed DBPR alignment, and it is anticipated that the impact on this sector with regard to the potential realignment of the route will be minimal.
5.5 ENVISAGED LOGISTICS HUB FACILITY
Neither the access nor the mobility function of the existing N3/R103 will diminish and hence the envisaged logistics hub should not be negatively affected by the proposed new alignment.
The logistics hub is aimed at an existing (and growing) freight market and, as such, its success does not hinge on visibility / passing trade on the existing N3 – it will be a destination in its own right. 23
5.6 COMMUNITY, GENERAL GOVERNMENT SERVICES AND INFRASTRUCTURE
These services in general locate where it is accessible to the local and regional consumer market.
Although the transport component of the infrastructure sector relies on local and regional accessibility it does not rely on direct access or visibility from national roads such as the N3 and is regarded as location insensitive.
5.7 TRADE SECTOR
The trade sector is arguably the sector which is most sensitive to access and exposure variances. The trade sector includes retail activities, wholesale activities, short-stay activities, restaurants and take-away outlets, automotive sales and repairs and fuel sales. Given the spatial structure of the town economy, specific activities are reliant on direct access and visibility from the existing N3/R103. These activities relate directly to fuel sales and ancillary activities including retail sales, catering establishments (restaurants) and to a lesser scale short-stay establishments (e.g. guesthouses). The majority of these activities are concentrated towards the entrances to the town.
It is therefore evident that certain components of this sector are location sensitive with regard to the N3 realignment. In the context of the above, it can be concluded that the impact of the N3 realignment will be most noticeable in terms of selected trade-based activities. In terms of the town of Warden none of its economic activities front directly onto the existing N3/R103.
5.8 WARDEN
The town economy of Warden reflects significantly smaller economic base and primarily offer a service centre function to the surrounding farming communities. Warden contributed 15.3% towards the GRP and 13.4% towards total employment of the local economy of Phumelela. Warden’s trade sector contributes 27.7% towards the town’s GRP and 43.6% towards total employment.
Table 11: Size of Trade Sector - Warden 24
Description GRP (R million) Total Employment
Warden Economy 95,7 1 094
Trade Sector 26,6 477
Retail & Wholesale 25,3 449
Catering & 1,3 28 Accommodation
Sources: Demacon, 2011; Quantec, 2011
Currently 3 of the Warden farmers employ more than 1 000 workers on a daily basis. This 2015 employment figures reflect the reality of the current situation compared to the Demacon and Quantec information that was calculated in 2011 from official STATSSA official published information. The more than 1 000 job opportunities also reflects the expansion of agricultural activities since 2011 reflecting the initiatives in expanding agricultural job opportunities by applying labour absorbing technologies.
The impact will only relate to the businesses directly reliant on business from the N3. These subsectors contribute small segments towards the town economies. It should also be noted that merely a segment of these businesses will be impacted on directly by the realignment of the N3: Automotive maintenance and repairs: approximately 10% of businesses in Warden is directly reliant on transient trade from the existing N3/R103 Fuel sales: approximately 5% of businesses in Warden is directly reliant on transient trade from the existing N3/R103 Short-stay accommodation: approximately 5% of businesses in Warden is directly reliant on transient trade from the existing N3/R103 Restaurants: approximately 5% of businesses in Warden are directly reliant on transient trade from the existing N3/R103. The diversion of traffic to the DBPR will lead to job losses in Warden, Harrismith and Van Reenen.
In Warden three retail-related job losses will probably occur, with a possible maximum of five job losses.
In Harrismith a probable loss of 20 retail-related jobs will occur, with a possible maximum of 30 job losses. 25
5.9 HARRISMITH
The economic impact on Harrismith can be depicted as follows: The town economy contributes 18.2% (R1.2 billion) towards the GRP and 16.0% (11 111 employees) towards the employment figure of the Maluti-a- Phofung local economy. The dominant economic sub-sectors of the town include Finance and Business Services, Manufacturing, Government and Community Services, Infrastructure and Trade. The largest employment sub-sectors of the town include Community and General Government Services, Manufacturing, Trade and Finance and Business Services. It is primarily the trade sector that is location sensitive with regards to the present N3/R103. The trade sector is arguably the sector which acts most sensitive to access and exposure variances. The trade sector include retail activities, wholesale activities, short-stay activities, restaurants and take away offerings, automotive sales and repairs and fuel sales. Given the structure of the town economy specific activities are reliant on direct access and visibility from the present N3/R103. These activities directly relate to fuel sales, retail sales, catering establishments and to a much lesser scale short-stay establishments. The majority of these activities are concentrated towards the entrances to the town. In the context of the above it can be concluded that the impact of the N3 realignment will be higher in terms of these activities. It is therefore clear that the route realignment will not result in an impact on the town economy as a whole, or in fact on the trade sector as a whole but that it will be focused on very specific trade sector activities only. An analysis of the national accounts and local economic structure furthermore indicate that the actual economic impact does not correlate with a loss or change in turnover: the actual economic impact correlates with a net change in GRP which, for fuel sales and related activities, only accounts for approximately 10% of business turnover, e.g. if business turnover were to change (positive or negative) by R100 million per annum, the actual economic impact is not R100 million per annum but merely 10% thereof, i.e. R10 million. The trade sector contributes 11.9% towards the GRP (R141,9 million) and 22.8% towards the total employment (2 534) of the town economy.
26
Table 12: Size of the Harrismith Trade Sector
Description GRP (R million) Total Employment
Harrismith Economy 1 198,2 11 112
Trade Sector 141,9 2 534
Retail, Wholesale, Fuel & 133,2 2 331 Automotive Sales
Catering & 8,7 203 Accommodation
Sources: Demacon, 2011; Quantec, 2011
The impact will only relate to the businesses directly reliant on transient trade from the existing N3/R103, with emphasis on those predominantly located at the entrances to the town. This mainly refers to fuel sales, automotive repairs and support, restaurants and to a much lesser extent short-stay accommodation. These sub-sectors’ contribution to the town’s economy is illustrated in Table 13 below.
Table 13: Size of affected Trade Sub-Sectors (Harrismith)
Trade Sub- GRP % of Town Total % of Town sector (R’million) GRP Employment Employment
Automotive 7,61 0,64% 133 1,20% maintenance & Repairs
Fuel Sales 9,59 0,80% 168 1,51%
Sale of Motor 1,68 0,14% 29 0,27% Vehicle Parts & Accessories
Short-stay 1,90 0,15% 42 0,38% Accommodation 27
Restaurants 6,86 0,57% 161 1,44%
Sources: Demacon, 2011; Quantec, 2011
The following subsection illustrates the anticipated impact / effects that the bypass will have on the town of Harrismith. The impact will not relate to the town economy at large, but will be focused towards a specific segment of the trade sector, as illustrated in Table 3.4. Given a land use survey, the business segments within each of these sub-sectors that are directly reliant on transient trade from the N3 were calculated. The impact of the road realignment will relate to these segments: Automotive maintenance and repairs and motor vehicle parts and accessories: approximately 30% of these businesses in Harrismith are directly reliant on transient trade from the existing N3/R103. Fuel sales: approximately 45% of such businesses in Harrismith are directly reliant on transient trade from the existing N3/R103. Short-stay accommodation: no more than 10% of such businesses in Harrismith are directly reliant on transient trade from the existing N3/R103. Restaurants: approximately 85% such of businesses in Harrismith are directly reliant on transient trade from the existing N3/R103.
Table 14: Economic Impact of Route Alignment on Trade Sub-sectors (Harrismith)
Trade Sub- Segment GRP % of Total % of Sectors of (R’million Town Employmen Employmen ) t t Businesse GRP s
Automotive 30% 2.28 0.19 40 0.36% maintenance & % repairs
Fuel sales 45% 4.32 0.36 76 0.68% % 28
Sale of motor 30% 0.51 0.04 9 0.08% vehicle parts % and accessories
Short-stay 10% 0.18 0.02 4 0.04% accommodatio % n
Restaurants 85% 5.83 0.49 136 1.23% %
Total 13.11 1.09 265 2.38% %
Sources: Demacon, 2011; Quantec, 2011
The overall impact / effect of the road realignment will be manifested in the loss of transient trade with reference to these business segments specified above. Loss of transient trade is estimated at a maximum of 20%.
Table 15: Economic Displacement Impact of Route Realignment on Harrismith
Trade Sub-Sectors GRP (R’million)/annum Total Employment
Business Segment to be 13.11 265 Impacted
Economic Displacement 2.62 53 Impact (loss)
% of Total Town Economy 0.22% 0.48%
Sources: Demacon, 2011; Quantec, 2011.
During the construction period of the road it is anticipated that the local economy as well as Harrismith itself will benefit from project-driven induced economic growth. However, the real displacement effect will only be visible after construction. The 29
analysis has indicated that the displacement effect that will apply after construction – reflected from 2020 onwards will be negligible – 0.22%.
It is consistent with statistical analyses, which affirm that it does not translate into structural economic changes. Hence, the effects are negligible in economic terms.
5.10 SUMMARY
The information in Table 10 and 11contains the GRP (R’000) of the Warden town economy (2010 nominal prices), expressed in real 2005 values. In this context it is useful to express the PSB financial contribution to the regional economy in current values. In 2008 the PSB generated approximately R30m and compare this to the current financial extent of the farming activities of approximately R130m in 2015. This indicated clearly to extent of the importance of the PSB farming activities in regional perspective and especially the local economy of Warden.
Of more importance in the South African national context in support of the National Development Plan objectives, 3 farmers in the Warden area employ more than 1 000 workers on a daily basis. This 2015 employment figures reflect the reality of the current situation compared to the Demacon and Quantec information that was calculated in 2011 from official STATSSA official published information. The more than 1 000 job opportunities also reflects the expansion of agricultural activities since 2011 reflecting the initiatives in expanding agricultural job opportunities by applying labour absorbing technologies
6 POTENTIAL IMPACTS ON ECONOMIC SUB-SECTORS
ALONG THE ROUTE AND IN THE REGION
This Chapter provides information on the road economic analysis the following classes of non-road-user beneficiaries namely the general public; land owners and users; roadside enterprises; utility enterprises and goods consignors and consignees.
The purpose of this Chapter will be to indicate how the road economic analysis impact on the PSB later in the report. 30
6.1 INTRODUCTION
Owing to the fact that the proposed DBPR incorporating Deviation 2A at the Wilge River and avoidance of Lincoln Pan (DBP+D2A+LP) is economically justified and ranks best from an economic viewpoint, further analysis focuses on this alternative9.
The proposed new DBPR (the proposed road) will not only stimulate economic development indirectly, it will also have a direct impact on the performance of primary-sector producers (e.g. agriculture in general), secondary-sector industries (e.g. manufacturing) and tertiary-sector businesses (e.g. tourist amenities)10. In the latter class, the proximity of the road will be important to road-oriented retail enterprises such as vehicle service and fuel stations, food retailers, lodging and hospitality businesses (e.g. guesthouses and recreational resorts) catering for tourists. For the purpose of road economic analysis the following five classes of non- road-user beneficiaries can be distinguished: i. The general public ii. Land owners and users iii. Roadside enterprises iv. Utility enterprises v. Goods consignors and consignees.
6.2 THE GENERAL PUBLIC
It can be argued that everyone benefits from the existence and extension of a road system in that (because of increased accessibility) it enables society to function effectively. Society needs access to economic resources (input-related) and to market places (output-related) and would be denied a wide range of goods, services and revenue opportunities in the absence of a road network. Roads provide access to land (not just for the occupants, but also for the provision of social and emergency services and amenities); they facilitate personal and commercial transportation, the administration of law and order, and the fulfillment of government duties and community services. A new road affords the various tiers of government an opportunity to spatially distribute community services more equitably, for example, policing and protection services, law and order, health services (such as clinics), and education. Roads constructed, for example, primarily for strategic or defense
9 Pienaar, W J, 2014. Economic impact assessment of the proposed de Beers Pass Route. March, page 32. 10 Ibid, page 32. 31
purposes could be said to serve the interests of society at large rather than only the relatively small group of users who live in the less densely populated parts of the country where these roads are often located. In this respect the proposed road is potentially a good example for the economic development in South Africa through the reduction of logistical costs in general.
6.3 LAND OWNERS AND OCCUPANTS
The value (and usefulness) of land or fixed property is inseparably linked to its accessibility. In rural areas, new or improved roads can increase the value of land considerably by bringing resources, amenities and markets closer. Agricultural land and tourist venues are typical examples in the case of the DBPR.
Businesses on agricultural property along the proposed new road stand to gain in three respects after implementation of the road: i. Those agricultural inputs that are at present procured from outside the study area will be sourced more efficiently from the areas north of Warden and south of Tugela Toll Plaza. ii. The marketing of agricultural products towards the north and the south of the study area will be done more profitably. iii. Opportunities for major farm stall development and guesthouse establishment on abutting property will most likely arise. Based on the fact that property owners are duly compensated for any future financial loss when land is acquired for road-building purposes, and with regard to the above- mentioned three points, it is expected that the value (price) of property per hectare, and any other business asset value will definitely not drop, but will with a high probability rise by a small proportion after implementation of the new road.
6.4 SUMMARY
Based on the fact that property owners are duly compensated for any future financial loss when land is acquired for road-building purposes, and with regard to the above- mentioned three points, it is expected that the value (price) of property per hectare, and any other business asset value will definitely not drop, but will with a high probability rise by a small proportion after implementation of the new road.11
11 Ibid page 34. 32
7 STRATEGIES
This Chapter provides information on the national and provincial strategies impacting on the PSB and agricultural production in general in South Africa. Reference will be made to the National Development Plan, the Microeconomic Reform Strategy, the Integrated Manufacturing Strategy, the National Industrial Policy Framework, the Free State Provincial Growth and Development Strategy, the Free State’s Industrial Strategy, regarding the importance of agricultural and agro-processing for the country.
The purpose of this Chapter will be to indicate how the policy framework must guide the agricultural development and opportunities for developments on the PSG’s activities that will guide also agricultural developments in South Africa.
7.1 NATIONAL DEVELOPMENT PLAN
The National Development Plan (NDP) indicates that SA can create 1 million jobs by 2013 by raising competitiveness and export earnings through targeting support to specific sectors (specific agriculture), promote investment in labour-intensive areas (agriculture).12 To bring job creation about the NDP indicated Increasing exports, focusing on those areas where South Africa already has endowments and comparative advantage such as agriculture and agro-processing.
The NDP further indicates South Africa’s hinterland is marked by high levels of poverty and joblessness, with limited employment in agriculture. The NDP proposal includes the Creating of more jobs through agricultural development, based on effective land reform and the growth of irrigated agriculture and land production and developing industries such as agro-processing.13
The NDP’s vision includes better integration of the country’s rural areas through job creation with the driving force behind this will be an expansion of irrigated agriculture supplemented by dry-land production where feasible.14 The NDP identified Agriculture as the primary economic activity in rural areas to create close to I million
12 2012. NDP 2030, Overview. April, page 17. 13 Ibid, page 22. 14 2012. NDP 20130, Chapter 6, An integrated and inclusive rural economy. April, page 2. 33
jobs by 2030.15 The NDP indicated that the target can be achieved by expanding irrigation agriculture referring to:16
the 1,5 million hectares under irrigation (which produce virtually all South Africa’s horticultural harvest and some field crops) can be expanded by at least 500 000 hectares through the better use of existing water resources and developing new water schemes.17 Use some underused land in commercial areas and land-reform projects for commercial production. Pick and support commercial agriculture sectors that have the highest potential for growth and development. Support job creation in the upstream and downstream industries. Priority should be given to successful farmers in commercial areas, which would support further improvement of the area and industries and areas with high potential to create jobs should receive the most support. The Commission proposed to Manage agriculture use better.18 The NDP proposed that the farming sector will have to increase its water efficiency to improve production to expand its irrigated agriculture opportunities, which has high job-creation potential. The NDP further acknowledge the importance of agriculture which tends to be capital- and skills-intensive and has the ability for job creation.19
The NDP acknowledge the fact that many rural communities live in areas far from economic activity. The relative decline in agriculture and the consequent decline in agricultural employment have reduced earnings capacity in rural areas.20
The NDP states that the sectors that employ low-skilled people, such as agriculture, should assist with job creation or, at best, provide temporary employment. 21
The NDP referred to many small towns and rural areas that have stagnated or declined as agriculture has gone through structural changes. The report stated that
15 Ibid, page 3. 16 Ibid, page 3. 17 Ibid, page 3. 18 2012. NDP, Chapter 4, Economic infrastructure. April, page 21. 19 Ibid, page 24. 20 2012. NDP Chapter 15, Transforming society and uniting the country. April, page 4. 21 Ibid, page 10. 34
successful agricultural production requires suitable land that is well located in relation to major markets and agro-processing chains.22
Chapter 7 of the NDP described how to expand regional, African and international trade by referring to Expand and diversify trade in agriculture and agro-processing – which should include a purposeful strategy on food security.23 The NDP further indicate the concept of regional integration and the extensive interest of shown by external investors in acquiring large tracks of land for commercial agriculture as part of the New Partnership for Africa’s Development (NEPAD). While such investment may reduce economic barriers to the effective use of natural resources and create new market opportunities, such capital-intensive agriculture may not address poverty and could result in displacement of poor people, adding to migration pressures.24
Creating jobs in agriculture will not be easy. It will require credible programmes, sound implementation, significant resources and stronger institutions.
In summary, the NDP states that with the right approach it is possible to reverse the decline in the agriculture sector, promote food production and raise rural income and employment. White commercial farmers, agribusinesses and organized agricultural bodies can help bring the objective of job creation to fruition. A significant effort and resurgence in agriculture is required.25
7.2 NATIONAL STRATEGY
The Microeconomic Reform Strategy targets improved performance in terms of growth, employment, small business development, black economic empowerment (BEE), geographic spread of economic activity, and competitiveness, through improved integration and coordination of government policies and programmes. Three key strategic elements include:
i. Investing in ‘economic fundamentals’ that underpin growth (of which infrastructure, including logistics infrastructure is one fundamental); ii. Improving the efficiency of and expanding access to services in key input sectors (such as transport, energy and telecommunications);
22 2012. NDP Chapter 8, Transforming human settlements. April, page 8. 23 2012. NDP Chapter 7, Positioning South Africa in the world. April, page 8. 24 Ibid, page 18. 25 Ibid, page 4. 35
iii. Developing the growth, employment and equity potential of selected priority sectors, namely agriculture (including food production), tourism, ICTs, cultural industries, minerals and metals, clothing and textiles, automobiles, agro- processing, and chemicals. Policy priority:
Agriculture has been identified as priority sector at a national level, since agriculture contributes towards developing the growth and employment for selected priority contributions towards food production and further beneficiation for agro-processing.
7.3 INTEGRATED MANUFACTURING STRATEGY
The Integrated Manufacturing Strategy sets out to accelerate the contribution of manufacturing and related activities to growth, employment and equity. Through value matrix analysis and a combination of broad-based and customised interventions, the strategy aims to address the following, many of which the Trade Zone has the potential to contribute towards:
i. Improving market access (domestically and internationally); ii. Moving South African economic activity towards greater value addition and beneficiation; iii. Creating a manufacturing system that is integrated into the economies of SADC and the rest of Africa in a way that is mutually beneficial; iv. Increasing equity within agriculture, manufacturing and related activities, and increasing the accessibility to participate in economic opportunities; v. Create a system that makes better use of opportunities and is more able to address obstacles and be responsive, by increasing the capacity to be knowledge-intensive across the agriculture, manufacturing and related parts of the economy. Policy priority:
Agriculture and agro-processing have been identified as priority sectors at a national level, as they build on South Africa’s traditional areas of strength, while holding the potential for greater value addition and knowledge intensity. They are also relatively labour intensive sectors, which could contribute significantly to job creation, rural development and empowerment. 36
7.4 NATIONAL INDUSTRIAL POLICY FRAMEWORK26
A process of intensive consultation and analysis has culminated in a revised IPAP. The agriculture sector’s deliverables are included in the 2010/11 – 2012/13 IPAP. These require intergovernmental cooperation and coordination.
Policy priority:
Agriculture has been identified as priority sector at a national level in terms of the MTSF priorities, as they are responsible for:
i. Decent employment (key outcome 4)
i. Vibrant and sustainable communities contributing towards food security for all (key outcome 7)
ii. Skilled and capable workforce (key outcome 5)
iii. Protect and enhance our environmental assets and natural resources (key outcome 10).
7.5 PROVINCIAL GROWTH AND DEVELOPMENT STRATEGY (PGDS)
The Free State Provincial Growth and Development Strategy (2005 – 2014) states that - specific programmes of action were announced to grow the formal economy, for instance: To enhance the country’s export performance, focusing on services and manufactured goods. Key programmes of action to grow the informal economy are e.g.: Calling on the Department of Agriculture to increase its support to agricultural activities in the communal land areas as well as other small-scale agriculture. Both these calls for action plans mentioned above ties in very closely with international global trends as, on a global basis, the fastest growing market sector is that of the export of perishable products. It includes the sourcing from emerging countries of fresh produce and fish, for the major world metropolitan urban centres, with their higher per capita incomes.
This has been accelerated by the growing market in organically produced food, which is more labour intensive to produce and obtains higher prices.
26 2007. National Industrial Policy Framework (NIPF). The implementation of industrial policy was set out in the Industrial Policy Action Plan. 37
Besides the PGDS and the NLTSF, the relevant acts, policies, strategic frameworks, programmes and related requirements in terms of which the rural transport strategies should be aligned, include:
i. The Integrated and Sustainable Rural Development Programme (ISRDP), which is aimed at the coordinated delivery of integrated bundles of services and anchor Rural Transport Strategy for South Africa v development projects in terms of a prioritised set of rural development nodes (13 at present); ii. The requirements for integrated development planning (IDP) as set out in the Municipal Structures Act; iii. The government’s main social and economic development programmes, such as the Poverty Alleviation Programme, the Community Based Public Works Programme (CBPWP), and the Local Economic Development (LED) Programme; iv. The Accelerated and Shared Growth Initiative as identified by President Thabo Mbeki and driven by vice-President Ms Phumzile Mlambo-Ngcuka to ensure the halving of poverty by 2014 and as such the needed GDP growth of 6%+ per year.
7.6 FREE STATE INDUSTRIAL STRATEGY
It is clear that the Free State’s Industrial Strategy and Provincial Growth and Development Strategy’s socio-economic objectives are likely to include the following:
Job creation, particularly among unskilled and semi-skilled workers Poverty alleviation Rural economic development Creation of a more outwardly-oriented economy Modernised/technologically advanced Placing emphasis on industrial and infra-structural development, and Developing human resources. The Harrismith multi-modal freight logistics hub is a flagship project of the Free State and the plan is to kick-start the Free State Growth and Development Strategy with this logistics and supply chain enhancement.
Within agriculture and agro-processing, perishables have been identified as a sub- sector in which the Eastern Free State may have specific niche competitiveness, in part because of growing conditions. Numerous projects have been identified (and it is crucial that more time, money and expertise be allocated to identify even more agricultural and aqua-culture projects) to encourage growth in agricultural production 38
for both domestic and export consumption. Niche growth areas may include cut flowers, subtropical fruit etc. However, numerous hurdles exist to realising this potential to contribute to socio-economic development in the province and country.
These include the small current volumes of perishables produced, inadequate skills, the need to transform the industry to encourage empowerment, understanding of market requirements amongst growers and logistics and cold chain management for the perishables sector.
7.7 SUMMARY
i. The NDP states that with the right approach it is possible to reverse the decline in the agriculture sector, promote food production and raise rural income and employment. White commercial farmers, agribusinesses and organized agricultural bodies can help bring the objective of job creation to fruition. A significant effort and resurgence in agriculture is required. ii. The Microeconomic Reform Strategy identify Agriculture as the priority sector at a national level, since agriculture contributes towards developing the growth and employment for selected priority contributions towards food production and further beneficiation for agro-processing. iii. The National Industrial Policy Framework has identified Agriculture as priority sector at a national level in terms of the MTSF priorities, as they are responsible for: a. Decent employment (key outcome 4) b. Vibrant and sustainable communities contributing towards food security for all (key outcome 7) c. Skilled and capable workforce (key outcome 5) d. Protect and enhance our environmental assets and natural resources (key outcome 10). iv. The Free State Provincial Growth and Development Strategy (2005 – 2014) states that - specific programmes of action were announced to grow the formal economy, for instance to enhance the country’s export performance, for example in agriculture. v. It is clear that the Free State’s Industrial Strategy and Provincial Growth and Development Strategy’s socio-economic objectives are likely to include the following: a. Job creation, particularly among unskilled and semi-skilled workers 39
b. Within agriculture and agro-processing, perishables have been identified as a sub-sector in which the Eastern Free State may have specific niche competitiveness, in part because of growing conditions. Numerous projects have been identified (and it is crucial that more time, money and expertise be allocated to identify even more agricultural and aqua-culture projects) to encourage growth in agricultural production for both domestic and export consumption. c. Understanding of market requirements amongst growers and logistics and cold chain management for the perishables sector.
8 FOOD SECURITY
8.1 INTRODUCTION
The Food and Agricultural Organisation of the United Nations defines food security as a condition which exists when all people , at all times, have physical, social and economic access to sufficient, safe and nutritious food to meet their dietary needs of food preferences for an active and health life. The dimensions for food security are multiple and complex making measurement a challenge.
8.2 GOVERNMENT’S ROLE IN ENSURING FOOD SECURITY
Government has since 1994 prioritised food security as reflected in policy, programming and resourcing around specific elements of food security. The government recently developed an overarching food security policy for South Africa led by the Department of Agriculture, Forestry and Fisheries.
Some interventions have focused on policies and programmes, agriculture production, value chains, market regulations and land security. However, the challenge for food and nutrition security clearly shows that government alone cannot tackle this issue without local interventions. A smooth coordination and healthy relationship between Civil Society Organisations and government remains the main challenge towards successful implementation of food security projects and programmes.
Recognition is given to the fact that at a national level, the South African government has clearly set strategic objectives to either reduce or eliminate poverty and mal- nutrition in the country and several food security programmes highlight the progress that has been made by government institutions towards achieving food security for all. However, there seems to be little evidence made available to the public to show 40
actual implementation of these national food security programs and their potential impacts on communities.
8.3 NATIONAL INDUSTRIAL POLICY FRAMEWORK27
The National Industrial Policy Framework stated in “SP9: Spatial Industrial Development and Industrial Infrastructure Programme that an industrial infrastructure programme needs to support a range of types of infrastructure, such as cold chain facilities to unlock particular types of agro-processing activities.” 28
8.4 ANNUAL REPORT OF DEPARTMENT OF AGRICULTURE29
8.4.1 Food security
To address the challenges of poverty, unemployment and the inadequate access to food, the department re-prioritised food security as high-priority-focus areas.30 The National Policy on Food and Nutrition Security was approved by Cabinet in September 2013 to ensure the availability, accessibility and affordability of safe and nutritious food at national and household levels.
8.4.2 Employment
Agriculture has been identified as one of the key job drivers in the NDP to create a p[potential estimated new 1 million jobs by 2013.31
According to estimates in the Quarterly Labour Force Survey of Statistics SA, there has been an estimated 713 000 farm jobs in South Africa for Quarter 4 of 2013/2014, representing a year-on-year decline of 27 000 jobs.32
8.4.3 Exports and trade
Trade opportunities with other emerging economies have been concluded and trade on the African continent has been accelerated. Our top export products to the
27 2007. National Industrial Policy Framework (NIPF). The implementation of industrial policy was set out in the Industrial Policy Action Plan. 28 RSA. National Industrial Policy Framework. DTI, page 18. 29 2014. Annual report 2013/2014. Department of Agriculture, Forestry and Fisheries. RP 202/2014. 30 Ibid, page 12. 31 Ibid, page 12. 32 Ibid, page 31. 41
Southern African Development Countries (SADC) include soya-bean oil, food preparation, sunflower oil, wheat, maize and apples.
8.4.4 Medium to long-term goals
To meet the objective of reducing the incidence of hunger to zero by 20130, the department will continue to increase the number of hectares of land under production through the Fetsa Tlala Food Production Initiative33 over the Medium Term Expenditure Framework (MTEF) period, in line with our commitment to the Medium Term Strategic Framework (MTSF) for Outcome 7 of vibrant, equitable and sustainable rural communities and food security for all. 34
The Agricultural Policy Action Plan (APAP) has its policy goals set out in the Integrated Growth and Development Plan (IGDP) to be reviewed annually. In response to the NDP, the Strategic Integrated Project (SIP) 11 will provide the necessary force towards building the agricultural economy, and in this instance, the upgrading of agricultural infrastructure. 35
8.4.5 Increased inputs costs
The Annual Report 2013/2014 indicated that the focus for the department was on three key priority areas, namely food insecurity, unemployment and economic development. It further acknowledged the importance of many factors that influence on the performance of the agricultural sector.
These include the increase of labour costs, rising input costs such as fuel and electricity, the weak rand and unpredictable weather conditions.
Over the past three decades, agriculture has experienced a cost curve (which means a significantly higher increase in input costs compared to output prices) of about 3%. To counter this, producers have to become more productive by yielding higher production levels, while driving down costs through greater efficiency.
33 The Fetsa Thala Food Production Initiative was launced in October in 2013 in the Northern Cape by President Jacob Zuma. As part of the initiative, 104 000 hectares of fallow land were planted with maize, beans and potatoes. 34 Ibid, page 13. 35 Ibid, page 13. 42
8.5 KEY POLICY ISSUES FOR THE MEDIUM TERM 36
The Integrated Growth and Development Plan (IGDP) for Agriculture, Forestry and Fisheries outlined key development areas for agriculture. Agriculture has not grown as fast as other sectors over the past few decades, but remains a critical sector for employment and food security in which development opportunities should vigorously pursued and not overlooked.
The government has a tremendous responsibility to maintain the fragile balance between achieving agricultural developments within the constraints required for assuring ecological sustainability.
The IGDP has been developed within the Medium Term Strategic Framework which relies on intergovernmental cooperation in the implementation of key policies such as the New Growth Plan, National development Plan, the Industrial Policy Action Plan II, the Comprehensive Rural Development Programme.
One of the 12 Outcomes identified in the IGDP – Outcome 10 – specifically refer to protect and enhance our environmental assets and natural resources.
The Annual report for Agriculture of 2012, Minister Joemat-Petterson as well as Deputy Minister Mulder stated that farmers as private sector entrepreneurs are international competitive and create jobs and attract investment to agriculture on farms in SA, big commercial farming as well as developmental farming activities.
The Department of Agriculture appreciates the contribution of commercial farming’s contribution to export growth, implying an increase in the efficiency of production.
The volatility of agriculture due to both production and price risk must also be appreciated in making farming a risky business.
The contribution of agriculture to employment and its high multipliers together with its strong forward (all its outputs used in further beneficiation of final consumer products) and backward (all the inputs required in the production process) linkages. It is however, a concern that agriculture has lost 50% of its employment over the period 1970 – 1995 and a further 5,1% decline during the year 2011 to 2012. This is especially important in light of the fact that it has one of the strongest employment multipliers in the economy.
However, cognizance must be taken that SA is a net importer of processed foods.
36 2004. Food security in South Africa. Key policy issues for the medium term. HSRC, January. 43
Arable land capable of sustaining intensive to moderately well-adapted cultivation amounts to about 12% of SA’s land. Only 2% is prime agricultural land (Class I and II) and 1,5 million ha are irrigated land.
Opportunities for further growth lie in greater technical efficiency, accessing more niche markets and value-addition within the established commercial agriculture.
The Department of Agriculture acknowledges the importance of commercial farming in addressing food security; contribute to SA’s export performance and employment creation.
The 2012 Annual Report of Agriculture indicated that employment in agriculture declined by 27% between 1993 and 2007, declined by 18% between 2008 and 2012. Any further decline cannot be tolerated and must therefore not be encouraged by any interference with the availability of arable land for agricultural production.
8.6 STATE OF THE PROVINCIAL ADDRESS37
The Premier of the Free State indicated in his 2015 State of the Provincial address that the government will work relentlessly to ensure that economic development and job creation will receive serious attention. He further indicated that agriculture and agro-processing will be one of the focus areas in the Free State.
The provision of bulk water supply to Warden has been announced by the Premier of the Free State with the construction of 3 Ml reservoir raw water pump station to be expected to be completed by August 2015.38
8.7 SUMMARY
The Department of Agriculture, Forestry & Fisheries’s 2013/214 Annual Report Minister Zokwana’s Foreword list as Achievement item 1 on Food security to address poverty, unemployment and the inadequate access to food that his department re-prioritised food security as high priority-focus area.
The South African government has clearly set strategic objectives to either reduce or eliminate poverty and mal-nutrition in the country and several food security programmes highlight the progress that has been made by government institutions towards achieving food security for all. However,
37 2015. State of the province address by Hon E S Magashule, Premier of the Free State. 24 February. 38 Ibid, page 30. 44
there seems to be little evidence made available to the public to show actual implementation of these national food security programs and their potential impacts on communities.
To address the challenges of poverty, unemployment and the inadequate access to food, the department re-prioritised food security as high-priority- focus areas.”
According to estimates in the Quarterly Labour Force Survey of Statistics SA, there has been an estimated 713 000 farm jobs in South Africa for Quarter 4 of 2013/2014, representing a year-on-year decline of 27 000 jobs.
SA’s top export products to the SADC include soya-bean oil, food preparation, sunflower oil, wheat and maize.
In response to the NDP, the SIP 11 will provide the necessary force towards building the agricultural economy, the upgrading of agricultural infrastructure.
The Annual Report 2013/2014 indicated that the focus for the department was on three key priority areas, namely food insecurity, unemployment and economic development.
Over the past three decades, agriculture has experienced a cost curve (higher increase in input costs compared to output prices) of about 3%. Producers had to become more productive by yielding higher production levels, while driving down costs through greater efficiency.
Arable land capable of sustaining intensive to moderately well-adapted cultivation amounts to about 12% of SA’s land. Only 2% is prime agricultural land (Class I and II) and 1,5 million ha are irrigated land.
Opportunities for further growth lie in greater technical efficiency, accessing more niche markets and value-addition within the established commercial agriculture.
Food insecurity raises the issue of vulnerability. People are most vulnerable are those who do not have enough capabilities meaning a combination of assets, potentialities and capabilities to overcome the probability of failing into chronic food insecurity.39
39 2003. Food security in Southern Africa. Cuases and responses from the region. HSRC, 18 March, page 19. 45
9 PAUL STEYN BOERDERY (PSB)
9.1 INTRODUCTION
The farm has been occupied by the family since 1860s. The farm has been going through different stages of economic and financial prosperity as well as difficult conditions that almost terminated the agricultural activities. Various serious decisions had then to be taken to ensure the economic and financial sustainability of the farm as a going concern in order that it could be maintained and expanded to its current status.
These and subsequent decisions impacted very positively on the future and the current conditions making this farm a vibrant role-player in the community of Warden and its residential areas from where most of its workers commute on a daily basis.
The farm consist of 6 000 ha belonging to PSB and approximately another 6 000 ha are rented in the vicinity of Warden from other farmers.
Various investment projects originated from the activities on the farm and the value- added agricultural agro-processing activities will be described in the following sections.
The subject land was farmed as one farming unit with free access to all parts of the land and all outlying areas of every separate title owned by the farming operation. However, at the time of the expropriation the farming activities were extremely limited and restricted to a lot less land than what are currently under farming activities. The owners of the farmland could not and did not foresee what the impact of the expropriation would be 18 years later.
A number of different farming operations will be impacted. These include:
Management of lands and employees activities on lands now fragmented from the main operation; Access to town for operational business if prevented from accessing the road; Crossing for cattle and equipment (noting that some of the farming equipment, such as harvesters are large – a lot larger than 18 years ago); Dust and pollutants affecting the quality of the wool clip (from more than 36 000 sheep), during the construction period, as well as the palatability of grazing. This would not be permanent and depends on wind direction – but since the farm will be dissected by the road, the impact will be on both sides of the road irrespective east or west; 46
Crime, and especially the threat of stock theft of sheep along the DBPR which to date has been isolated and reportedly reasonably isolated from the problem; With an improved N3 road and adequate access/overpasses, safety for farm equipment and staff crossing the road should be enhanced, as will be the safety for local users of the N3 when transporting farm produce. This should be guaranteed by SANRAL.
9.2 BACKGROUND
The following background information depicts the development of PSB agricultural activities:
Farm history The current farming operations are the third generation of Steyn farmers on the land. During the years (more than 60 years) the land owners bought more and more land until this day where they own approximately 6 000ha consisting of several titles. In addition, they also rent about 6 000ha to supplement the farming business and in doing so, achieve economies of scale. Land acquisition process The expropriation, although done with the approval and cooperation of the owners, was completed 18 years ago. At the time the farming activities were extremely limited compared to the massive extensive farming undertakings currently in practice. The owners could not “wait for a road to happen” and kept on investing and extending their farming reach to not only increase the levels and intensity of farming, but also the extend and diversity of farming. Irrigation dams were developed, mother irrigation lines were installed and almost 800ha of arable land are as a result under irrigation. This allows for a very big maize harvest every season, as well for the production of more than 36 000 head of small stock and about 2 500 head of large stock, in addition to about 30 000 tonnes of potatoes being produced every season. These farming activities will be interrupted in an unprecedented way with the proposed road splitting the farming activities in two almost equal parts. SANRAL servitude transaction In 1990 the DBPR was proclaimed in the Government Gazette. Various pieces of land of the PSB were part of these transactions. 47
Details of the transaction back in 1998 are shown as Annexure A and Annexure B. Transfer of the expropriation was effected on 2010 (see documentation).
48
Farming development strategy Business development plan (BDP) for 3 years, 5 years, and 10 years at this time includes the expansion of the wholesale butchery, the erection of new abattoir, the development and planting of new apple orchards, improved potato production methodology (biological intervention), and the better usage of technology in all farming activities. PSB involvement in Warden District The owners of PSB have shown over many years that they also invested in the community and contribute toward the human capital in the Warden District. They serve on several boards of directors (e.g. the local Co-op), associations, local primary school (even though they don’t have school-going children), job creation (they employ more than 550 workers and personnel), they distribute a salary bill of more than R1.4 million monthly in town, and they spend virtually millions on equipment, technology, consumables and material (about 17% of the local co-op’s turnover comes from PSB). Description of the servitudes: The servitude in the name of the SANRAL, according to the SG-diagrammes, comprises three sections crossing three different farm portions of the PSB farming operations (see figures 2, 3 and 4 below): o Portion 6 of the Farm Leeupoort 1795 (S.G. No 1771/2008) measuring 15.3741ha o Portion 5 (of 2) of the Farm Leeupoort 1795 (S.G. No. 1770/2008) measuring 8.2451ha o Portion 4 of the Farm Leeupoort 1795 (S.G. No. 1769/2008) measuring 15.7051ha By Proclamation 2028 in Government Gazette 12715 of 31 August 1990 (sheet 2 and 3A) as amended by Proclamation 1733 in Government Gazette 18558 of 17 December 1990, portions of the following farms were also expropriated for the DBPR:
o Remainder of portion 1 of Leeupoort 1795 (approximately 10 ha) o Remainder of Brakwal 408 (approximately 4 ha) o Remainder of Vaalbank 392 (approximately 9 ha). In total the area under discussion is approximately 62 ha. 49
9.3 CURRENT ECONOMIC IMPACT
The following table depicts the current extent of the PSB on the farm as well in the community of Warden:
Table 16: PSB Economic Impact
Impact measure Current
No of employees 550
Estimated dependents 3 300 (6/employee)
Total turnover R124m
Total Income Tax R25m @ 28%: R7m
Total payroll taxes R1,42m
Total VAT Farming entity/VAT vendor
Not applicable
Current land under irrigation 800 ha
Number of water irrigation systems 14
Crop under irrigation Potatoes, maize & other (green pastures & fodder & oats)
Potatoes employment: Land 300
9 months/annum
Potatoes employment: Plant 200
9 months/annum
Other farming employment 100
Potatoes production 30 000 tons
Meat processing (in Warden) employment 30
% contribution to VKB (Warden) turnover 17% 50
Community participation in sponsoring 7 teachers
Community participation in renovating school Financial support for hostel boarding hostel was re-opened with PSB renovation funds - Model C school (50% African & 50% white children)
Number of shops in Warden where workers 5 buy on a regular monthly basis
Estimation of monthly spending per shop by R133 000 workers (loss of income if workers are not employed
From the above it is clear that the PSB is a major contributor to the economy and economic wellbeing of the Warden district.
9.4 ECONOMIC IMPACT OF PROPOSED DBPR ALIGNMENT
The following table indicates the anticipated impact on PSB farming activities as well as on the broader communities in the Warden area if no alleviation in any form is provided.
The assumption is therefore that the DBP Route alignment is implemented and no support of any form is provided to the activities of the PSB. The information presented therefor refers to the activities of the irrigation for potatoes, maize, green fodder as well as oats therefor impacting of the cattle and sheep activities as well:
No farming activities with potatoes will be possible without any financial support due to the considerable investment required to re-organise, re-align and apply business process re-engineering activities. The financial implication is not within the means of the PSB means.
51
Table 17: PSB Economic Impact with NO Support
Impact measure No support scenario
No of employees 100
Estimated dependents 600 (6/employee)
Total turnover R33,6m
Total Income Tax R1,9m
Total payroll taxes R380 000
Total VAT Farming entity/VAT vendor
Not applicable
Current land under irrigation 600 ha
Crop under irrigation Potatoes, maize & other (green pastures & fodder & oats)
Potatoes employment: Land 0
Potatoes employment: Plant 0
Other farming employment 50
Potatoes production No production
Meat processing (in Warden) employment The current 20 will be substantially reduced due to the loss of irrigated fodder to feed the cattle stock and subsequently less animal slaughter
% contribution to VKB (Warden) turnover 5%
Community participation in sponsoring teachers 0 52
Community participation in renovating school No further financial support boarding hostel was re-opened with PSB funds - Model C school (50% African & 50% white children)
Number of shops in Warden where workers buy on a Substantially reduced regular monthly basis
Estimation of monthly spending per shop by workers Substantially reduced (loss of income if workers are not employed)
9.5 POTENTIAL NEGATIVE IMPACT OF DBPR
Figure 2 below shows the position of the servitude (the proposed DBPR) acquired by SANRAL and the extent to which it will sever the land in two portions – it cuts through the spine of the farming activities.
Figure 2: The lay of the land and the position of the N3 highway splitting the farming operations in two distinctive sections
Figure 2 clearly indicates the placement of the proposed DBPR almost in the middle of the current farming activities. If the DBPR construction is to be implemented the current activities of the PSB will cease to exist in the current format. 53
Figure 3, 4 and 5 is attached for ease of reference describing some of the different servitudes.
Although some of the impact of the proposed DBPR can be mitigated, it will have a lasting impact on the way farming has been done up to this point. The mitigating actions would be very expensive and would not be within the reach of the PSB financial means. 54
Figure 3: The first (north-western) section of the servitude
55
Figure 4: The second (middle) section of the servitude
56
Figure 5: The third (south-eastern) section of the servitude
57
9.6 AGRO-ECONOMIC IMPACT
The following aspects describe the agro-processing impact on the PSB activities if the DBPR implantation is affected:
Local Economy PSB plays a substantial role in the local economy. Apart from the fact that it employs just more than 500 of the potential 4 300 adult workers in the whole of Warden (i.e. 11,6% of the potential workforce), it also contributes about 17% of the annual turnover of the local agri co-op, VKB. PSB’s monthly salary and wage bill is just more than R1 400 000 and most of this money is spent in the Warden precinct. If this money was equally spent between 10 retail dealers or merchants in Warden it would provide each of those traders with a R140 000 turnover per month – significant for a small town like Warden. The loss of a substantial portion of this income will not only close down about half the shops in town, but it will also seriously compromise the survival of the town. Regional Economy PSB runs a wholesale butchery in Warden that generates an annual turnover of just more than R44 000 000. This turnover is spawned within the region and even spilling over into adjacent regions. Currently the butchery is only processing beef carcasses from the farm’s own stock via the abattoir in Harrismith, but the owners of PSB also want to include lamb and sheep as from 2016. This investment, as well as the trading with VKB upholds a substantial portion of Warden’s regional economy. In addition, PSB plans to develop its own abattoir near the existing grain silo, which will further increase the red meat processing capacity to the benefit of the region and its red meat producing farmer community. Currently the lamb and sheep stock is transported to Krugersdorp where processing is taking place. This value added downstream economic activity is leaking out of the local economy and therefore the investment and job creation multiplier is lost for any Local Economic Development activity. Tax Structures PSB’s tax position will be substantially affected by the construction of the DBPR due to the radically scaling down of farming activities. Investment Planning Planning for the next 5 years will amount to millions in local investment – all of which will have to be put on hold if the DBPR become a reality. The 58
estimated investment development strategy will be more than R20 million, which will go hand-in-hand with the creation of more than 300 additional jobs for the immediate region.
9.7 SOCIO-ECONOMIC IMPACT
The smaller a town the bigger the impact of job losses. Some employers are sometimes “forced” to retrench staff while still showing profits, but scaling down activities for economic reasons. While PSB may be faced with reducing a percentage of their costs by letting staff go because of a reduction of farming activities, the reality is that retrenched staff will experience a 100% income reduction.
It is estimated that every employee supports between 5 and 6 direct dependents and the effect on letting someone go is both devastating to the individual as the society in general. PSB is therefore overly sensitive for such a situation and will only consider same as a crisis measure.
Retrenchment can, and normally does have a traumatic and emotional impact on the still-employed as well as those who have been laid off – it is a loss for all. The remaining employees may feel demotivated and insecure, which can result in lower productivity within the farmworker force – especially if the retrenchment process hasn't been handled appropriately or forced upon the farming “family” from an external realm. For a retrenched individual, the impact of being retrenched can be, and normally is devastating. Retrenchments don't only affect the financial security of the sufferer, but also their personal sense of worth because some employees derive a lot of self-worth from their jobs. Retrenchment brings uncertainty, loss of a future, and sometimes, total despair. If not managed correctly, retrenchment could result in depression, and if this happens on a grand scale it will spill over into the community.
The potential of a large retrenchment exercise will inevitably affect other parts of the community as well
Wellbeing of local municipality At present, several smaller municipalities are struggling to operate and maintain their services infrastructure in a cost-effective and sustainable manner. The end result is predictable: rapid deterioration of assets, followed by catastrophic component failure, and regular and prolonged disruptions in service delivery – as was the recent case with a lack of water supply for the townsfolk.
The current tendency in the Warden municipality to defer maintenance is not advisable from both a technical and financial perspective as without maintenance 59
assets will require replacement long before they have reached the end of their design life. Instead, the municipality needs to allocate more resources for operations and maintenance (O&M) to sustain a satisfactory level of service delivery. Preventative maintenance programmes at the local municipality is recommended by various national policy documents such as the Municipal Finance Management Act, Municipal Structures Act, Municipal Systems Act, etc.
Provincial governments and national government are keen to commit funds for capital projects, but reluctant to support municipalities to meet their O&M obligations – especially where the O&M does not meet expected standards. The net contribution of PSB to the Warden municipality and its assistance with water supply is material, as was called upon recently when the municipality had experience problems with the supply of water to the town residents.
As part of the private sector PSB has the necessary resources available to support the local municipality in performing their O&M obligations in a sustainable manner. This may however, be in jeopardy if the DBPR is constructed.
Many municipalities, especially those like Warden’s, are struggling to keep their services infrastructure operational, and need to consider the option of outsourcing essential services such as water and wastewater treatment to the private sector.
Job creation PSB has the potential, as were proven over the last 10 years, to create a substantial amount of jobs – something that the new road will definitely stifle, if not prevent at all. PSB, through its development and investment planning, foresees the creation of another 300 jobs from the further development of the land and the improvement of farming methods and methodologies, as well as the introduction of more technology and diverse farming practices.
The quest for job creation is well formulated in the Government’s National Development Plan of creation more than 11 million jobs by 2030 and PSB can support this objective in expanding its agricultural activities.
Staff and community development Human capital betterment projects (including staff training and career development) have been part of the PSB’s strategic planning programme for some time. This against South Africa’s agricultural education sector limited success to produce enough skilled agro-processing workers. 60
Agri-SETA40 in 2010 identified a range of scarce skills in agriculture. At small-scale level, it was found that farmers lacked skills in a host of areas: farm management and entrepreneurship, resource management and record-keeping, financial planning and management, marketing, processing and packaging, transport, natural resources management, and mechanical and electrical knowledge.
In the commercial sector, the critical constraint identified was the poor educational levels of a large proportion of the farm worker labour force, which demanded a considerable investment in adult basic education and training and other life-skills programmes.
Agri-SETA also found that commercial farmers needed to improve their management and business and marketing skills, develop more environmentally responsible production and processing systems, raise environmental, health and safety compliance, and make more progress towards meeting international trade standards.
There is also a particular need for fruit pickers, animal handlers and dairy parlour workers – indicative of the tough working conditions and relatively low remuneration of these occupations. PSB experienced the same type of shortages over a number of years and have finally decided to change the situation by a private initiative.
According to Obert Mathivha41, Managing Director of the Commercial Agriculture Youth Chamber, one of the challenges facing youth is limited access to technical skills experience and capacity building. He confirmed that the industry and every individual farm can invest in land and equipment but there has to be a corresponding investment in human capital. He welcomed the PSB intervention plans in principle.
Theo Venter,42 a political and economic analyst at North-West University, points out that agriculture plays an important role in government’s National Development Plan, which aims to create 11 million new jobs by 2030, with one million (9%) of those in agriculture. However, he says there’s a huge need to up-skill workers in farming, agro-processing and downstream development.
The PSB initiative, although only in a planning stage, is an important action by the private entity, but it can be upped to ensure a new generation of skilled farmworkers
40 FarmersWeekly 26 July 2013 41 Telephonic interview with Mr Mathiva on 5 July 2015 42 Telephonic interview with Dr Venter on 5 July 2015 61
– at least for PSB. The following skill-related vocations are being considered at PSB’s Centre for Career Development (CCD).
Potato Graders Apple Graders Sheep Shearers Wool Graders Meat Graders Butchers Animal Husbandry Assistants Farm Technicians Irrigation Technicians This extremely exciting and worthy initiative will suffer immeasurable damage if SANRAL doesn’t observe the situation with care and caution.
PSB has already, 5 years ago, embarked on their very positive Learner Assistance Programme (LAP) in conjunction with the Primary School Initiative (PSI) by financing 6 teacher posts at the local primary school in order to ensure the survival and sustainability of the school as an important part of the town’s existence. In addition the initiative was linked to the restoration and reintroduction of the school’s dormitory – also guaranteeing the school’s ongoing existence.
9.8 AGRICULTURAL IMPACT
The following issues have been identified in indicating the impact of the DBPR on the PSB agricultural activity:
Food security Food security is vital – especially for a country that is a net importer of food. The UN, through the Food and Agricultural Organisation (FAO), has declared 2014 the International Year of Family Farming43. Governments around the world have been invited to:
o Place farming at the centre of regional, national and global agricultural, environmental and social policies; and to o Elevate the role of farmers as stewards who manage and protect natural resources and drive sustainable development. PSB knows the market that is available; they identified that there are crop and market combinations that suit their operations better than others. They further identified the fact that logistics will influence their production decisions, because these dictate how,
43 FW 29 June 2014 62
when, in what condition, and at what cost produce can be taken to the market. The fact that PSB has managed to achieve this much over the last 20 years translates into the very fact that they make a bigger contribution to food security than many of their larger (super-large) counterparts.
Not only employ PSB 550 people currently, they contribute substantially to food security in South Africa by producing extensively red meat, maize and potatoes.
This achievement should be applauded and supported, not damaged or injured in any way.
Production development Farming operations like PSB stay in the agri-business because there are incentives for them. They grow crops and raise livestock to feed their families, yes, but mainly they sell and earn a living in a market economy that is becoming increasingly global and extremely competitive – they are not only content to operate and compete in this market, but they are keen to take the challenge further than expected.
Current incentives favour increased agricultural production at the expense of ecosystem services – this should be avoided at all costs. Interestingly, many studies indicate that fertiliser-use efficiency could be greatly increased by better matching nutrient inputs to crop demand in time and space, but essential investments in on- farm nutrient-management research and in extension activities that promote such practices have not yet occurred – such as being observed and implemented by PSB.
Clearly, appropriate incentives are needed for farmers like PSB. In addition to the practices described in the preceding sections and all the good things that PSB already achieved, PSB will rely on a rapidly expanding base of biological and agronomic knowledge that is often specific to certain agro-ecosystems, regions, soil types and slopes. PSB’s Managing Director and is also the General Manager is only 35 years old and is eager to learn more and faster in order to stay abreast of agricultural developments.
Making the right decisions at the farm level for him and his management team in terms of input-use efficiency, human health and resource protection is becoming an increasingly knowledge-intensive task. He will need every bit of help and support that he can contract and source through relationships.
Ultimately most incentives will come from consumers. Agricultural input becomes a serious cost and ends up on the consumer’s table. A broad look at trends in agricultural production shows that many of the elevated environmental impacts 63
projected for the coming 50 years are tied to increased consumption of livestock products and concomitant elevated demand for grains fed to livestock. This will increase production costs immensely. Pricing and labeling each type of livestock product to reflect the true total costs of its production could provide consumers with important information and with incentives for choosing alternative food products. This is exactly what PSB wants to achieve by extending value chain and adding more value to the production from their farms.
Putting PSB’s contribution to food security into perspective, it is important to note that more than 4% of its internal GDP is spent or reinvested towards improved farming methods. South Africa spends less than 1% (while we are one of the developing countries where most of the increased food demand will occur during the next 50 years).
We need to look at each farmer on merit and note at the farming community as a whole. PSB is doing many things better than most and as such they need to be supported to keep on doing just that.
Job creation As a labour-intensive and rural industry, agriculture has an important role to play in job creation and poverty alleviation in South Africa44. As one of the main job creating sectors of the South African economy identified in the National Development Plan, agriculture should contribute about 9% of all new jobs in future years.
Sadly, agriculture related employment is on the decline in the commercial farming sector, as farms have become larger and more mechanised. According to the 2008 agricultural statistics, the total number of farm employees has dropped from 1 600 000 in 1971 to 628 000 in 2005. Given the population increase over that time, agriculture’s contribution to employment dropped from 8.3% to 1.3% in relative terms. Where PSB can create a substantial number of jobs on its own in a micro- environment, this should be supported with zest and vigour.
The Department of Agriculture’s Medium Term Strategic Framework (MTSF) emphasizes agriculture as a focus area for job creation (mentioned above), but to achieve this goal, labour intensive sustainable production systems should be encouraged. PSB shows the way in many respects.
44 WWF Report (AGRICULTURE: FACTS & TRENDS South Africa) 64
So, what is it that makes PSB so successful? These are some of the operational standards that they have made their own. They ensure the sustainability of their farming operations by:
Reducing the use of pesticides and eliminate or minimise exposure to these products. Optimising production and production diversity without putting the soil and soil health at risk. Focusing on crop alternation in order to allow soil to recover from season to season and to carry and produce different crops in different seasons. Caring for their work force by employing the optimum number and allow them to be exposed to training, qualification and development in future. 9.9 PRACTICAL IMPACT
The infrastructural impacts relate to farm buildings, farm houses and farm worker housing, boreholes and water sources for irrigation (mother lines), cattle grazing camps and on-farm roads. In this instance, the SANRAL road reserve divides the property in half. Note should be taken of the existing land usage. If it is grazing land, the effect would be less on the owner compared to intensive farming (potato cropping).
Careful consideration needs to be given to the need for agricultural under- or over- passes (subways or bridges) in view of the grazing camp rotational scheme commonly implemented in the agricultural sector (high-pressure grazing).
Although the provision of such agricultural under or over-passes is costly, it is important to note that SANRAL remains legally obliged to put the landowner, PSB, in the same or in a similar position than that what he was in before the construction of the road. This may well require the comparing of the costs related to the provision of an agricultural underpass with the costs associated with the acquisition of the severed portion of land. In particular care needs to be taken in construction of underpasses as they may not be large enough in time to allow the passage of large agricultural machinery, especially contractor land preparation, planting and harvesting equipment. In addition depending on terrain and run-off they can develop into impassable watercourses.
It also needs to be noted that where severed portions of properties are acquired, they must be subjected to being sub-divided in terms of Act 70 of 1970 (which governs that agricultural land being sub-divided, should be able to function as an independent economically viable unit) in order to facilitate the transfer of the severed land to 65
SANRAL or remainder portions to the original owner. If the consent required in terms of Act 70 of 1970 cannot be obtained, it may result in SANRAL being obliged to acquire the entire property, irrespective of whether access is available to a large portion thereof.
9.10 OTHER IMPACTS
Some other impacts have also been identified and are listed below:
Uncontrolled fires; Proposed cuts through mother irrigation lines (MILs); For a 8-month period seasonal workers have to be moved across a national road to get to area of operation; Theft and increased crime (especially stock theft), which is negligible within current operations; Current N3 is a main source of access to farms along the route, without alternatives; Movement of large (high-tech) agricultural machinery across roads and underpasses that are of inadequate size, if not provided for; Polluted grazing (dust and cement) becomes unpalatable; Changes in soil biology as a result of cement dust pollution; Road dissects irrigation sources and in some cases bisects existing farm dams; Difficulty in moving livestock across N3 on a regular basis (with the current high-pressure grazing system); Difficulty in providing safe access for large pantechnicons (20-30 ton trucks) for transfer of about 1 300 cattle, 12 000 tons of potatoes, and 36 000 sheep annually (about 600 trips); Difficulty in operational control and management when staff and resources have to be moved and operated on lands located across a freeway; and Pollution risk of water as dams are very close to the proposed DBPR alignment. 9.11 SUMMARY
PSB is not the ultimate farm, but it is doing many things right and they play a vital role in the local and regional economy where it operates. This should be protected and applauded.
It is our prayer that SANRAL carefully observe the content of this document and engage in consultation with PSB and its representatives.
10 CLOSING COMMENTS
10.1 INTRODUCTION
Development comes at a cost – always. We cannot expect to develop without paying a price towards the end result. Like we need food, we need roads and factories and 66
mines. However, regulation seems inevitable in order to make development work for everybody.
The government is exploring and implementing legislative tools like tax incentives and ploughing restrictions in order temper agricultural development and ensure sustainable food security. At the same time the end users like retailers and manufacturers are greening their product ranges through certification and standards and expecting a better product from farmers – like PSB is already doing.
Farming is a significant intervention in biodiversity and has a tremendous impact on the environment. However, for every risk that agriculture provides to biodiversity, it also offers an opportunity. While agricultural activities can threaten habitats, pollute water and consume resources, they can also – when operations are sustainably managed like it is happening on PSB land – provide new habitats, help protect watersheds and improve soil health. Initiatives that are already embracing this policy and development directive includes the Potato and Biodiversity Initiative, the Right Rooibos Project, the Biodiversity and Wine Initiative, Badger-friendly Honey, and sustainably harvested wild flowers under the Flower Valley Conservation Trust. It happens everywhere in agriculture.
PSB is making a huge contribution towards sustainable farming and sustainable food production. Every collaborative effort to mainstream sustainable agriculture between industry, the conservation community and consumers points to a more optimistic future – a future where we appreciate the value of managing our natural resources, creating renewable flows and ensuring that monoculture does not destroy our heritage and, ultimately, our well-being. This is what we all try and endeavour to achieve.
The development of the DBPR cannot and should not compromise PSB’s efforts in this regard.
10.2 SUPPORT PACKAGE
The following support package is requested to mitigate the economic impact of the DBPR alignment the PSB’s activities:
1) Tax holiday for the establishment of the abattoir by Warden Municipality to allow positive cash flow management to be generated; 2) Favourable electricity tariff from the Warden Municipality at abattoir to encourage maximum job creation – especially labour intensive technology application; 67
3) Interest Free Loan or alternatively Low Interest rate loan for Agro-processing infrastructure investment at the Industrial Development Corporation (IDC) for the following: a) to establish the abattoir, b) expanding the meat processing facility in Warden, c) the expansion of the potatoes processing plant, as well as the d) establishment of the apple orchards and apple processing plant and equipment; 4) Grant Funding for Agro-processing Farming activities and Job Creation in Agriculture financial support from the Land Bank in support of activities (a), (b), (c) and (d) as listed above in Paragraph 3); for the continuation of the agricultural activities to continue without negatively impacting on the job creation opportunities of the PSB activities; 5) SANRAL support on the applications for the approval of dams on the PSB facilitation irrigational operations to be adapted and facilitate expansions with agricultural activities in lieu of the construction of the DBPR.
10.3 FORWARD AND BACKWARD LINKAGES
In the most basic form, the value-added chain is the process by which technology is combined with material and labour inputs and these process inputs are assembled, marketed and distributed.
Agriculture and agro-processing is a typical industry where forward and backward linkages play a very import role and even more so in a small community such as the town of Warden. A forward linkage is created when investment in a particular project encourages investment in subsequent stages of production. A backward linkage is created when a project encourages investment in facilities that enable the project to succeed. Agricultural projects create both forward and backward linkages.
Table 18 depicts the agricultural value chain in the South African agro-food regime. While the farming activities of the PSB is very important, inputs to agriculture, wholesale markets, retail markets, processing and packaging, supply to wholesale markets and consumption all play vital roles.
Table 18: Value Chain within Agro-food regime
Inputs PSB Wholesale Retail Markets Consumption Markets & 68
Processing & packaging
Seeds Property Grain storage Hawkers Advertising rights
Fertilisers Soil Milling Corner cafees Branding
Pesticides Vegetation Canning Specialty Consumer stores choices
Herbicides Water Slaughter Supermarkets Cultural preferences
Medicines Dry land Leather goods Farmers’ crops markets
Feed Irrigated Baking crops
Fuel Range Processed livestock foods
Machinery Penned livestock
Equipment Labour: Own
Fencing Labour: Hired
Buildings Housing
Finance: Services land, capital goods & production inputs
Insurance
Source: Turok, Ben. The Controversy about Economic Growth. 2011. 69
Table 18 clearly indicates the impact of the PSB on the local economic development environment, specifically on the Warden environment but also on the Free State and the South African. Scaling down farming activity at PSB will impact substantially negatively on investment and job creation on a number of economic sub-sectors as indicate with the economic multiplier impact even larger on investment and job creation.
10.4 CLOSING REMARKS
The PSB is excited in expanding its agro-processing business and the development of the local economy of the Warden community in support of South Africa’s food security provision, the achievement of some of the targets set in the NDP and other governmental strategic guiding policy documents. The current 550 job opportunities and expansion plans testify to PSB’s commitment and support to targets of the NDP.
On its own, it will not be possible to contribute substantial towards these goals and lest of all in providing job opportunities for the local communities if the DBPR construction is approved. PSB’s employment will reduce to approximately 100 people with detrimental impact on the local economic development conditions of the town of Warden. Expanding programmes and new investment and the creation of additional job opportunities at the new planned abattoir will not materialize.
Government support is needed and PSB will then be able to expand its footprint on the local economic development opportunities in the Warden and surrounding communities in creating additional job opportunities in addition to retain the current employment status.
Without government support, i.e. IDC low interest loan, dti grant for job creation and Department of Water Affairs approval for the irrigation dams, the PSB’s contribution to the local economic development activities in the Warden district would not be able to be retained. Its contribution to the economic activity of Warden has been quantified to the best of our ability, based on certain assumptions. Certain multipliers have also been calculated; however some assumptions might be under-valued and could lead to a substantial negative impact of the local economic development activities in the town of Warden with a consequential negative impact of the residential areas.
Decision makers will in future have to explain to the local communities why decisions were taken impacting negatively on the local communities. Similar decisions were 70
taken in the past in numerous towns, such as Windburg, without taking the responsibilities of the impact and consequences.
71
ANNEXURE A: PHOTO PORTFOLIO
Photo 1: Some of more than 500 workers on the potato fields
Photo 2: Bulk bags of potatoes ready to be processed
72
Photo 3: Potato harvesting in full swing
Photo 4: The flat plains through which the new road will cut
73
Photo 5: Some of the pivot patches that will have to be adjusted as a result of the road
Photo 6: The irrigation dams to the east of the new road
74
Photo 7: Cultivation equipment in careful storage
Photo 8: Soil working equipment in storage
75
Photo 9: Bulk bags of potatoes ready for washing, sorting and bagging
Photo 10: Potato sorting plant
76
Photo 12: Potato bagging and packaging
Photo 13: Intensive labour involved in the potato packaging process
77
Photo 14: Potatoes ready for the market or end users
Photo 15: Potatoes entering the washing trough
78
Photo 16: The potato washing trough
Photo 17: Some of the more than 30 000 head of sheep on the farm
79
Photo 18: The sheep are in excellent shape
Photo 19: The maize crop on irrigated land produce a very high yield
80
Photo 20: ‘Draaigras’ is sown by aeroplane on the maize fields and is ready for grazing after maize harvesting
Photo 21: An excellent maize harvest
81
Photo 22: A new 5-tonne cold transporter for beef carcasses
Photo 23: A client prepares a load of bones for processing
82
Photo 24: Inside one of the refrigerated rooms
Photo 25: Beef front quarters waiting to be deboned
83
Photo 26: Deboning and cut preparation area
84
ANNEXURE B: SG NO 1770/2008
85
86
87
88
89
90
91
ANNEXURE C: SG NO 1769/2008 & 1771/2008
92
93
94
95
96
97
98
99
100
ANNEXURE D: QUESTIONNAIRE45
Company name: Paul Steyn Boerdery Pty Ltd
Trading as: PSB
Annual figures (full 12 month financial period)
Impact measure Current Estimated figure after the N3 moves to the De Beers Pass with likely more than 70% of traffic diverted away from the current route
Number of employees 550 100
Estimate of number of 6 5 dependents per employee 3 300 dependents 500 dependents
Total turnover R124 million R33,6 million
Total Income Tax R25 million @ 28% = R7 Assume to reduce in a (including STC) million similar pro-rated percentage to the reduction in turnover
Total payroll taxes R1,42 million Assume to reduce in a similar pro-rated (Total EMP201 figures percentage to the plus Eskom bill (if reduction in turnover applicable)
Total VAT Farming entity / VAT Assume to reduce in a Vendor similar pro-rated (Total VAT201 figures percentage to the over a 12 month period) Not Applicable reduction in turnover
45 Questionnaire submitted to Cullinan and Associates. Per: Gregory Daniels 101
Number of:
- Visitors Not applicable
- Motors
- Trucks
- Persons
(Per annum)
Loss of salaries and R3 million wages
Loss of seasonal workers 300
Estimate of number of 1 500 dependents per seasonal employee
Loss of wages of seasonal R4,95 million workers
Total loss of salaries and R8 million wages
Number of shops in 5 Warden where workers buy on a regular monthly basis
Estimation of monthly R133 000 spending per shop by workers (loss of income if workers are not employed)
If only 3 of the current 5 60 people affected shops should close in Warden and estimated 4 employees per shop are 102
retrenched – estimated impact on community
Support to local schools 7 employees and specifically B A Spies 35 people affected Boarding Hostel which was re-opened with PSB funds – impact on job opportunities to be lost
Contribution to VKB Contribution to turnover = Contribution to turnover = turnover – the biggest 17% 13% business in Warden Employment = 90 Employment loss = 11,7 people
Impact = 59 people
Possibility that the local Employment = 5 Impact = 25 people bank to close its permanent operations
Warden estate agency R8 000/month managing our worker and Loss of 1 job opportunity temporary worker accommodation reduction in Gross Turnover
Anticipated staff losses at Loss of chemist, butcher, garage & others
103
ANNEXURE E: ESTIMATED LOSS TO THE LOCAL
ECONOMY
Number of people affected Salary & income deduction impact
500 R 3 000 000
1 500 R 4 950 000
60 R 432 000
35 R 714 000
58,5 R 1 193 400
25 R 600 000
5 R 60 000
2 183,5 R10 949 400
Annexure 2
ENVIRONMENTAL IMPACT ASSESSMENT (EIA) FOR THE PROPOSED NATIONAL ROAD 3 : KEEVERSFONTEIN TO WARDEN
(De Beer’s Pass Section) EIA Ref No: 12/12/20/1992
(This is an Annexure to the Submission of Paul Steyn Boerdery (Pty) Ltd)
LIST OF PROPOSED MITIGATING ACTIONS
INTRODUCTION
As is clearly stated and explained in the main Submission as well as the Report by Dr HJ Wiese that the National Road 3 De Beer’s Pass Section (hereinafter “the Road”) will have very serious and devastating impacts on the farming activities of Paul Steyn Boerdery (Pty) Ltd (hereinafter “PSB”). If it is inevitable that the construction of the Road has to proceed, PSB wishes to propose the following actions and steps to mitigate the negative impacts of the Road on PSB’s activities. The reader is referred to the annexed Google image with the numbered points thereon. Each of the following paragraphs will refer to a particular numbered point on the attached image.
Point 1: This is the crossing of the Road over Cornelis river. The River currently acts as a buffer to protect PSB from livestock theft from the nearby township and squatter areas. When the river was still easily passable, PSB suffered huge losses due to stock theft, but since it has been made impassable, the problem is under control. A new bridge will again provide easy access to pedestrians or even mobilised thieves. PSB does not know what the design of the bridge will be and it is not able at this stage to really submit solutions for the problem, but PSB requests that the problem be borne in mind during the design phase and also requests that some kind of security measures, fences etc. should be arranged in future.
2
Point 2: This is a pump station for the irrigation lands. PSB’s water rights allow the taking of water from the Cornelis river in this area. The irrigation mother lines and power lines will have to cross the Road in the vicinity of Point 2A in order to bring water to irrigation lands numbered 2A and 2B. There must thus be some conduit, underpass or something in this area.
Water drainage: As PSB does not know what the design of the Road will be like, it is uncertain what must happen with regard to the contours in these lands as well as in other lands which will be dissected by the Road. Will PSB still be able to discharge natural run-off water into the Road reserve where that is the natural flow direction? Will SANRAL accept the run-off water in the form of contours as these create a somewhat concentrated water discharge?
Point 3: It will be necessary to move the irrigation circle over Point 3 in order to make up lost land at 2B. This means that certain groundwork will have to be done and also the existing road have to be moved at Point 3. PSB will need SANRAL’s assistance in this regard, both financially as well as mechanically. If there are large construction machinery on site, it would probably be easy for them to quickly build a deviation of the existing road.
Point 4: This is similar to Point 3 above. The irrigation circle will have to be moved or enlarged and the existing road will have to be rerouted somewhat.
Point 5: This land, as well as certain other lands may have to be converted from a centre pivot irrigation system to a floppy irrigation system, which does cater for square irrigated areas. This is very expensive and a financial contribution is requested from SANRAL.
Point 6: There will have to be an underpass in this area to enable PSB to work on both sides of the Road. Bear in mind that the irrigation lands are worked at different times and with different implements than the dry lands and it is not possible to simply work all the lands on one side of the Road and then go 3
around and work on the other side. The lands in this area are of high potential and should not be lost.
In this same area there will have to be an access for power lines and irrigation mother lines to cross the Road. There is a pump station at the dams that serves the lands which will be separated by the Road.
Point 7: Does SANRAL recognise the existing road as a public tertiary road and will there be an underpass for large vehicles? Bear in mind that the PSB packing sheds are at the main homestead (near Point 2) and that many large trucks (maximum road capacity) as well as large farming implements are using this road regularly, often up to 10 times per day. The same question applies to Point 11.
Further, somewhere at Point 7 there will have to be a crossing of power lines and irrigation mother lines. It will obviously be costly to move these facilities from their existing positions.
Concrete tracks: There are three bridges currently indicated on the section of the Road that crosses PSB’s land and PSB requests that at each one of these crossings over a river, spruit, wetland etc., there must be a concrete track or small road that will allow PSB to move from one side of the Road to the other, except during exceptionally wet periods. This will retain the current agricultural activities and capacitate PSB to expand in further agro-processing activities.
Point 8: These are currently irrigation lands with centre pivot systems. There is no practical possibility to move the lands out of harms’ way and PSB will have to convert these lands at great cost to floppy irrigation systems. Financial assistance is requested from SANRAL.
Point 9: Although the attached Google image does not show this as an irrigation circle, it has been converted as such. It will be necessary to move this circle sideways to make way for the Road. 4
Point 10: Two centre pivot systems will have to be moved elsewhere on PSB’s other land as there is no room to move them in the existing area. Financial assistance in this regard is requested.
Point 11: Does SANRAL recognise this as a tertiary road for which provision by way of an underpass or overpass will be made? Bear in mind that if the Susanna interchange is built, many large trucks will have to use this road in order to get onto the Road at the Susanna interchange.
Point 12: There will be an extremely disturbing noise pollution factor at the main residence of PSB’s farming operations. PSB requests practical interventions to mitigate the noise pollution.
Possible actions: These mitigating actions would, in addition to practical on-the- ground works, typically involve financial support by the Industrial Development Corporation, the Department of Trade and Industry, Development Bank of Southern Africa and the Land Bank in supporting the business process re- engineering actions in facilitating the retention of job opportunities and in supporting a substantial number of local residents in the township. The impact on local businesses in Warden and surrounding areas would be detrimental without these financial support packages.
New proposal: PSB is wondering what the possibility is of moving the currently planned Susanna interchange on S789 to road S788. Could this be investigated?
Possible sale of land: PSB is so concerned about the huge effect of the Road upon its farming activities that PSB is seriously willing to sell all the farms along the Road alignment together with some of the irrigation water rights. This will enable SANRAL to consolidate and re-subdivide it into a number of smaller units with water rights and which can then be converted into an emerging farmer project. If SANRAL liaises with Department of Rural Development in this 5
regard, funding may be obtained and this will obviate the necessity of many of the abovementioned interventions. PSB is open and willing to explore this aspect further in negotiations.
----- 00000 -----