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FINAL MASTER AGRI- PARKS BUSINESS PLAN
Waterberg District Municipality
April 2016
This Document is prepared for:
DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM
Rural Infrastructure Development Branch
Private Bag X833
Pretoria
0001
Prepared by:
AND
URBAN-ECON DEVELOPMENT ECONOMISTS MANSTRAT AGRICULTURAL INTELLIGENCE First Floor SOLUTIONS Lake View Office Park 170 Outeniqua Avenue 137 Muckleneuk Street Waterkloof Park Brooklyn Pretoria Pretoria South Africa 0028 Tel: 012 342 8686 Fax: 012 342 8688 E-mail: [email protected]
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This Report has been read and approved by:
______
PSSC – Head, Limpopo Province Date
Mr. Julius Mashaphu
______
REID Director: Mr. Charles Neluheni Date
______
RID Director: Ms. Shandukani Khumela Date
______
Divisional Manager: Economic Development, Waterberg DM: Date
Ms. Betty Molekwa
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Waterberg DM Master Agri-Park Business Plan Road Map
Chapter 1: Introduction Chapter 2: Agri-Park Model
Summary: An introduction to the master business plan report is provided in Summary: This chapter provides an overall overview to the Agri-Park model this chapter through: the project background, goals and objectives, the which was developed by the DRDLR. project’s purpose and a demonstration of the project methodology. Key words: Agri-Park model, small-scale/smallholder farmers, FPSU, AH, Key words: concept, smallholder/small-scale farmer, FPSU, AH, RUMC, capital RUMC, production, facilities, information, large-scale/ commercial farmers expenditure Must read if the reader: Must read if the reader: Is no familiar with the Agri-Park’s concept. Does not have a background on the Master Agri-Park Business Plan Project. Seeks to understand the 3 units of the Agri-Park model. Does not know what the goals and objectives of the project are. Is interested in the project process.
Chapter 5: Main Role Players Chapter 4: Location Context Chapter 3: Policy Review
Summary: A list of role-players that are Summary: This chapter provides an overview of the Summary: The important policies that affect the important for the Waterberg Agri-Park Waterberg DM and its features that are important for Waterberg DM Agri-Park are reviewed in this Development are listed in this chapter, along the development of the Agri -Park. chapter and the alignment of the Agri-Park to with potential duties that they may take on. the policy is identified. Key words: Waterberg DM, local municipalities, Key words: government, private, location, economic infrastructure, economic activities Key words: policies, strategies, national, associations, organisations, financial provincial, local, implications, alignment institutions, companies, service providers, Must read if the reader: roles Does not know the location of the Waterberg DM Must read if the reader: Does not know the status of important locational Is not familiar with policies that are influential Must read if the reader: features of the Waterberg DM. to the Waterberg Agri-Parks Programme. Is not familiar with the role-players that are Does not know the Agri-Hub location and its Is not familiar with the policy implications for expected be involved with the Waterberg selection. the Agri-Park. Agri-Park. Is interested in the potential duties to be Chapter 7: Agricultural Industry Analysis taken up by the role players Chapter 8. 9 & 10: Commodity
Summary: In this chapter, an analysis of Waterberg’s Analysis agricultural features is provided, as well important Chapter 6: Economic and Socio- factors that are influential to agricultural development. Summary: The three commodities that have Economic Analysis The three agricultural commodities to be produced in been selected to be produced in the initial phase the district’s Agri-Park are identified. of the Agri-Park programme are individually
Summary: This chapter analyses the analysed according to: The market; Value chain; Key words: agricultural activities, GVA, commodities, economic and socio-economic status quo of Agro-Processing opportunities; Stakeholders and climate, resources, projects, selection criteria, the Waterberg DM through statistics of the service providers; Technology; Socio-economic prioritisation, top three commodities following indicators: demographics, economic contributions and influences; Emerging/ profile, unemployment status, skills level, Must read if the reader needs to know: Potential entrepreneurs; and SWOT analysis income and poverty The current agricultural status of the Waterberg DM. Commodities: beef, maize, broilers Must read if the reader: The status of resources and climate features affecting
Does not know the socio-economic status agriculture in the Waterberg DM. Must read if the reader:
quo of the Waterberg DM. The process of selection used for the three Is interested in the commodities’ market Does not have knowledge of the effect of commodities. trends. the socio-economic status quo on the The three selected commodities. Is interested commodities’ business enabling Waterberg Agri-Park development. features. Needs to know the value chain relations. Chapter 12: Agri-Park Organisational Chapter 12: Implementation Guidelines Structure
Summary: The implementation guidelines for the Chapter 11: Agri-Park Concept develop ment of the Agri-Park are discussed. Summary: The organisational structure for the Development Agri-Park is demonstrated schematically and Key words: implementations, guidelines, process explored. Summary: The concepts for the Waterberg Agri-Park recommendations, programmes, action plan, are developed, based on the Agri Park Model, and a timeframes Key words: structures, organisational, advisory, basic capital expenditure is provided. approval, implementation, monitoring Must read if the reader needs to know: Key words: concept, smallholder/small-scale farmer, The implementation of the Waterberg Agri-Park. Must read if the reader: FPSU, AH, RUMC, capital expenditure How government programmes are aligned with Does not know how the Agri-Park is Must read if the reader needs to know: the Agri-Park. organised. The recommended action plan and timeframes. What the concept of the Waterberg Agri-Park is. How the 3 units in the Agri-Park model will function.
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Executive Summary
The Agri-Park concept is a relatively new concept in South Africa and has led to the introduction of the Agri-Park Programme per district municipalities. The master business plan herein will serve as a guiding document in the implementation of the Agri-Park Model in the Waterberg DM, which was developed by the Department of Rural Development and Land Reform (DRDLR).
Section 1 - Introduction: provides a background to the Agri-Park Programme. The goals and objectives of the project are provided as well, along with the purpose that the business plan will serve. In order to provide insight into the methodology used in compiling the business plan, the methodology is demonstrated and briefly discussed in this section.
Section 2 - Agri-Park Model: explores the Agri-Park concept by providing a definition of an Agri-Park, and explaining the Agri-Park Model in terms of its three basic units: the Farmer Production Support Unit (FPSU), the Agri-Hub (AH) and the Rural-Urban Market Centre (RUMC). The functions of the Agri-Park units and demonstrations of the interactions between the units are presented in this section.
Section 3 - Policy Review: the Agri-Parks Programme aims to align with some of the crucial government strategies set out in existing policies in order to achieve its set objectives and gain support from government structures. Therefore, the section provides a review of the national, provincial and local policies that are influential to the development of the Agri-Park Project. A background is provided on the relevant policies; key focus areas and targets are identified; and the policy implications for the Waterberg District Municipality (DM) Agri-Park are indicated.
Section 4 - Locational Context: is an overview of the location features of the Waterberg DM that are important in the development of the Agri-Park. Therefore, some of the main locational features and major economic infrastructure are discussed. The proposed location of the Agri-Hub is indicated along with the criteria for its selection and rationale.
Section 5 - Main Role-Players per District: enlists the main role-players that could potentially be involved in the Waterberg DM Agri-Park at different levels of the development process. Three categories of role players have been identified into the following: Government and Public Sector; Private Companies; and Associations and Organisations. This section serves the purpose identifying the possible assistance and partnership opportunities that could be available for the Waterberg Agri-Park.
Section 6 - Economic and Socio-Economic Analysis: assesses the economic and socio-economic status quo of the Waterberg DM. Indicators in relation to population figures, economic growth, sector employment, employment, skills level, income and poverty level, are studied against the performance of Limpopo and South Africa as a whole.
Section 7 - Agricultural Industry Analysis: one of the objectives of the Agri-Park project is to identify three dominant, or most feasible commodities within the district. Thus, an overview of the main agricultural activities taking place in the district are indicated, focusing on the types of commodities or products farmed and produced. Partly, the purpose of this section is to provide relevant information regarding the current agricultural practices as well as the advantages and disadvantages that the Waterberg DM’s Agricultural sector faces. Furthermore, the three dominant commodities (beef, maize and poultry) were identified for initial production by the Waterberg Agri-Park, through a thorough prioritisation process that is presented in this section.
Section 8 – Beef Commodity Analysis: Section 8 to Section 10 is a study of the top three commodities, which analyses the market, value chain, production needs, stakeholders, regulatory guidelines, social aspects and SWOT analysis. Beef is analysed in Section 8. Guidelines regarding the breeding, different methods of primary production, nutritional information and disease control of cattle are provided. The market analysis demonstrates that beef production does not meet the demand, with a small amount of
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beef being exported and a significant decrease in imports. The highest volume of beef is expected to be sold through live auctions, abattoirs, and meat processors. The value chain allows for relationships with other commodities such as maize. There are a few service providers in the Waterberg DM that are available to provide inputs as indicated in the section as well as technologies that smallholder farmers can use to improve production including surveillance, reproduction and inoculation technologies.
Section 9 – Maize Commodity Analysis: the market, value chain, production needs, stakeholders and social aspects are analysed for maize as one of the three commodities. Guidance is provided for the production of maize, regarding the seasons for planting and harvesting, conditions that are suitable for maize production, application of fertiliser and weed control, and expected output per hectare. Maize is highlighted as an imported commodity for food security and animal feed, with animal feed being quite important for the district. The maize produced in South Africa completely meets the demand with excess volumes being produced allowing for imports that contribute significantly to foreign exchange. Silos, large regional cooperatives and animal feed manufacturers are priority markets with the highest volumes sold through these channels. The value chain also reflects the contribution maize makes to other value chains and the importance of storage and milling for further value-addition. The social trends reflect the many perspectives that there are about the consumption of maize, including its importance for health and the trend of organic food and genetically modified foods.
Section 10 – Broiler Commodity Analysis: an analysis of the market, value chain, production needs, stakeholders and social aspects for the broiler analysis is provided in this section. Primary production aspects that are regarded include production guidelines, technologies and main input provisions. According to the market analysis, the production of broiler does not meet the demand and has thus lead to concerns of dumping in South Africa, therefore there needs to be significant improvement in the production. Restaurants and hospitality businesses, as well as abattoirs and meat processors’ marketing channels are expected to have the highest volumes sold through them. Similar to the other two commodities, the broiler value chain allows for the integration of maize as feed and the processing of broiler meat allows for a wide range of value added products to be sold to a wide market. One of the most threatening challenges for emerging broiler farmers is the cost of inputs for broiler production and dumping, however, a significant opportunity is lies in the ability to produce good quality maize that is nutritious and affordable.
Section 11 - Agri-Park Concept Development: describes the Agri-park concept in relation to the three (3) identified commodities (i.e. beef, maize and poultry) in the Waterberg DM. The concept focuses on the alignment of the value chain that has been developed for each commodity with the Agri-Park model. In addition, an estimate of the capital expenditure is calculated for each of the Agri-Park units to provide an approximate cost of the Agri-Park.
Chapter 12 – Agri-Park Organisational Structure: the proposed organisational structure of the Waterberg DM Agri-Park is explored. A discussion is provided of how activities such as task allocation, coordination and supervision are managed to lead to the successful implementation of the Agri-Park in the Waterberg DM.
Section 13 - Implementation Guidelines: presents the guidelines for the processes that will be applied in executing the Agri- Park project. The purpose of the implementation guidelines is to provide the relevant stakeholders with a guiding document that will ensure that the project is implemented in an efficient and conventional manner, based on the concept developed in the previous section. The implementation guidelines cover the areas such as: the implementation process, alignment with government programmes, specific recommendations as well as the roll – out plan.
Summaries of the concept for the Waterberg Agri-Park, according to the Agri-Park Model’s units-FPSU; AH; and RUMC; are presented in the diagrams in the following pages.
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Summary of the FPSU roles and functions Key Role Location Training Infrastructure/ Equipment
The following forms of training would be The criteria that was used to select the FPSUs The FPSU will serve the following core provided at the FPSU: are as follows: The FPSU would require to put in functions: a) Close proximity to small scale farmers 1. Training of training personnel on how to place the following major 1. Agricultural input supplies, b) Agricultural activity in the municipality disseminate information to the SHF, AH equipment / infrastructure: c) Infrastructure in terms of electricity and and the FPSU. 2. Mechanisation support, 3. Extension support, water 2. Market analysis skills 4. Local logistics support, d) Accessibility via a good road network 3. Business and financial management 1. Transport facilities (e.g Bakkie or 5. Primary produce collection, e) Close proximity to existing farming skills. pick-up vehicles), 6. Through-put to Agri-Hubs, operation 4. Supply chain and logistics skills 2. Sorting facilities, 7. Limited sorting, packaging, storage, f) ICT 5. Trading techniques (local and 3. Feedlot, 8. Some processing for local markets, international) 4. Silos, 9. Packaging of products for the local It is proposed that each Municipality should 6. Agriculture computer programme 5. Weighing and packaging market, small retail outlets and the fresh have an FPSU. The exact locations will be training machines, produce markets, selected in later stages of the programme. 6. Local pack houses, 10. Transportation of produce destined for 7. Small scale processing facilities processing directly from the farm to the for local market, AH. Human Capital 8. Produce sorting facility, 9. Auction facility, 11. Some marketing and distribution, Resources FPSU Expenditure 12. Auctioning of produce where applicable 10. Storage facility,
(e.g. auctioning of live animals) 11. Farming/mechanisation The FPSU will provide the following core HR The estimated capital expenditure for the equipment required for farming opportunities: Waterberg DM FPSU is indicated as follows: activities.
1. Agricultural extension officers’/ FPSU Expenses Cost (R)
support office, Collections points 891 255 2. Machine operators/ Local
mechanisation centre and Buildings 2 648 480
workshops, Infrastructure and 32 277 956 3. Agronomists, equipment 4. Researchers, Total cost (6 FPSUs) 214 906 146 5. Voluntary/Established commercial
farmers.
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Summary of the AH roles and functions
Location Key Role Training Infrastructure/ Equipment The Waterberg DM Agri-Hub will be located in The Agri-Hub will serve the following Modimolle town and will be the only AH in the functions: District. The identification of the AH was Some of core training activities that would The AH is expected to have the conducted by the DRDLR according to the 1. Training, take place within the Agri-Hub include: following equipment/ infrastructure following criteria 2. Logistics, 3. Agro-Processing/value – addition, 1. Training of processing staff on requirements: a) Existing Land Capability 4. Storage/warehousing, how to handle and operate b) Existing Agricultural infrastructure 5. Packaging, various processing equipment, Administrative facilities, c) Identification of enterprise areas 6. Product distribution 2. Training on best practices, based Rental facilities, (DAFF 1936) 7. Local market sales on changing demand and Agro-Processing facilities d) Existing Road and Rail connectivity supply, and machinery, e) Proximity to: 3. Training on new innovations as Feedlots, i. Water sources they surface, Abattoir, ii. Retail markets 4. Processing skills, Storage and freezing iii. PIMD poorest wards 5. Health and safety training facilities iv. Social relief programmes 6. Management skills. Auction facilities, v. Potentially vacant state land Storage and parcels Packaging facilities,
vi. Recapitalisation projects Quality control facilities, vii. EDD gateways, etc. Agricultural input Human AH Capital distribution and sales Resources Expenditure centre, Retail facilities,
Training centre, The AH will provide the following HR The estimated capital expenditure for the Student and staff housing, opportunities: Waterberg DM AH is indicated as follows: Logistics and transport
facilities. 1. Administrative staff, AH Expenses Cost (R)
2. Quality control personnel, Buildings 5 502 140
3. Processing/floor staff, Infrastructure 1 940 700
4. Research and demonstration Equipment 52 000 000
personnel, Total Cost 59 442 840 5. Training personnel.
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Summary of the RUMC roles and functions
Location Infrastructure/ Equipment
It is proposed that there should be only one RUMC RUMC for all the Agri-Parks in the Limpopo province. However, if the Waterberg’s DM’s The RUMC would require to put in Agri-Park develops into a feasible business Key Role place the following venture, and there is a demand for an RUMC equipment/infrastructure: in ten years, an ideal location would be Training The RUMC will serve the following selected at a district level. 1. Large warehouses/ holding function: facilities It is further proposed that the RUMC should 2. Cold storage facilities be strategically located in the Polokwane The following forms of training would be 1. Market intelligence 3. Administrative facilities/ area, around the Polokwane International provided at the RUMC: 2. Assist farmers, and processors in information centre Airport for the following reasons: managing a nexus of contracts 4. Customer service desks 1. Training of the training personnel 3. Large warehousing and cold 5. Information systems and 1. Polokwane is the provincial capital on how to disseminate storage facilities. equipment and the economic hub of the information to the SHF, AH and 4. Market Research. 6. Transport Limpopo province the FPSU. 5. Establishing agreements with 7. Tracking devices 2. Has existing infrastructure, and 2. Market analysis skills markets 3. Will position the province for export 3. Supply chain and logistics skills 6. Liason with traders opportunities. 4. Trading techniques (local and
international).
5. Agriculture computer However, future studies will have to be Human Resources programme training. conducted to determine the feasibility of
this proposed location for the RUMC. The RUMC will provide the following HR;
1. IT expert/personnel
2. Administrative manager
3. Training personnel
4. Marketing personnel
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Contents Waterberg DM Master Agri-Park Business Plan Road Map ...... iii Executive Summary ...... iv Contents ...... ix List of Tables ...... xiii List of Figures ...... xvi List of Diagrams ...... xvii List of Maps...... xviii List of Acronyms ...... xix SECTION 1: Introduction ...... 1 1.1. Project Background ...... 1 1.2. Goal and objectives...... 2 1.3. Purpose of the Master Business Plan ...... 2 1.4. Methodology ...... 3 SECTION 2: AGRI-PARK MODEL ...... 5 2.1. An understanding of the Agri-Park concept ...... 5 2.2. Strategic objectives of the Agri-Parks Programme ...... 10 SECTION 3: POLICY FRAMEWORK AND GOVERNMENT PROGRAMMES ...... 11 3.1. National policy overview ...... 11 3.2. Linkages to national government programmes ...... 18 3.3. Provincial policy overview ...... 21 3.4. Local policy overview ...... 28 3.5. Summary ...... 32 SECTION 4: LOCATION CONTEXT ...... 35 4.1. Description of the district ...... 35 4.2. Location of the Agri-Hub ...... 38 4.3. Locational Map of the Agri-Park in the Waterberg DM ...... 39 4.4. Economic infrastructure ...... 40 SECTION 5: MAIN ROLE-PLAYERS IN THE WATERBERG DISTRICT ...... 43 5.1. Government role players ...... 43 5.2. Private companies ...... 46 5.3. Associations and organisations ...... 52 SECTION 6: SOCIO-ECONOMIC ANALYSIS ...... 55 6.1. Demographic Analysis ...... 55 6.2. Economic Profile ...... 58 6.3. Employment per sector ...... 61
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6.4. Unemployment Status ...... 62 6.5. Skills Level ...... 63 6.6. Income and poverty ...... 63 6.7. Synthesis ...... 65 SECTION 7: AGRICULTURAL INDUSTRY ANALYSIS ...... 66 7.1. Main agricultural activities ...... 66 7.2. Current and proposed projects in the region ...... 67 7.3. Environmental conditions and resource analysis ...... 75 7.4. Commodity Selection ...... 80 7.5. Description of the three highest ranked commodities ...... 85 7.6. Other Possible Agri-Park Commodities ...... 87 Section 8: Beef Commodity Analysis ...... 89 8.1. Production guidelines ...... 89 8.2. Market assessment ...... 92 8.3. Value chain assessment ...... 102 8.4. Agro-processing opportunities ...... 103 8.5. Main input suppliers...... 104 8.6. Competitors ...... 105 8.7. Stakeholders ...... 106 8.8. Technology ...... 108 8.9. Demand and needs analysis ...... 112 8.10. Socio-economic contribution ...... 112 8.11. Contribution to food security ...... 113 8.12. Regulatory requirements ...... 114 8.13. Substitute Products ...... 116 8.14. New entrants ...... 116 8.15. Societal and cultural trends ...... 117 8.16. SWOT analysis ...... 117 Section 9: Maize Analysis ...... 119 9.1. Production Guidelines ...... 119 9.2. Market assessment ...... 120 9.3. Value chain assessment ...... 125 9.4. Agro-processing opportunities ...... 126 9.5. Main input suppliers...... 128 9.6. Competitors ...... 128 9.7. Stakeholders ...... 128
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9.8. Technology ...... 129 9.9. Demand and needs analysis ...... 134 9.10. Socio-economic contribution ...... 134 9.11. Contribution to food security ...... 135 9.12. Regulatory Requirements ...... 135 9.13. Substitute Products ...... 137 9.14. New entrants ...... 138 9.15. Societal and cultural trends ...... 139 9.16. SWOT analysis ...... 140 Section 10: Broiler Analysis ...... 141 10.1. Production Guidelines ...... 141 10.2. Market assessment ...... 142 10.3. Value chain assessment ...... 151 10.4. Agro-processing opportunities ...... 153 10.5. Main input suppliers...... 154 10.6. Competitors ...... 154 10.7. Stakeholders ...... 155 10.8. Technology ...... 157 10.9. Demand and needs analysis ...... 159 10.10. Socio-economic contribution ...... 160 10.11. Contribution to food security ...... 160 10.12. Regulatory Requirements ...... 160 10.13. Substitute Products ...... 164 10.14. New entrants ...... 164 10.15. Societal and cultural trends ...... 165 10.16. SWOT analysis ...... 165 SECTION 11: Agri-Park Concept Development ...... 167 11.1 Introduction of the Agri-park concept ...... 167 11.2 Proposed development concept of Beef ...... 168 11.3 Proposed development concept of Maize ...... 174 11.4 Proposed development concept of Broiler production ...... 180 11.5 Combined Agri-park concept for the District ...... 185 11.6 Capital Expenditure ...... 194 11.7 Conclusion ...... 195 SECTION 12: Agri-Park Organizational Structure ...... 197 12.1. Advisory Structures ...... 197
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12.2. Approval structures ...... 198 12.3. Implementation and Monitoring Structures ...... 200 SECTION 13: IMPLEMENTATION GUIDELINES ...... 202 13.1. Introduction to the Implementation Guidelines ...... 202 13.2. Implementation Process ...... 202 13.3. Alignment with Government Programmes ...... 204 13.4. Recommendations ...... 211 12.6. Roll-Out Plan ...... 215 REFERENCES ...... 222 Annexure A ...... 223 Agriculture Service providers ...... 223
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List of Tables
Table 2.1: Norms and Standards for Agri-Parks 9
Table 3.1: Targets for food security and rural development 23
Table 3.2: SIP 11 projects in Limpopo 23
Table 3.3: Limpopo infrastructure development projects 27
Table 5.1: Summary of extension service providers in for the Waterberg DM 43
Table 5.2: Government Financial Institutions 44
Table 5.3: Private financial institutions 46
Table 5.4: Millers within Limpopo Province 48
Table 5.5: Packing Houses and Cold Storage Facilities in Limpopo Province 48
Table 5.6: National organisations and associations. 52
Table: 5.7: Limpopo Associations and Organisations 53
Table 5.8: Distribution of cooperatives in the Waterberg DM 54
Table 6.1: Waterberg Population growth 2005 - 2025 55
Table 6.2: Waterberg DM Population growth rates 56
Table 6.3: Waterberg DM household total growth 57
Table 6.4: Household Size 2015 57
Table 6.5: Inflation-Adjusted poverty lines, 2011 64
Table 7.1: Waterberg DM Project 68
Table 7.2: Department of Agriculture Projects 68
Table 7.3: Current agriculture projects in the Waterberg DM 69
Table 7.4: LED projects for agricultural exploitation 71
Table 7.5: LED projects related to agriculture and agro processing 72
Table 7.6: LED projects in support of emerging farmers 72
Table 7.7: SMME projects in support of emerging farmers 72
Table 7.8: RID projects 73
Table 7.9: LAND projects 73
Table 7.10: RECAP projects 74
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Table 7.11: AVMP, Agri-Parks and RCVP projects 74
Table7.12: Commodities Identified for Prioritisation 80
Table 7.13: Commodity Prioritisation 82
Table 7.14: Top prioritised commodities 84
Table 8.1: Breeding and calving seasons 88
Table 8 .2: Minimum market gain weight 89
Table 8.3: Calving percentage and weaning weight for different managements systems 89
Table 8.4: Inoculation periods for various diseases 90
Table 8.5: Starting and finishing weight 91
Table 8.6: Target weight for finishing 91
Table 8.7: Dressing Percentage 91
Table 8.8: Marketing channels 95
Table 8.9: Beef processing opportunities 103
Table 8.10: Feedlots in the Waterberg DM 104
Table 8.11: Beef industry competitors 105
Table 8.12: Beef industry service providers in Waterberg DM 106
Table 8.13: Beef cattle farming technology 107
Table 8.14: Waterberg production statistics (2005) 112
Table 8.15: Beef Industry Regulatory Requirements 113
Table 8.16: SWOT analysis 117
Table 9.1: Growth Cycle 118
Table 9.2: Maize yield under different rainfall areas 119
Table 9.2: South Africa total commercial maize area planted, production and consumption (2004 – 2014) 120
Table 9.3: Marketing Channels 121
Table 9.4: Maize agro-processing opportunities 125
Table 9.5: Maize industry service providers in Waterberg DM 128
Table 9.6: Maize farming technology 129
Table 9.7: Waterberg productions statistics 133
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Table 9.8: Maize Regulatory Requirements 134
Table 9.9: SWOT analysis 138
Table 10.1: Brooder temperature 140
Table 10.2: Vaccination programme for broilers 141
Table 10.3: Marketing Channels 143
Table 10.4: South Africa broiler production, consumption, exports and imports (2004 – 2013) 149
Table 10.5: Processing opportunities 152
Table 10.6: South African Poultry Producers 153
Table 10.7: Service Providers 154
Table 10.8: Poultry Associations 155
Table 10.9: Beef cattle farming technology 156
Table 10.10: Waterberg production statistics 159
Table 10.11: Poultry meat regulatory documents 160
Table 10.12: SWOT analysis 164
Table 11.1: Proposed development concept for beef 167
Table 11.2: Proposed development concept for Maize 173
Table 11.3: Proposed development concept for broiler production 178
Table 11.4: Combined Agri-Park concept 183
Table 11.5: Capital Expenditure Estimates 191
Table 11.6: Total Capital Expenditure 204
Table 13.1: The Waterberg Agri-Park’s Alignment to Government Programmes 204
Table13.2: Table Showing the Specific Recommendations for the Waterberg DM Agri-Park. 211
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List of Figures
Figure 4.1: Waterberg DM internet access 42
Figure 6.1: Waterberg DM population distribution by local municipalities 56
Figure 6.2: Age Profile, 2013 58
Figure 6.3: Racial profile, 2015 58
Figure 6.4: GVA Growth by Waterberg DM and Limpopo, 2003 – 2013 59
Figure 6.5: GVA contribution per sector in Limpopo, 2003, 2013. 60
Figure 6.6: GVA contribution in the Waterberg DM, 2003, 2013 60
Figure 6.7: Employment contribution per sector for Waterberg DM and Limpopo, 2013 61
Figure 6.8: Unemployment in Waterberg DM and Limpopo, 2013 62
Figure 6.9: Waterberg DM and Limpopo Education Levels, 2014 63
Figure 6.10: Annual household income for Waterberg DM and Limpopo Province 64
Figure 7.1: Agricultural GVA Contribution per Municipality (2013) 67
Figure 7.2: Waterberg DM average rainfall 75
Figure 7.3: Waterberg DM: Minimum and maximum temperatures 76
Figure 8.1: Beef production vs Consumption in South Africa (2005-2014) 92
Figure 8.2: Beef production distribution in South Africa 94
Figure 9.1 South Africa maize production by provinces 2012 119
Figure 10.1: Distribution of broilers in South Africa during 2013 141
Figure 10.2: Broiler production and consumption 142
Figure 13.1: Waterberg DM Roll-Out Plan 207
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List of Diagrams
Diagram 1.1: Waterberg Master-Agri-Parks Business Plan Methodology 3
Diagram 2.1: Agri-Park produce and information flows 8
Diagram 2.2: Strategic Representation of the Agri-Park model 9
Diagram 8.1: Beef value chain 102
Diagram 9.1: Maize Industry Value Chain 125
Diagram 10.1: Broiler industry value chain 153
Diagram 12.1: Waterberg DM Agri-Park Organisational Structure 197
Diagram 12.2: The Agri-Park Implementation and Monitoring Structures 201
Diagram 13.1: Waterberg DM Master Agri-Park Implementation Process 203
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List of Maps
Map 4.1: Waterberg Local Municipalities 35
Map 4.2: District Municipalities in Limpopo 36
Map 4.3: Waterberg Agri-Hub location in relation to the district 39
Map 4.4: Closer view of Agri-hub 40
Map 5.1: Average rainfall distribution 76
Map 7.2: Average Maximum Temperature 76
Map 7.3: Average minimum temperature in Waterberg DM 77
Map 7.4: Grazing Capacity 77
Map 7.5: Land Capacity 78
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List of Acronyms
Acronym Description AFF Agriculture Forestry and Fisheries AgriBEE Agricultural Black Economic Empowerment AH Agri-Hub AIDS Acquired Immune Deficiency Syndrome APAP Agricultural Policy Action Plan ARC Agricultural Research Council AVMP Animal and Veld Management Programme BBBEE Broad-Based Black Economic Empowerment BFAP Bureau for Food and Agricultural Policy BLNS Botswana, Lesotho, Namibia and Swaziland BRT Bus Rapid Transit CASP Comprehensive Agricultural Support Programme COGTA Cooperative Governance and Traditional Affairs CRDP Comprehensive Rural Development Programme CSIR Council for Scientific and Industrial Research DAFF Department of Agriculture, Forestry and Fisheries DAPOTT District Agri-Parks Operational Task Team DBSA Development Bank of South Africa DED Department of Economic Development DEDEAT Department of Economic Development, Environmental Affairs and Tourism DL Department of Labour DM District Municipality DNA Deoxyribonucleic acid DPWT Department of Public Works and Transport DRDAR Department of Rural Development and Agrarian Reform DRDLR Department of Rural Development and Land Reform DTI Department of Trade and Industries DWS Department of Water and Sanitation EDD Economic Development District EIA Environmental Impact Assessment EMF Economic Management Framework ESTA Extension Security of Tenure EU European Union FAO Food and Agricultural organisation FNB First National Bank FPSU Farmer Production Support Unit GAP Good Agricultural Practices GDP Gross Domestic Product GDS Gauteng Development Strategy GFS Glucose, Fructose Syrup GGP Gross Geographic Product GIS Geographic Information System GM Genetically Modified GMO Genetically Modified Organism GVA Gross Value Added HACCP Hazard Analysis Critical Control Points HIV Human Immunodeficiency Virus HR Human Resources ICT Information and Communication Technology IDP Industrial Development Plan IDT Independent Development Trust IDZ Industrial Development Zone IGDP Integrated Growth and Development Plan IMQAS International Meat Quality Authority IPAP Industrial Policy Action Plan IPILRA Interim Protection of Land Rights Act
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IT Information Technology KPA Key Performance Area LARP Land and Agricultural Reform Project LDA Limpopo Department of Agriculture LED Local Economic Development LM Local Municipality LRAD Land Redistribution for Economic Development LSU Livestock Unit MMS Multimedia Message Service MTEF Medium Term Economic Framework MUTASSHI Musina-to-Africa Strategic Supply Hub Initiative NAFU National Agricultural Farmers Union NAMPO National Maize Producers Organisation NAPOTT National Agri-Parks Operational Task Team NDA National Development Agency NDP National Development Plan NEA Not Economically Active NEF National Empowerment Fund NERPO National Emerging Red Meat Producers Organisation NFPM National Fresh Producers Market NGO Non-Government Organisation NGP New Growth Path NIPF National Integrated Policy Framework NW North West NWK North West Korporasie (Corporation) PAPOTT Provincial Agri-Parks Operational Task Team PICC Presidential Infrastructure Coordinating Commission PIMD Provincial Index of Multiple Deprivation PLAS Proactive Land Acquisition Strategy PPP Public Private Partnerships RECAP Recapitalisation and Development Programme REID Rural Enterprise and Industrial Development REM Retail Emerging Markets RID Rural Infrastructure Development RMAA The Red Meat Abattoir Association RMPO Red Meat Producers Organisation RUMC Rural-Urban Marketing Centre SA South Africa SADC Southern African Development Community SAFA South African Feedlot Association SAFEX South African Futures Exchange SAFVCA South African Fruit and Vegetable Canners Association SAGIS South African Grain Industry Services SANHA South African National Halaal Association SAPA South African Poultry Association SDF Spatial Development Framework SEDA Small Enterprise Development Agency SEZ Special Economic Zone SPFS Special Programme for Food Security SHF Smallholder Farmer/s SIP Strategic Integrated Project SME Small and Medium Enterprise SMME Small, Medium and Micro Enterprises SMS Short Message Service SONA State of the Nation Address SP Strategic Plan SRAC Sports, Recreation, Arts and Culture SWOT Strength Weaknesses Opportunities and Threats TDCA Trade Development and Cooperation Agreement USA United States of America
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SECTION 1: Introduction
The Department of Rural Development and Land Reform (DRDLR) has been commissioned for the implementation of an Agri-Parks programme that is aimed at the eradication of rural poverty - a critical challenge for the government. This requires that a business plan is developed for each Agri-Park in order to move forward with the operationalisation. Therefore, this particular Master Agri-Park Business Plan is compiled for, the Waterberg District Municipality (DM) in the Limpopo province.
1.1. Project Background
The Department of Agriculture Forestry and Fisheries (DAFF), together with the DRDLR presented the implementation of the One District, One Agri-Park programme against the backdrop of the framework of the rural economic transformation model. The One District, One Agri-Park programme will promote the objectives for agricultural and rural development as stated in the National Development Plan (NDP). The NDP views agriculture as crucial to employment and food security. Thus, it is estimated that agriculture would possibly create a million jobs by 2030 (National Planning Commision, 2011). The NDP (2011) encourages an inclusive rural economy in which: rural communities should have better opportunities to have full participation in the economic, social and political life of South Africa.
It is within this setting that the Agri-Parks programme was developed. The Agri-Parks concept will revitalise agriculture and the agro-processing value chain in the Agri-Parks programme, thus contributing to the priorities outlined in the 2015 State of the Nation Address (SONA), in the pursuit of growth in the agricultural sector. President JG Zuma stated in the February 2015 State of the Nation Address (SONA) that:
“Agriculture is a catalyst for growth and food security. We are working with the private sector to develop an Agricultural Policy Action Plan which will bring one million hectares of under‐utilised land into full production over the next three years.
Among key interventions this year, we will promote the establishment of Agri•Parks or cooperatives and clusters in each of the 27 poorest district municipalities to transform rural economies. An initial funding of R2 billion has been made available for the Agri‐ Park initiative.
We will further enhance our Agro‐processing exports which have been growing rapidly especially to new markets in Africa and China. For example, we have concluded agricultural trade protocols for the export of South African Maize and Apples to China. The export of apples alone is projected to generate five hundred million rand in foreign exchange over three years.
A good story to tell in agriculture is the success of some of our emerging farmers and smallholders. In the Vhembe District Municipality in Musina, the Limpopo Government has supported the Nwanedi Cluster comprising 300 farmers growing vegetables on just over 1,300 hectares for commercial purposes. The Cluster has already created more than 2,500 jobs as vegetable farming is highly labour-intensive.”
The programme will succeed the present challenges, including: high input costs, especially in animal feed, competing interests for land, anti-competitive behaviour which resulted from market dominance, climate change in the form of droughts, floods, and fires, and the degradation of soil as a whole, which affected productivity.
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1.2. Goal and objectives
Goals and objectives that drive the Master Agri-Parks Master Business Plan are defined by expressing the main aim of the programme as well as the milestones that need to be met to reach this aim. Thereafter, the reasons behind the development of the Master Business Plan can be put forward.
The goal of the project is to develop a Master Master Agri-Park Business Plan for the Waterberg District Municipality that aligns with the Agri-Park Model that was developed by the Department of Rural Development and Land Reform and the dominant Commodity Value Chains in the specified District Municipalities.
With the goal defined above, the Agri-Park Programme objectives are considered as well to ensure that the Master Business Plan is effective in guiding the planning and implementation of the Waterberg Agri- Park. The objectives of the Agri-Park Programme can be summarised as follows:
Promote growth of the smallholder sector by creating new small-scale producers in the district, as well as new jobs in agro-processing by the year 2020 (as set out in the NGP); Promote the skills of and support to small-holder farmers through the provision of capacity building, mentorship, farm infrastructure, extension services, production inputs and mechanization inputs; Strengthen existing and create new partnerships within all three spheres of government, the private sector and civil society to develop critical economic infrastructure such as roads, energy, water, ICT and transportation/logistics corridors that support the Agri-Park value chain; Enable producer ownership of the majority of Agri-Parks equity (70%), with the state and commercial interests holding minority shares (30%); Allow smallholder producers to take full control of Agri-Parks by steadily decreasing state support over a period of ten years; Bring underutilised land (especially in Communal Areas Land and land reform farms) into full production over the next three years, and expand irrigated agriculture; and Contribute to achievement of the NDP’s “inclusive rural economy” and target of 1 million jobs created in agriculture sector through creating higher demand for raw agricultural produce, primary and ancillary inputs, as well as generating increased downstream economic activities in the sector.
1.3. Purpose of the Master Business Plan
The main rationale of the development of the Master Business Plan is to guide the process of setting up an Agri-Park in the Waterberg DM. The Master Business Plan can be viewed as a document that conceptualises the Agri-Park Model in the Waterberg DM in light of the District’s current dynamics. The purpose of the Waterberg Agri-Park is summarised by the following:
1. To apply the Agri-Park Model developed by the DRLDR. 2. To identify the existing agro-processing facilities and farmers within the Waterberg DM and to establish possible linkages. 3. To identify three possible agro-processing business opportunities for each the Waterberg DM Agri-Park. 4. To develop an institutional/operational plan for Waterberg DM Agri-Park that indicates how existing farmers will be linked with the Agri-Park. 5. Review all existing documentation, maps and information. 6. To work with the representative of the Waterberg DM and the Council for Scientific and Industrial Research (CSIR). 7. To develop a SWOT analysis that includes a legal, environmental, financial, and technical analysis.
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8. Identify current agro-processing initiatives and possible synergies, linkages and opportunities to buy into existing businesses. 9. Do a financial analysis of the proposed agro-business opportunities. 10. To conduct a feasibility and viability assessment of the proposed agro-processing facilities. 11. Develop an operational plan for the Agri-Park. 12. Determine the costing of the Agri-Park.
The Master Agri-Park Business Plan will therefore, be structured around the identification of suitable products, location, potential public and private partners, social mobilisation, value chain linkages, funding sources, a governance model and a budget. These are all viewed as critical success factors associated with the project. Importantly, an assessment of the district’s comparative advantages, in terms of agriculture, will inform the development of the Agri-Parks.
1.4. Methodology
Diagram 1.1 provides for a methodology illustration of the various steps that are undertaken for the study, these are issue described below in more detail.
Diagram 1.1: Waterberg Master-Agri-Parks Master Business Plan Methodology
Step 1: Step 2: Policy Step 3: Status Orientation Review Quo
Step 5: Agri-Hub Step 6: Feasibility Step 4: Identify Opportunity Assessment existing initiatives Analysis
Step 7: Financial Step 8: Step 9: Business Analysis Operational Plan Plan
The steps displayed in Diagram 1.1 can be described as follows:
Step 1: Orientation - The purpose of the first step was to engage with the client to achieve a consensus on the goals and objectives of the project. The project team held an inaugural meeting with the relevant stakeholders to finalise project objectives, process deliverables, and present a project management programme.
Step 2: Policy Review - The policy review entails conducting programme and policy alignment, along with advising the government of the possible opportunities in terms of the proposed Agri-Park developments.
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Step 3: Status Quo – A status quo analysis of agricultural and agro-processing industry was conducted for the Waterberg District Municipality (DM). The status quo analysis will provide the background to the agricultural environment in the district that will be used as a departure point for the project team.
Step 4: Identify existing initiatives – The Waterberg DM has a number of existing successful farmers that have agro-processing operations. There are also existing farmer support programmes and support services. Step 4 entails identifying these operations in order to develop linkages and opportunities through collaboration.
Step 5: Agri-Hub Opportunity Analysis - The purpose of Step 5 was to conduct an opportunity analysis of each Agri-Park in order to determine the agro-processing business opportunities. Based on the opportunity analysis the project team was able to develop a business case for the Waterberg Agri-Park.
Step 6: Feasibility Assessment – This assessment assisted in the determination the viability of a proposed Agri-Hub and agro-processing business opportunities.
Step 7: Financial Analysis: A financial analysis for the proposed agro-processing business concepts was conducted in this step, which will be prepared over a five-year period taking into consideration both the capital (CAPEX) and operational expenditure (OPEX) of the business
Step 8: Operational Plan - Guidance in terms of the organisational structure of the Agri-Hub is provided through the operational plan. An organisational structure defines how activities such as task allocation, coordination, and supervision are directed towards the achievement of organisational aims. The plan indicates how the existing farmers will be linked with the Agri-park development.
Step 9: Business Plan – A master business plan is compiled that focuses on the operational aspects of the business and the inputs from the client, and the district municipalities will be required to compile the plan.
The following section provides further information on the back ground of the Agri-Park and explores the Agri-Park model.
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SECTION 2: AGRI-PARK MODEL
2.1. An understanding of the Agri-Park concept
The lack of co-ordination and an integrated package in the agriculture sector has led to the Agri-Parks initiative, a concept relatively new in a South African context. The concept follows an integrated Agri- Parks approach of collective farming efforts, farmer incubation programmes, Agri-Clusters, and Eco- Villages; while also contributing to land conservation and preservation. The initiative is similar to that of a traditional agricultural business park or hub model, where multiple tenants and owners operate under a common management structure where a range of enterprises can exist.
The Agri-Parks model is required to have a strong social mobilisation component for the organisation, and the mobilisation of black farmers and agri-business entrepreneurs to actively support the initiative. Furthermore, the model should strengthen partnerships between government, the private sector, and civil society, while partnering with DAFF and COGTA is essential as well.
For the successful mobilisation of the programme, the Agri-Parks should:
Be based on the locational economic and comparative advantages. Have all the elements of a value chain (cluster) present for a dominant comparative, or product advantage. Be able to lay a solid economic foundation for the development of rural industrialisation.
To ensure the mobilisation of the Agri-Parks programme the following 10 guiding principles should be followed:
1. One Agri-Park is to be established in each district. 2. The Agri-Parks should be controlled by the local farmers. 3. The Agri-Parks are required to be catalysts from which rural industrialisation can take place. 4. The Agri-Parks must be government-guided to ensure economic sustainability. 5. The Agri-Parks must strengthen partnerships between the public and private sectors in order to increase access to services. 6. The Agri-Parks must maximise the benefit to existing state land with agricultural potential in the provinces, where possible. 7. The Agri-Parks must maximise access to markets for all farmers with a bias towards emerging farmers and rural communities. 8. The Agri-Parks must maximise the use of high-value agricultural land. 9. The Agri-Parks must maximise the use of existing support services and industries. 10. The Agri-Parks should support growing towns and the revitalisation of rural towns in the way of economic and population growth, as well as promote rural-urban linkages.
The Agri-Parks system is a relatively new concept to South Africa, but the idea draws from existing models locally and abroad, including educational/experimental farms, collective farming, farmer-incubator projects, agri-clusters, eco-villages, and urban-edge allotments, as well as market gardens. These models exist in both a public and private capacity, serving as transition or buffer zones between urban and agricultural uses. The naming of the concept as a “Park” is intended to convey the role that the Mega Agri-Park (nationwide network) will play in open space preservation. Although the term “Agri-Parks” suggests permanent land conservation and recreational use that is synonymous with the description “public park”, it brings to the fore a more traditional model of an agricultural “business park”, or “hub”, where multiple tenants and owners operate under a common management structure. The Agri-Parks are intended to provide a platform for networking between producers, markets and processors, while also providing the physical infrastructure required for the transforming industries.
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The focus of the Agri-Park is primarily on the processing of agricultural products, while the mix of ‘non- agricultural’ industries may be low or non-existent. Of prime importance is access to viable agricultural land, where a range of productive agri-horticultural enterprises may exist.
An Agri-Park can be defined as an innovative system of agro-production, processing, logistics, marketing and training, and extension services located in District Municipalities. As a network, it enables a market- driven combination and integration of various agricultural activities and rural transformation services. The Agri-Parks contain 3 basic units:
1. The Farmer Production Support Unit (FPSU). The FPSU is a rural outreach unit connected with the Agri-Hub. The FPSU does primary collection, some storage, some processing for the local market, and extension services including mechanisation.
2. Agri-Hub Unit (AH). The AH is a production, equipment hire, processing, packaging, logistics and training (demonstration) unit.
3. The Rural Urban Market Centre Unit (RUMC). The RUMC has three main purposes; i. Linking and contracting rural, urban and international markets through contracts. ii. Acts as a holding-facility, releasing produce to urban markets based on seasonal trends. iii. Provides market intelligence and information feedback, to the AH and FPSU, using latest Information and communication technologies.
Farmer Production Support Units (FPSU): Are centres (more than one per district) of agricultural input supplies, extension support, mechanisation support, local logistics support, primary produce collection, and through-put to Agri-Hubs. The FPSUs have limited sorting, packaging, storage, and processing for local markets with through-put of excess products to Agri-hubs.
Agri-Hub: Agri-Hubs are located in central places in a District Municipality, preferably places with
sufficient physical and social infrastructure to accommodate storage/warehousing facilities; Agri-
processing facilities; packaging facilities; logistics hubs; agricultural technology demonstration parks;
accommodation for extension support training; housing and recreational facilities for labourers. Agri- hubs receive primary inputs form FPSU’s for processing, value adding and packaging, which is through-put into the Rural Urban Market Centres or exported directly to markets.
A Rural Urban Marketing Centre (RUMC): RUMCs are located on the periphery of large urban areas, these facilities provide market intelligence assist farmers, processors in managing a nexus of contracts. With large warehousing and cold storage facilities to enable market management. Both
FPSU’s and Agri-hubs provide inputs to the RUMC. Agri-Parks share RUMCs.
a) Activities that will take place within the FPSU Agricultural input supply control, in terms of quality, quantity and timeous deployment of inputs. Extension support and training, using the private sector, provincial departments of agriculture, universities, agricultural graduates and National Rural Youth Service Corps (NARYSEC) working in a symbiotic relationship to “hold-hands” with farmers over the next 10 years. Mechanization support (tractor driving, ploughing, spraying, harvesting etc.) Machinery, servicing workshop facilities. Local logistics support, which could entail the delivery of farming inputs, transportation post-harvest, transportation to local markets. Primary produce collection. Weighing of produce and stock. Sorting of produce for Local and other markets.
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Packaging of produce for local markets Local storage. Processing for local markets (small scale mills etc.) Auction facilities for local markets Provide Market information on commodity prices (ICT). Farmers wanting services and support from the FPSU will register with the FPSU of their choice. Small Business Development and Training Centre. Banking Fuel (energy centre)
The following facilities will be situated within the Farmer Production Support Unit:
Agricultural extension support office; Local pack house Local mechanisation centre and Small scale processing facilities for local market workshop Primary logistics collection support Local market centre Produce sorting facility Auction facility Storage facility Aquaculture and Agri-Tourism facility .
b) Agri-Hub Unit (AH)
Agri-Hubs are to be located in central places in the Waterberg District Municipality, preferably places with sufficient physical and social infrastructure to accommodate storage/warehousing facilities; Agri- processing facilities; packaging facilities; logistics hubs; agricultural technology demonstration parks; accommodation for extension support training; housing and recreational facilities for labourers. Agri- hubs receive primary inputs form FPSU’s for processing, value adding and packaging, which is through-put into the Rural Urban Market Centres or exported directly to markets. The AH is designed to have catchment areas of 120km in low density areas and 60km in high density areas, indicating fewer AH’s than FPSU’s.
Also, the AH unit will be divided into various zones, with each of the zones interacting with one another in their activities (synergetic relationships). The different zones that will be present are: Production Zone Retail Zone Agro-Processing Zone Research and Industrial Zone Logistic Zone Aquaculture Zone
The following facilities will also be present within the Agri-Hub Unit:
Retail facility Logistics and transport facility Administrative facility Agricultural input distribution and sales centre Machinery rental and mechanisation Silos support Packaging facility Abattoirs Quality control facility Feedlots Agro-Processing facility Aquaculture facility Training centre Green houses Research and Demonstration Plots Railway line Student and staff housing Rental space
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c) The Rural Urban Market Centre Unit (RUMC)
RUMCs are to be located on the periphery of large urban areas, these facilities provide market intelligence assist farmers and processors in managing a nexus of contracts, with large warehousing and cold storage facilities to enable market management. Both FPSU’s and Agri-hubs provide inputs to the RUMC. Agri-Parks share RUMCs. The RUMC is designed to have the largest catchment areas of 250km in low density areas and 150km in high density areas. The RUMC has three main purposes;
i. Linking and contracting rural, urban and international markets through contracts. ii. Acts as a holding-facility, releasing produce to urban markets based on seasonal trends. iii. Provides market intelligence and information feedback, to the AH and FPSU, using latest Information and communication technologies.
The Agri-Park model is to be duplicated in each district across the country, essentially creating a Mega Agri-Park. Each Agri-Park, however, will be developed based on its own comparative advantages and its strength, in order to develop each district level economy. The business plans for the Agri-Parks will therefore, be structured around the identification of suitable products, the location, potential public and private partners, social mobilisation, value chain linkages, funding sources, a governance model and a budget. These are all viewed by the project team as critical success factors associated with the project. Importantly, an assessment of each district’s comparative advantages, in terms of agriculture, will inform the development of the Agri-Parks.
The Agri Park Model Defined
The model will be implemented over each of the districts in South Africa, leading to the creation of a Mega Agri-Park. Therefore, the business plans for the Agri-Parks will be structured around the identification of suitable products, location, potential public and private partners, social mobilisation, value chain linkages, funding sources, a governance model, and a budget. These are all viewed as critical success factors associated with the project. Importantly, an assessment of each district’s comparative advantages, in terms of agriculture, will inform the development of the Agri-Parks. Diagram 2.1 provides a visual representation of the information and produce flows within the Agri-Hub system.
Diagram 2.1: Agri-Park produce and information flows
Agri-Parks
Large-Scale Farmers Small-Holder Farmers (LSH) (SHF) Co-operatives LSF will be Farmer Production Support Unit 1. SHFs will be encouraged to use (FPSU) encouraged to use the the Agri-Park Agri-Park process process established established as
as depicted. depicted. It is within this
However, due to Agri-Hub (AH) process that SHF will be
their existing Produce supported over the experience and next ten years. product volumes 2. SHF will be able to Rural Urban Market Centre (RUMC) Information move produce from they may choose to enter the Agri-Parks the FPSU to the RUMC
process at the AH, without going through RUMC or even go the AH, if no further directly to the Market Value-adding or Market. packaging is required.
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Diagram 2.2 illustrates the strategic representation of the Agri-Park model. This model is to be duplicated in each district across the country, essentially creating a Mega Agri-Park. Each Agri-Park, however will be developed based on its own comparative advantages and its strength, in order to develop each district level economy.
Diagram 2.2: Strategic Representation of the Agri-Park model
Source: CSIR, 2014
Diagram 2.2 depicts the catchment area of the Agri-Park in the grey circle, essentially illustrating the size and contents of the Park that includes farmers, FPSU’s, AH’s and RUMC’s. The Agri-Hub, or AH, forms the central point of the Agri-Park that is linked to the FPSU’s. There will be more than one FPSU per district, which is intended to provide a supporting role between the AH and the farmers. All these components of the Agri-Hub are interlinked, providing a streamlined and integrated approach to agricultural and rural development. Table 1 provides the relevant detail of the catchment of each component.
Table 2.1: Norms and Standards for Agri-Parks Component Proposed catchment area in Proposed catchment area in areas of low density population areas of high density population FPSU 30km 10km Agri-Hub 120km 60km RUMC 250km 150km
The FPSU is designed to have catchment areas of 30km in low density areas and 10km in high density areas, indicating that there will be several per district. The AH is designed to have catchment areas of 120km in low density areas and 60km in high density areas, indicating fewer AH’s than FPSU’s. The RUMC is designed to have the largest catchment areas of 250km in low density areas and 150km in high density areas.
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2.2. Strategic objectives of the Agri-Parks Programme
The strategic objectives of the Agri-Parks Programme are as follows: Establish Agri-Parks in all of South Africa’s District Municipalities that will kick start the Rural Economic Transformation for these rural regions. Promote the skills of, and support to, SHF through the provision of capacity building, mentorship, farm infrastructure, extension services, production inputs, and mechanisation inputs. Promote the growth of the smallholder sector by creating 300 000 new small-scale producers, as well as 145 000 new jobs in the agro-processing industry by the year 2020 which has been set out in the National Growth Path. Create new and strengthen existing partnerships within all three spheres of government, the private sector and civil society to develop critical economic infrastructure such as roads, energy, water, ICT, and transportation/logistics corridors that support the Agri-Park value-chain. Allow smallholder producers to take full control of Agri-Parks by steadily decreasing state support over a period of ten years. Enable producer ownership of the majority of Agri-Parks equity (70%), with the state and commercial interests holding minority shares (30%). Bring under-utilised land (especially in communal areas and land reform farms) into full production over the next few years, and expand irrigated agriculture. Contribute to the achievement of the National Development Plan’s “inclusive rural economy” and target of 1 million jobs created in agriculture sector through creating a higher demand for raw agricultural produce, primary, and ancillary inputs, as well as generating increased downstream economic activities in the sector.
The Agri-Parks Programme seeks to achieve rural economic development through a comprehensive approach to development by developing agricultural value-chains that are linked nationally. The programme will also be able to address issues of employment, skills development, and productivity of land.
The Agri-Parks programme is viewed as a programme that will address issues of rural economic development, one of government’s key areas to address. Government has previously intervened with various anti-poverty programmes, but with a lower impact than what was expected. The Agri-Parks model, however, is expected to co-ordinate anti-poverty activities, providing an integrated package service that will match the local priorities.
With a discussion of the Agri-Parks concept done above, specific attention should be directed towards policies that are related to the Agri-Park through a policy review.
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SECTION 3: POLICY FRAMEWORK AND GOVERNMENT PROGRAMMES
This section of the Master Business Plan provides an overview of the national, provincial, and local policies that will have a direct influence on the development of the Agri-Parks concept in each District Municipality. The effect that the Waterberg Agri-Park and the policies have on each other is identified by indicating the implications that the reviewed policies have on the Agri-park, as well how the Agri-Park align with these policies.
3.1. National policy overview
National policies are published by national government departments and have implications for policies and programmes that affect areas all over South Africa. Provincial and local government use these policies to guide development and the respective levels and their policies and strategies are guided by the national policies. The national policies that are important for the Agri-Park are reviewed.
3.1.1. National Growth Path (2010)
Government adopted the New Growth Path (NGP) in 2010 as the driver of the country’s job creation strategy. The NGP suggests that in order to achieve growth and transformation of economic imbalances, firm choices and shared determination are required from every structure within the South African society. The goal is to grow employment by five million jobs by 2020; to ensure that half of the working-age population in South Africa will be employed and that unemployment would be reduced from 25% to 15%. The NGP is also formulated to reduce inequality and eliminate rural poverty by identifying areas where long term structural and feasible changes can be made. (Economic Development Department, 2010)
STRATEGIC PRIORITIES / FOCUS AREAS
The strategic focus of the NGP is to support employment creation. Efforts will be prioritised in key sectors such as infrastructure, the agricultural value chain, the mining value chain, green economy manufacturing, tourism, and certain high- level services. To achieve these objectives, the framework seeks to:
Identify areas that have potential for large scale employment creation. Develop a policy package to facilitate employment creation in the areas identified. Create a consensus on the new local and global opportunities, and see how these opportunities can be seized in order to achieve socially desirable and sustainable outcomes. Strengthen the domestic and regional agricultural markets by supporting smallholder farmers. Broaden the markets for South African goods and services through a stronger focus on exports. Provide quality basic and secondary education. Invest in health including effective measures to address HIV/AIDS.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT
The agricultural value chain has been prioritised to play an important role in the provision of job opportunities and improve the standard of living of farm workers. The NGP targets opportunities for 300,000 households in agricultural smallholder schemes, plus 145,000 jobs in agro-processing by 2020, while there is potential to upgrade conditions for 660,000 farm-workers. It can be concluded that the NGP supports the development of the Agri-Parks.
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3.1.2. National Development Plan – 2030 (2010)
South Africa’s first National Planning Commission was set by President Jacob Zuma and inaugurated in May 2010. The objective posed to the National Planning Commission was to take an independent view of South Africa, and from that, derive a Vision and a Plan that is focused on enabling a much better quality of life for all South Africans by 2030. The primary channels through which improvement in quality of life are likely to come about, are through eliminating poverty and reducing inequality - the two single biggest problems in South Africa. These aspects affect every other aspect of development and every aspect of life for the citizens of this country. As both a cause and result of these primary problems, the NDP has identified nine specific and predominant challenges:
1. Too few people work. 2. The quality of school education for black people is poor. 3. Infrastructure is poorly located, inadequate, and under-maintained. 4. Spatial divides hobble inclusive development. 5. The economy is unsustainably resource-intensive. 6. The public health system cannot meet demand or sustain quality. 7. Public services are uneven and often of poor quality. 8. Corruption levels are high. 9. South Africa remains a divided society.
STRATEGIC PRIORITIES / FOCUS AREAS The three broad frameworks identified to ensure that the proposed vision set out by the NDP is achieved are the following:
1. Raising employment through faster economic growth. 2. Improving the quality of education, skills development, and innovation. 3. Building the capability of the state to play a developmental, transformative role.
Given the complexity of national development, the plan sets out six interlinked priorities by which the main challenges will be addressed: Uniting all South Africans around a common programme to achieve prosperity and equity. Promoting active citizenry to strengthen development, democracy, and accountability. Bringing about faster economic growth. Higher investment and greater labour absorption, focusing on key capabilities of people and the state. Building a capable and development state. Encouraging strong leadership throughout society to work together to solve problems. IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT
The National Development Plan views agriculture as critical to employment and food security. It is estimated that Agriculture would potentially create a million jobs by 2030. Agri-Parks will serve as important mechanisms to execute the NDP’s proposed rural development strategy due to their potential for supporting small-scale agricultural production and stimulating agro-processing in rural areas.
One core element of this approach is conducting commodity and value-chain analyses and mapping exercises to determine the best areas to establish Agri-Parks based on the growth potential of value- adding commodities. As such, each Agri-Park will focus on specific prioritised commodities that have the highest prospect of succeeding in their region. This is directly in line with the NDP’s approach of
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targeting high value commodities (most of which are labour intensive) to stimulate industrial growth, accompanied by measures that ensure sustainable production on redistributed land and an improved institutional support system.
In this regard, the NDP identifies certain agricultural sub-sectors that have the most potential for development, which are categorised into large labour-intensive industries, smaller labour-intensive industries, and large existing industries with significant value-chain linkages. For instance, small-scale labour intensive agriculture, including macadamia, pecan nut, rooibos tea, olive, fig, cherry, and berry industries, are found to have the greatest expansion potential due to the significant market demand for these products. The NDP projects that approximately 80 000 jobs can be created by further developing these particular areas of small-scale agriculture. By providing the necessary inputs, facilities, institutions, market-linkages, and partnerships, Agri-Parks can enable small-scale producers and rural residents to create new, and expand existing enterprises in these industries, which will have positive growth impacts on the rural economy.
The NDP states that in South Africa, a highly centralised, vertically integrated agro-processing sector already exists for staple foods such as maize, wheat, sugar, sunflower oil, tea, flour, peanut butter, cigarettes, beer, fruit juices, and canned goods. Key proposals identified for the agriculture and agro- processing sectors include the following: Greater investment in providing innovative market linkages for small-scale farmers in communal and land-reform areas. As part of a comprehensive support package for farmers, preferential procurement mechanisms should be put in place to ensure that new agricultural entrants can also access these markets. Growth in agricultural production has always been fuelled by technology, and the returns to investment in agricultural research and development are high. Technology development should therefore, be prioritised. Policy measures to increase the intake of fruits and vegetables, and reduce intake of saturated fats, sugar and salt, as recommended in the South African food dietary guidelines, to accompany strategies to increase vegetable and fruit production.
3.1.3. Industrial Policy Action Plan (IPAP)-2013/14 – 2015/16
The Industrial Policy Action Plan (IPAP) 2013/14-2015/16 is in the fifth iteration of IPAP and the apex policy document of the Department of Trade and Industry (DTI). It is drawn from a range of visions set out by successive industrial policies such as the NDP, NGP, and the National Industrial Policy Framework (NIPF). The IPAP sets out an industrial policy framework with overriding interventions that will prevent industrial decline and support growth, as well as diversifications of South Africa’s manufacturing sectors (The Department of Trade and Industry, 2014). IPAP will ultimately lead to a restructured economy with more value-adding, labour intensive, and environmentally sustainable industrial activities.
STRATEGIC PRIORITIES / FOCUS AREAS IPAP focuses on building on, and fulfilling, the plans set out in IPAP 2012/2013 in its transversal and sector-specific interventions. These transversal interventions are in the areas of: Public procurement Competition policy
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Innovation and technology Skills for the economy Industrial financing Developmental trade policy Regional integration Special economic zones
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT
IPAP identifies the agro-processing industry as a sector with the potential to spur growth and create jobs, because of its strong backward linkage with the primary agricultural sector. The agriculture and agro-processing value chain represents an important source of labour intensive growth. In addition, this value chain is central to the rural development and smallholder farmer development objectives of government.
The key-programmes identified for agro-processing within the IPAP are the following: 1. Development of a Food-processing Strategy and Action Plan with the objective of accelerated growth in the food-processing sector. 2. Development of a small-scale milling industry to enable small-scale maize milling enterprises in order to produce for local markets at competitive prices. 3. Enhancement of competition in the fruit and vegetable canning industry - The creation of a sustainable platform for the long-term growth and competitiveness of the industry. 4. Development of a Soybean Action Plan promoting market linkages between primary agricultural producers and processors. 5. Development of the organic food sector – The development of a competitive organic sub-sector producing high-quality food products for both local and export markets. 6. Supporting the Public-Private Partnership (PPP) for Food Security – Entails smallholder farmer access to formal retail chains, Government procurement, and small scale processing opportunities.
With infrastructure investment as one of its main components, upon which all other proposed actions rest, the Agri-Park Programme is crucial in the advancement the IPAP objectives. The Agri-Parks Programme will further promote an approach to land reform and rural development consisting of comprehensive spatial planning, appropriate categorisation of land and beneficiaries to ensure sustained agricultural development, associated/targeted skills development, employment creation, significant infrastructural expansion, improved public service delivery, more dedicated investment in agriculture through a targeted approach, and the increased involvement of the private sector in land reform and rural development initiatives.
3.1.4. Agricultural Policy Action Plan (APAP) (2015- 2019)
The Agricultural Policy Action Plan (APAP) (2015-2019) aligns itself to other existing national plans such as the NGP, NDP, and the IPAP. These plans were geared towards providing decent employment through inclusive growth, rural development, food security/ protection, as well as the enhancement of environmental assets and rural resources; with key job drivers identified as agriculture, infrastructure, mining, manufacturing, tourism, and the green economy. The APAP sets an action plan for a five-year period (2015-2019), and seeks to translate the high-level responses offered in the Integrated Growth and Development Plan (IGDP) into tangible, concrete steps. (Department of Agriculture, Forestry and Fisheries, 2014)
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STRATEGIC PRIORITIES / FOCUS AREAS The APAP seeks to provide both a long-term vision, and focused interventions in a 5-year rolling schedule, to be updated annually. APAP is based on Sectoral Key Action Programmes (commodities) and Transversal Key Action Programmes (e.g. research and innovation). It furthermore, presents institutional arrangements and processes for achieving this objective – especially to integrate planning, M&E between DRDLR and DAFF across 3 spheres of government. The APAP has 4 policy levers, which are: 1. Equity and Transformation: Ensuring a more producer-friendly (and consumer-friendly) market structure; Accelerating implementation of the Charters and the Small-scale fisheries policy; Promoting local food economies; and Investment in agro-logistics. 2. Equitable Growth and Competitiveness: Promoting import substitution and export expansion through concerted value chain/commodity strategies; Reducing dependence on industrial and imported inputs; Increasing productive use of fallow land; and Strengthening R&D outcomes. 3. Ecological Sustainability: Climate Smart Agriculture 4. Governance: Support services; Skills development; Research and development; Knowledge and information management (integrated spatial economic planning); Market access, information and regulation; and Institutional arrangements. IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The evaluating measurements used within the APAP to meet its short- and medium-term objectives are the following: 1. Contribution to food and security 2. Job creation 3. Value of production 4. Potential contribution to trade balance The APAP informs the Agri-Parks Business Plan through the identification of the following specific sub- sectors for key action programmes: 1. Poultry/Soybeans/Maize Integrated Value Chain 2. Red meat value chain 3. Wheat value chain 4. Fruits and vegetables 5. Wine industry 6. Forestry 7. Small scale fisheries The developments of Agri-parks are in line with the APAP policy levers and would help in achieving its set out goals.
3.1.5. Department of Agriculture, Forestry and Fisheries Agro-processing Strategy (2012)
The Department of Agriculture, Forestry and Fisheries’ (DAFF) Agro-Processing Strategy was developed to create a strategic direction on agro-processing for both national and provincial government. The strategy seeks to provide a response on the agro-processing job creation and related government priority targets set out in existing policy frameworks such as the NGP and IPAP. (Department of Agriculture, Forestry and Fisheries, 2012)
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STRATEGIC PRIORITIES / FOCUS AREAS The strategic objective is to articulate how government should intervene to support and develop Small and Medium Enterprises (SMEs), agro-processing in the local and global agricultural sector, as well as forestry and fisheries value chains. The following strategic interventions are set out by this strategy: 1. Facilitate access to incentives and support packages 2. Facilitate access to infrastructure 3. Promote value chain linkages 4. Support technical and managerial training 5. Facilitate access to appropriate technology 6. Facilitate access to business development services
The implementation of this strategy is to be aligned with the implementation of the Smallholder Development Programme, the Zero Hunger Plan, and the Marketing Strategy of the DAFF to realise its intended objectives. IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT Developing and supporting the currently underserviced agro-processing small and medium enterprises (SME) has been identified as key to achieving government’s priority targets of promoting job creation, economic growth, and equity. The findings of the Department of Agriculture, Forestry and Fisheries Agro-processing Strategy forms a vital input in formulating the Agri-parks Master Business Plans due to the scope of agro-processing in the national economy.
3.1.6. Strategic Plan for the Department of Agriculture, Forestry and Fisheries (2013/14 – 2017/18)
The Strategic Plan for the DAFF was guided by other key policies such as NGP, NDP, IPAP and the work of the Presidential Infrastructure Coordinating Commission (PICC); aimed at tackling the challenges of poverty, inequality, and unemployment. The Strategic Plan for the DAFF sets out programmes of action and projects for a period of five years (2013/14 – 2017/18), and is formulated to improve and develop production by means of entrepreneurship promotion in the AFF sectors. (Department of Agriculture, Forestry and Fisheries, 2015)
STRATEGIC PRIORITIES / FOCUS AREAS The Strategic Plan of the DAFF aims to address the social and economic challenges that the agriculture, fisheries and forestries sectors are faced with. It further sets new opportunities for service delivery with relation to job creation, food security, rural development, and skills development. The opportunities or action areas highlighted for key policy development include the following:
Food security production programmes Strategic plans for supporting small producers Aquaculture programmes Agro-processing strategic frameworks
The strategic goals set out in the document are the following: Increased profitable production of food, fibre, and timber products by all categories of producers. Sustained management of natural resources. Effective national regulatory services and risk management systems. A transformed and united sector. Increased contribution of the sector to economic growth and development. Effective and efficient governance.
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IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The Strategic Plan of the DAFF supports the development of the Agri-parks development. Agro- processing is highlighted to play a key role in ensuring an equitable food-secure economy. Interventions should focus on developing processed agricultural products, while at the same time targeting increased export-trade. Investment in agro-processing should be increased as a means of reinvigorating specific strategic value chains such as soya beans, rooibos, beverages, fruit and vegetables, as well as forestry. An equitable food-security economy will improve access to markets, especially for smallholder farmers.
3.1.7. National Policy Framework on the Development of Small and Medium Agro- Processing Enterprise in the Republic of South Africa 2015
The National Policy Framework on the Development of Small and Medium Agro-Processing Enterprise in the Republic of South Africa was initiated by the DAFF. (Department of Agriculture, Foretry and Fisheries, 2015)
STRATEGIC PRIORITIES / FOCUS AREAS The objectives of this document are the following: Rural industrialisation through the establishment of agro-processing industries that are closer to production areas. Local economic growth through increased trade in rural areas. Job creation through the establishment of SME agro-processors to improve livelihoods of both smallholder agro-processors and producers.
However, the specific challenge that this policy aims to address is the limited active participation of rural-based SMEs’ agro-processors in the agro-processing mainstream value chain. The strategic objective is to create a profitable, competitive and thriving small and medium agro-processing industry. In order to achieve this, the policy seeks to: Provide entrepreneurial support to small and medium agro-processors. Support enterprise development through facilitating access to markets, finance, incubation, and mentorship. Facilitate agro-processing industry research and technology transfers. Facilitate infrastructure investment specifically within rural areas. IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The major constraints to developing the thriving agro-processing value chain identified in the framework are: a lack of appropriate technology, inadequate infrastructure, access to finance, and low levels of technical and entrepreneurial skills. The Agri-Parks developments will focus on providing continuous support to small and medium scale agro-processing enterprises. Continuous support will assist in increasing the number of enterprises and address the challenges they face with integrating and actively participating in the mainstream economy.
3.1.8. Strategy for the Development of Small and Medium Agro- Processing Enterprises in the Republic of South Africa (2014 – 2019)
The Strategy for the Development of Small and Medium Agro-processing Enterprises in the Republic of South Africa was developed to support increased participation of small and medium scale agro-processing enterprises in the agro- processing sector. The strategy aims to support the vision of the DAFF, which aligns with the NDP and IPAP, while linking directly to the outcomes of the Medium Term Strategic Framework (MTSF, 2009).
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STRATEGIC PRIORITIES / FOCUS AREAS The strategy seeks to articulate how the small and medium agro-processing enterprises within the agriculture, forestry and fisheries sector in South Africa can be supported and developed at all levels of government (national, provincial, and local). IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The Strategy for the Development of Small and Medium Agro-processing Enterprises in the Republic of South Africa informs the Agri-parks Master Business Plan through identifying the following four intervention pillars that are needed for the development of Small and Medium Agro-processing Enterprises: 1. Entrepreneurial support 2. Enterprise development (Access to finance, market access and incubation) 3. Industry research and technology transfer 4. Infrastructure investment
3.1.9. Agriculture, Forestry and Fisheries: Integrated Growth and Development Plan 2012
The Integrated Growth and Development Plan (IGDP) was developed for the Medium Term Expenditure Framework (MTEF) (2011/12 – 2014/15) with the aim of providing a long-term strategy for the growth and development of the agricultural, forestry and fisheries sector in South Africa. The IGDP seeks to address the current realities and challenges that these sectors face, and to develop a common vision that will ensure equitability, productivity, competitiveness, and sustainability.
STRATEGIC PRIORITIES / FOCUS AREAS The strategic priorities of the IGDP for the agricultural, forestry, and fisheries sector are the following: Attaining equity and transformation Equitable growth and competitiveness Environmental sustainability Good governance IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The IGDP identifies that in terms of agro-processing, there is a need to support South African exporters in order for them to position their products better in fast-growing, developing country destinations and Africa. This may require focused export intelligence and marketing support, as well as intergovernmental assistance to ensure that South African products are not unfairly subject to nontariff barriers. Greater emphasis and investment is required in the understanding and managing of international trade standards and regulations, especially in the areas of food safety and sanitary and phytosanitary measures.
3.2. Linkages to national government programmes
The Agri-Parks concept will be in support of existing rural development programmes implemented by government. A description of the key programmes in this regard is provided.
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3.2.1. Department of Rural Development and Land Reform
a) Comprehensive Rural Development Programme
The Comprehensive Rural Development Programme (CRDP) is aimed at being an effective response against poverty and food insecurity through maximising the use and management of natural resources to create vibrant, equitable, and sustainable rural communities. A CRDP must improve the standards of living and welfare, but also rectify past injustices through rights-based interventions and address skewed patterns of distribution and ownership of wealth and assets. The strategic objective of the CRDP is therefore, to facilitate integrated development and social cohesion through participatory approaches in partnership with all sectors of society. This document thus, serves as the policy framework document for the Comprehensive Rural Development Programme - or 'CRDP'. The document thus, aims to set out the programme principles.
STRATEGIC PRIORITIES / FOCUS AREAS The vision of the CRDP is to create vibrant, equitable, and sustainable rural communities including: contributing to the redistribution of 30% of the country’s agricultural land; improving food security of the rural poor; creation of business opportunities, de-congesting and rehabilitation of over-crowded former homeland areas; and expanding opportunities for women, youth, people with disabilities, and older persons who live in rural areas.
The ultimate vision of creating vibrant, equitable, and sustainable rural communities will be achieved through a three-pronged strategy. The components of this three-pronged strategy are also the key elements that characterise the CRDP and are as follows: Coordinated and integrated broad-based agrarian transformation, Strategically increasing rural development, Improved land reform. IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The types of priorities that are typically catered for in the CRDP, categorised according to the three key strategies mentioned above, include – but are not limited to – the following: A. Economic Development Agrarian Transformation Livestock farming and related value chain development (exploring all possible species for food & economic activity). Cropping and related value chain development (exploring all possible species, especially indigenous plants for food and economic activity). Rural Development The establishment of business initiatives, agro-industries, cooperatives, cultural initiatives, and vibrant local markets in rural settings. B. Social Development Rural Development The empowerment of rural communities, especially women and the youth, through facilitating and mediating strong organisational and institutional capabilities and abilities to take full charge of their collective destiny. Capacity building initiatives, where rural communities are trained in technical skills, combining them with indigenous knowledge to mitigate community vulnerability, especially, to climate change, soil erosion, adverse weather conditions and natural disasters, hunger and food insecurity.
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C. Physical and Infrastructure Development Rural Development Revitalisation and revamping of old, and the creation of new economic, social, and information communication infrastructure and public amenities and facilities in villages and small rural towns. D. Institutional Development Land Reform Projects will be linked to the acquisition of, and access to, land through the three land reform programmes (redistribution, tenure, and restitution). All projects implemented through the three programmes will be implemented efficiently but in a sustainable manner linked to the strategic objective of the CRDP.
b) Other Programmes
Other programmes implemented by the DRDLR are the following:
1. LAND REFORM PROGRAMME The Land Reform Programme aims to initiate a sustainable land reform programme in South Africa, based on the following three strategic objectives: 1. Strategically located land acquired 2. Farm development support provided to smallholder farmers 3. Functional system and institutional arrangements 2. RECAPITALISATION AND DEVELOPMENT PROGRAMME The Department of Rural Development and Land Reform’s Recapitalisation and Development Programme seeks to operationalise the policy of the same name, published 23 July 2014. It focuses on human (capacity development), infrastructure development and operational inputs on properties in distress or that are newly acquired through the land reform redistribution, restitution and other programmes since 1994, as well as other agricultural properties in distress acquired without grant funding. The approach is to ensure that the enterprises are profitable and sustainable across the value chain in line with the Master Business Plan, which stipulates comprehensive development requirements of targeted properties over a 5-year recapitalisation and development cycle. 3. PROVINCIAL SHARED SERVICES CENTRES Provincial Shared Services Centres (PSSCs) are established to coordinate land reform programmes. The PSSC’s focus on the following services:
1. Redistribution in terms of the Pro Active Land Acquisition Strategy (PLAS) 2. Tenure (ESTA, IPILRA) 3. Recapitalisation 4. State Land Administration
3.2.2. Department of Agriculture, Forestry and Fisheries
The following rural development programmes are driven by DAFF:
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1. COMPREHENSIVE AGRICULTURE SUPPORT PROGRAMME (CASP)
To ensure the commercial viability of emerging farmers from a household food security level to a commercial level, a farmer-to‐farmer mentorship policy has been developed. The department regards skills development as one of its critical focus areas and this obviously includes providing hands-on training to emergent farmers in various fields of farm management. 2. MICRO‐AGRICULTURAL FINANCIAL INSTITUTIONS OF SOUTH AFRICA (Mafisa)
The Micro‐Agricultural Financial Institutions of South Africa (Mafisa) encourage partnerships between established agricultural enterprises and emerging farmers and entrepreneurs by providing access to finance for farmers, especially beneficiaries of the land restitution, redistribution, and land tenure reform programmes. The Land Bank administers the credit scheme on behalf of the department, while the provincial departments provide assistance to access the scheme. Four development finance institutions are currently participating in the disbursement of Mafisa funds in the provinces. 3. ILIMA-LETSEMA
The grant provides for farmers who lack access to credit to be assisted to access agricultural production inputs. The inputs are necessary to increase agricultural production and hence, to improve household and national food security. Jobs are sustained and new ones created when farm enterprises are made operational, and this requires provision of the production inputs. 4. AGRICULTURAL BROAD-BASED BLACK ECONOMIC EMPOWERMENT (AgriBEE)
The AgriBEE Charter seeks to provide direction on the integration of emerging participants into mainstream agriculture by creating linkages, partnerships, and networks for balanced, mutually benefiting results for all concerned. It specifically encourages partnerships between established agricultural enterprises and emerging farmers and entrepreneurs. It seeks to ensure enhanced competitiveness and sustainable development with the improvement/expansion of the existing businesses, rehabilitation of ailing agricultural business concerns, and expanded entry for new businesses in the sector.
3.3. Provincial policy overview
Policies that are developed for the Limpopo Province are reviewed in this sub-section. These provincial policies are developed by Limpopo’s provincial departments in order to assist with the implementation of national policies, and to guide the development of local municipality policies.
3.3.1. Limpopo Development Plan (2015-2019)
The Limpopo Development Plan reflects the steps in an ongoing journey to eliminate poverty, reduce inequality, and improve the quality of life of the Limpopo citizens, as visualised in the National Development Plan (NDP). The document is the culmination of workshops at different levels of government and with private sector stakeholders throughout Limpopo. The Limpopo Development Plan (2015 – 2019) is based on lessons learnt from previous Limpopo Strategies and Plans, on the National Development Plan (NDP), the MTSF Outcomes (National and Provincial), the provincial Lekgotla of May 2014, and the LDP Summit of December 2014. (Limpopo Provincial Government, 2015)
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STRATEGIC PRIORITIES / FOCUS AREAS The development objectives are classified into three broad development themes and fourteen priority outcomes, each with its own targets and indicators. The broad development themes are:
Economic Transformation (including infrastructure and workplace conflict reduction); Social Transformation, including improved quality of life, social cohesion, active citizens; and Improving Service Delivery (access to and quality of services and local government capacity).
Outcome Seven of the Limpopo Development Plan focuses on comprehensive rural development. The 2030 Vision envisions rural areas that are spatially, socially and economically integrated and where residents have economic growth, food security and jobs, as a result of agrarian transformation and infrastructure development programmes, and have improved access to basic services, health care, and quality education. It is envisioned that by 2030, agriculture will contribute strategically to the GGP of Limpopo.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT
By 2030, agriculture in Limpopo will create close to 100,000 new jobs, contributing significantly to reducing overall unemployment. Achieving this vision will require leadership on land reform, communal tenure security, financial and technical support to farmers, and the provision of social and physical infrastructure for successful implementation. It will also require capacity building to enable state institutions and private industries in order to implement these interventions. Improved coordination and integration in the planning and implementation of area-based and differentiated rural development plans will be needed over the medium-term to achieve the vision of an inclusive rural economy.
A. Agricultural Production and Job-creation
The Action Plan for agricultural production and job-creation includes the three competitive clusters recommended as part of the job-creation and economic development strategy, and as summarised below:
1. Horticulture: Extensive investigations have been conducted into the value-chain development opportunities that arise from current and expanded horticulture production in Limpopo. Production levels and areas for citrus, subtropical fruit, and vegetables are well known. Interventions required to take the current horticulture clusters in Limpopo to their next development stage include clarity regarding land reform, rural road construction, higher levels of production, and appropriate skills development. 2. Meat Production: Low rainfall areas in Limpopo that are unsuitable for horticulture, are generally suitable for cattle, game, and goat meat production. Value-chain development within this cluster in the Province is still in a rudimentary stage. Several feedlots are importing cattle from outside the Province. Key public sector interventions that could take this cluster into its next development phase, with associated manufacturing value-chains, include a livestock farmer support programme on communal land and appropriate skills development.
3. Forestry: The relatively well-established forestry cluster in Limpopo has regressed over the past decade, with reduced planting and some manufacturing value-chains, such as sawmills, that have been shut. The cluster can be revived and taken to its next level of development, with significant potential for job-creation and economic growth. However, this will require policy certainty with regard to land reform, increased timber production, improved and stable electricity supply in rural areas, and appropriate skills development.
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Table 3.1 provides the targets set out for MTSF infrastructure development in the Limpopo province.
Table 3.1: Targets for food security and rural development PROVINCIAL OBJECTIVE OUTCOME INDICATOR BASELINE 5-YEAR TARGETS Agri-logistics and rural Number of irrigation schemes upgraded 6 11 infrastructure. Number of irrigation systems installed 16 12
B. Food Security
The Action Plan for food security also includes the strategies for horticulture and meat cluster development referred to above, as well as the rural development strategy and the provision of agriculture starter packs, and land reform. The table below provides the targets for food security and rural development.
PROVINCIAL OBJECTIVE OUTCOME INDICATOR BASELINE 5-YEAR TARGETS Implementation or rural Number of hectares of under-utilised land 56 000 200 000 development strategy in communal areas and land reform projects converted into productive units Number of Households benefitting from 5 406 26 000 agricultural food security initiatives Number of smallholder farmer developed 14 469 25 000 and supported for agrarian transformation. Coordinated food security Revitalisation of Infield Irrigation Schemes 60 300 interventions in order to (RESIS) ensure better rural Number of Smallholder farmers supported 5 460 5200 livelihoods and a viable agricultural sector.
C. SIP 11 Projects
The following SIP 11 projects in Table 3.2 are currently being implemented in the Limpopo province:
Table 3.2: SIP 11 projects in Limpopo SIP NUMBER AND NAME SCOPE OF SIP LOCALITY SIP 1 Unlock mineral resources. Lephalale Unlocking the Northern Urban development in Waterberg - Waterberg Mineral belt with first major post-apartheid new urban Waterberg as the Catalyst centre will be a “green” development project. Major impacts of this project in Medupi Power Lephalale include; job-creation, Station increased contribution to GDP, skills developments, upgrading of houses, and development of social infrastructure) Transnet- Waterberg Feeder Rail: Waterberg rail To upgrade the rail from 6metric tonnes per annum (Mtpa) to 24Mtpa.
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A feasibility study and environmental approvals will be undertaken during the course of this year.
SIP 6 SIP 1 Mopani, Integrated Municipal Unlocking the Northern Mineral belt Sekhukhune, Infrastructure Projects with Waterberg as the Catalyst Capricorn, (focuses on the 23 most Vhembe challenged district municipalities) SIP 17 Participate in mutually beneficial Neighbouring Regional Integration for infrastructure projects to unlock long- countries and up African Co-operation and term socio-economic benefits for the into Africa Development region, e.g. projects involving water, transport and energy SIP 7 Coordinate planning and Polokwane Integrated Urban Space implementation of public transport, BRT and Public Transport human settlements, economic and Programme (transform the social infrastructure, and location fragmented cities as well decisions into sustainable urban as addressing the settlements connected by densified challenges of urban transport corridors. sprawl)
E. Special Economic Zone (Musina)
The envisaged Special Economic Zone (SEZ) at Musina is focussed on logistics, imports, exports and beneficiation. The envisaged SEZ is based on two initiatives, namely, the Musina-to-Africa Strategic Supply Hub Initiative (MUTASSHI) concept and an Eco-Industrial Park. The location of Musina makes it the ideal hub to serve as the logistics port to other African countries. A complete business case for the Eco-Industrial Park has been developed. The SEZ will also be linked to the SIP 17 infrastructure project on Regional Integration for African Cooperation and Development.
F. Other Infrastructure Project s
In addition to the SIP-related infrastructure projects, the following other priority infrastructure projects will be promoted within the context of this Limpopo Development Plan:
Construction of Mamitwa Dam; Raising of Tzaneen Dam wall; Integrated Mooihoek Water Scheme; Purified water supply to Bela-Bela, Modimolle, and Mookgopong local municipalities; Reticulation from De Hoop and Nandoni Dams; Rural access roads in support of agriculture and tourism clusters; Solar photovoltaic electricity generation, as well as options for co-generation; Information and communication technology; Nodal infrastructure for priority growth points; and Adequate maintenance for all existing infrastructure.
G. Trade and Co-operation Agreements
Trade and Co-operation agreements that have already been signed between Limpopo and its neighbours in pursuit of regional development and integration include:
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A memorandum of Understanding between Polokwane Local Municipality and the City of Bulawayo, 2012; A twinning Agreement between Limpopo and the Gaza Province of Mozambique, signed in 2006, with its work plan; A partnership and Co-operation Agreement between Thabazimbi Local Municipality and the City of Gaborone, 2006; A memorandum of Agreement between Musina Local Municipality and Beitbridge Rural District Council (October 2004); A memorandum of Understanding between Waterberg District Municipality and Kgatleng District Council in Botswana (December 2003).
The Agri-parks development will build further on the initiatives and projects identified above towards rural development in the Limpopo province.
3.3.2. Limpopo Agro-processing Strategy (2012)
The Limpopo Agro-processing Strategy was developed in 2012 and identifies the key ago-processing opportunities across the Limpopo province. The opportunity identification is based on commodity production data collected by the Limpopo Department of Agriculture. The purpose of the project was to undertake a detailed analysis of the agro-processing sector in the Province and analyse and interpret the findings to formulate an agro-processing strategy aimed at accelerated agro-industrial development and increased job creation in key sectors. (Limpopo Provincial Government, 2012)
STRATEGIC PRIORITIES / FOCUS AREAS The purpose of the agro-processing strategy is to enhance agro-processing capabilities of the Province in order to address economic development challenges. The strategy will create sustainable job opportunities in the medium-to long-term periods by reaching the objectives as indicated by IPAP2 and other developmental documents. CLUSTER DEVELOPMENT Additional to the agro-processing identified in the Limpopo Agri-processing Strategy, it also identifies five cluster development concepts to promote the development if the sector in the province. The clusters are the following:
1. Limpopo Subtropical Cluster Concept: The cluster concept involves the establishment of processing facilities for value adding activities for subtropical commodities. The potential locations identified for the proposed Subtropical Cluster are the Tzaneen area spread towards Politsi, Modjadjikloof, Letaba, and Letsitele mainly in the Mopani and Vhembe districts.
2. Limpopo White Meat Cluster Concept: Chicken is purchased across all income categories and as a result, high demands for poultry exist. The Limpopo Province might not be the highest producer of broilers/poultry, but the province has numerous poultry activities that cannot be ignored and the opportunity for poultry value addition in the Province can be of high benefit. Poultry processing clusters should be located in the major livestock production areas, where there is high concentration of broiler producers, namely the Capricorn, Waterberg and Mopani District Municipalities.
3. Limpopo Red Meat Cluster Concept: The Limpopo Province has numerous livestock held by smallholder groups or communal ownership, and most sales are of live animals and don’t make it to commercial processing. Therefore benefits of value addition are not felt by most farmers. There exists a great potential for greater involvement by emerging sector in slaughtering and processing of beef and goat, especially since there are various red meat abattoirs in the Province.
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Concentrations of livestock and goat are found in the Waterberg and Capricorn District Municipalities, making the two districts potential locations for red meat processing.
4. Limpopo Grain Cluster Concept: The grain industry provides strong linkages for the animal feed industry, and forms strong backward linkages to the industry. The province might not be the highest grain producer, but significant volumes exist to create food security for the majority of rural areas and benefit the expanding animal industry in the province. It was indicated that the Mopani, Vhembe, and Sekhukhune District Municipalities have high productions of maize.
5. Limpopo Logistics Cluster Concept: The development concept for the logistic cluster is to take advantage of existing infrastructure and future logistics development projects, as well as logistic clusters, in the Capricorn District Municipality. Musina is in close proximity to SADC regions for the export of goods; thus opportunities can be exploited. The cluster will cater for numerous industries that complement each other such as agriculture, manufacturing, and trade industries.
The commodity selection for the Agri-parks Master Business Plan was guided by the Limpopo Agro- processing Strategy and identified cluster developments.
IMPLICATIONS FOR THE AGRI-PARK DEVELOPMENTS The Agri-Park should be aware and take into consideration the cluster concepts, especially when selecting the top three commodities. By demonstrating implementation of the cluster concepts, the Agri-Park will be aligning with the provincial policy and have the ability to secure support from other stakeholders that are the drivers behind the cluster development.
3.3.3. The Mapping of Agricultural Commodity Production in the Limpopo Province
In 2012 the Limpopo Department of Agriculture undertook a study to map agricultural production across the province. The Limpopo Province is extremely diverse in terms of agriculture and it was therefore, necessary to collect statistical data aggregated at municipal level. (Limpopo Department of Agriculture, 2012)
STRATEGIC PRIORITIES / FOCUS AREAS Based on the project objectives, the data was captured through the following: The bulk of the mapping was done utilising the available aerial photography and satellite imagery. The advantage of this is the fact that it is initially mapped, and then to a certain degree also verified and validated all in the same process. Infrastructure was captured during the various vehicle-based field visits where interviews with producers were conducted, who highlighted where the infrastructure was located. Analysis of existing data from a number of role-players in the industry. The aerial survey was primarily used as (in this context) as a means of verifying the data. IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The data provided through the Mapping of Agricultural Commodity Production in the Limpopo Province were utilised in the commodity identification for the Agri-Parks Master Business Plan (refer to Section 7.5).
3.3.4. Limpopo Department of Agriculture Strategic Plan 2015/2016 – 2019/2020
The Limpopo Province’s Department of Agriculture Strategic Plan assesses the achievements and challenges faced by the agriculture sector in 2015/2016 and outlines strategies and quantifiable objectives for the years ahead. (Limpopo Department of Agriculture, 2015)
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STRATEGIC PRIORITIES / FOCUS AREAS The Limpopo Department of Agriculture Strategic Plan 2015/2016 – 2019/2020 sets out the following eight programmes: 1. Administration 2. Sustainable Resource Management 3. Farmer Support and Development 4. Veterinary Services 5. Research and Technology Development Services 6. Agricultural Economics 7. Structured Agricultural Education and Training 8. Rural Development
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT In response to the provincial government priority on agro-processing and value adding, the Limpopo Department of Agriculture has identified the infrastructure development projects in Table 3.3 over the MTSF period, to support agricultural development throughout the value chain:
Table 3.3: Limpopo infrastructure development projects PROJECT TARGET FOR 2015/16 – 2019/20 LOCATION OF PROJECT Masalal packhouse Refurbishment of Masalal citrus and mango Mopani District pack house facility (Letsitele) Nwanedi Cooperative Establishment of a vegetable packhouse Vhembe District facility (Musina) Bee Honey processing Development of a processing facility for Vhembe and Mopani infrastructure honey bee producers in Limpopo Districts Lebowakgomo Renovation of poultry houses around Sekhukhune and Abattoir Sekhukhune and Capricorn to feed into the Capricorn Districts Abattoir Valley Farms Upgrading of Valley farms, an existing fruit Vhembe District juice and drying facility that belongs to the (Levhubu) Levhubu land claimant communities Tshakhuma Atchar Establishment of an Atchar facility for mangos Vhembe (Tshakhuma Factory and vegetable farmers Village) Moletji Dairy 1 processing facility and 13 villages Moletji Moshate and 13 villages Soil Conservation 8 313 Hectares Ga Kgatla Blouberg works Leolo Greater Tubatse Fencing Provision of fencing All municipalities Feedlot and animal Support the establishment of feedlot and Waterberg District feed mills facilities feed mills around Waterberg District Irrigation Schemes 6 Irrigation Schemes Sekhukhune District Capricorn District Vhembe District
It is crucial for the Agri-Parks Master Business Plans to be aligned to the infrastructure projects identified above. The importance of the value chain is emphasised in the strategic plan, as employment can be created along the entire value chain. The Agri-Parks Master Business Plans will promote the objectives of the Department of Agriculture in Limpopo. All policies and strategies relating to agriculture development have to be aligned to the Department of Agriculture strategic plan.
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3.4. Local policy overview
The Waterberg DM’s policies are reviewed to identify local government implications for the Waterberg Agri-Park. These policies are also influenced by national policies, as well as policies developed by the Limpopo Province.
3.4.1. Waterberg District Municipality Integrated Development Plan (IDP) 2015/16
The Integrated Development Plan was reviewed and developed under the instruction of the IDP Framework/Process Plan, through which the 2015/16 Waterberg IDP was introduced. As the principle strategy, the resources in the Waterberg DM should be used to ensure the successful implementation of the IDP.
STRATEGIC PRIORITIES / FOCUS AREAS
The vision for the Waterberg IDP is stated as follows “We are the energy hub and eco-tourism destination in Southern Africa.” (Waterberg District Municipality, 2015)and is supported by a mission to develop motivated and innovative human capital that will influence a sustainable economy in the energy, mineral and ecotourism sectors to benefit the Waterberg’s communities. The IDP’s key thrusts are the following:
1. Institutional Development 2. Mining Development & Beneficiation 3. Industrial Development and Investment 4. The Green Economy 5. Agriculture and Agro-Processing 6. Small Business and Retail Development 7. Tourism Development 8. Transport and Logistics
For the purpose of the Agri-Park, specific attention has been paid to the Agriculture and Agro- Processing Thrust , which has the following programmes planned:
1. Pursue Agri-Tourism 2. Agricultural activities 3. Emerging farmers 4. Promotion and diversification
The following activities or actions will be taking place under the programs listed above:
Establishment of an Agro-Processing Hub/Cluster Accelerate implementation of the District CRDP programme Develop a distribution network for small-scale farmers Facilitate partnerships and collaborations to assist small-scale farming enterprises Facilitate the development of community gardens Horticulture and niche products through new technologies Establishment of a regional Fresh Produce Market Encourage small-scale farmers to engage in the production of niche products Encourage the production of niche and specialty products in community gardens Focus on niche and specialty products when encouraging greater agricultural exports Develop a distribution network for agricultural export produce Assist producers with meeting export/processing standards and regulations
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Link producers to the relevant export council Link existing and potential exporters to the Global Export Passport Initiative
The agricultural strategic focus indicated in the Waterberg DM IDP demonstrates knowledge of the Agri-Park programme and has formed programmes to implement the Agri-Park’s model. Therefore, the Agri-Park programme and the Waterberg IDP are well aligned and this can be indicated as follows:
1. The Agri-Park will consist of an Agri-Hub that will provide processing services and facilities for farmers. The Agri-Hub is one of the main three components of the Agri-Park model. 2. The Agri-Park’s FPSU component connects the farmers to the Agri-Hub and provides support facilities and inputs to allow for production. Through the FPSU, the Agri-Park provides a distribution network for small-scale farmers, encourages partnerships and collaboration, and promotes rural communities to participate in agricultural activities. 3. Local small-scale farmers will be the main beneficiaries of the Agri-Park, thereby ensuring that they have the support system needed to grow and develop their farms. 4. The RUMC is the third main component of the Agri-Park, which is the link between the farmers and the agricultural production to the market, while providing further support services. Thus, a distribution network for exports will be available, assistance will be available in order to abide to regulations and standards, as well as the provision of links to relevant export organisations and institutions 5. Through the commodities identified for agro-processing opportunities, niche products will be developed.
3.4.2. Waterberg DM Local Economic Development Strategy 2014
The Waterberg DM Local Economic Development (LED) strategy is a five-year plan for the district. The purpose of the LED strategy is to identify measures that can create economic development and economic growth in the district. Therefore, the LED aims to deal with the creation of employment opportunities, income redistribution, and mitigating poverty by encouraging local economic activities through an organised and locally relevant collection of mechanisms and measures.
STRATEGIC PRIORITIES / FOCUS AREAS The Waterberg DM LED Strategy 2014 is a review of the existing district LED Strategy. Therefore, the LED review explores the coordinated and integration possibilities available to expand the economic foundations of the Waterberg District Municipality by gathering all economic information. (Waterberg District Muncipality, 2014)
The following key thrusts have been highlighted in the LED Strategy: 1. Mining Development 2. Industrial and Investment Development 3. Green Economy 4. Agriculture & 5. Agro-Processing 6. Small Business and Retail 7. Tourism Development 8. Transport & Logistics
Similar to the Waterberg DM IDP 2015/2016, the Agriculture and Agro-Processing thrust is supported by the following programmers that have been planned: Pursue Agri-Tourism
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Exploit Agricultural Opportunities o Mechanical Processing and Manufacturing: Crop/Stock/Game farming Supporting Emerging Farmers Export Promotion and Diversification
The above listed programmes are expected to achieve the following: Business development and job creation Household food security Increased number of black farmers/producers Fewer economic leakages Beneficiation and product diversification Increase market size and diversity Horticulture cluster development Game farm management strategy in collaboration with agricultural strategy Agro-processing incentives
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT
The Agri-Park model and its implementation in the Waterberg DM supports the LED’s agriculture and agro-processing strategy by:
Encouraging agro-processing through the Agri-Hub, which will provide services and facilities to process primary products for the farmers Supporting emerging farmers through the FPSU, which links farmers to the Agri-Hub, and provides facilities and primary processing. The Agri-Hub as well as the RUMC provides further support to emerging farmers through the availability of processing opportunities and links to the market. The market linkages provided by the Agri-Park through the RUMC extends an opportunity for farmers to participate in exports.
The LED also provides support to the Agri-Park by: Forming objectives and programmes that allow agriculture to contribute efficiently to the Waterberg District, and thus guides the Agri-Park’s impact towards the district’s development. Providing guidelines on the commodities that demonstrate agro-processing opportunities: Crops, Livestock and game. Speciality product opportunities have been highlighted as well. Recognising the Agri-Parks programme as a programme that will assist in exploiting the agricultural produce of the district. Proposing projects that are related to agriculture and agro-processing, as well and integrating DRDLR and DAFF.
Along with the Agri-Parks programme, the LED also places emphasis on the following concepts: The development of speciality and niche products Water harvesting Development of small scale farmers and producers Agro-processing and manufacturing Strengthening the agriculture value chain Accelerating the implementation of the Comprehensive Rural Development Programme (CRDP)
3.4.3. Waterberg DM Spatial Development Framework 2014
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A Spatial Development Frame (SDF) provides direction and guides decision-making over a specific period of time. The aim is to create integrated and inhabitable cities, towns and residential areas. The SDF demonstrates desired patterns of land use, directions of growth, urban edges, special development areas and conservation areas for land-use management by the local government (Waterberg District Municipality, 2014).
STRATEGIC PRIORITIES / FOCUS AREAS
The Waterberg DM SDF 2014 is a review of the 2009 SDF. The SDF provides the district municipality with a long-term spatial strategy based on its desired spatial form.
The vision of the SDF is as follows: ‘A spatially functional and equitable district that is a conducive living environment for all, an energy hub and an eco-tourism destination.’ (Waterberg SDF, 2014)
To support the vision, a number of objectives have been complied in the SDF. One the objectives that refer to agriculture and is related to the Agri-Park is as follows: To support sustainable agricultural practices and protected valuable agricultural areas.
The following objectives are specified for the spatial concept:
1. Sustainable use of natural resources 2. Development of energy hub, mining and industrial core 3. Stimulation of sustainable agricultural centre 4. Facilitating sustainable development of rural settlements 5. Strengthening national and international linkages 6. Creation of intraregional connectivity 7. Supporting the development of a national infrastructure corridor 8. A functional hierarchy of nodes 9. Enhancing tourist corridors and facilities
For the purpose of the Agri-Parks, the objective of stimulating a sustainable agriculture centre is significant. The achievement of this objective requires facilitation of, and support for sustainable agricultural advancement.
The motivation behind this objective is as follows:
Food security over the long term Potentially large number of jobs created Population skills fit employment profiles Support for survival strategies
However, the following should be taken note of:
Environmentally responsible agricultural practices must be ensured Agricultural practices must not compromise the quality and quantity of water in the district Exploitation of farm workers must be rooted out and secure accommodation provided
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT
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Agri-Parks is a programme that contributes significantly towards the facilitation and support for sustainable agricultural advancement in the Waterberg DM: The Agri-Park is a form or an agriculture centre Provides support to farmers, especially small-scale farmers Through the development of the FPSUs and the Agri-Hub, centres of concentration for farming services are created. Expands the opportunities of production for the district’s primary agricultural products The proposed Agri-hub site considered important elements highlighted in the SDF, including:
o Land capability o Agricultural land
The SDF can be seen as a significant guideline policy from a spatial point of view by providing guidelines of the following aspects: Areas worthy of protection due to environmental sensitivities or productive capacities; Economic opportunities; Areas of population concentration or nodes; and Linkages or corridors
Thus, the SDF will be of significant influence in the selection of the FPSU’s, the Agri-Hub, and the RUMC sites.
3.4.4. Waterberg DM Agricultural Development Strategy 2005
The Waterberg DM Agricultural Development Strategy 2005 was formulated in response to the need for a comprehensible strategy for agriculture in the district. The strategy is a logical plan to guide agricultural development for commercial and emerging farmers, as well as encouraging economic growth, employment opportunities, and better livelihood for the district. (Waterberg District Muncipality, 2005)
STRATEGIC PRIORITIES / FOCUS AREAS The Waterberg DM Agricultural Development Strategy 2005 provides a status quo of the primary production in the Waterberg DM, reviews relevant policies, assesses agricultural trends, and identifies opportunities for agriculture. After the above studies have been presented in the Agricultural Development Strategy, recommendations are provided according to the opportunity identification in the following value chains: 1. The horticulture value chain; 2. The meat production value chain; and 3. Agri-Tourism value chain
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The formulation of the Waterberg DM Agricultural Development Strategy took place around ten years ago, making its relevance questionable. However, there are trends indicated in the strategy that are still reflected on recently. The value chain opportunities that were recommended to be focused on are still recommended today and similar guidelines have been demonstrated in recent policies such as the Waterberg DM LED Strategy.
The Waterberg Agri-Park should therefore, pay attention to the value chains opportunities recommended.
3.5. Summary
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In this section, a detailed synthesis of the outlined existing policies and strategic plans at the national, provincial and local level will be presented. The purpose of this sub-section is to identify whether the proposed Agri-park programme will be aligned to the strategic plans that already exist in government spheres.
The policies and strategies analysed at the national level consisted of;
1. New Growth Path (NGP) -2010 2. National development Plan-2011 3. Industrial Policy Action Plan (IPAP)-2013/14 – 2015/16 4. Agricultural Policy Action Plan (APAP) (2015-2019 5. Department of Agriculture, Forestry and Fisheries Agro-processing Strategy (2012) 6. Strategic Plan for the Department of Agriculture, Forestry and Fisheries (2013/14 – 2017/18) 7. National Policy Framework on the Development of Small and Medium Agro-Processing Enterprise in the Republic of South Africa 8. Comprehensive Rural Development Programme
National Policies: Approximately 11 national policies, strategies including programmes were reviewed and analysed in this report. The purpose of the analysis was to identify if the proposed Agri-Parks Programme is aligned to the existing agriculture, infrastructure and other relevant supportive development plans. The key emphasis noted in the NGP regarding the alignment to the Agri-park programme objectives is the identification of the potential large scale employment creation commodities. In the NDP, the key highlight is the reiteration of recognising agriculture as critical to employment and food security measures. The Agri-Parks will serve as an important mechanism in executing the NDP’s plan of creating million jobs by 2030. The IPAP’s major relevant intervention is its objectives of providing sector-specific intervention, in particular, industrial financing and regional integration. This will play a key role for small-scale farmers who will have to be supported in the implementation of the Agri-Parks. One of the key policies towards implementing the Agri-Park programme for Waterberg DM is the APAP. The policy action plan emphasises the sectorial equitable growth and competitiveness. Key to APAP is the development of commodities that are labour intensive as well as export market-oriented. In order to get the necessary support from government in different areas, Agri-Parks programme implementation stakeholders will have to be aligned to the national policies.
The following policies/strategies were reviewed and analysed at the provincial level:
1. Limpopo Agro-processing Strategy (2012) 2. Limpopo Development Plan (LDP) (2015-2019) 3. Mapping of Agricultural Commodity Production in the Limpopo Province 4. Limpopo Department of Agriculture Strategic Plan 2015/2016 – 2019/2020
Provincial Policies: The purpose of reviewing and analysing provincial agricultural policies/strategies was to assess the existing provincial agricultural policies/strategies. The LDP identified economic transformation as one of the province’s development themes. This indicates that the province is in full support of agricultural initiatives that will transform rural economies. The provincial strategic plans also emphasise the importance of farmer support and development as well as rural development within the province. One of the provincial documents that was for commodity identification purposes in this report was the mapping of agricultural commodities within the province per district municipality. The Agri-Park programme objectives align to most of the provincial goals.
The local strategic plans/policies reviewed at the local government level (Waterberg DM) consist of the following:
1. Waterberg Integrated Development Plan (IDP) 2015/16
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2. Waterberg Local Economic Development (LED) Strategy 2014 3. Waterberg Spatial Development Framework Review (SDF) 2014 4. Waterberg Agricultural Development Strategy 2005
Local policies/strategic plans: The district policies focus on the growth of the agricultural sector as an economic sector and an important job creation source. Smallholder farmers are also highlighted with reference to being supported and protected, as well as the importance of reaching markets and the ability to participate in the global agriculture market. Support for the Agri-Park is evident in the district’s plans and strategies by reference of the Agri-Park and/or the Agri-Hub. Furthermore, in expressing the objectives and goals for agricultural development in the Waterberg DM, opportunities can be identified for the Agri-Park’s contribution to agriculture in the district. The Agri-Park model also demonstrates support of the objectives in the policies and comparisons can be identified between these objectives and the Agri-Park components. In addition, guidelines for the effective development of the Agri-Park can be identified in the policies. Therefore, the Agri-Park supports the agriculture-related policies in the district, while these policies also demonstrate recognition and consideration of the Agri-Park development.
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SECTION 4: LOCATION CONTEXT
The locational context section studies the location of the Waterberg DM, including the current situation and relationships with the surroundings. An indication of the location and related features influences the activities and dynamics that take place in Waterberg. In addition, understanding the locational context assists in understanding the current dynamics and allows for informed decisions and recommendations to be made in terms of the agricultural development of the district
4.1. Description of the district
As one of South Africa’s mineral rich areas, the Waterberg DM is significant mining area with platinum, iron ore, coal and diamond mines. An internationally recognised Biosphere Reserve is found within the district and spans over 414 000 hectares (ha), including a wide range of indigenous species of plants and animals. Furthermore, a competitive advantage exists for the agricultural sector due to fertile soil.
The Waterberg DM extends over approximately 4 951 882 ha, and is the biggest district Municipality in Limpopo, while having the smallest population (Waterberg District Municipality, 2015). The district area mainly contains commercial farms, game farming, rural settlements and small towns. A description of the district can be provided by viewing features of the district that are significant in the development of the Agri-Park. The description of the district looks at the following features:
i. Location ii. Major towns iii. Transport routes, and iv. Main economic activities
i. Location
The Waterberg is a district municipality in the Limpopo Province, located on the western part of the province. A five-border control point separates the province from Botswana, namely Groblersbrug, Stockpoort, Derdepoort, Zanzibar, and Platjan. Neighbouring district municipalities include the Capricorn District Municipality in the north, and the Sekhukhune District Municipality in the east, creating a strategic location for Waterberg. The North West Province shares the district’s south-western boundary, whereas on the south-eastern side the Gauteng Province exists.
The location of Waterberg DM is indicated in Map 4.1, which is a map of the Limpopo Province and the district municipalities in the province.
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Map 4.1: Waterberg Local Municipalities
Source: Urban-Econ maps generated from DRDLR
Geographically, Waterberg is the largest district municipality and has been divided up into six local municipalities as indicated in Map 4.2.
The local municipalities demarcated in Map 4.2 are listed as follows: Mogalakwena Local Municipality Map 4.2: District Municipalities in Limpopo Bela-Bela Local Municipality Thabazimbi Local Municipality Lephalale Local Municipality Mookgophong Local Municipality Modimolle Local Municipality
Despite the district’s size, Waterberg DM has the lowest population when compared to other district municipalities in Limpopo. The total population of the district is 679 336 people (2011) (Waterberg District Municipality, 2015), which makes up 179 886 households of an average household size of 3.8 people ( (Regional, Standardised , 2015)). The Mogalakwena LM has the highest percentage of the district’s population, with 55,45%, followed by Lephalale LM with 13,44% and the smallest population, 2,82% is in Mookgophong (Regional, Standardised , 2015).
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ii. Major towns
The major cities and towns in the district can be listed as: Lephalale Thabazimbi Modimolle Bela-Bela Mokopane, Mahwelereng Amandelbult Mine Town Mookgophong, Pienaarsrivier, Thabazimbi, Vaalwater
Out of the towns listed, Mokopane is the biggest commercial centre of the district while Modimolle is the centre for administration where the Waterberg District Municipality Office is located (Waterberg District Municipality: 2015).
iii. Transport routes
The main national transport routes that intersect the district include the N1 and N11. Mokopane is connected with Polokwane in the north and Pretoria in south by the N1. However, the N1 bypasses the main urban centres, and excludes the municipal area from fully benefiting from passing traffic, although it remains the key national and regional links to the eastern part of the district area. The N11 passes only through Mokopane and provides an important link with the north western part of the province and Botswana.
There are also railways in the Waterberg DM, with one passing though Modimolle and close to other towns along the south eastern part of the district and has a branch to Vaalwater towards the centre of the district. Another railway is from the north of Thabazimbi through towards a southerly direction. Furthermore, airfields accepting light aircraft are present in Thabazimbi, Lephalale, Bela-Bela, Modimolle and Mokopane, however commercial air flights do not exist here.
iv. Main economic activities
The main economic activities in the Waterberg DM fall under the mining, agriculture and tourism sectors. In terms of economic contribution, agriculture and mining sectors in the district are among the sectors that contribute the most to the Limpopo Province. In addition, the highest proportion of the employed people are working in the agriculture and mining sectors.
Minerals that are mined in the region include iron, platinum and coal, which are the influence behind a few of the districts towns and cities. The district produces the highest amount of platinum in the province and hosts the Eskom Medupi Power Station close to Lephalale. Towns such as Lephalale Mokopane, Northern and Thabazimbi are the result the mining activities around the minerals found in these areas (SDF). Platinum mines such as Amandelbult and Union in Thabazimbi are producing millions of tons of ore and have reserves worth hundreds of millions of tons. The Kumba Iron Ore mine has been reported to outlive its lifetime which was estimated to end in in 2013. More coal and petroleum mining in Lephalale has been taking place and with the coal power stations currently being constructed, further mining is foreseen. Other mining and quarrying activities in the Waterberg DM include cement and iron. Commercial agriculture activities are concentrated towards the south-east part of the district and irrigated agriculture takes place along a few rivers, with the Crocodile River being the most prominent.
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High agricultural activity is found mostly in the Modimolle LM and Mookgophong LM with game and cattle farming considered important parts of the agricultural sector. Even though agricultural activity in the district is limited in terms of potential, there are significant contributions made by the agricultural sector to the Waterberg DM’s employment levels.
Tourism in the district is boosted by attractions such as the Nylsvley wetlands and the Bela-Bela warm water springs. Activities such as game and golf tours and leisure activities for families are contributing to the growth of tourism in the district. An important feature of the Waterberg tourism economy is the Waterberg Biosphere, which is a world renowned Biosphere that hosts hotels, resorts and adventure activities. A number of other sectors are highly linked to tourism and affect tourism performance, including: retail trade, catering and accommodation.
4.2. Location of the Agri-Hub
An Agri Hub is an agglomeration of agricultural cultivation, packing, processing, storage and marketing of agricultural commodities in a central location, such as an economic hub. It is a combination of a working farm and a municipal park that is located at the urban edge. They are designed for multiple uses that accommodate small farms, public areas and natural habitat. They allow small farmer operations access to secure land and local markets.
The selection of the location of the Agri - hubs was done by the Provinces, and a geographic analysis was conducted to analyse each proposed Agri - hub location in relation to specific criteria.
The methodology used for site selection was informed by the following: The need to utilize existing state land with agricultural potential in the provinces. The need to create equal access to markets to all farmers within the province with a bias to emerging farmers and cluster of communities is required. The approach of having one Mega Agri-Hub per district is required. The knowledge that some districts need special intervention by government is required (not ignoring the other remaining districts).
The following are the specific criterial and analytical steps considered in selecting location of the Agri- Hub: Existing Land Capability (class I to VIII) Existing Agricultural infrastructure (e.g. silos, abattoirs, millers, ginners, feedlots, SAGIS food processors, Agbiz, Kooperasies, fresh produce markets, etc.) Proximity to potentially vacant state land parcels Proximity to water sources (dams, rivers, reservoirs) Proximity to the Comprehensive Agricultural Support Programmes (CASP), Ilima-Letsema, PLAS, Restitution claims, recapitalisation projects Identification of enterprise areas (DAFF 1936) e.g. cattle, sheep, maize Proximity to social relief projects Proximity to EDD gateways Existing Road and Rail connectivity (actual road surface conditions may vary) and existing linkages – nationally and cross border Proximity to SPAR, Pick N Pay food stores (value chains) Proximity to PIMD poorest wards Proximity to Land Care projects Proximity to rural towns Proximity to AVMP farms Proximity to existing CRDP wards
The Agri-Parks Model places the Agri-Hub in a pivotal area in the district where the physical and social infrastructure in the area are capable of supporting the range of facilities that the Agri-Hub offers. Thus, Modimolle has been carefully selected as the location of the Agri-Hub. Previously known as Nylstroom, Modimolle is in the Modimolle Local Municipality and can be generally described as a town that has
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agriculture and tourism as the main economic activities. The following reasons have been put forward for the selection of the Agri-Hub location: Good Rail and road connectivity (N1) Land Capability is moderate for cultivation Many CASP and Ilima-Letsema Projects in the area There are Land Reform implemented projects to the north-west of the location Potential vacant state land near Bela-Bela and near Modimolle town There are PLAS Projects to the north of the location There is a Ginner, SPAR Food store, and a grain silo in Modimolle town There are 2 CASP 15-16 projects to the west of the proposed location There are a few Restitution claims to the north-east of the proposed location There is a SPAR food store, grain silo, and a miller at the proposed location There is a land care project to the east of Modimolle town
4.3. Locational Map of the Agri-Park in the Waterberg DM
The location of the Agri-Hub and the rationale for the selection are mapped at different levels. Map 4.3 indicates the location of the Agri-Hub in relation to the Waterberg DM.
Map 4.3: Waterberg Agri-Hub location in relation to the district
Source: Department of Rural Development and Land Reform 2015
The location of the Waterberg Agri-Hub is indicated by the green circle on Map 4.3, which indicates that the Agri-Hub is in the town of Modimolle. The reasons listed above for the selection of the Agri-Hub location are indicated on the map. A few roads and railways pass Modimolle, or at least are not too far. Routes such as the N1 and other important regional roads make the town’s location desirable. Highly arable land is also indicated on the south-east of the province where the Agri-Park will be located. Map 4.4 displays a closer view of the area surrounding the Agri-Hub proposed location.
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A zoomed in map indicates further details about the location site and the immediate surroundings. Map 4.4 provides a closer view.
Map 4.4: Closer view of Agri-hub
Source: Department of Rural Development and Land Reform 2015
The closer view on Map 4.4 allows further details on the reasons for the selection of the Modimolle town as a location to be demonstrated. It is evident on Map 3.4 that there is an abattoir close to the Agri-Park (red triangle) location, vacant state land (purple shape) and Comprehensive Agricultural Support Programmes (CASP). The proximity of the N1 road is easy to observe along with the regional roads and railways converging in the Modimolle town.
4.4. Economic infrastructure
Interaction between different economic regions is what continues to expand economic activity to different parts of the world. Economic infrastructure makes such interactions possible. Thus, an overview of the existing economic infrastructure in the district is important in order to understand how well enabled the district is for economic interactivity.
4.4.1. Transport infrastructure
The N1 is a crucial road connection between the Gauteng Province and the Limpopo Province, and passes the south-eastern part of the district. The route further on connects the Limpopo and Gauteng provinces to Zimbabwe. A number of activities are focused along the route, creating a corridor. Another important national route is the N11, which is a corridor that runs along north-western part of the district. The N11 links the Waterberg DM to the Mpumalanga Province and Botswana. Other regional level roads, most importantly the R33, play a significant role in linking up the Waterberg DM to other areas of economic opportunity and have become significant corridors.
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In addition to the major routes mentioned above, the Waterberg DM has various other routes, including local routes which include gravel roads and roads that are in a poor state. With an increase economic activity, roads are becoming degraded, yet little maintenance and rehabilitation has been done. Only 16 % of Waterberg’s roads are paved, leaving 84% unsurfaced. (Waterberg District Municipality, 2014). Roads that need to be upgraded or improved include the R101, which connects Bela-Bela with Modimolle, Radium. Pienaarsrivier and the Gauteng Province (Bela-Bela LED).
There are three primary rail lines that function under Transnet in the Limpopo Province, which consist of 1 135km total rail length. A 576km long main line transports general domestic and international cargo through Pretoria, Pienaarsrivier, Polokwane, Musina and Beit Bridge as part of the Transnet Northern System. Another main line that carries coal from Lepahalale links Pretoria North, Brits, Rustenburg, Thabazimbi and Lephalale, includes parts that belong to the Transnet Northern System. The third main line joins Groenbult, Tzaneen, Hoedspruit and Kaapmuiden carrying coal from Soutpansberg Coal fields to Maputo. (Waterberg District Municipality, 2014)
Limpopo hosts 160 airfields out of 950 airfields in South Africa, which is 17% of the country’s airfields. There is an international airport, Polokwane International, and two domestic airports, Kruger Park and Eastgate. (Waterberg District Municipality, 2014)
4.4.2. Electricity infrastructure
Having access to energy means access to a wide range of opportunities for the Agri-Park. Many of the operations involved in an Agri-Park’s activities require access to energy, including agro-processing. Therefore, the Waterberg Agri-Park’s status of access to energy is important for success specifically electricity, since it is the most commonly provided and is convenient. Other sources of energy are highly important as well, especially energy sources that are environmentally friendly.
Some progress can be observed for household access to electricity in Limpopo, where 64% of households had access to electricity in 2001 and increased to 87% in 2011 (Regional, Standardised , 2015). In the Waterberg DM, 87% of the total households have access to energy, thus most of the district has energy access (Regional, Standardised , 2015). For South Africa, 85% of households use electricity for lighting and 74% use electricity for cooking (Regional, Standardised , 2015). However, concerns around electricity generation exist, and there is a negative outlook on the near future’s progress. A few power stations exist and are currently under development in the Lephalale area The development of power stations, such as the Eskom Medupi Power Station and increased use of renewable energy are expected to contribute to better provision of electricity.
4.4.3. Telecommunication infrastructure
Another important component of economic infrastructure is telecommunication, which refers to communication through technology. The Agri-Park needs to keep up with economic trends and changes, while maintaining connections with different economic markets and centres. For this to happen, the Agri-Park should be well informed though a number of communication mediums. The standard of telecommunication of the district is dependent on the information and communication technology (ICT) in the area. The degree of ICT availability and its presence in the district will demonstrate the level of connectivity and suitability of the district to be well informed through telecommunication.
Limpopo has an absence of a technology cluster that would attract research institutions, as well as ICT Multi-National Enterprises. Such developments would help to promote ICT as an economic sector, which would be a huge economic advantage for a number of sectors in the province, including the agricultural sector. Another important issue is the lack of access to communication facilities and affordable communication facilities in rural areas. Rural areas are the root of agricultural production, thus for the development of an efficient Agri-Park, better access to ICT facilities in rural areas is crucial. Significant weaknesses are posed by the limitations that exist in ICT infrastructure for access to the technological
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sphere, as well as the shortage of technical and managerial skills to manage, operate and maintain ICT infrastructure.
An important form of telecommunication is the internet. The world has become highly dependent on the internet as a source of information and therefore, increased use of the internet has resulted. Thus, the current access to the internet in the Waterberg DM also demonstrates the level of telecommunication in the district. The internet access of the households in the Waterberg DM can be used to make interpretations about internet access for the district in general. Figure 4.1 provides information about the internet access of households in the Waterberg DM.
Figure 4.1: Waterberg DM internet access 2011
80% 73% 70%
60%
50%
% 40%
30%
20% 15%
10% 4% 3% 4% 0% From home From cell phone From work From elsewhere No access to internet Source of Internet
Source: Statistics South Africa, Census 2011
Waterberg’s household internet access is indicated in the graph in Figure 4.1, according to the different sources. A huge percentage of the households in the district, 73%, do not have access to the internet. The remaining 26% of the households that do have access to the internet are mainly connected through the cell phone. Therefore, along with the limited ICT development in Limpopo, there is a lack of access to the internet, which limits the access to information especially to small-holder farmers.
The locational context of the Waterberg DM has provided an overview of the district with the Agri-Parks concept as a backdrop. Thus, the Waterberg DM demonstrates potential for agricultural development through the Agri-Parks programmes and has a number well established towns and commercial nodes. However, the economic infrastructure in the district needs to be developed in order to provide the support needed for the Agri-Park. The following section indicates the expected role-players that will be involved and influential in the Waterberg Agri-Park development.
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SECTION 5: MAIN ROLE-PLAYERS IN THE WATERBERG DISTRICT
This section outlines the main role-players for the Waterberg DM Agri-Park including government role- players, private companies, as well as associations and organisations. These role players will be involved at the different components in the Agri-Park and are important for providing institutional, financial and operational assistance to the Agri-Park. Moreover, the role players considered in this section will be affected by the development of the Agri-Park, opening opportunities for partnerships and collaborations.
5.1. Government role players
Government role-players are expected from the different government spheres (National, provincial and local government), as well as parastatal organisations that provide extension services and financial services.
5.1.1. Extension services
Extension services can be understood as extension support to local farmers that is provided by the Limpopo Department of Agriculture as well as agricultural service centres located within the Waterberg DM. The extension service providers identified in the Limpopo Province and Waterberg DM are presented in Table 5.1.
Table 5.1: Summary of extension service providers in for the Waterberg DM Role Player Potential Role Government & Public Sector Department of Rural Monitoring and Evaluation Development and Land Provision of institutional support Reform (DRDLR) Provision of funding Project facilitation Limpopo Department of Agricultural institutional support at provincial, district and local Agriculture and Rural levels Development (LDARD) Waterberg District Facilitation of District initiatives Municipality (WDM) Liaison with local stakeholders Institutional support and facilitation National Development Grant funding Agency (NDA) Partnering for development Research and development Capacity building Department of Trade and Development facilitation Industry (DTI) Institutional support Agriculture Resource Agricultural research support Council (ARC) Institutional support Department of Public Works Infrastructural support and coordination and Transport (DPWT) Site preparation and bulk services implementation support Small Enterprise Facilitation of agri-business development Development Agency Small business development (SEDA) Institutional and soft skills support to emerging farmers and entrepreneurs Department of Labour (DL) Employment equity and support Creating linkages between employers and employment opportunities
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Role Player Potential Role Department of Water and Formulation and implementation of policy Sanitation (DWS) Responsible for water services provided by the Government Local Municipalities (LM) Facilitation of local initiatives Liaison with local stakeholders Institutional support and facilitation Department of Agriculture, Agricultural sector support Forestry and Fisheries Promote rural development (DAFF)
Table 5.1 lists the government role players that are important for extension services, and from the potential roles listed, it is evident that the roles mainly include providing funding, institutional support and development pf agricultural capabilities.
5.1.2. Financial services
The provision of funding is a highly crucial service to the Agri-Park and its stakeholders. Most importantly, funding services will contribute to the opportunities that small scale farmers are inaccessible to as a result of their limited income. Table 5.2 contains information about government financial institutions
Table 5.2: Government Financial Institutions Financial Institution Description Contact details The Department of Specifically tasked with “overseeing the work of Website: Economic key state entities engaged in economic www.economic.gov.za Development Development”.
The Department of A range of financial incentives for business are Website: www.thedti.gov.za Trade offered by the DTI. and Industry (DTI) The Department Facilitates a range of financial programmes Website: www.daff.gov.za of Agriculture, including the Micro-agricultural Forestry and Financial Institution of South Africa (MAFISA) and Fisheries (DAFF) AgriBEE Equity Fund Programmes.
Limpopo Facilitates a number of financial programmes Website: www.ledet.gov.za Department of for the Limpopo Province. Economic Development MAFISA (Micro- A micro and retail agricultural financial scheme Phone: 012 319 7295 agricultural for the destitute population that is economically Email: Financial Institution active. Saving and banking services are made [email protected]. of South Africa) available at approved financial institutions. Loans are available for production inputs, livestock, small-scale irrigation systems and small-scale farming equipment and implements to small and emerging farmers and other target groups.
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Financial Institution Description Contact details The Small Has established offices that assist small, medium SEDA Waterberg phone: 015 Enterprise and micro enterprises (SMMEs) with business 491 2168 Development plans, company registration, proposals for Agency (SEDA) funding, and other related requirements.
The Land Bank Offers finance to the agricultural economy and Phone: 0800 00 52 59 agri-business sectors. A recent offering, the Website: Retail Emerging Markets (REM) financing www.landbank.co.za or package, assists farmers who have limited resources with funding at favourable interest rates.
The Development Provides funds projects that contribute to the Phone: 011 313 3911 Bank of Southern development of infrastructure. Africa (DBSA)
The Industrial Funds initiatives from a range of sectors Phone: 011 269 Development including agriculture and agro-processing. 3000 Corporation (IDC) Applicants should be able to prove that they Website: www.idc.co.za have assets and/or a certain amount of savings. and www.sefa.org.za
The Independent Functions mainly within the realm of the second Telephone No.: Development Trust economy, contributing to the government in its 012 845 2000 (IDT) project implementation of development Website: www.idt.org.za. projects.
The National Mandated to eliminate poverty through offering Telephone No.: Development financial grants to civil society organisations that 011 018 5500 Agency (NDA) implement developmental projects in all Telephone No. (Limpopo): provinces. 015 291 2492
National Supports black enterprise development in South Telephone No.: 011 305 Empowerment Africa’s industrial value chain, in addition to 8000. Fund increasing the rate of the acceleration job (NEF), creation to align with government’s New Growth Path.
Limpopo Business A provincial development agency that provides Telephone No.: 015 015 279 Support Agency financial help to co-operatives and small Website: www.libsa.co.za (Libsa) businesses.
Source: The Agri-Handbook for South Africa, 2013/2014
The financial institutions listed and briefly described in Table 5.2 are specifically formed by the government, or form a partnership with the government. While, they all offer financial assistance, it is offered in different ways in order to achieve certain goals related to economic and agricultural development such as assisting small-scale farmers and SMMEs, increasing agricultural production and eradication of poverty amongst other goals. The roles played by the institutions listed above can be summarised as:
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Provision of financial guidance Promotion agricultural development through incentives Facilitation of financial programmes Provision of financial grants Offering financial loans Offering saving and banking opportunities Provision of financial support to SMME’s
5.2. Private companies
In the Waterberg DM Master Agri-Park Business Plan, private companies refer to companies that are not under government ownership. The main role players in the private sector assessed are financial institutions and agro-processing business.
5.2.1. Finance
Other than government-owned institutions, there are private institutions that provide financial assistance, including those that focus specifically on agriculture. Table 5.3 lists private financial institutions that are available for the Waterberg Agri-Park and its stakeholders.
Table 5.3: Private financial institutions Financial Institutions Description Financial companies Agricultural Business Chamber (Agbiz) Facilitates workshops on interventions to make sustainable funding available to emerging farmers. ABSA, FNB, Standard Bank and Nedbank are all members of the Agbiz. ANDISA Agri Offers services such as management of “change of control” transactions and land reform transaction advisory, business planning and feasibility studies. Elilox Group Operates in infrastructure development consulting, construction, project management, SMME development, and agriculture. Financial Services Board A distinctive independent institution initiated by statute to supervise the South African Non- Banking Financial Services Industry in the public interest. Is’Baya Development Trust Offers assistance to entrepreneurs, including skills, mentoring, and business development training. Peulwana Agricultural Financial Services Provides input loans, linkages to mainstream markets, and other support services to small and medium scale farmers and agro-processors in South Africa. SA Business Resource Institute (SABRI) SABRI supports promising small and medium enterprises (SMEs) through the start-up and growth phases. South African Credit Co-operative League SACCOL Ltd was established by Savings and (SACCOL) Credit Co-operatives (SACCOs) and Credit Unions around South Africa as their National Association]. Thembani International Guarantee Fund (TIGF) Uses loan and grant capital raised from individuals and organisations in the United States
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and Europe as security for guarantees to cover loans from South African banks. South African Savings Institute (SASI) Independent non-profit organisation dedicated to developing a robust culture of saving in South Africa. University of Pretoria Houses the Centre for Inclusive Banking in Africa. Banks First National Bank (FNB) Standard Bank Agriculture
ABSA Agribusiness
Bidvest
CAPITEC
First National Bank
Nedbank AgriBusiness Ltd
Rand Merchant Bank Sasfin Bank
Standard Bank
UBank
WesBank
Source: The Agri-Handbook for South Africa, 2013/2014
Table 5.3 lists different types of private institutions and they are categorised into private financial companies (agencies) and banks. The main roles that are expected from the private financial institutions can be summarised as:
Financial solutions and support for emerging farmers and agri-businesses Business/financial skills training Sourcing funding grants for emerging farmers Providing financial advisory services Offering saving and banking opportunities Offering financial loans Training in financial and business skills
5.2.2. Current agro-processing businesses
Another group of role-players that are to be considered for the Agri-Park development are the existing agro-processing businesses in the Limpopo Province and the Waterberg DM. It is important to identify the existing business in order to assess the opportunities for joint ventures, partnerships and services offered. The agro-processing businesses are presented according to their services:
Millers Packing houses and cold storage facilities Processing units, as well as Other businesses and organisation that are beneficial to agro-processing
Millers that are found within the Limpopo Province are presented in Table 5.4.
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Table 5.4: Millers within Limpopo Province Name District Municipality Contact Person Tel No Address
Sasko Mill - Capricorn Polokwane Mr Gideon van Zyl 015 293- 55 Antimoon Polokwane (Mill Manager) 0050 Street, Ladanna, 0700 NTK – Vhembe Thulamala Mr Patrick 015 964- Stand 42, Shayandima Madambiri (Mill 3031 Mahwasane Manager) Street, Shayandima, , 0945 NTK – Seshego Capricorn Polokwane Mr McKay 015 223- 40 Khensani Drive, Makharamedzha 5711 Seshego, 0742 (Mill Manager) NTK – Waterberg Mokopani Mr Hendrik Naude 015 491- 10 Hereford Potgietersrus (Mill Manager) 9000 Street, Potgietersrus, 0601 Progress Mill - Capricorn Polokwane Mr Eric Platt 015 297- 1 - 20th Street, Polokwane (Managing 3452 Industria, Director) Polokwane,0699 Ve-Op Waterberg Mookgopong Mr JCK 014 743- 7 - 1st Street, Rollermeule Opperman 2225 Naboomspruit, (Owner) 0560 Wes Enterprises Waterberg Thabazimbi Mr P Eloff 014 777- Warmbaths (Pty) Ltd (Managing 1330 Road, Director) Thabazimbi, 0380 Source: Agricultural Strategy for Capricorn District Municipality
Table 5.4 presents the millers that have been identified in the Limpopo Province. A few of these millers are also within the Waterberg DM, namely: NTK in Mokopane, Ve-Op Rollermeulle in Mookgophong, and Wes Enterprises (Pty) Ltd. The existence of these millers presents opportunities for agreements, service provision, and partnerships for the Waterberg DM Agri-Park.
a) Packing Houses
Another group of businesses that are considered as agro-processing businesses are packing houses. Fruit packing houses have been identified in Limpopo and are indicated in Table 5.5.
Table 5.5: Packing Houses and Cold Storage Facilities in Limpopo Province Pack House Product Nearest town Cold storage facility Citrus Alldays No Floris v Wyk Yes Soetdoring Boerdery Dendron No Wolkberg sitrus LDV Boerdery Modimolle No Zebediela Mokopane Yes Nordikane No Potties Pakstoor Citrus/Grapes Yes Ben Bekend Citrus No Limburg Plase Mooiplaas Citrus/Druiwe Sunningdale Citrus Yes
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Anlo Farm Grapes Mokopani (Close to Zebediela)
Montina Boerdery Tomatoes Mooketsi ZZ2 Wildebeesfontein Peaches Mookopong Bufland Boerdery Citrus/Peaches No Netcor Peaches Will Neethling Polokwane Branlee Estates Ratho Boerdery Citrus Pontdrif Yes Source: Agricultural Strategy for Capricorn District Municipality
As indicated in Table 5.5, Limpopo has a considerable distribution of fruit pack houses which pack different fruits with the most common being citrus. The Waterberg DM has pack houses in Modimolle, Mokopane and Mookgophong. Possible partnerships can be identified, where these packing houses can be part of the Agri-Hub or can form part of the FPSU’s primary processing and local retail function. These packing houses can also be used to carry out the agro-processes as a service providers through beneficial agreements.
b) Processing Units
There are some processing units in the Limpopo province that have been identified for possible partnerships and agreements with the Agri-parks. The following processing units have been identified in the Limpopo Province:
Granor Passi (Pty) Ltd: Granor Passi (Pty) Ltd is the biggest fruit processor in South Africa. Its product range includes citrus varieties, apple, pear, guava, mango, litchi, papaya, banana, apricot and strawberry. Processing plants are located in Polokwane and Letsitele in the Limpopo Province, and the Langkloof in Capetown, Western Cape, respectively. The new industrial area of Polokwane is where the manufacturing plant can be found, which takes up the following tasks: processing all citrus varieties, guavas and strawberries, the blending of all formulated products, and the manufacturing of fruit preparations for yoghurt. Research and development are also carried out by the plant in Polokwane (Capricorn District Municipality).
Enterprise Foods: From the Tiger Brand Group of companies, Enterprise Foods is sited in Polokwane. This unit processes meat into Viennas and polonies. The meat is imported from their abattoir in Midrand. It may be expected that Enterprise Foods also imports other ingredients from outside Limpopo Province.
Hygienik Dairy: Hygienik Dairy is located in Louis Trichardt and produces milk to supply Hygienik Depot in Polokwane with milk, which is distributed in Limpopo.
McCain: McCain has a depot that is operated at Marble Hall, where vegetables are provided by farmers. A significant commodity in this farming region is peas. The vegetables are washed and chilled before transportation to McCain’s processing unit in Springs where they are blanched and frozen. These vegetables are then marketed and sold as frozen vegetables.
Miami Canners: Maimi Canners are located in Letsitele, Limpopo Province. The canning of tomatoes and other vegetables such as onions and cucumber is their main function, as well as the production of archer.
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Neotech Industries: Agro Processors of Limpopo (APOL Ltd) is a company composed of vegetable farmers in Limpopo, most of whom are organised under the Limpopo Tomato Growers Association (LTGA). Over 2 500 emerging tomato farmers are members of the LTGA, with 5% from Waterberg DM.
Tiger Brands Musina: A Tiger Brands processing unit at Musina manufactures tomato paste and receives tomatoes from emerging farmers at Nwanedi, among others. Tomatoes from emerging farmers at Blouberg were also provided to the processing unit but are not provided anymore but the possibility for them to deliver again is not ignored.
Tiger Brands Duiwelskloof: The Tiger Brands processing unit in Duiwelskloof processes a variety of products such as tomatoes, onions, carrots, cabbage, green peppers, potatoes and others. A range of canned commodities are also produced. Tomatoes are the main commodity with an assortment of products such as puree, tomato sauce, stews and others. Quite a few emerging farmers deliver to this unit, as Tiger Brands tries to recruit more emerging farmers.
Rhodes Fruit Group: An agro-processing plant is accessible in Biaba in Vhembe DM, where the processing of tomatoes and other vegetables takes place. The plant is owned by the Rhodes Fruit Group.
The processors listed above are not necessarily located in the Waterberg DM, but are distributed in different areas of Limpopo. While developing partnerships for the Waterberg DM with the above processors may be difficult, opportunities exist to develop agreements and contracts for service provision to the Agri-Park or to sell the Agri-Park commodities to these processors.
c) Major Service Providers in the Limpopo Province
Further private companies that are not necessarily agro-processing businesses but that play an important role in providing services that are linked to agro-processing are identified. The major services providers in the Limpopo Province can be found in different parts of the province, where some have offices and branches in the Waterberg DM. All three components of the Agri-Park’s system (FPSU, AH and RUMC) will have opportunities for the involvement of the identified extension services. The following types of services providers are available in different areas in South Africa:
Information growing techniques and problems Chemicals and control of pests and diseases Irrigation equipment dripper systems – precision dosing Spraying/irrigation pumps, implements, tractors and equipment Seedling mediums Protective clothing when using chemicals Fertilizers Seed, seedlings (grafted seedlings) and nurseries Protective clothing when using chemicals
A list of the different service providers providing the above services can be found in Annexure A.
d) Main Input Suppliers
There are two major active cooperatives in Limpopo Province namely: Obaro and NTK Limpopo Agric Ltd (NTK) of which NTK is the main role player.
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Obaro: Obaro's core business is providing services and products to the agricultural sector. The product range in the Limpopo Province mainly includes: trade and financing. Obaro's business also extends to the general public. The following branches are in the Limpopo Province: Lephalale, Mokopane, Marble Hall, Groblersdal, Hoedspruit, Mookgophong and Vaalwater.
NTK Limpopo Agric Ltd (NTK): The core business of NTK is trading in inputs, mechanisation, irrigation equipment and household goods NTK provides agricultural inputs, agricultural equipment and household goods to farmers and the general public in Limpopo Province. Furthermore, NTK renders grain handling and storage facilities, mechanisation and irrigation equipment to farmers. It also operates maize milling facilities in three towns in Limpopo. NTK’s head office is located in Modimolle.
NTK is also the owner of all grain silos in Limpopo with the exception of 2 silos, which are located at Vaalwater and Immerpan. The following produce is handled: Maize, wheat, sunflower, sorghum and soybeans. NTK receives and sells produce, or arrange for direct transactions between the farmer and buyer.
NTK operates an agricultural development branch to render extension services to emerging and commercial farmers. They have currently three extension officers in the field and plan to increase them to six in the near future. They are willing and keen to assist the consultants with the planning of agricultural projects. The possibility also exists to render support services to these projects. Basic research regarding agricultural crops in Limpopo has been scaled down and is a matter of concern regarding sustainable production in the province.
Other suppliers that are less prominent are the following:
Wenkem: Wenkem is the distributor of a broad range of agricultural chemical products. Wenkem is in partnership with Bayer Crop Science. Wenkem has a representative in Naboomspruit and Modimolle.
Avello: Avello is a supplier of agricultural chemicals.
Pannarseed: this company offers a wide range of seeds to farmers. Their activities in Limpopo Province are coordinated through a regional branch in Delmas.
Monsanto: the Monsanto seed distribution company, does not have branches in Limpopo Province but they do deliver seeds across the province, based on demand.
Hygrotech: the company markets value-added products in the total spectrum of the vegetable industry in South Africa. Limpopo Province is served through its branch in Mokopane.
Mayford: supplies vegetable seeds to farmers. Limpopo Province is served through its branches in Tzaneen and Lephalale.
Irrigation contractors: there are several operational irrigation contractors in the Limpopo Province. They are involved with the design and installation of irrigation systems. They are present in Tzaneen, Polokwane, and Louis Trichardt.
Omnia fertilizers are sold through its representatives in Modimolle and Polokwane.
Sasol fertilizers are also distributed through its agent in Polokwane.
The objective of the identifying the main private role players in the district was to assess the organizations that could possibly assist smallholder farmers, be involved in the Agri-Park and form partnerships with the Agri-Park.
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5.3. Associations and organisations
Associations and organisations refer to the group of role-players that also have a significant role in the development of the Agri-Park. These are organisations that aim to represent farmers and the agricultural industries and its sector, as well as taking up the task of contributing to the development of agriculture and agricultural stakeholders. As role players to the development of the Agri-Park, associations and organisations at the national, provincial and local level are assessed.
5.3.1. National
The national organisations that are expected to play a role in the Agri-Parks programme are listed in Table 5.6.
Table 5.6: National organisations and associations. Organisations/Associations Role Agri Sector Unity Forum (ASUF) Facilitation of market penetration Access to development opportunities Guidance through strategic frameworks Agri SA Facilitation of market penetration Access to development opportunities Access to information Agricultural Business Chamber Facilitation of market penetration Access to development opportunities Agri-business guidance Regulatory guidance AgriSETA (Agricultural Sector Education Skills development and training and Training Authority) Facilitation of interaction between different stakeholders Facilitation of market penetration Access to development opportunities Red Meat Industry Forum Facilitation of market penetration Red meat development support Red Meat Producers Organisation Facilitation of market penetration Red meat development support National Wool Growers Organisation of Emerging sheep farmer support towards wool South Africa production Training of wool workers and farm workers Emerging Farmers Provision of agricultural produce Identification of agricultural and training needs and requirements South African Feedlot Association (SAFA) Industry representation Provides support and solutions Collective branding of grain fed beef Educational workshops and tours Animal health issues National Emergent Red Meat Producers Lobbying and Advocacy Organisation Access to Information Access to Finance Access to Technical Support Grain SA Strategic support and services to South African grain producers National African Farmers Union (NAFU) Emerging farmer support Facilitation of access to land for small farmers AFASA Facilitate the development of African farmers
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Organisations/Associations Role Red Meat Abattoir Association Skills training Support services Source: Urban-Econ, 2015
The associations and organisation listed in Table 5.6 are at the national level and their main roles to the Agri-Park are summarised. Some of the organisations and associations have branches in different parts of South Africa and some of them are found in Limpopo, as presented in the following section.
5.3.2. Provincial
Limpopo’s provincial organisations that are expected to play a role in the Agri-Parks programme are listed in Table 5.7.
Table: 5.7: Limpopo Associations and Organisations Farmer organisations / associations Potential Roles
AFASA - Limpopo Facilitate the development of farmers.
Agri-Limpopo Facilitation of market penetration Access to development opportunities Access to information Transvaal Agricultural Union (TAU Development Support SA) Access to information Represent farmers Red Meat Producers Organisation Skills training (RMPO) Limpopo Support services National African Farmers Union Emerging farmer support (NAFU) Limpopo Facilitation of access to land for small farmers Source: Urban-Econ, 2015
The associations and organisation in Table 5.7 are mostly provincial branches of national associations and organisations. Generally, the roles identified pertain to assisting farmers in the Limpopo Province with development support, access to information and opportunities and representation of the farmers.
5.3.3. Local
At the Waterberg DM local level, the role of associations and organisations is usually taken up by farmer organisations. Information of farmer organisations on the Waterberg is not readily available, while continuous research is conducted to identity them. However, there are a few cooperatives that have been identified though the Waterberg LED Strategy 2014 and the Waterberg SDF 2014. Table 4.9 provides a distribution of co-operatives in the Waterberg DM’s local municipalities, as indicated in the LED Strategy.
Table 5.8: Distribution of cooperatives in the Waterberg DM Municipality No. of co-operatives Industry focus Bela-Bela 2 Agriculture and manufacturing Lephalale 49 Agriculture and catering Mogalakwena 42 Agriculture, trade, finance, manufacturing Mookgophong 5 Agriculture, catering, manufacturing Modimolle 14 Agriculture, catering Thabazimbi 8 Catering, manufacturing Source: Waterberg LED Strategy 2014
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The co-operatives in the different local municipalities listed in Table 5.8 are mainly focused around agriculture, catering, and manufacturing. The agricultural cooperatives in the Waterberg DM can be expected to take on the following roles:
Beneficiaries to the Agri-Park programme Provision of services Representations of farmers Access to information and development access
The purpose of this section was to identify the role-players for the Agri-Park in the Waterberg DM along with their potential roles. According to the role-players that have been identified, it is evident that the Agri-Park has adequate potential support. There are a number of government agencies that are particularity tasked with assisting agricultural initiatives and activities by providing support though institutional guidance, advisory services and financial assistance among other services. The Private sector also has institutions that are available to assist the Agri-Park stakeholders with funds and other financial services. The existing agro-processing businesses and related establishments in the Limpopo Province and Waterberg DM could provide partnership opportunities that the Agri-Park can leverage. Associations and organisations at national, provincial and local level also demonstrate the support that the farmers and other Agri-Park stakeholders have available. The following section scales down to a focus on the Waterberg DMs socio-economic profile, which will provide a view of the district’s status quo.
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SECTION 6: SOCIO-ECONOMIC ANALYSIS
The socio-economic analysis of the Waterberg DM studies various indicators in order to provide a view of the socio-economic status of the district. By analysing the socio-economic status, key issues, shortcomings and performance measures can be identified: thus, allowing the Agri-Park to specifically fit to the district’s context and assist in addressing challenges The analysis is conducted according to:
Demographics Economic Profile Employment per Sector Unemployment rates Skills (levels of education) Income and poverty
6.1. Demographic Analysis
The demographic analysis seeks to study the dynamics and structure of the Waterberg DM population. The following population aspects are studied:
Population Household Age Structure Racial structure
6.1.1. Waterberg DM Population and household
a) Population Size
The population growth indicated in Table 6.1 displays the population totals from 2005 to 2025. In order to display the population growth in the Master Business Plan, the population totals for every second year from the year 2005 up to 2015 have been provided as well as a ten-year leap to 2025. The population totals from 2005 to 2011 have been obtained from Census data and from 2013 onwards, and calculation have been done using the growth rate and Census data population totals for the year from 2013 onwards.
Table 6.1: Waterberg Population growth 2005 - 2025 Area 2005 2007 2009 2011 2013 2015 2025
South Africa 47 269 795 48 596 537 50 020 387 51 548 743 53 191 571 54 956 508 63 168 275
Limpopo 4 966 792 5 086 481 5 226 053 5 381 818 5 551 505 5 740 191 6 486 557
Waterberg 592 599 611 717 630 502 651 105 673 925 698 423 802 557
Source: Regional Standardised data, 2015
Table 6.1 displays the population growth for South Africa, Limpopo and the Waterberg DM from the yeas 2005 to 2025. Currently, in 2015, the Waterberg DM has a population total of 698 423 people and has increased by 105 824 people - 16% from the population total in 2005 which was 592 599. By the year 2025, 802 557 people are expected to live in the Waterberg DM when compared to South Africa and Limpopo, Table 6.1 indicates that South Africa has a population total of 54 956 508 people and Limpopo has a total of 5 740 191 people, and both have been calculated to have a 16% increase from 2015. Therefore, the Waterberg DM population contributes 1% to the South African population and 12% to Limpopo’s population. The population growth rates for South Africa, Limpopo and the Waterberg DM are presented
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in Table 6.2, with a growth rated for the census years 2001 and 2011, as well as the years 2005 to 2025. When comp
Table 6.2: Waterberg DM Population growth rates Growth rate (2001 to Growth rate (2005 to Table 6.2 indicates that the growth Area 2011) 2015) rate for the period 2001 to 2011 is 1.4% for South Africa, 1.2% for South Africa 1,4% 1,5% Limpopo, and 1.4% for the Waterberg DM. Therefore, it can be Limpopo 1,2% 1,5% said that the Waterberg DM Waterberg 1,4% 1,7% population increased by an estimate of 1.4% each year between the (Source: Regional Standardised data, 2015) 2001 and 2011 period, and is expected to increase by a higher 1.7% growth rate for the years between 2005 and 2025. However, in order to calculate the population totals in Table 6.1, the 2001 to 2011 growth rate is used. Table 6.2 also indicates that the 2001 to 2011 growth rates between the three different areas compare closely. Both the population size, growth, and growth rate for the Waterberg DM have implications for the development of the Agri-Park: the population trends and characteristics influence other categories that are important for the Agri-Park.
Figure 6.1: Waterberg DM population distribution by local municipalities A comparison of the Greater Mopani population contributions by Sekhukhune 21% 20% the districts in the Limpopo Province are displayed in Figure 6.1.
As demonstrated in Figure Waterberg 6.1, the Vhembe DM 12% contributes the highest Vhembe population at 24% followed 24% closely by the Capricorn DM with a contribution of 23%. Capricorn The Mopani DM is not far with 23% 21%, as well as Greater Sekhukhune at 20%. The (Source: Regional Standardised data, 2015) smallest population is contributed by the Waterberg DM contributing 12%. The Agri-Park is in a district with a smaller, more manageable population size, which may also have a disadvantage when it comes to factors such as the size of the workforce and service distribution.
b) Household
The growth in the total number of households for South Africa, Limpopo and South Africa have been assessed. Every second year from the year 2005 up to 2015 has been provided, along with a ten-year leap to 2025. The population totals from 2005 to 2011 have been obtained from the Census and from 2013 onwards. Calculation have been done using the household size and recorded totals. The household growth is indicated in Table 6.3, displaying the household totals from 2005 to 2025.
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Table 6.3: Waterberg DM household total growth Area 2005 2007 2009 2011 2013 2015 2025
South Africa 12 851 535 13 455 899 14 031 931 14 546 270 15 006 120 15 500 856 17 817 041 Limpopo 1 230 678 1 298 256 1 362 508 1 416 789 1 461 035 1 510 261 1 706 632 Waterberg 159 205 164 148 168 520 173 115 177 878 183 221 210 539
(Source: Regional Standardised data, 2015)
According to Table 6.3, Waterberg currently (2015) has 183 221 households which are expected to increase to 210 539 in 2025. In 2005, the population total was at 159 205 households, meaning that the total number of households in the district have increased by 24 016 households or 15%. South Africa currently has 15 500 856 households with a forecast of 17 817 households in 2015, and Limpopo holds 1 706 632 households and is expected to have a household total of 1 706 632 in 2025. Furthermore, South Africa and Limpopo’s household totals have increased by 21% and 23%, respectively, from 2005. Therefore, Waterberg’s growth is slower than the country and its province. The average household sizes for 2015 for South Africa, Limpopo and the Waterberg DM were estimated by dividing the population size by the number of households, and are presented in Table 6.4.
Table 6.4: Household Size 2015 Area Household size 2015
South Africa 3,5 Limpopo 3,8 Waterberg 3,8
(Source: Regional Standardised data, 2015)
According to Table 6.4, Waterberg has an average household size of 3.8, which is equal to that of Limpopo, while South Africa’s household size is a not so far at 3.5. Therefore, it can be concluded that Waterberg has approximately about four people per household, which is similar to that of South Africa and Limpopo. The number of households and the household sizes provide an idea of the households that the Agri-Park will provide income and food to, among other needs. The smaller household size and totals in the Waterberg DM make the objectives relating development of the Waterberg Agri-Park more achievable.
6.1.2. Age and racial profile
The age and racial composition of the Waterberg DM have a considerable impact on the socio- economic status. Aspects such as employment and income are affected by the age and racial profile.
a) Age profile
The age profile for the Waterberg DM is studied by assessing the age categories according to the child population (0-15 years), the working age population (16 -64), and the aged population (65 and above). Figure 6.2 presents the age profile of the Waterberg DM. By looking at the different age groups, the portion of the population that is eligible to work can be identified.
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Figure 6.2: Age Profile, 2013 As shown by Figure 6.2, 65% of the Aged Waterberg population belongs to the population, 6% working age group, 29% are children and 6% are part of the aged population. The Waterberg age profile indicates that Child there is a relatively large working population, population that has the opportunity to 29% contribute to the working force.
Working Furthermore, the working age supports age 35% of the rest of the population, which is population, not a burden for the working age since 65% an average of approximately two working age people support one dependant (aged and child population). The Agri-Park will have a decent workforce to provide (Source: Regional Standardised data, 2015) employment to. Furthermore, the income received from the job opportunities can be shared with the child and aged populations without it being a burden on the working population.
b) Racial Profile
The racial profile for the Waterberg DM assesses the racial categories that include white, black, asian and coloured. Figure 6.3 demonstrates the racial profile of the Waterberg DM. With the aim of the Agri- Park assisting small-scale black farmers, it is important for the Agri-Park to know the racial distribution in the district
Figure 6.3: Racial profile, 2015 Coloured White , Figure 6.3 indicates that 91.8% of the Waterberg , 0.2% 7.5% DM’s population are categorised as black, which Asian , 0.4% is evidently the majority. The white category is represented by 7.8% of the district’s population, and the coloured and Asian categories are poorly represented. The high amount of the population categorised as black pose considerable impacts Black , on policies that are based on assisting the 91.8% previously disadvantaged.
(Source: Regional Standardised data, 2015)
6.2. Economic Profile
The economic performance of the Waterberg District is studied by assessing the growth in the Gross Value Added (GVA), as well as the contribution by the different economic sectors to District’s GVA. In order to understand the impact of the results shown by the information presented, comparisons are made to the Limpopo Product.
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6.2.1. GVA Growth
The GVA Indicates the measure of value of goods and services produced in an area, industry, or sector of an economy. The comparative advantages of the production structure, the diversification of the economy, labour force productivity, and other aspects are reflected by the GVA. The GVA growth from 2003 to 2013 for the Waterberg DM and Limpopo is presented in Figure 6.4.
Figure 6.4: GVA Growth by Waterberg DM and Limpopo, 2003 - 2013
120,000
100,000
80,000
60,000
40,000 GVA at constant price (R million)(R price constant at GVA
20,000
-
Years
Limpopo Waterberg
(Source: Regional Standardised data, 2015)
According to Figure 6.4 the GVA of the Waterberg DM grew extremely slow and this is demonstrated by a relatively flat line on the graph. The GVA by Waterberg was worth R21 775 million in 2003 and only grew to R23 542 million in 2013. Meanwhile, Limpopo’s GVA increased from R86 578 million in 2003 to R111 249 million, as demonstrated by a gentle sloping line. Therefore, the Waterberg GVA not only has a stagnant growth, but it is much slower than Limpopo’s clearly growing GVA. The Agri-Park plans to contribute to the district’s economic growth by speeding up agricultural development and related development. With the status of the district’s GVA contribution and its growth, the Agri-Park needs to set goals for its contribution to the economy will assist the district’s economic development and production.
6.2.2. GVA Contribution per sector
Further details about the different economic sectors can be assessed by studying the GVA contribution per sector as presented in Figure 6.5, for Limpopo and Figure 6.6 for the Waterberg DM.
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Figure 6.5: GVA contribution per sector in Limpopo, 2003, 2013.
General government
Community, social and personal services
Finance, insurance, real estate and business services
Transport, storage and communication
Wholesale and retail trade, catering and…
Construction Industry Electricity, gas and water
Manufacturing
Mining and quarrying
Agriculture, forestry and fishing
0% 5% 10% 15% 20% 25% 30% GVA Contribution
2003 2013
(Source: Regional Standardised data, 2015)
Figure 6.5 indicates that the highest contribution is from the construction sector, with a contribution of 21% down from 28% in 2003. Other significantly contributing sectors are government, and the finance, insurance, real estate and business services. The highest growth is reflected by the general government and the largest decrease is reflected by the construction sector. Figure 6.6 displays the GVA contribution per sector in the Waterberg DM.
Figure 6.6: GVA contribution in the Waterberg DM, 2003, 2013
General government
Community, social and personal services
Finance, insurance, real estate and business services
Transport, storage and communication
Wholesale and retail trade, catering and accommodation
Construction Industry Electricity, gas and water
Manufacturing
Mining and quarrying
Agriculture, forestry and fishing
0% 10% 20% 30% 40% 50% 60% GVA contribution
2003 2013
(Source: Regional Standardised data, 2015) As indicated by Figure 6.6, the highest contribution to the GVA is from the construction sector at 47% in 2013, which is a decreased GVA contribution from 54% in 2003. The next highest contribution follows far
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behind, from the general government, which increased from contributing 10% in 2003 to contributing 13% in 2013. Therefore, a comparison between the Waterberg DM and the Limpopo Province demonstrates that Waterberg had an uneven economy, while similarly having construction as the most significant contributing sector to the GVA. With regard to the Agri-Park, it is important to also observe the GVA contributions from the sectors: agriculture, forestry and fisheries, and manufacturing (agro-processing is an industry under manufacturing). Both sectors show rather small GVA contributions for both Limpopo and Waterberg, with Waterberg demonstrating poorer GVA contributions. Therefore, the Agri-Park will have to work towards ensuring better growth and production of the agriculture and agro-processing industries.
6.3. Employment per sector
An analysis of the contribution to employment levels of each of the economic sectors is crucial in understanding the socio-economic status of the Waterberg district. Sectors that contribute the most to employment are revealed and further deductions linked to job creation opportunities, type of skills and income, can be made. Figure 6.7 demonstrates the economic sectors’ contribution to the number of employed people in the district.
Figure 6.7: Employment contribution per sector for Waterberg DM and Limpopo, 2013
General government
Community, social and personal services
Finance, insurance, real estate and business services
Transport, storage and communication Wholesale and retail trade, catering and accommodation Construction
Industry sectors Industry Electricity, gas and water
Manufacturing
Mining and quarrying
Agriculture, forestry and fishing
0% 5% 10% 15% 20% 25% 30% 35% %
Waterberg Limpopo
(Source: Regional Standardised data, 2015)
According to Figure 6.7, the wholesale and retail, catering and accommodation sector contributes the most jobs to the Waterberg DM, with Waterberg DM contributing 25% and the Limpopo Province contributing a slightly higher 29%. In Limpopo, the next highest employment contributions are from community, social, and personal services (15%), as well as general government (13%). Meanwhile the Waterberg DM’s next highest employment contributions are from the manufacturing industry (16%), mining and quarrying (15.4%), and Agriculture, forestry and fisheries (11%). Thus, the highest employment contributions in the Waterberg DM are for sectors that are mainly secondary and primary sectors which mostly require less formal skills and are less paying than most tertiary related employment opportunities. While GVA contributions for agriculture, forestry and fisheries, and manufacturing are poor, their
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employment contributions are among the highest in the district. Thus, the Agri-Park will be contributing to further jobs in the agriculture and agro-processing industries, and will have the opportunity to employ an experienced workforce.
6.4. Unemployment Status
Unemployment is also an important indicator, which demonstrates the contribution of the economy as well as the ability of the population to receive an income. It is important to clarify some definitions related to unemployment before assessing the indicator itself.
Economically active population: Includes the employed, the unemployed and the population that is active in the informal sector (DBSA). Unemployment: Includes persons actively looking for a job but who are not in any type of paid employment. Not economically active (NEA): includes the population that is not under paid employment and is not actively seeking employment
The portion of the population that is employed (formally and informally), unemployed, and the NEA are considered in the unemployment analysis, as well as the unemployment rate. It is important to note that the analysis of unemployment considers the working age population. With the above aspects clarified, an analysis of unemployment in the Waterberg DM and Limpopo can be provided in Figure 6.8.
Figure 6.8: Unemployment in Waterberg DM and Limpopo, 2013
(Source: Regional Standardised data, 2015) Figure 6.8 indicates that in the Waterberg DM, 49% of the economically active group is employed in both the formal and informal sector and 7% of this group is unemployed, while 44% belong to the NEA group. The Limpopo Province demonstrates that 38% of the working age population is employed, 8% is unemployed and 54% is not economically active. Therefore, the Waterberg district displays that there is a lower percentage of the population that in unemployed.
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Furthermore, research on the employment rate in 2013 indicates that Waterberg has an unemployment rate of 11.8%, which is less than the South African unemployment rate of 24.7% and that of Limpopo – 17.8%. The Agri-Park will be able to contribute to the efforts to decrease the unemployment rate by providing agricultural and agro-processing employment opportunities, including the influence to other related sectors.
6.5. Skills Level
An analysis of the skills seeks to understand the level of skills in the Waterberg DM. Skills levels reveal aspects about the ability to access employment opportunities, as well as the standard of life. To assess the level of skills acquired by the Waterberg DM population, the portion of the population and their highest education level is studied. Figure 6.9 presents the highest education achieved in Waterberg and Limpopo.
Figure 6.9: Waterberg DM and Limpopo Education Levels, 2014
35.0%
30.0%
25.0%
20.0% % 15.0%
10.0%
5.0%
0.0% No schooling Some Complete Some Grade 12 Less than Higher primary primary Secondary Grade 12 with Certificate Education Level Limpopo Waterberg
(Source: Regional Standardised data, 2015)
According to Figure 6.9, both the Waterberg and Limpopo Province have closely compatible figures for the different education levels. Both areas demonstrate that 19% of their population have achieved a qualification higher than matric, and 13% in Limpopo have a matric certificate with 14% in the Waterberg DM. However, what is alarming is that most the population in both areas have not completed secondary education, displayed by 29% in Waterberg, as well as 11% of the Waterberg population with some secondary education. The analysis reveals that the Waterberg DM is rather poorly educated. The low percentage of the population that has completed matric and has a higher qualification means that the Agri-Park should implement skills development and training programmes. 6.6. Income and poverty
Income and poverty indicators are important in important the socio-economic analysis because they are the result and underlying cause the different socio-economic statuses in the district. As mentioned in the introduction of the Master Business Plan, there are many communities that are afflicted by poverty, and one of the government’s major challenges is ensuring that all households have an income to support their families. Therefore, analysing the income and poverty in the district will provide a view of the number of people with an income that barely allows them to support themselves.
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6.6.1. Income profile
The income profile seeks to reveal the percentage of the population that fall within defined income categories. The annual household income profile for the Waterberg DM and Limpopo Province is displayed in Figure 6.10.
Figure 6.10: Annual household income for Waterberg DM and Limpopo Province
Unspecified R2 457 601 and more R1 228 801 - R2 457 600 R614 401 - R1 228 800 R307 201 - R614 400 R153 601 - R307 200 R76 801 - R153 600 R38 401 - R 76 800 R19 201 - R 38 400
R9 601 - R 19 200 income Categories (R/annum) Categories income R4 801 - R 9 600 R1 - R4 800 No income
0% 5% 10% (Source:15% Regional Standardised20% data,25% 2015) %
Waterberg Limpopo
Source: Regional Standardised Data
In Figure 6.10, it is evident that both the Waterberg DM and Limpopo Province households mostly receive an income between R9 601 – R38 400. For Waterberg, the highest portion of the population, 21%, has an income of R19 201 – R38 400, while for Limpopo the income category of R9 601 – R19 200 has the highest percentage of the population at 23%. Income categories higher than R307 201 do not have a percentage of populatio0n that is higher than 3%, for both areas. Therefore, Waterberg has a higher income category with the highest percentage, than Limpopo. However, both areas demonstrate high levels of inequality as a result of steady decreased population percentages with increasing income. The Agri-Park can provide employment which will contribute to increasing household income, and with better training and skills development opportunities, higher income levels can be attained by the households.
6.6.2. Poverty Line
To assess the poverty status in the Waterberg DM, the percentage of the population that recieves an income below the poverty lines is investigated. Table 6.5 indicates the inflation adjusted poverty lines for South Africa
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Table 6.5: Inflation-Adjusted poverty lines, 2011 Rands per Annum per Poverty Line Rands per Day Rands per Annum households Lower-Bound 443 5 316 21 264 Upper-Bound 620 7 440 29 760 (Source: Urban Econ Calculations based on Regional Standardised Data and Stats SA)
As indicated by Table 6.5, the lower-bound poverty line was R443 and the upper-bound poverty line was R620 in 2011. In assessing the percentage of the poverty, the lower- and upper-bound poverty lines were applied. Calculations were done using the average household size (Table 6.4) in order to have a measure of the poverty line per annum at household level. The results were R21 264 per annum for the lower-bound poverty line and 29 760 for the Upper bound poverty line. Therefore, the income profile in Figure 6.10 can be referred to in order to have an estimate of the population that falls below the poverty line. Both the upper-bound and lower-bound poverty lines fall with the R19 201 – 38 400 income category. Thus, if we just consider the preceding income category of R9 601 – R19 200, it can be observed that more than 45% of Waterberg’s population falls below the poverty line. Through provision of employment opportunities, training opportunities and support, better economic performance and community support, the Agri-Hub will be able to contribute to eradicating poverty. However, with such high levels of poverty in the district, the Agri-park will have to carefully and strategically plan the fight against poverty.
6.7. Synthesis
With an analysis of the different indicators used to study the socio-economic status of the Waterberg district, the following points can be highlighted.
The Waterberg DM has a small population especially when compared to other Limpopo Districts. A majority of the population represents the black race, which is significant for the application of BBBEE and land reform policies. A stagnant growth exists with reference to the district GVA, which calls for action that will influence an increase. The GVA contribution per economic sector is highly concentrated around the construction sector, demonstrating a lack of diversification which is risky for the district’s economy. Employment is concentrated mainly in the wholesale and retail trade, catering and accommodation sector, followed by primary sectors. This demonstrates a lack in skills as well as the assumption that those that work probably receive a low wage. Further employment opportunities need to be made available in more secondary and tertiary sectors, as well as an improvement in the skills development and training aspect. Although the district demonstrated lower unemployment rates in comparison to South Africa and Limpopo, other indicators reveal that the majority of those that are employed are in low skill and low wage jobs. An alarming portion of the Waterberg DM population receives an income that is lower than the poverty line.
Therefore, the Waterberg DM’s socio-economic status can be described as one that is highly dependent on the primary industry with little economic growth and expansion and still has some improving to make in their level of living and increase chances to access opportunities. However, with the Agri-Parks development and the correct interventions, issues pertaining to diversifying and expanding the economy, increasing the skills of the population and ultimately increased income, the district has the potential to improve the current socio-economic conditions though the development of the Agri-Park.
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SECTION 7: AGRICULTURAL INDUSTRY ANALYSIS
As a sector, agriculture can be defined as: “The agriculture sector incorporates establishments and activities that are primarily engaged in farming activities, but also includes establishments focusing on commercial hunting and game propagation and forestry, logging and fishing.” (Agro-processing strategy). Key informants for the strengthening and expansion of the rural economy in the province are the existence of agriculture and agri-related activities, which are crucial to the economic development and growth of the rural development. Waterberg’s agricultural economy plays a significant role in the agricultural development of Limpopo, contributing 30% to the province’s agricultural activities. An overview of the Waterberg DM’s agricultural industry will reveal dynamics that will contribute to identifying the opportunities that can be leveraged.
7.1. Main agricultural activities
With most of the district’s employment being based in the agricultural industry, it is important to understand which agricultural activities are significant. Generally, commercial farming mostly takes place in the south east part of the district, known as the Springbok Flats. Along several rivers, irrigated agriculture takes place, with the Crocodile River being the most prominent. Subsistence farming is prominent in the rural villages, where cattle is farmed by villages near mountains, and the lowlands mostly farm crops. Extensive agricultural activity is found surrounding towns in the district including: Lephalale, Thabazimbi and Mookgophong. Local municipalities such as Bela-Bela, Modimolle and Mogalakwena host small-scale agricultural activities. Development potential is recognised by the Waterberg District Municipality for the following:
Game farming Agro-Processing Meat and Horticulture Cluster Agro-Tourism Extensive livestock production (beef, sheep and goats)
The agricultural produce from the agricultural activities that take place in the Waterberg District Municipality have been identified and selected according to the potential. These products can be into the following commodities:
Cattle Livestock Tobacco Poultry Onions Table grapes Soya bean Maize Sorghum Cotton Paprika Sunflower Ground nuts Wheat Game Piggery Citrus Lucerne
The identification of the above commodities has been influenced Limpopo and Waterberg agricultural strategic documents including: The Waterberg Agricultural Strategy 2006, The Mapping of Agricultural
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Commodity Production in the Limpopo Province and the Limpopo Agri-Processing Strategy. Further selection will be demonstrated later in the section as a result of a prioritisation model.
7.1.1. Contribution to District GVA
The contribution to the Gross Value Added (GVA) is assessed, which indicates the measure of value of goods and services produced in an area, industry, or sector of an economy. The GVA is a good indicator of the importance of the industry to the specific area and how it compares other industries in the same vicinity. Currently, the Waterberg DM agriculture sector contributes only 2,77% to the district’s GVA . The local municipalities’ GVA contributions towards the Waterberg DM agriculture industry is indicated in Figure 7.1.
Figure 7.1: Agricultural GVA Contribution per Municipality (2013)
Thabazimbi ; 12% Mogalakwena; 18%
Bela-Bela ; 15% Lephalale; 28%
Modimolle; 17% Mookgopong ; 10%
Statistics South Africa, 2013
Figure 7.1 indicates the agriculture GVA contribution by the local municipalities in the Waterberg DM. Lephalale LM contributes the highest GVA with 28.12%, followed by the Mogalakwena LM with a GVA contribution of 18.08%, which is 10% less. The lowest GVA contribution is from the Mookgophong Municipality, with a contribution of 10.06%.
The overview of agricultural activities in the district demonstrates that there is a foundation for the Agri- Park development. There is already significant activities and production taking place that will allow the Agri-Park to identify opportunities for further development.
7.2. Current and proposed projects in the region
The existing and planned projects in the Waterberg DM are identified in order to include these projects and consider them in the development of the Agri-Park. The projects were identified from the following district strategic policies and departments:
Waterberg IDP 2015/2016 Waterberg SDF 2014 Waterberg LED Strategy 2014 Limpopo DRDLR
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7.2.1. Projects listed in the Waterberg IDP 2014/2016
Table 7.1 presents an agriculture related project by the Waterberg District Municipality as indicated in the IDP.
Table 7.1: Waterberg DM Project
PROJECT NAME Project description Project Pending Funding Abattoir Refurbishment of the abattoir R8 000 000 Source: Waterberg IDP 2015/2016 The Waterberg IDP 2014/2015 also provides the projects planned by the Department of Agriculture, in Table 7.2
Table 7.2: Department of Agriculture Projects Local Land owner CASP Budget Categories of Number of Project Name Farm Name Commodity Project Activities Municipality ship/access Allocation (R'000) farmers Beneficiaries Tshoga Mookgophong Zachariasboom Private 226 130 Cash crops Installation of irrigation Smallholder 2 354 KR Prt 3 system Clermont Workers Lephalale Clermont Farm LRAD 161 516 Large Stock Construction of Feedlot for Smallholder 12 Trust 429 LR 350 cattle Tswelang Pele Lephalale Clermont 429, LRAD 126 069 Cash crops Irrigation under shade net Smallholder 10 Dinoko portion 3 Omega (Lema Lephalale Omega 205 LRAD 88 136 Cash crops Irrigation under shade net Smallholder 20 Gararo) registration division LR Tirisanommogo Modimolle Modimolle Communal 73 453 Cash crops Installation of irrigation Subsistence 3 system Mapela Communal Communal 2 646 999 Aquaculture Completion of aquaculture Smallholder 3 Aquaculture dam and payment of retention
Vhuwelo Youth Modimolle Pt 23 of De Nyl LRAD 8 106 930 Tunnels Completion of tunnels and Smallholder 9 Zyn Oog 423KR Installation of irrigation system Total 11 429 233 Source: Waterberg IDP 2015/2016
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7.2.2. Projects listed in the Waterberg SDF 2014
The agriculture projects that are currently running in the Waterberg DM are indicated in Table 7.3 as listed in the Waterberg SDF 2014.
Table 7.3: Current agriculture projects in the Waterberg DM
Name of Project Municipality Activity / Commodity
Piggery Bokamoso Youth Project Bela Bela Piggery Mnguni Sp Farming (Lease) Bela Bela Piggery Lema O Phele Sub Group B Mookgopong Piggery Grains E & M Ndala Rdw (Lease) Bela Bela Grains Mmatshipi Project Bela Bela Broiler grain Motau Agricultural Bela Bela Grains Mothoa Tp (Lease) Bela Bela Grains P Pila (Rdw) (Lease) Bela Bela Grain Sibiya (Lease) Bela Bela Grains Tshehlo Farming (Lease) Bela Bela Grains Mudau Farming (Lease) Bela Bela Grains Cattle, livestock and small stock Clermont Feedlot Lephalale Cattle Mabena Petrus Rdw (Lease) Bela Bela Livestock Masombuka Farming (Rdw) (Lease) Bela Bela Livestock Matsheni (Lease) Bela Bela Livestock Maubane Mc (Rdw) (Lease) Bela Bela Livestock Mphahlele Farming (Rdw) (Lease) Bela Bela Livestock Tshoane Farming (Lease) Bela Bela Livestock Wilson Family Project (Lease) Bela Bela Livestock Mokoele Faming (Lease) Lephalale Livestock Plas Babirwa (Matsoma) Lephalale Livestock Plas Modisa Kgomo Project Lephalale Livestock Dilley Farm Dwellers Modimolle Livestock Ngwanaboko Farming Project Modimolle Livestock Hlalefo Farming Project Mogalakwena Livestock Plas Kgatla Mj Mogalakwena Livestock Poultry (chickens, broilers and layers) Itireleng Free Range Layer Bela Bela Free range layers Dimati Poultry Lephalale Chickens Galeboe Food Security Lephalale Chickens Mashabela Youth Modimolle Layers Bophelo-Ke-Semphekgo Mogalakwena Chickens Lafata Agric /Minthiro Mogalakwena Chickens Vionen AHF Mogalakwena Poultry Chau Chau Mookgopong Chickens
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Name of Project Municipality Activity / Commodity Ga-Mmasebetsa Mookgopong Poultry Sonah Poultry Thabazimbi Poultry Fruit Hoornbosch Farm Lephalale Grapes Bathokoa Development Project Mogalakwena Citrus Vegetables Cyferkuil Disabled Bela Bela Vegetables Ditlou Le Dinare Bela Bela Vegetables Duroc Project Bela Bela Vegetables Fepa Setshaba Bela Bela Vegetables Khoza Farming Bela Bela Vegetables Mahlangu Veg Project (Lease) Bela Bela Vegetables Mokoena Bela Bela Vegetables Mutewera L. Bela Bela Vegetables Rua-Naga (Merinovlakte) Bela Bela Vegetables Sindane Family Project Bela Bela Vegetables Lema Gararo Food And Development (Omega) Lephalale Vegetables Setateng Food Security Lephalale Vegetables Velen Rozen Lephalale Vegetables Agri-Clear Woman Project Modimolle Vegetables Badirammogo Farming Project Modimolle Vegetables Bakwena Agricultural Modimolle Vegetables Brunza Agri Enterprises Modimolle Vegetables Dimamorako Modimolle Vegetables Driefontein Farm Workers Modimolle Vegetables Ipopeng Youth Modimolle Vegetables Itireleng Modimolle Vegetables Mabaleng Youth Modimolle Vegetables Mash Project Modimolle Vegetables Olifantspoort Farm Workers Trust Modimolle Vegetables Vhuawelo Youth Modimolle Vegetables Xantium Modimolle Vegetables Zenzeleni Modimolle Vegetables Basadi Temong Trust Plas Mogalakwena Vegetables Dynaz Farming Mogalakwena Vegetables Kgatelopele Women In Farming Project (Lease) Mogalakwena Vegetables Legong (Lease) Mogalakwena Vegetables Makidikidi Mogalakwena Vegetables Plas Basadi Temong Project Mogalakwena Vegetables Miracle Mile Inv 57 Pty Ltd Thabazimbi Vegetables Seven Hills Food Security Thabazimbi Vegetables Mixed Commodities Jm Kgagara Boerdery Bela Bela Vegetables and grain
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Name of Project Municipality Activity / Commodity Msiza Crop Farming (Rdw) (Lease) Bela Bela Grains and Livestock Private Tebogo Farming Enterprise Bela Bela Grain veg goats Rua-Naga Bela Bela Chickens and vegetables Sj Mahlangu (Lease) Bela Bela Livestock and grains Ikageng Tshehlong Lephalale Cash crops and Chickens Madidimalo Project Lephalale Chickens and vegetables Nailana Vegetable And Broiler Project Lephalale Vegetables and chickens Profit Typhoon Lephalale Vegetables and livestock Seleka Agricultural Primary Cooperative Lephalale Vegetables and chickens Tswelang Pele Dinoko Project Lephalale Vegetables and livestock Monyebodi Farming Modimolle Cattle and vegetables Mothethea Modimolle Pigs and vegetables Eickstein Farming Mogalakwena Cattle, poultry and vegetables Jj Farming Cc Mogalakwena Vegetables and Cattle Mapela Irrigation Scheme Mogalakwena Vegetables and Grain Sunningdale Farm Workers Mookgopong Citurs and vegetables Kwena Ya Madiba Agricultutal Connexion Project Thabazimbi Poultry and Vegetables Mokonyane Farming Thabazimbi Livestock and vegetables Mooivalei Citrus Project Thabazimbi Citrus and vegetables Rakgase Farming Thabazimbi Cattle and grain Kwena Ya Madiba Agricultural Connexion Project Thabazimbi Poultry and Vegetables Source: Waterberg SDF 2014)
7.2.3. Projects listed in the Waterberg LED Strategy 2014
One of the LED Strategy’s key thrusts is the development of agriculture and agro-processing. Therefore, the projects listed in the LED Strategy are related to the agriculture and agro-processing thrust. Table7.4 presents projects that contribute to the exploiting agricultural opportunities.
Table 7.4: LED projects for agricultural exploitation Local Municipality Project Description Mechanical processing and manufacturing for District-wide crop, stock and game farming
Development of drought-tolerant crops, such as dates and Prickly Pear. Mookgophong
The main agricultural products being produced include maize and wheat, with some vegetable Mookgophong and sunflower production. Lephalale A seed nursery at Madibaneng. Mogalakwena A seed nursery at Madibaneng. Mogalakwena Makomole agricultural farm. Modimolle Alma hydroponics. Modimolle Meropa vegetables. Modimolle Limpopo Dipudi project, which is a goat abattoir.
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Local Municipality Project Description LDA Leseding poultry project in Vaalwater Modimolle (Mabatlane). Modimolle The Busy Bee aquaculture project. Modimolle Organic vegetable projects. Modimolle Venison processing project. Source: Waterberg LED Strategy 2014
The projects that are related to agriculture and agro-processing are indicated in Table 7.5.
Table 7.5: LED projects related to agriculture and agro processing Project Project No. of Main driver and role Project Name Project Status Description Location Beneficiaries players Organic Lettuce, Ongoing project Ward 1, 23 Manager PED, Farming – Agro cucumber, Thabazimbi Kumba Mine, processing and spinach, butternut, Department of vegetable green beans, Agriculture packaging tomatoes, beetroot;Pack house Tiisetso Chicken farming In progress, Bela-Bela 30 Dept. of Agriculture facility searching for a ext. 6 and Dept. of Rural new partner due Development and to construction Rural Reform service provider’s inferior facility construction Beneficiaries still active Source: Waterberg LED Strategy 2014
The LED also presents projects that are supportive of emerging farmers as indicated in Table 7.6.
Table 7.6: LED projects in support of emerging farmers Local Municipality Project Description Lephalale The Marula project at Steenbokpan. Lephalale The expansion of the integrated Godisa projects. Lephalale The Maropong Paprika project. Thabazimbi The development of an agricultural cluster. Modimolle Waterberg agriculture training project. (Source: Waterberg LED Strategy 2014)
Additional projects have been identified, which contribute to supporting emerging farmers and are displayed in Table 7.7.
Table 7.7: SMME projects in support of emerging farmers Name of cooperative No of Locality Challenges beneficiaries Dinaletsna Cooperative 3 Masakhane, Bela-Bela · Non-commitment of other members; Irrigation system; No fencing; Tractor and implements; Equip non-functional boreholes; Theft / security Legong Farming 5 Radium, Bela-Bela Dedicated market ;Withdrawals from Cooperative members ; Transport; Non-functional borehole ; Theft / security
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Mmamerogo 6 Plot 17 Wilgeguns Dilapidated hydroponic Hydrophonic Greenery (Masakhane), Bela-Bela infrastructure; Water shortage; Theft / Cooperative security
Moselane Agricultural 5 Radium, Bela-Bela Non commitment of other members; Coop No Fencing; Non-functional borehole; Theft / security
Bunolo Agricultural Rust de Winter 180 JR, Dilapidated infrastructure; Theft / Cooperative Bela-Bela security
Lekhureng cooperative 549 Hulpfontein (Radium), limited Bela-Bela
Tetembumo Chix 5 7644 Ext 6, Bela-Bela Agricultural Cooperative
Batho le teme agricultural 958 Mazakhele, Bela-Bela Insufficient land; Theft / security and farming primary cooperative limited (Source: Waterberg LED Strategy 2014)
7.2.4. Projects by the DRDLR
A list of projects that support the Agri-Parks programme have been provided by the Limpopo Provincial DRDLR. Table 7.8 displays the RID projects.
Table 7.8: RID projects NAME OF THE PROJECT DESCRIPTION OF THE PROJECT STATUS ESTIMATED BUDGET Animal handling Construction of 2x reservoirs for Contractor on R3 200 000 .00 facilities, Tsimanyana Mokwete, Construction of 2x site, Advert stage, irrigation scheme reservoirs for Morgerzone, Advert stage Construction of 9km fence (Source: Limpopo Province DRDLR)
The LAND projects are displayed in Table 7.9.
Table 7.9: LAND projects FARM NAME PROPERTY DESCRIPTION HECTARES Portion 6 (R/E) of Sterkstroom 105 Portion 6 (R/E) of Sterkstroom 105 KR 782.8605 KR R/E, Portion 5,6 & 7 of the farm R/E, Portion 5,6 & 7 of the farm 990.4374 Merinovlakte 495 KR Merinovlakte 495 KR Portion 1 of the farm Duikerpan Portion 1 of the farm Duikerpan 249 LQ 150.5186 249 LQ R/E Roodebult 128 KS R/E Roodebult 128 KS 675.4211 Portions 1, 2, 3, 4 and 10 Kalkpan Portions 1, 2, 3, 4 and 10 Kalkpan 127 1556.5717 127 KS KS Portion 1 Kalkvalley 151 KS Portion 1 Kalkvalley 151 KS 674.3434 Portion 19 Grootvlei 417 KR Portion 19 Grootvlei 417 KR 393.7147 Portion 1 and 8 Doornkop 357 KR Portion 1 and 8 Doornkop 357 KR 625.974 Total Hectares 5 145.3014 (Source: Limpopo Province DRDLR) The RECAP projects are indicated by Table 7.10.
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Table 7.10: RECAP projects PROPERTY Amount FARM NAME Hectares Commodity New/existing DESCRIPTION Disbursed Limpolo Ptn 4 of Blindefotein 404.8458 Livestock Existing 1 434 803 570 KR Feni Ptn 3 Rustig 696 KS 397.5191 Crops Existing 1 017 000 Rietfontein Farm Ptn 26 Rietfontein 389 37.7502 Crops Existing 1 962 582 Workers Trust KR De Nyl Zyn Oog 256.9596 256.9596 New Ptn 7 De Nyl Zyn De Nyl Zyn Oog Ptn 7 1 616 100 Oog 423 KR De Nyl Zyn Oog 423 KR Rietfontein Ptn 5 Rietfontein 389 328.8458 328.8458 New 1 482 600 KR Springbokvlaakte Portion 12 20.486 Crops New (Kgola Trust) Springbokvlaakte 41 3 068 260 JR Windhoek Ptn 0 Windhoek 50 LR 42.9271 Livestock New 1 605 200 Kirstenbosh Portion 6 and 12 of 1460 Livestock New 1 123 800 Kirstenbosh 497 LR Ngoetjana Portion 0 of the farm 1 369.6632 Livestock New 1 999 846 Schuilplaats 596 KS Mash Ptn 0 of Donkerpoort LRAD 1 032 344 Crops 2 072 060 406 KR Rarang Ptn 6 and 12 of the PLAS 1460 Livestock 1 123 800 farm Bosch 497 LT Baloyi Portion 1 (R/E) farm LRAD 676.3078 Livestock 1 310 200 Hard Times 162 LR Moyo Farming Portion 4 of the farm PLAS 365.7407 Livestock 1 510 840 Middledoon 691 KR Ditlou dinare Portion 20 l of the LRAD 21.4154 Crops 1 843 740 farm BLaauwboschkuil 20 JR (Source: Limpopo Province DRDLR)
The AVMP, Agri-Parks and RVCP projects are indicated together Table 7.11.
Table 7.11: AVMP, Agri-Parks and RCVP projects Base Budget Allocation Expenditure Name of No of BRANCH Status Type of commodity per (R) projects farmers Category (R) AVMP
2,000,000.00 (Senoela and 20 Memo to be Cattle production Botsalanong) presented in the feed lot next TPAC programme REID for livestock Agri-Parks 3,000,000.00 0.00 Purchasing of Memo to be Livestock abattoir submitted to CRDP REID equipment committee 0.00 Inputs, shade Memo to be Vegetables nets and submitted to CRDP irrigation committee REID system for
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Botsalanong and Nailana RVCP Base Budget Allocation No of per Name of ha and BRANCH Category Expenditure projects farms Status Type of commodity REID 300,000.00 R 0.00 RBM (Inputs 40ha Memo referred Crop and irrigation and 2 back from TPAC production,(Tomato system) farms and corrected to es, cabbages, be re- presented in onions. the next TPAC (Source: Limpopo Province DRDLR)
The presentation of current and planned agricultural projects demonstrates the efforts by the government to improve the agricultural sector in the Waterberg DM. Such projects create a basis for the development of the Agri-Park programme, where there are already commitments to improve production and supportive elements including infrastructure.
7.3. Environmental conditions and resource analysis
An assessment of the environmental conditions and useful resources will contribute in understanding what type of agricultural activities will be most efficient in the Waterberg DM. Currently, a water crisis exists in the district, while there are parts of the district that have a semi-arid climate area of concern. The agricultural potential of the Waterberg DM is highly linked to the environmental conditions and available resources. The environmental conditions and resources that are analysed include the climatic conditions (temperature and rainfall) and resources (soil and water).
7.3.1. Climate
The Waterberg District has a varying climate, with the northern and western regions of the district experiencing a hot and semi-arid climate and the southern and eastern regions with more humid and slightly cooler climate. The climate of the Waterberg district is assessed by analysing the maximum and minimum temperatures in the district as well as the rainfall. These climate indicators are studied by using graphs as well as maps for spatial observation. a) Rainfall
The rainfall patterns of the Waterberg DM are also analysed by using a graph and a map. Figure 7.2 displays a graph that indicates the district’s average rainfall in the different months of the year. Figure 7.2: Waterberg DM average rainfall
As indicated in the graph in Figure 7.2, Waterberg’s average monthly rainfall is higher in the beginning of the year, decreases towards the middle of the year, and increases again towards the end of Source: Agricultural Research Council the year. The highest average rainfall in the district during January is recorded at 103mm and the lowest is recorded
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during July, with only 2mm of rainfall. Therefore, the district receives summer rainfall and has very little rain during the winter months. For a spatial indication of the rainfall patterns in the Waterberg DM, Map 7.1 demonstrates a distribution of the average annual rainfall.
Map 5.1: Average rainfall distribution According to Map 7.1 the higher rainfall is received by the southern parts of the region and lower rainfall is received in the northern parts. Rainfall exceeding 650mm is recorded for areas around the town of Thabazimbi. The majority of the drier part of the district receive between 451mm and 500mm.
Therefore, the rainfall is higher for southern areas encouraging agriculture. While the Source: Agriculture and Research Council Waterberg DM is a summer rainfall area, rainfall in the spring and winter is limited.
b) Temperature
The maximum and minimum temperatures in the Waterberg DM are analysed by observing the average temperatures at different times of the year. Figure 7.3 indicates both the average minimum and maximum temperatures in the district for each month of the year.
Figure 7.3: Waterberg DM: Minimum and maximum temperatures
35.0
30.0
25.0
20.0
15.0
Degrees Celsius 10.0
5.0
0.0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Min Temperature 17.6 17.3 15.6 11.9 11.6 3.1 3.2 6.1 10.8 14.2 16.1 17.0 Max Temperature 30.2 29.8 28.7 26.5 24.1 21.4 21.7 24.2 24.2 29.3 29.4 29.5
Source: Agriculture and Research Council
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As indicated by Figure 7.3, both the minimum and maximum temperatures are high towards the months at the beginning of the year and lower towards the middle of the year. The highest average maximum temperature is 30.2 Degrees Celsius in January and the lowest is 21.4 Degrees Celsius in June. The lowest minimum temperature can be expected in June at 3.1 Degrees Celsius and the highest minimum can be expected in December at 17 Degrees Celsius. A spatial analysis of the temperature patterns can be indicated on a map. The distribution of maximum temperatures in the Waterberg DM during January are indicated on Map 7.2.
According to Map 7.2, the Map 7.2: Average Maximum Temperature district’s hottest areas are towards the north-west as well as the south-east with highest average temperature being 33 Degrees Celsius in the extreme north-west part of the district.
Cooler Maximum average temperatures are indicated for the part of the central area of the district, with 26 Degrees Celsius being the lowest maximum temperature. The distribution of minimum temperatures in the Waterberg DM during July are indicated on Map 7.3.
Source: Agriculture and Research Council
Map 7.3: Average minimum temperature in Waterberg DM Map 7.3 demonstrates that in July the district’s coldest minimum average temperatures are experienced mainly by the central area of the district, with 0 Degrees Celsius being the lowest minimum temperature. Areas in the north, spreading towards the north- east and north-west are warmer during July than the central areas, with 6 Degrees Celsius as the highest minimum temperature experienced.
The information above can be interpreted by stating that Waterberg demonstrates that there is a wide temperature range of 27.1 degrees. Therefore, the district experiences extreme temperatures with summers that are warm and winters that are Source: Agriculture and Research Council cool. Both the rainfall and temperature information indicates that the central and south-western parts are favourable for agriculture.
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With reference to climate change, the district has limited contributions due to the majority being rural areas. However, awareness needs to be taken by paying attention to the Medupi Power station emissions and to possible land degradation as a result of overgrazing, as well as deforestation.
7.3.2. Natural resources
The natural resources that provide to the agriculture activities are analysed. Therefore, the soil and water capacities and status in the Waterberg DM are studied to provide information that will influence the type of agricultural products that can be produced by the Agri-Park.
a) Soil Map 7.4: Grazing Capacity The soil conditions in the Waterberg district are studied by analysing the land capability and grazing capacity of the land. Maps have been used to demonstrate the soil conditions in different parts of the district. The distribution of the district’s grazing capacity is indicated in Map 7.4
Map 7.4 displays the grazing capacity by indicating the capacity according to the hectares available for grazing for a Map 7.5: Land Capacity single livestock unit (LSU). As Source: Manstrat Agricultural Intelligence Solutions demonstrated by map 5.4, Most of the district is covered by good grazing capacities ranging between 5 ha/LSU to 4 ha/LSU. There is also a noticeable coverage of land that is not available for grazing, mostly on the south-east parts of the region. Map 7.5 displays the land capacity levels distributed in the Waterberg DM.
Map 7.5 demonstrates that the Waterberg DM has good potential land that is arable towards the south east, and mostly land of low potential on the north-west side. There are various small parts of the district that have very low potential land that is suitable for wildlife. Therefore, the north-western parts of the district has land that is more suitable for grazing of livestock, while the south- eastern parts are more suitable for cultivation of crops.
Source: Agriculture and Research Council
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b) Water
The availability of water as a resource in the Waterberg DM can be analysed by studying water sources including rivers and dams. Map 7.6 indicates the distribution of rivers and dams in the district.
Map 7.6: Rivers Map
Source: Waterberg District Spatial Development Framework 2014
As shown on Map 7.6, there is high drainage towards the south-east part of the district, while even further in the same direction the drainage is very low. The north-west direction has a few rivers indicated for it, which start branching off in the south-easterly direction. The district’s major rivers are the Lower Crocodile River and the Mokolo River. The Mokolo River and the tributaries belonging to the river grow from the western part of the Waterberg and flows into the Mokolo Dam. The Lower Crocodile River flows in a north and north- westerly direction until it joins the Marico River, creating the Limpopo River. The major dams in the Waterberg district can be listed as follows:
• The Mokolo Dam: the district’s largest dam supplying water to the Matimba power station and the town of Lephalale. The dam also supplies water for irrigation purposes downstream. As extensive development took place upstream, the dam's yield was highly reduced, and presently the dam's water is assigned to its maximum. • The Doorndraai Dam: The Doorndraai Dam is found on the Sterk River close to Mokopane. The dam supplies water to Mokopane and for irrigation beside the Sterk River. • The Glen Alpine Dam: The Glen Alpine Dam is found on the Mogalakwena River, which is just outside the district towards the northeast. Limited yields are reported for this dam as it rather small. The dam supplies water for irrigation downstream.
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• Other dams: Other smaller dams are found in the District and they are mainly used for irrigation.
Water has become a scarce resource in the Waterberg District. Besides the rivers and dams, groundwater is also used, but the use depends on the aquifer’s hydrogeological characteristics. Rural communities use ground water as the main source, while surface water is used as well. The uses include irrigation and supply to the platinum mines to the west of Mokopane.
The Waterberg DM’s climatic conditions and resources present some challenges, however different parts of the district have different set of conditions, where some conditions are favourable for agricultural production. While the Waterberg DM climate still allows for significant agricultural production and the soil conditions are suitable in a number of areas, the limited availability of water is a concern that needs to be noted and planned for. Thus, the district’s conditions can be said to be suitable for the development of the Agri-Park, however some initiatives will have to be developed to address the water shortages.
7.4. Commodity Selection
The commodity selection refers to the process of selecting three main commodities that will be produced through the Waterberg Agri-Park’s initial phase. The process entails:
Identifying a range of commodities that are currently produced in the district Identifying selection criteria that will be used to select the most suitable commodities Prioritisation of the identified commodities.
A prioritisation/selection tool is has been utilised to score the identified commodities according to the selection criteria and the highest scoring commodities will be selected to be the top three commodities. The process is discussed in detail below.
7.4.1. Commodity Identification
After a review of economic development and agricultural strategic reports developed for the Limpopo Province and Waterberg DM, it was possible to identify a variety of commodities that were prominent in the district (listed in section 7.1). For purposes of the commodity prioritisation, a further range of commodities were identified according to the production and hectares of land dedicated to each commodity. Thus, a commodities list from the various strategic documents used in section 7.1 was consolidated with and additional commodities that were deemed suitable to be produced in the Waterberg DM by the provincial Mapping of Agricultural Commodity Production in the Limpopo Province. The consolidated commodities list thereby presents the commodities produced in the Waterberg DM and have been identified to be put through the prioritisation tool for selection of the top three commodities. Table 7.12 indicates the identified commodities that will undergo the selection process.
Table7.12: Commodities Identified for Prioritisation
Meat Industrial Crops Field Crops Vegetables Fruit Beef Cotton Maize Onion Citrus Goat Tobacco Wheat Butternut Table grapes Venison/Game Lucerne Sorghum Chillies Peach Poultry Groundnut Soya Beans Sunflower
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7.4.2. Commodity Selection Criteria and Prioritisation
As indicated in Section 7.1, there are a few agricultural commodities that are produced in the Waterberg DM. However, the objectives of the Agri-Park state that only three commodities will be considered for the first phase of the Agri-Park Programme. Therefore, in order to identify the three commodities to be processed in the Agri-Park, a prioritisation model has been utilised: using a range of criteria to prioritise the most suitable commodities. In compiling the selection criteria, a few influences have been applied, including the Agricultural Policy Action Plan (APAP). The APAP seeks to align itself to the New Growth Path (NGP), the National Development Plan (NDP), and the Medium Term Strategic Framework in respect of outcomes such as:
Creation of decent employment through inclusive growth; Comprehensive rural development and food security; and Protection and enhancement of environmental assets and natural resources.
A collection of criteria has been applied in selecting the commodities that will be considered for prioritisation, and ultimately as part of the top three commodities. The APAP has outlined important aspects to consider in the agricultural development of the different possible commodities. Therefore, the criteria outlined by the APAP are as follows:
1. Contribution to food security (a food security crop should: be produced all year round; affordable, nutritious and healthy; fit into consumer’s daily diet etc.). 2. Job creation (a crop with the potential of creating job opportunities must be labour intensive). 3. Growth potential. 4. Potential contribution to trade balance (imports of such crops should not currently exceed export). 5. Value of production. 6. Agro-Processing.
The development of an Agri-Park per District Municipality Programme is part of the response for achieving national goals of inclusive rural development and integration; employment creation; poverty eradication; and inequality reduction. Therefore, the Agri-Park Model also seeks to strategically select the top three (3) agricultural commodities produced within the District Municipality, which align with the APAP selection criteria and develop integrated value-chains for these commodities.
The commodity prioritisation was conducted using a prioritisation model, which sorted the commodities produced in Waterberg according to the highest score. Amongst a list of possible commodities available in the Waterberg DM, only those with markets in South Africa (or with reasonable export potential) were selected. Biophysical requirements of each commodity (e.g. temperature range, rainfall or water requirements, soil and land requirements etc.) were compared with local environmental conditions. Commodities that are unlikely to thrive under local conditions were eliminated; only commodities that are viable and profitable were considered and evaluated in terms of macro-economic and social performance indicators to ensure sustainability and maximise societal good. Hence potential commodities were selected and rated based on the following criteria listed in Table 7.13. With the above guidance from APAP, criteria were developed. The criteria are used to prioritise the potential commodities using a prioritisation model.
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Table 7.13: Commodity Prioritisation A. Comparative advantage
o Hectares planted: the hectares of land planted with the commodities are compared against other districts and the Limpopo province total. o Grazing Land: the proportion of land used for grazing by the different types of livestock is compared among districts and with the total of Limpopo B. Biophysical criteria
o Temperature: The most critical factors that were considered for each commodity were factors surrounding whether the area has sufficient temperature during the months of the growing season as required by the particular crop. o Water/moisture: For each commodity three things were considered namely, rainfall patterns during the months of the growing season, the quantity and quality of water, availability of irrigation schemes in the region, etc. o Land type: evaluations included the extensive patches of land covering the area suitable for the particular crop/animal in terms of soil, land type (steepness, rockiness and soil depth regime of the landscape) and land capability (grazing capacity and arable potential). o Capability and soil: In terms of evaluating the soil conditions, texture, drainage and depth of the soil have to be considered for each commodity. o Weed, pest and disease resilience: The most crucial factor that has to be considered, is to assess if the crop requires extensive pest and disease control and if the commodity will be particularly vulnerable to pest and disease infestations in the particular area. o Adaptability to adverse conditions: The most important evaluation criteria to consider is to assess if the crop/animal is generally resilient and adaptable to hail, extreme weather conditions and climate change.
C. Enterprise viability criteria
C.1 Transport, market access and demand o Distance to markets and transport cost: Factors such as the local transport infrastructure availability and conditions, choice of mode of transport, and the likelihood that cost-efficient transport contractors will be available to transport packaged and or processed products to market destinations have to be considered. o Current demand: Evaluation factors assessed whether the commodity products have an existing or an increasing demand. o Future market growth potential: Given global and local market trends, an evaluation process had to consider if the commodity has further marketing potential. Additionally, the evaluation process assess if the demand for the crop likely to grow into the short to medium term future. o Market openness: Commodity assessment that need to be considered is to whether buyers of the will be willing to buy from new suppliers and small-scale farmers. In particular, the popularity of commodity products for consumption at household level. C.2 Strategy, payback and profitability o Business strategy and positioning: Considerations included assessing if the commodity is compatible with the likely range of viable business strategies and positioning strategies adopted by small-scale farmers and cooperatives. o Payback period: This criterion involved payback potential of the commodity. Considerations involved scoring based on the potential of the commodity’s finished products to generate income from the first season. o Profitability: Given the average expected enterprise budget, evaluations considered if the commodity is likely to turn into value adding profitable entities in the area. C.3 Human, physical and financial capital
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o Familiarity and local knowledge/skills: evaluations were based on the existing local farmers’ skills or if significant awareness will have to be conducted. o Labour cost and productivity: assesses local labour cost, willingness of workers to perform farm and agro-processing work, and overall labour productivity at competitive levels - given the labour intensity/requirements of the particular enterprise were considered. o Implements and infrastructure: Accessibility of the necessary implements by smallholder farmer was also evaluated. o Ease to finance: contract farming, equipment leasing rather than ownership evaluation had to be considered. D. Economic development criteria
D.1 Linkages and processing opportunities o Forward and backward economic linkages: This involves assessing backward and forward linkages that will significantly contribute to business and job opportunity creation throughout the value chain o Processing opportunities at district level: This involved assessing agro-processing opportunities to be exploited specifically by intended beneficiaries of the Agri-Parks scheme. D.2 Job creation - Direct on-farm job creation o Indirect and induced job creation: This involved an assessment of whether commodity activities are labour intensive or not for job creation purposes. o Job quality/decency: This involved assessment of potential indirect opportunities that could be created. D.3 Local development o Local opportunities and agglomeration: The most important factors that needed consideration included assessing potential opportunities for local entrepreneurs, unemployed youth, etc. o Agro-intensification and local GDP growth: This included an assessment of whether commodity is characterised by a relative high level of agricultural intensification, and high income per surface area unit? D.4 Global competitiveness and trade o Global competitiveness: Is the region truly globally or at least regionally competitive to produce the crop/animal. o Export potential: potential opportunities for value added products to be exported outside South Africa. o Import substitution potential: Does the crop or its value adding products present an opportunity to contribute to import substitution, at local, regional or national level? E. Political and social criteria
E.1 Political and institutional issues o Government priority including APAP: Is the particular enterprise regarded as priority by APAP and other policies, strategies, plans or programmes o Shortlisted by the district: Was the crop/animal shortlisted by the district o Existing successful or planned projects: Indication of already existing projects in place in the area that are already farming with the particular animal/plant. o State/communal land suitability: This criterion assess compatibility to the most likely tenure forms and business model(s) associated with the enterprise. E.2 Social Issues o Acceptability (Local “buy-in”): This mostly involved the buy-in by local farmers for potential commodity farming activities. o Income equality: Evaluation considered more the labour intensive nature of the commodity more as opposed to the capital intensive nature. o Black smallholder suitability: Overall suitability of the enterprise for Black smallholder farmers? o Crime and vandalism resilience: especially for commodities such as livestock, dryland oil seeds and industrial crops.
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E.3 Food security and sustainability o Contribution to food security: Does the crop/animal contribute significantly to food security at local, district and national level? o Sustainability: Is it likely that the food will be sustainably produced, thereby conserving the ability of the region to produce food over the long term and contributing to other social and economic services provided by the landscape.
7.4.3. Commodity Prioritisation
Certain scores were assigned to each selection criteria and each of potential commodities was rated using these scores to ensure uniformity in the prioritisation process. Once each selected commodity has been scored based on the selection criteria, the assigned scores were summed and the overall percentage was used to determine the whether or not the potential commodity should be prioritised for the Agri-Park. Table 7.14 presents the score sheet of the top prioritised commodities. The purpose of the following table is to provide a framework to systematically evaluate a possible crop or livestock enterprise to decide if it has potential to farm with, given local environmental conditions, economic and market considerations and smallholder constraints and preferences. The green colour in the column for the overall score is used to indicate the suitability of each commodity in the Waterberg DM. The green colour indicates that the commodity is highly suitable and recommended (high-impact), the yellow colour indicates that it recommended but with certain degree of caution (medium-impact) while the orange colour indicates that the commodity is not recommended for the District (low-impact).
Table 7.14: Top prioritised commodities Possible crop/livestock for Waterberg DM Score Notes and comments The district is covered with good grazing for cattle. There is good potential for feedlots specifically for Red meat production (beef & game) 93% finishing/fattening purposes. Very high yields are attained through irrigation. Maize 88% Suited for small scale Very high yields under irrigation. Required to support the red meat industry because it is Lucerne 87% a very important supplementary feed.
Poultry: Chicken broilers and layers 86% There are opportunities to supply the local market.
Good to moderate (south) to marginal (central) yields possible under dryland conditions. Pigeon pea (very important for food 86% Overall an excellent local food security crop for this security) district.
Good yields in the south. Very important for food security. Could also serve the red meat industry well because it Sorghum 86% can be used as supplementary feed. High comparative advantage. Growing demand globally for game bird meat and Other poultry: Game birds 85% eggs.
Very high yields are possible under irrigation in the north Chillies 85% and west.
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Possible crop/livestock for Waterberg DM Score Notes and comments Very high yields are possible under irrigation in the north Pearl millet 84% and west.
Various tree species tailored to the area can be planted to produce wood (for timber, energy or craft), food (including honey, indigenous fruits e.g. marula, etc.), fodder to increase animal carrying capacity, medicinal plant material, environmental functions etc. Agroforestry 84% Require little capital, skills, effort or water. Highly suitable for marginal land where no other crop can be grown or animal enterprise can be cost efficiently established.
It can be deduced based on Table 7.14 of the top prioritised commodities for the Waterberg District Municipality that the five (5) highest ranked commodities, based on the selection criteria are:
1. Red meat – 93%, 2. Maize – 88%, 3. Lucerne – 87%, 4. Poultry- 86 % and, 5. Pigeon pea - 86%.
However, only three commodities are to be selected for the initial phase of the project. The three selected commodities are beef, maize, and poultry. The selected commodities will be the initial commodities to be produced by the Agri-Park. As the programme continues, the following group of prioritised commodities will be added. The rest of the Master Business Plan pays attention to the selected commodities and an analysis of each of the commodities will be conducted.
7.5. Description of the three highest ranked commodities
7.5.1. Beef Cattle
The highest ranking commodity in the Waterberg District Municipality is beef cattle. As demonstrated in the comparative advantage study done above, beef already has a high coverage in the Waterberg DM. The prevalence of beef in the district comes with the advantage of existing infrastructure such as abattoirs that can be further used to develop the production of beef in the Agri-Park. Institutional support through strategies and studies conducted by the Waterberg DM is available and further motivates the development of the commodity by identifying it as the red meat cluster. The semi-arid climate conditions in the district are most suitable for the rearing of cattle, especially parts with low rainfall. Furthermore, the high ranking position of beef cattle in the prioritisation model was influenced by the potential for growth and expansion demonstrated, as well as the availability of state land, employment opportunities, suitability for small-holders, and available markets. A range of agro processing opportunities are available for creating products such as mince, sausages and steaks, and by-products used for manure and leather amongst others.
Beef cattle farming is one of the more viable agricultural activities across South Africa, with almost 80% of agricultural land being suitable for grazing. Therefore, beef is produced throughout South Africa, including the Waterberg District as a part of the beef production in the Limpopo Province.
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Over the past decade (from 2004) cattle numbers have increased from 13.5 million to more than 14 million in 2014. Approximately 80% of the total cattle herds are for beef cattle and the remaining 20% is for dairy cattle. There is a range of beef cattle producers, from well off commercial farmers with recent technology, to communal subsistence producers also have indigenous knowledge. Of the 14 million cattle available in South Africa, 60% are owned by commercial farmers and 40% by emerging and communal farmers. Cattle breeds range from international breeds to local indigenous breeds such as the Afrikaner, Nguni and Bonsmara. There are also various breeder organisations and producer organisations such as the Red Meat Producers Organisation (RPO) and the National Emerging Red Meat Producers Organisation (NERPO) representing producers in the commercial and emerging sectors respectively (Department of Agriculture, Forestry and Fisheries, 2012).
7.5.2. Maize
The second highest ranking commodity in the prioritisation model is maize. Most of the hectares of land in the Waterberg DM used for the production of crops is used for maize. Areas in the southern part of the district demonstrate suitable conditions for the cultivation of maize, with substantial rain and moderate climate allowing for good soil capacity. In addition, there is infrastructure that can be used for maize in the various parts of the district, including grain silos. The cultivation for maize has the potential to provide opportunities for job creation and opportunities for small holder farmers as well. The opportunities for growth of the maize industry is based on its ability to provide animal feed and its popularity as a staple food for a majority of the South African population.
As South Africa’s most important crop, maize is both the main feed grain for livestock and the staple food for most of South Africa’s population. Of the maize produced in South Africa, approximately 60% is white maize and the other 40% is yellow maize. White maize is primarily used to produce food for humans, while yellow maize is mostly used to produce animal feed. Following sugar cane, maize is the second largest crop that is produced in South Africa. The maize industry is divided into two categories: commercial and developing agriculture. Commercial maize farmers are estimated at 9000, while the number of developing agricultural farmers is not known. The gross value of maize production amounted to R 27 billion in 2013/14.
7.5.3. Poultry
Poultry, specifically broilers, is the third commodity to be produced in the Waterberg Agri-Park. Although it was only the fourth highest score in the prioritisation model, policies like the Limpopo Agro-Processing Strategy 2012 and consultations with the Waterberg DM influenced the decision to have broilers as one of the commodities for the Agri-Park. The Waterberg DM demonstrates good potential for boiler farming where there is land available, including state land that can be used to expand and set up poultry farms. A market exists for poultry, as well as a wide range of products that can be processed though agro-processing. Products such as chicken portions, processed good such as sausages and burgers, feed and by-products are value-added products that can be processed from broilers. Therefore, the broiler industry has good employment opportunities and is accessible to small-holders.
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The largest segment of the South African agricultural sector is the poultry industry, which is contributing more than 16% to South Africa’s gross domestic product. At present, one of the leading meat products that is consumed in South Africa is poultry. Thus, as one of the main suppliers of a protein, the industry provides a strong platform for the government’s zero-hunger goals, as well as rural development.
The most commonly used breed of chickens for broiler farming is a pure-meat breed, which is the off- spring of White Plymouth Rock and Indian Game. The off-spring bear the names of the companies that breed them such as Ross, Hubbard, Arbor Acres, etc. The male White Plymouth Rock is crossbred with the female Indian Game in order to produce a male line for meat-type birds, and vice versa for a female line. The pure-meat type chicken is able to gain weight much faster and uses feed efficiently.
7.6. Other Possible Agri-Park Commodities
The three (3) selected commodities discussed in the previous sub section were a result of strategic document directives, production statistics and consultations with the District’s office and the District Agri- Park Management Council (DAMC). However, there are other commodities that were highly suitable for the Waterberg DM and should be considered for the development in later phases of the Agri-Park programme. Thus, should any of the three selected Agri-Park commodities have challenges in implementation, the commodities indicated in Table 7.15 have been compiled to provide a selection of addition commodities that can be developed.
Table 7.15: Other possible suitable commodities Commodity Description Agro-Processing opportunities/products Other red meat Other red meat animals can be Fresh carcass, fresh/frozen cuts, canned (game) farmed. Such animals include goats, and pickled meat, burger patties, sheep and piggery. The climate and minced meat, sausages, dried meat, vegetation in the district is more offal products and products from skin. conducive for livestock farming. Poultry (Free Currently Waterberg has poultry Whole bird carcass and retail cuts, Range) farming projects taking place and frozen whole bird or cuts, support from the government to canned/bottled and pickled chicken, further develop free range poultry in cured and smoked chicken, cooked the District. Free range poultry is and smoked sausages, burger patties, suitable for the climate in meatballs, nuggets and finger, offal. Waterberg Vegetables Vegetables such as cabbage, Freshly packed vegetables, frozen butternut, pumpkin, potato, onion vegetables, canned or bottled and tomato are currently being vegetables, canned soup, sauces, cultivated in the district in significant chutney, jam, food and juices. hectares of land. There are also a few small scale farming projects that are supported by the government. Wheat Wheat is also a significantly Wheat flour, baked goods, bran, wheat produced commodity in Waterberg meal, confectionary goods, frozen DM and has some possibilities of dough, wheat beer, wheat gluten, being cultivated beside irrigation. wheat starch, wheat protein, wheat stubble and animal feed. Soya Beans A considerable amount of soya Canned soya beans, dried seeds, soy bean farming takes place in the milk, soy sauce, soy flour, soy bean meal, district and the commodity is a soybean protein oil, stabilizing agent, suitable substitute for maize. Both and feedstuff for livestock humans and animals contribute to the consumption of soya bean.
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The commodities listed in Table 7.15 rated highly in the commodity prioritisation tool and can therefore, be considered for development in the Waterberg DM Agri-Park. Other types of livestock, such as game can also be produced in the district, as well as other poultry farming, such as free range chicken. Cultivated commodities that can also be produced are vegetables, as well as wheat and soya beans.
The agricultural industry analysis provided above has studied and summarised some important components that affect and influence the agricultural industry in the Waterberg DM. An overview of the agricultural activities in the district revealed that are a number of agricultural activities that produce a variety of commodities, which are contributed to by each local municipality. A review of the current and future projects in the district demonstrated that there are various agricultural projects that will be helpful and, have created a support basis for the Agri-Park development. An important issue that needs careful intervention was highlighted in the climate and resource analysis- where is was emphasised that, despite the district having suitable conditions for the development of the Agri-Park, the shortage of water in the district is a major concern. Furthermore, the section went on to explore the process that was utilised in selecting the top three commodities to be produced through the Agri-Park. This was the commodity selection, which was conducted through a prioritisation model. The most suitable and significant commodities were selected and scored against criteria that were influenced by the APAP, and the top scoring commodities were selected. In the case of a possible prevention of the implementation of the three selected commodities, other possible commodities were proposed. The following section is an analysis of these selected commodities: beef, maize and poultry.
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Section 8: Beef Commodity Analysis
8.1. Production guidelines
This sub-section provides some of the basic information that will guide in the primary production of cattle and goat. It also provides important information that the farmers can use in assessing the performance the herd. The production guideline for all the selected commodities have been mainly sourced from Smith (2006).
8.1.1. Production options
There are few types of cattle enterprises that are suitable for small-scale cattle farmers. These include: I. Growing and feeding systems--In these operations, calves or weaners are either raised or purchased and then are fed (fattened for slaughter). Included in this category are operations specializing in producing cattle for home use. II. Breeding herds--A breeding herd consists of cows and bulls that are used to produce calves for sale as breeding or feeder animals. III. Combinations of growing, feeding, and breeding herds
Success of the operation will entirely depend on adapting a strategy that is most suitable for the production needs and capabilities. Most calves produced by the small scale farmers for commercial purposes are marketed as weaned calves weighing from 250 to 300 kg.
8.1.2. Breeding and calving Seasons
a) Production options
There are few types of cattle enterprises that are suitable for small-scale cattle farmers. These include: Growing and feeding systems--In these operations, calves or weaners are either raised or purchased and then are fed (fattened for slaughter). Included in this category are operations specializing in producing cattle for home use.
Breeding herds--A breeding herd consists of cows and bulls that are used to produce calves for sale as breeding or feeder animals.
Combinations of growing, feeding, and breeding herds
Success of the operation will entirely depend on adapting a strategy that is most suitable for the production needs and capabilities. Most calves produced by the small scale farmers for commercial purposes are marketed as weaned calves weighing from 250 to 300 kg. The seasons where breeding and calving should take place are indicated in Table 8.1, which differentiates cattle in sourveld and sweetveld.
Table 8.1: Breeding and calving seasons Veld type Breeding Calving Sourveld Novemeber, December and January August, September and October Sweetveld December, January and February September, October and November Source: The Farming Handbook, 2006
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8.1.3. Breeding Management
a) Basic production norms
Basic production norms include the following
The oestrous cycle takes place between 18 to 24 days The gestation period lasts between 280 to 285 days 40% of calves should be born during the first month of the calving season Calf weight should be 7% of a mature cow’s weight Heifers should be mated at 300kg or 65% of mature cow weight at two years old Mortality should be 2%
The minimum market weights for different breeds are indicated in Table 8.2
Table 8 .2: Minimum market gain weight Maturity Market weight Breeds Early 380 Hereford, Angus, Afrikaner Medium 410 Braman, Sussex Late 520 Simmentler, South Deven, Pinzgauer, Drakensnerger Source: The Farming Handbook, 2006
Breeding: Table 8.3 indicates the calving percentage and weaning weight. The calving percentage determines the probability of calves that will be born out of the herd under the specified management system. The weaning weight that applies for the different management systems is also indicated.
Table 8.3: Calving percentage and weaning weight for different managements systems Management system Calving percentage (%) Weaning weight Management optimal on veld 60 150 Management + supplementary feeding 80 190 Management + supplementary feeding + breeding 90 210 Source: The Farming Handbook, 2006
Dehorning: Calves should be dehorned when the horn buds are felt at one to three weeks with a hot iron.
Castration: Castration can take place up to two week before weaning, however three months is the preferred age.
Weaning: Between seven to eight months age is the preferred time for weaning (up to ten months). In terms of seasons, Sourveld fed cows should be weaned before early May and Sweetveld before June
Animal Improvement: Animal performance relies on genetic inheritance as well as the influence of the environment. Genetic improvement takes place over a long term period not ever spectacular due to: a. Low production rate b. Reduced selection progress as a result of large selection of economic traits c. A generation interval of approximately 5 years, which is long and decreases the genetic material turnover.
Breeding herd: The highest herd size should be between 200 and 300 head during breeding and calving season, with an optimum of 100 – 150 head.
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8.1.4. Disease Control
I. Inoculation
Inoculation is important to prevent the herd from diseases that will affect production. A qualified animal health practitioner should take the responsibility of inoculating at the relevant times and in the correct doses. Table 8.4 indicated the period or time when inoculation for different diseases should take place.
Table 8.4: Inoculation periods for various diseases Disease Period/time Quarter-evil 1 month before weaning and again at weaning, then again every spring season Contagious abortion Inoculate using S16 (heifers from 4 to 8months) Anthrax 4 to 6 weeks before weaning, then again every spring season Paratyphoid 7 to 14 days old and again at 3 to 8 weeks Botulism 4 to 6 weeks before weaning, then again 7 weeks later for a boost, then annually Rift Valley fever At weaning and thereafter every spring season Lumpy skin At weaning Source: The Farming Handbook, 2006
It should be noted that different areas will have different frequencies of prevalence of the diseases in Table 8.3.
II. Dosing: According to dung samples studied by a veterinary department. Heifers being bulled or cattle within three weeks of slaughter.
III. Dipping
a. Level of tank and dip strength should be monitored, and agitated with suitable tools. b. Cattle should not be dipped in wet weather c. Cattle should be rested and hydrated before dipping d. Cattle be counted e. Dipping should take place in groups according to size f. Animal should be completely submerged g. A draining pen should be allowed to thoroughly drain dip h. Before returning to camps, cattle should be allowed to dry
8.1.5. Nutrition
I. Vital nutrients for cattle can be grouped into five categories d. Water e. Energy – carbohydrates and facts f. Protein g. Minerals – phosphorus and calcium are the most important h. Vitamins
II. Fattening: There are three ways of fattening cattle that have been identified and listed as follows:
1. Veld fattening 2. Pasture finishing
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3. Pen fattening
The starting and finishing weight for 120 day period are indicated in Table 8.5.
Table 8.5: Starting and finishing weight Age Starting weight Finishing weight Weaner 240 400 18-month old 250 450 30-month old 275 475 Source: The Farming Handbook, 2006
Cattle have different target weights for finishing according to age, breed and maturity. Table 8.6 indicates the finishing weights for the different categories.
Table 8.6: Target weight for finishing Maturity type Breed Age (Months) 15 24 30 Target weight Early Afrikaner 330 kg 390 kg 420 kg Hereford Angus 360 kg 420 kg 450 kg Medium Bonsmara 390 kg 450 kg 480 kg Santa Gertrudis 410 kg 480 kg 510 kg Late Simmentealer 440 kg 510 kg 540 kg Charlais 470 kg 540 kg 570 kg Source: The Farming Handbook, 2006
8.1.6. Production
The value of a slaughtered animal is determined by calculating the dressing percentage. The concept of dressing percentage is essential for the comprehension of slaughter cattle pricing systems and variability. Calculating dressing percentage entails dividing the carcass weight by the live weight of the animal, then expressed as a percentage. Table 8.7 indicates the dressing percentages at different maturities.
Table 8.7: Dressing Percentage Maturity Average weight of live Dressing percentage Average Carcass animal (kg) (%) weight (kg) Weaners 380 60 228 1.5 Years 420 56 235 2.5 Years 450 53 238 Source: The Farming Handbook, 2006
8.2. Market assessment
The market assessment provides an analysis of the local markets, global markets, and the beef industry within a South African context.
8.2.1. Local markets
The red meat industry in South Africa evolved from a highly regulated environment to one that is totally deregulated today. Since the deregulation of the agricultural marketing dispensation in 1997, the prices in the red meat industry are determined by demand and supply forces.
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Meat consumption in South Africa has expanded rapidly over the past decade and while continued growth in meat consumption is projected in the coming decade, a confluence of macroeconomic factors is expected to result in higher meat prices and slower consumption growth relative to the past. Income growth remains the core driver of rising meat consumption and hence the cautious outlook for income growth in South Africa is a fundamental factor underlying slower demand growth. Furthermore, relative prices and consumer preferences drive the choice between various meat types over time. Chicken remains the most affordable source of protein and is expected to account for 65% of additional meat consumed by 2024.
Livestock is a highly important commodity in SA. Rainfall, climate and other natural resources is suited for livestock production in the region. Factors influencing production include: expansion of the fast-food industry; higher average income of the population; the rapid rate of urbanisation; and the influx of international processing companies. Competition is also very strong for emerging farmers, especially since there are several large vegetable producers in the district
a) Production versus Local Consumption
A comparison of local beef production and consumption allows for interpretations to be made about the sufficiency of beef production to the demand of beef products. There has been a steady increase (13%) in beef production for the past 10 years and production increased from approximately 800 000 ton in 2005, to 980 000 tons in 2014. Figure 8.1 shows the local consumption of beef compared to total production for each year to determine if the country is self-sufficient in terms of beef production.
Figure 8.1: Beef production vs Consumption in South Africa (2005-2014) 1200
1000
800
600 Tons 400
200
0 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Production Consumption
Source: Trends in the Agricultural Sector, 2012
The statistics in Figure 8.1 indicate that beef consumption was higher than beef production throughout the period under analysis, which means that South Africa is not self- sufficient. It should further be noted that SA also imports a considerable number of live cattle from Namibia to supplement own production stock (refer imports section below). The same trend was followed by both consumption and production moving on an increasing trend from 2005/06 to 2013/14 (even though there were sporadic declines within this period due to the global economic meltdown, which led to a decreased disposable income of larger
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number of consumers). Consumption increased by more than 10% from 2010/11 to 2013/14. The beef industry produces around 980 000 tons of meat and imports around 20 000 tons while exporting 4 000 tons. Per capita consumption is around 18.5 kg and number of consumers is around 50 million.
Persistent drought conditions in South Africa and neighbouring countries, as well as the depreciation in the exchange rate have resulted in persistently high feed prices and continued depreciation of the local beef industry. The drought conditions induced a significant oversupply in the beef market both from South Africa and neighbouring countries, depressing prices, despite the upward trend in global markets. Whilst prices increased sharply in 2014, cattle slaughter numbers increased for the second consecutive year, which would indicate that domestic producers have yet to enter a phase of herd rebuilding, despite improved profitability. Persistent drought conditions in the early part of 2015 resulted in domestic feed grain prices rising, and while domestic beef prices have reached record levels, producer margins remain tight. Prices of beef increased significantly over the past 3 years increasing from around R 24/kg in 2010/11 to R 32/kg in 2013/14, an increase of 25% (Extension Suite Online). In the face of growing demand, prices are projected to increase continuously over the next decade and are expected to reach R57/kg by 2024. This represents an average annual increase of 5.7%, which is marginally above general inflation and hence in real terms prices increase slightly over the baseline (BFAP Baseline Agricultural Outlook, 2015).
The beef supply chain has become increasingly vertically integrated, mainly fuelled by the feedlot industry where most of the large feedlots own their own abattoirs and/or have some business interest in certain abattoirs. In addition, some feedlots have integrated further down the value chain and sell directly to consumers through their own retail outlets. Some abattoirs have also started to integrate vertically towards the wholesale level.
Currently, many wholesalers source live-slaughter animals directly from farmers or feedlots on a bid and offer basis, i.e. they take ownership of the animal before the animal is slaughtered. The animal is then slaughtered at an abattoir of the wholesaler’s choice, where after the carcass is distributed to retailers. In some instances, the public can also buy carcasses directly from wholesalers.
The abattoir industry has expanded tremendously in number and in capacity. In this regard, it is important to note that this industry can be divided into those abattoirs that:
(i) are linked to the feedlot sector and the wholesale sector, or are owned by municipalities and (ii) those that are mainly owned by farmers and SMME’s.
The former abattoirs are mainly class A and B abattoirs, the latter are usually classified as C, D and E class abattoirs. There are approximately 500 abattoirs in South Africa slaughtering 2.3 million cattle on an annual basis. Approximately 40% of all slaughtering is performed by abattoirs that may slaughter an unlimited number of animals (Class A) and approximately 60% of cattle are slaughtered by highly regulated abattoirs (Class A & B) (Profile of SA Beef Market Value Chain, 2014). The abattoirs, situated nationwide are able to access cattle in most areas.
b) Production Areas
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The production of beef takes place all over South Africa. The number of cattle available in production areas does not necessarily determine the amount of beef produced, but the amount depends on the infrastructure such as feedlots and abattoirs. South Africa’s well developed transport infrastructure promotes the movement of cattle and calves from one area to another, even from other countries such as Namibia. Figure 8.2 outlines the beef production per province.
Figure 8.2: Beef production distribution in South Africa Eastern Cape, 6% Western Cape, 4% North West, 11%
Northern Cape, 6% Free State, 19%
Mpumalanga, 23% Gauteng, 14%
Limpopo, 5% KwaZulu Natal, 12% Source: Profile of SA Beef Market Value Chain, 2012
As indicated in Figure 8.2, the province of Mpumalanga has the highest beef production in South Africa, followed by the Free State with a 19% beef production. Limpopo contributes 5%, which is among the provinces with the lowest beef production, and the lowest contribution from the Western Cape with 4% of South Africa’s production. While 2013 marked a return to profitability in the global context, severe drought conditions in South Africa and neighbouring countries as well as substantial depreciation in the exchange rate resulted in persistently high feed prices and continued depreciation of the local beef industry. The drought conditions induced a significant oversupply in the beef market both from South Africa and neighbouring countries, depressing prices, despite the upward trend in global markets. Whilst prices increased sharply in 2014, cattle slaughter numbers increased for the second consecutive year, which would indicate that domestic producers have yet to enter a phase of herd rebuilding, despite improved profitability. Persistent drought conditions in the early part of 2015 resulted in the domestic feed grain price rising, and while domestic beef prices have reached record levels, producer margins remain tight. Prices of beef increased significantly over the past 3 years increasing from around R 24/kg in 2010/11 to R 32/kg in 2013/14, which is an increase of 25% (Extension Suite Online).
In the face of growing demand, prices are projected to increase continuously over the next decade, reaching R57/kg by 2024. This represents an average annual increase of 5.7%, which is marginally above general inflation and hence in real terms prices increase slightly over the baseline (BFAP Baseline Agricultural Outlook, 2015). The beef supply chain has become increasingly vertically integrated. This integration is mainly fuelled by the feedlot industry where most of the large feedlots own their own abattoirs and/or have some business interest in certain abattoirs. In addition, some feedlots have integrated further down the value chain and sell directly to consumers through their own retail outlets. Some abattoirs have also started to integrate vertically towards the wholesale level.
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c) Specific marketing channels
Farmers have a choice of marketing channels to sell beef cattle directly to. The marketing channels can be applied to the Agri-Park’s RUMC component, where the marketing channels that are best for the farmers that are part of the programme. Table 8.8 provides a summary of the marketing channels that are available for beef producers.
Table 8.8: Marketing channels
Marketing channel Description Advantages Challenges Priority & gaps/opportunities
*Volume Direct sales (farmer-to- Sell directly to consumers 16% Simple, easy and requires Small volumes sold per Very low relevance to the consumer) through personal contact, at very few skills. transaction. Agri-Park scheme the farm gate or stall, or at Will not provide the desired farmers’ markets. scale for efficient marketing and distribution. Small independent shops or Pay an abattoir to process 1.7 Very good prices can be To be viable, both the Moderate priority supermarkets the carcass, then collect and % attained and potentially a abattoir and the retailers Farmers can capture profit sell the meat to small, very profitable channel. need to be nearby to that would have gone to independent retailers e.g. Ideal when there are many minimise transport costs. abattoirs general dealers, "corner small independent Important factors include: Negotiations with abattoirs shops", spaza shops that have supermarkets or shops in the entrepreneurial spirit, and coordination of logistics refrigerators etc. area, and the farmer can be willingness to accept risk, may be demanding. closely involved in selling and invest in sales effort and to Huge potential to capture distributing to them. build customer relationships. value Strong relationships with the Beef sales tend to be slow in shop owners can be built and small local supermarkets and can result in strong customer spaza shops, therefore loyalty. farmers can expect low sales volumes Consumers pay more for beef that is not as fresh compared to other channels. Large retail chains Pay an abattoir to process 0.3 Large and stable demand. The profit per unit is low. Could be a primary the carcass, then collect and % Some retail chains have Strict quality, quantity and marketing channel for sell the beef directly to large special programs to buy from administrative requirements. cattle farmers participating national retail groups, usually smaller or previously Not suitable when the farmer in the Agri-Parks system. by contract. Some large disadvantaged farmers. is unable to supply
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Marketing channel Description Advantages Challenges Priority & gaps/opportunities
*Volume retailer groups buy centrally, consistently in fairly large Important to brand the while others such as Spar volumes and good quality. meat as locally produced. allow local stores to buy Most large retailers do not Gaps or room for significant independently, which makes buy directly from farmers, but growth in the market for it easier for small local farmers from abattoirs (often linked products such as organic or newly established farmer to large feedlots) instead. beef, grass-fed beef and groups (e.g. marketing hormone and antibiotic free cooperatives or farmers that beef, which could be an participate in the Agri-Parks important niche market in system) to sell to this lucrative the near future. and growing marketing channel. Butchers Sell live cattle directly to 8% May often obtain significantly Dealing with many individual High potential. butchers who will slaughter higher prices from butchers butchers may be time This is a gap in the market the animal then sell the meat than from other cattle consuming. because the level of to the public. Unlike abattoirs, marketing channels. Entrepreneurial spirit, strong coordination that can be butchers sell directly to the Could be a lucrative channel negotiation skills, willingness provided through the Agri- public (rather than to other for small-scale farmers. to accept risk, invest in sales Park system could make it butchers or retailers), Can build strong relationships effort and to build customer very profitable to slaughter at smaller scale and thereby gain strong customer relationships are important. coordinate slaughter by usually do not engage in loyalty. abattoirs and delivery to extensive meat processing. butchers (i.e. better than Although cattle are supposed the coordination that to be slaughtered at individual farmers or abattoirs, many butchers, abattoirs can do on their especially in less developed own). Therefore profit that areas or in the informal would have gone to sector, do the slaughtering abattoirs can be retained themselves. To sell legally to by Agri-Park farmers. butchers, a fee can be paid to abattoirs to do the slaughtering, then the meet can be collected and distributed to the butcher.
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Marketing channel Description Advantages Challenges Priority & gaps/opportunities
*Volume Catering businesses, Sell to catering businesses, 5% Many potential customers are Income could fluctuate Low Priority. organisers of events and event-hosting venues or available throughout the significantly. Holds excellent event-hosting venues event managers who country including townships Entrepreneurial spirit, opportunities for individual prepare and serve food and rural areas, and are very willingness to accept risk and small-scale farmers. during a variety of events, approachable without a lot to engage in constant Farmers that are organised e.g. parties, weddings, of red tape in trying to reach marketing and negotiations such as in the Agri-Parks conferences, funerals etc. and sell to them. are essential. system should rather focus Good prices could be on tapping into marketing negotiated. channels with larger and Quality criteria may not be as more consistent demand. strict because supply arrangements are usually informal. Livestock speculators Speculators travels from farm 16% Convenient because the Often not a very profitable Very low priority for farmers to farm or from one central speculator does all the work channel because the poor organised in the Agri-Parks place (e.g. extension officer's including transport, and often bargaining position of the system. office, local government visit the farmer on the farm. farmer may be exploited. Collectively the farmers will building, community centre Suitable when the farmer Farmer needs strong have sufficient scale of etc.) to another, buying from does not have transport or negotiation skills. operation and bargaining some farmers (taking does not want to be closely power to significantly ownership of the animal) and involved in marketing. reduce the need for selling to other farmers, other services of livestock buyers or via other marketing speculators. channels. Livestock auctioneers Auction businesses organise 23% Farmer does not have to Prices tend to be fairly low Low priority for farmers an action event that brings engage in negotiations with and better prices can often organised in the Agri-Parks livestock sellers and buyers buyers. be negotiated via alternative system. (mainly butchers, livestock The auctioneer promotes the marketing channels. Collectively, the farmers will speculators, other farmers event, guarantee payment to Auctions may involve have sufficient scale of and individuals) together at the farmer and some may bringing the animals back to operation and bargaining central locations on a regular even arrange for transport of the farm if the farmer was not power to somehow reduce basis. They facilitate the the animals. satisfied by the bid offered at the need for services of selling process and take Often used by farmers to turn the auction, therefore may auctioneers. commission on the sale price livestock into quick cash. waste time, transport costs, but do not take ownership of
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Marketing channel Description Advantages Challenges Priority & gaps/opportunities
*Volume the animals. This is the major effort and causes animal marketing channel and main stress and fatalities. price discovery mechanism for livestock in South Africa. Meat exporters Sell to exporters often by 1% Ideal when the farmer Stringent quality, quantity, High potential, specifically forward contract, who will produce in sufficient quality packaging, consistency, for grass-fed beef and distribute the product to and quantity to supply to food safety, traceability and organic beef. various types of foreign global markets. sustainability criteria. buyers, often to foreign Small-scale farmers may form Complex administrative wholesalers but increasingly cooperatives or engage in procedures and red tape directly to large foreign retail out-grower schemes to exclude most small-scale chains. This has the potential produce in sufficient quality, farmers. to be a very large and quantity and consistency for Small-scale growers who sell lucrative market. Although export markets. individually will be unable to some farmers (large farmers May be very profitable for export. or small farmers arranged in high value or niche products Prices are highly sensitive to associations or cooperatives) and in times of a favourable international price may sell directly to export exchange rate. fluctuations, exchange rate agents, exporters generally movements and global buy in bulk from other competition. channel members who buy from individual farmers. There is also a growing trend for exporters to own their own feedlots and abattoirs, however, they are likely to remain open to buy from local farmers who can steadily supply high quality animals or carcasses. Abattoirs & meat processors Sell to abattoirs, by contract 18% Strong and consistent Better prices can often be High priority during the or ad-hock. Abattoirs are a demand. negotiated via alternative initial phase very important and major Ideal when farmer has cattle marketing channels. Price Supply contracts to marketing channel for cattle. of good health and does not variations may be fairly large. more profitable They slaughter animals and Transport costs may be high.
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Marketing channel Description Advantages Challenges Priority & gaps/opportunities
*Volume sell the meat to butchers, have time to sell to individual Strict quality criteria applies. marketing channels other retailers and sometimes butcheries or other buyers. Animals that do not pass cannot be secured. operate their own butcheries Some processors provide health and quality standards then sells directly to the support to farmers. (e.g. being sick) may be public. Abattoirs range in size discarded in which case the from very small to very large. farmer may lose the animal Some buy the animal (take that could have been sold ownership), some just provide via other marketing a slaughtering service for a channels. fee (which may include Legal consequences in case retaining parts of the animal farmer cannot supply as per e.g. hides and offal). Some contract with a processor. abattoirs also engage in extensive meat processing. Meat processors usually buy from abattoirs or even have their own farms, feedlots and abattoirs, but some do buy directly from cattle farmers. Leather tanneries Sell cattle hides to tanneries, - Opportunities for The farmer needs to manage High priority preferably by contract. entrepreneurial farmers to the cattle throughout their The leather industry holds However, tanneries usually negotiate better prices (with lifetimes in such a way to significant potential for obtain the hide from abattoirs the abattoir or even directly prevent bruises and other further development, who often take ownership of with tanneries) to pay better damage to skins. however, it is essential to the hide and offal as part of prices for hides in good Uncommon for farmers to stimulate development of the slaughter fee. condition. deal with tanneries directly the leather industry as well. therefore special arrangements may need to be made. Ad hoc selling of cattle to Other farmers occasionally 3% The other farmer may arrange Demand may be small and Very low priority. other livestock farmers for may want to buy cattle to for transport therefore, it may inconsistent, and prices may Low and fluctuating re-stocking, breeding stock, supplement their own herds, be a profitable channel for fluctuate widely from demand. initial or additional animal to start a new cattle small-scale farmers without transaction to transaction. Farmers organised in the stock or raising on their production enterprise or to transport. Very low prices during Agri-Park system will have pasture or veldt. periods of drought. sufficient bargaining power
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Marketing channel Description Advantages Challenges Priority & gaps/opportunities
*Volume raise cattle if they have to access much more additional grazing capacity. profitable channels. Feedlots buying young Extensive cattle farmers sell 8% Strong, stable demand Better prices can often be Moderate priority. cattle for "finishing" young animals to large throughout the year. negotiated via alternative Ideal for extensive cattle feedlots to fatten the animals Ideal when an extensive marketing channels. farmers that are situated in before slaughter mainly at cattle farmer has good Strict health criteria apply geographically isolated abattoirs, often by forward reproduction rates but not because feedlot owners do areas. contract. have sufficient grazing not want to accept sick capacity to fatten animals cattle that could spread properly before slaughter. disease through their animal population.
The marketing channels presented in Table 8.8 are briefly described and compared according to the advantages and challenges identified, as well as the gaps and opportunities. Also, the volume is indicated as an estimated percentage of total production sold through this channel. By assessing the marketing channels though the volume of products sold, livestock auctioneers (23%), abattoirs and meat processors (18%), direct sales (16%) and livestock spectaculars are the most popular channels for marketing. Therefore, the Agri-Parks, through agro-processing channels will be able to make a good contribution to the beef products sold form the Waterberg district.
Under the previous marketing regime, wholesalers mostly bought carcasses through the auction system. Currently, many wholesalers source live-slaughter animals directly from farmers or feedlots on a bid and offer basis, i.e. they take ownership of the animal before the animal is slaughtered. The animal is then slaughtered at an abattoir of the wholesaler’s choice, where after the carcass is distributed to retailers. In some instances, the public can also buy carcasses directly from wholesalers.
The South African abattoir industry has expanded tremendously in number and in capacity. In this regard, it is important to note that this industry can be divided into those abattoirs that (i) are linked to the feedlot sector and the wholesale sector, or are owned by municipalities and (ii) those that are mainly owned by farmers and SMME’s. The former abattoirs are mainly class A and B abattoirs, whereas the latter are usually classified as C, D and E class abattoirs. There are approximately 500 abattoirs slaughtering 2.3 million cattle on an annual basis. Approximately 40% of all slaughtering are performed by abattoirs that may slaughter an unlimited number of animals (Class A) and approximately 60% of cattle are slaughtered by highly regulated abattoirs (Class A & B) (Profile of SA Beef Market Value Chain, 2014).
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8.2.2. Global markets
a) Exports
Beef export quantities are relatively small and South Africa is not regarded as a serious exporter within the world market. Exports were relatively higher in the early 2000’s (around 11 000 tons) and then started on a fluctuating but decreasing trend to date. Export quantities for the past few years averaged around 4 000 tons per annum. However, there was there was a significant increase of 86% in export quantity and a decrease of 36% in import quantity during 2013 compared to 2012. The increase in exports might be due to the unbanning of South African bovine animals and their products. In 2013 South Africa exported 8 000 tons of beef yielding an export value of R 396 million.
In recent years (2013) exports are mainly to SADC and other African countries (6 000 tons) and Asia (1 800 tons) with Europe in the third place. Within the SADC Mozambique is the largest importer (73% of total exports) followed by Angola and Mauritius. Other African countries to whom South Africa exports to are Egypt, Nigeria and DRC (Profile of SA Beef Market Value Chain, 2014).
Of the provinces, Gauteng has recorded the highest export values of beef between the periods 2002 and 2011. This is mainly due to the fact that most exporters of beef are situated in Gauteng Province and the greatest proportion of beef was exported to neighbouring countries with Gauteng Province as the main exit point. Exports of beef were also recorded in all other eight provinces.
b) Imports
South Africa imported approximately 4 400 tons of beef in 2013 at an estimated value of R 97 million. The import quantity decreased by 36% in 2013 compared to 2012, this might be due to the outbreak of Foot and Mouth Disease (FMD), which made South Africa to be self-sufficient in beef and global economic meltdown which pushed consumers to switch to low priced protein content meat like chicken meat. For the period 2004 to 2013 the quantity of beef imports has decreased by 73 percent (with imports peaking in 2005 at 20 000 tons).
In earlier years South Africa imported beef mainly from the Americas and the highest quantities of imports were from South America (Brazil, Uruguay, Argentina and Paraguay). In recent years, South Africa imported primarily from Oceania with Australia serving as the main exporter (14 000 tons in 2012) followed by New Zealand. Namibia also exports 70% of its total beef production to South Africa in the form of livestock (amounting to approximately 25 000 tons) to increase local stock.
South Africa applies the Most-Favoured Nation (MFN) import tariff of 40.00% to all imports of beef excluding Namibia, which is a member of SADC. Namibia received an Intra SACU tariff rate of 0.00% for the past two years when exporting fresh or chilled beef carcasses and half carcasses to South Africa. South Africa also applies a preferential tariff rate of 0.00% to SADC countries (Profile of SA Beef Market Value Chain, 2014).
8.3. Value chain assessment
The following section will diagrammatically represent and provide an analysis of the beef value chain. The opportunity analysis will identify potential opportunities within the value chain. The development of value chains in the beef industry sustainable through supply, production through processing, to markets is important. The value chain process is visually represented from the production of the commodity through to the consumer. Diagram 8.3 demonstrates the beef value chain
Diagram 8.1: Beef value chain
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Diagram 8.1demonstrates the value chain for beef production starting from the input stage right through to the sales and consumption. The inputs required for beef production are mainly animal feed, breeders and calf weaners. Support and tertiary services include logistics such as travelling arrangements, veterinary services to ensure healthy cattle, and services offered by farmer organisations and agricultural forums. During primary production, the cattle is prepared for sale to processors and the activities involved include the sale of livestock though auctions and other sale methods and weaning new calves. After the primary production stage, processing or value addition can take place where the cattle are fed until they are ready for slaughtering and processing at the abattoir. Further processing takes place through the packing and specialisation of the beef products. Through distribution and marketing, the beef products are classified and transported to sale points, storage and through exports. The sale and consumption stage is the last component of the value chain, where the products are delivered and sold to consumers through butcheries, wholesale and retail stores, as well as consumption at establishments such as restaurants and the different households. The beef value chain accommodates all three components of the Agri-Park where the inputs and primary production are catered for through the FPSU’s. Value addition or processing activities can take place at the Agri-Hub, which will also include distribution and marketing activities. Through the RUMC, exports will be supported and linkages to points of sale and consumption will be available.
. 8.4. Agro-processing opportunities
As indicated in the value chain assessment, the processing of beef as an agricultural product is a significant activity. The term value add or addition indicates that value is added to beef products through processing, where speciality products are produced and packaging for convenience takes place. Therefore, it is important for beef to demonstrate a variety of agro-processing opportunities that will expand the product offering for the Agri-parks. Table 8.9 highlights some opportunities for local value- adding to beef and beef cattle
Table 8.9: Beef processing opportunities
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Process or basic method Product Slaughtering Beef carcass quarters Retail beef cuts Packaging and branding Packaged and branded meat cuts Freezing and packaging of slaughtered meat Frozen beef cut packs cuts Canning/bottling and pickling Canned beef Pickled beef Bottle beef Drying, including biltong and jerky Biltong Jerky Dry-curing and smoking Semi-dried beef Cured Smoked beef (dried beef) Curing whole beef cuts in brine Salt beef Curing small beef cuts in brine, further cutting, Corned beef (bully beef) pressing and canning. Mincing, mixing with seasoning and binders, Patties (frozen) patty forming, packaging and freezing. Fresh sausage making Fresh sausages Cooked and smoked sausage making Cooked sausages Smoked sausages Dry and semi-dry sausage making Dry sausages Semi-dry sausages Speciality and other diverse sausage making Speciality sausages diverse sausages Offal marketing Various offal products of high value Tanning Leather Rendering Rendering products originating from slaughter waste Jugging Perpetual stew
Table 8.9 presents the processing or value addition opportunities for beef production by indicating the different products that can be achieved though processing and the processing activities that take place. Therefore, it is evident that there is a range of processing activities and products are presented by the beef industry. The Agri-Hub will be able to cater to the processing activities and allow better valued beef products to be marketed and therefore, a better return for the farmers and other stakeholders in the Agri- Hub.
8.5. Main input suppliers
The main input suppliers’ section observes entities that supply the inputs needed for the production of beef and beef products. In terms of the beef cattle value chain, the main suppliers that will be assessed will be the main suppliers of the following inputs:
Feed Weaners Feedlot Logistics Veterinary services Extension services
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Machinery Finance
The following input suppliers serving the Waterberg DM have been identified: Afgri – one of the South Africa’s main agricultural and processing organisations supplying animal feed, financial services, equipment and milling, among other services. NTK – supplies production inputs for agricultural manufacturing in addition to handling, storing and marketing of grain and among its agricultural products are animal feed.
Afgri and NTK are some of South Africa’s most well renowned beef input suppliers for feed and equipment. A number of feedlot services that are found in the Waterberg DM are listed in Table 8.10.
Table 8.10: Feedlots in the Waterberg DM
Total ann. Through put District Standing Capacity x3.3/ann.
Lephalale - Koedoesrand 5 000 16 500 Mokopane 850 2 720 Mokopane - Oorlogsfontein 500 1 600 Modimolle - Bekenvlei Bdy 1 125 3 600 Mookgopong - Haakdoorn 1 125 3 600 Thabazimbi - Reenpan 400 1 280 Thabazimbi - HGW Bdy 400 1 280 Settlers - Alfar Farming Ent. 1 000 3 200 Total 10 400 33 780 Source: Waterberg District Municipality
Further input suppliers and input services providers for beef production in the Waterberg DM are indicated in sub-section 8.6.2 in Table 8.5.
8.6. Competitors
Companies or any other organisations in the beef industry that will be supplying the similar beef products to the Agri-Park are observed as competitors. Information of the beef industry’s competitors in Waterberg and Limpopo is not readily available and further research will take place to identify competitors. A few of South Africa’s major beef producers can be listed and are presented in Table 8.11.
Table 8.11: Beef industry competitors Name of producer Description Karan Beef Karan beef has the largest feedlot in Africa, with a feedlot capacity of Over 120 000 head of over 120 000 beef cattle. Established in 1974, Karan beef has been cattle distinguished as a supplier of high quality beef and beef products. The Karan beef farm is located in Heidelberg in the south of Johannesburg. The overall size of the Karan beef farm is 2 330 hectares. On the farm, there is an established game farm and wetland eco-development which is home to one of the largest selections of water fowls in South Africa. Karan beef also has the largest feed mill in the world, which produces up to 1 500 tons of mixed feed per day. Karan beef has an abattoir in Balfour which is 75 kilometres from Johannesburg. Thus, Karan beef has established a marketing and distribution centre in Johannesburg.
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Name of producer Description Sparta Beef Sparta is a leading group of beef suppliers, and is the largest employer in Over 100 000 heads of the Marquard district in the Free State Province. Established in the late cattle) 1960s, the Sparta group comprises of: an abattoir, a cattle feedlot, and a meat processing plant. Sparta contributes significantly to local communities; with 1200 people, the group contributes more than R3 million to the economy per month. In South Africa, Sparta has one of the largest feedlot operations, and has a capacity to feed over 100 000 cattle within the feedlot and farm. Sparta has a beef plant located in Welkom, which has the capacity to produce 400 tons of beef daily; and on average, slaughters more than 200 000 cattle a year. “Of the total daily production at the Sparta abattoir, the South African public consumes approximately” Beefcor Situated to the east of Pretoria, Beefcor was established in 1973 by the Over 60 000 heads Imperial Cold Storage & Supply Company Ltd (ICS). The company annually operates a Feedlot operation in Bronkhorstspruit and they have wholesale operations in Pretoria and Krugersdorp.
The competitors listed in Table 8.11 are some of South Africa’s largest beef producers and provided beef to a variety of markets. It can be expected that the competitors in Table 8.4 reach the Waterberg DM’s market and other markets that the Agri-Park will plan to reach, thus creating considerable competition. While the competitors listed are the main ones in the country, local competitors can be expected as well and such competition will assist in ensuring that the Agri-Park produces quality beef at compatible prices.
8.7. Stakeholders
There are number of stakeholders that can be identified for the beef industry in the Waterberg Agri-Park. The type of stakeholders identified are government, commodity service providers and organisations and associations.
8.7.1. Government
National o Department of Rural Development and Land Reform o Department of Agriculture Forestry and Fisheries
Provincial o Department of Rural Development and Land Reform o Department of Agriculture Forestry and Fisheries
District o Waterberg DM o Waterberg DM Local Municipalities o Waterberg DM Agriculture o Waterberg DM Economic Development
8.7.2. Services Providers
The services providers for the in the Waterberg DM are listed in Table 8.12
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Table 8.12: Beef industry service providers in Waterberg DM Stakeholder Type Town Service Ellisras Abattoir Abattoirs Lephalale Cattle Potgietersrus Abattoir Abattoirs Mokopane Cattle P Prus Abattoir Abattoirs Mokopane Cattle, cold storage, Butchery Thabazimbi Abattoir Abattoirs Thabazimbi Cattle Waterberg Regional Abattoir Abattoirs Modimolle Cattle Platrivier Auctioneers Auctioneers Bela-Bela Agricultural property, livestock Vleissentraal (PTY) Ltd Auctioneers Mokopane Livestock auctioneers, agricultural property Margeral Boerdery Breeders Bela-Bela Cattle breeders NTK Landmark (Naboomspruit) Cooperatives Naboomspruit Retail, livestock medicine, equipment suppliers NTK Bpk (Vaalwater) Cooperatives Vaalwater Retail, livestock medicine, equipment suppliers Ve Op Rollermeule (EDMS) Bpk Feed Manufacturers Mookgopong Animal feeds Warmbaths Milling Feed Manufacturers Bela-Bela Animal feeds Dundee Dynamix Tanneries Mookgophong Cattle hides, leather tanning State Veterinarian (Lephalale) Veterinarians Lephalale State veterinarian, primary health care, import and export, sample collection for disease State Veterinarian (Potgietersrus) Veterinarians Mokopane State veterinarian, primary health care, import and export, sample collection for disease
8.7.3. Beef Industry Organisations and Associations
The beef industry has a few of organisations and associations that are available for representation. Such associations and organisations play the role of making market research available; advocating and lobbying for the industry; liaising with government; and encouraging growth and sustainability. The organisations and associations for the beef industry are the following:
Red Meat Industry Forum (RMIF) - The forum is an umbrella group, representing all national organisations in the red meat industry. Its primary purpose is to deliver the support required to maintain a viable red meat industry, including negotiating for an enabling regulatory environment, informing industry policy and facilitating legislative compliance.
Red Meat Producers Organisation (RPO) - As part of the Red Meat Industry Forum, the RPO acts as the mouthpiece organisation for commercial producers and is tasked with representing members’ interests.
National Emergent Red Meat Producers Organisation (NERPO) - The NERPO supports the development of emerging farmers by influencing public policy and legislation; facilitating access to technical support, finance and markets; and encouraging greater participation of black farmers, women and youth in the industry.
South African Feedlot Association (SAFAS) - The SA Feedlot Association is an umbrella organisation that addresses the collective interests of South Africa feedlot operators by providing support and resources for relevant industry bodies.
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International Meat Quality Assurance Services (IMQAS): IMQAS acts as an independent agent at an abattoir that ensures a safe and wholesome product is supplied to the consumer through compliance with regulations of the Meat Safety Act (Act 40 of 2000) and meat inspection at the abattoir. Traceability is vital, and as it is approached positively, it is the single most important tool in the meat and livestock industry for future market development.
The Red Meat Abattoir Association (RMAA): RMAA is a representative forum for abattoir owners in South Africa. The mission of the Association is to provide representation and services to the abattoir industry, which will ensure the highest standards of meat safety and quality to the benefit of the industry and the consumer. Training is provided to abattoir personnel as part of the challenge to improve and maintain hygiene and safety standards of meat.
The associations discussed above are for red meat industries in general, however, most pay considerable attention to the beef industry as well.
8.8. Technology
The role of technology is immensely important in the development of agriculture and cannot be ignored in the development of the Waterberg DM. Keeping up with technology is vital in the beef industry and will allow the Agri-Park to keep up with competitors, keep informed and maintain efficient operations and production. The technology that is currently available for cattle beef farming is summarised in Table 8.13.
Table 8.13: Beef cattle farming technology Technology and short explanation Function or benefit to farmer Significant disadvantages or limits where needed Precision farming, integrated farm management systems and software Precision farming: Gaining real- Optimising and tailoring Very taxing in terms of capital, time or exact information within production levels at precise and equipment and skills particular parts of a single field to small-area level so that yield is requirements. determine the most appropriate maximised and inputs are Not well tailored to small-scale rate of application of inputs. minimised. farming conditions yet. Integrated farm management Maximise profitability and Applications for small-scale software: Combines information efficiency automate some farmers is currently still limited. and management systems from management and administrative Some good software and various on- and off-farms sources to tasks. systems developed by coordinate farming activities in a Coordinate and simplify international vendors are not highly efficient manner. management processes. tailored for South Africa yet. Plan-A-Head Beef Management Integrate with the systems of System: Herd management and cattle breeder societies and with record keeping according to ICAR other Plan-A-Head farming (International Committee for software to allow for whole-farm Animal Recording) guidelines enterprise management. specifically for South African beef Widely adopted therefore most cattle farmers. software bugs have already been fixed. The light edition is particularly suitable for small-scale farmers. Particular strong features include the program's record keeping capabilities, especially regarding animal health, reproduction and feeding. SimJunior: Basic financial Easy to use. Ideal for the small- management and accounting scale farmer software for the small-scale farmer.
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Technology and short explanation Function or benefit to farmer Significant disadvantages or limits where needed Accord: Complete human Particular strong features of the resource management system for system include its simplicity and farmers, including payroll, HR coverage of basic employment record keeping and administration. legislation. Agribeef: Complete beef cattle Approved by most breeder herd (commercial as well as stud) societies. management system). Particularly strong in record keeping and reproduction management. Feedlot: Feedlot management Particularly strong in record system for camp groups, sales keeping. groups and purchase groups. Studmaster Beef: A comprehensive Particularly strong in animal computer program for the breeding. management of beef cattle of any breed, focusing more on the breeding side of the herd than the financials. Animal reproduction Artificial insemination (AI): A farmer can cost efficiently Require significant skills and Introduction of the sperm into a introduce generically superior investment. female animal's uterus traits into his/her herd or flock without having to buy these superior animals. Oestrous synchronisation: Using Pregnant cows and later their hormone treatment to ensure that calves can be handled in a female dairy and beef cattle single cohort. becomes pregnant at increasing efficiencies of scale approximately the same time. Decrease cost and effort performing procedures through the different life stages. Animal handling Hydraulic cattle clamps: Silent, less New generation hydraulic Not readily available in South stressful and precise clamping of clamps fits more precisely and Africa yet. cattle at the neck to allow for safe does not produce a stress- handling of the animal. causing noise. Cattle hip-clamp: Instrument that Allows for convenient, stress and N/A allows for easy lifting of cattle. injury free lifting of sick cattle or cattle that need assistance to stand upright again. Animal feeding Rolling molasses lick: A tank filled Ensuring a fresh supply of Possible contamination risk in with molasses with wheels that molasses as needed by the case of poor hygiene. rotate through the molasses at the animals. bottom of the tank as the cattle lick the fresh molasses at the top of the tank. Animal watering Auto-refill watering troughs: Water Steady Important to make certain the troughs fitted with a small reservoir Easy to clean trough material are UV and low pressure floating valves to Re-fills automatically from a small resistant enable automated re-filling. build-in reservoir which minimizes Basin is easy to clean. contamination and risk of wastage.
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Technology and short explanation Function or benefit to farmer Significant disadvantages or limits where needed Animal health Vaccination: Vaccines contains Vaccines have a highly positive Many farmers still believe inactive parts or molecules that effect on disease control and vaccines to be ineffective, resembles surface proteins of a even eradication. therefore better education pathogenic virus or bacterium, Very high return on investment. and awareness creation are which are introduced into the needed. animal's blood stream so that In case a certain threshold of antibodies can be developed. animals are not vaccinated, herd immunity may be lost. Antibiotics: Have two main Increased growth rate and Routine feeding of antibiotics applications in agriculture: 1) To resistance against disease in as a method to increase treat infections, professionals, and case of routine feeding growth and as a preventative 2) As a routine feed supplement to supplementation. (rather than curative) animals in intensive farming systems healthcare method could be regarded as dangerous and unsustainable because it increases resistance to antibiotics. Resistance holds risk to future animal healthcare but also to human health because resistance may also be carried over to human pathogens. Veldt management Land rehabilitation techniques: Stabilise soil, control or reverse May be labour intensive. erosion damage and restore degraded land so that it can again be utilised for agricultural purposes. Farm energy Wind energy: Wind energy has Wind is a renewable form of Only a few areas in South been used for a long time in South energy and some areas in South Africa do have sufficient wind Africa in the form of wind pumps. Africa have sufficient wind profiles to justify investment in development potential small wind turbines. Appropriate for very small-scale Even larger battery storage operations. Less vulnerable to capacity compared to solar theft compared to solar panels. energy are required. Solar technology incl. photovoltaic Solar energy is a renewable form Large battery storage and thermal panels and solar of energy and most areas in capacity is required in case of drying and cooking: There are two South Africa have sufficient wind photovoltaic panels. Highly main forms of solar energy development potential. vulnerable to theft. harvesting, i.e. photovoltaic panels In fact, some parts of the that produces electricity, and southern and western Free State, thermal solar panels or tubes that western Limpopo, Gauteng and heat water. especially the Northern Cape and North West have excellent solar power potential even at global standards. Biogas fermenters: Biogas can be Enable the farmer to become Capital and skills requirements produced from a variety of on- independent of imported and may be significant although farm sources, especially animal increasingly expensive mineral or very low cost alternatives are dung of animals kept in confined natural gas. available. areas. Especially suitable for intensive livestock, pig and poultry farmers which produce large quantities of animal waste. New techniques enable even small farmers with just a few
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Technology and short explanation Function or benefit to farmer Significant disadvantages or limits where needed animals to produce gas in a viable manner. Farm protection, security and visual monitoring Video and photographical Valuable to monitor veldt Advanced systems can be technology: Fixed point condition, effects of grazing or very expensive. photography, security camera fire control regime, rehabilitation systems and remote sensor- efforts, and to monitor animal or triggered photography. criminal activity in remote parts of the farm. Some systems notify the farmer by SMS of sensed activity and immediately send the footage by MMS or video clips to the farmer's mobile device Apps for mobile phones and tablets THE MERCK VETERINARY MANUAL Comprehensive animal health Not free Mobile App, available for both and reproduction reference not Android and Apple. It contains only to vets but to farmers as guidelines for the diagnosis, well. treatment, and prevention of animal disorders and diseases. Cattle breeds: Overview of the Useful for the new farmer to help world's more important beef and in breed selection. dairy cattle breeds and their characteristics. Online and mobile information portals AgriSuite Online: Internet based The system can be accessed on Not publicly available yet agricultural information system a PC or Mac, on tablets and developed and maintained for smartphones, in the office or on farmers. Provide a variety of the farm. general agricultural information Contains the most essential, directly to farmers. useful and concise information in a very simple and user-friendly format. Other Drones: Un-manned aircraft Very useful for general Models tailored for agriculture capable of exploring the farm and inspections, monitoring and are expensive. taking photos from the air. mapping. Tight regulation is expected in Advanced models can even the near future. perform some remote sensing functions. Remote sensing: Interpreting Enable the farmer to make well Depending on the service satellite images to make farming informed decisions based on subscribed to, it may be very decisions. information that otherwise would expensive. have been too difficult or expensive to obtain. Provides complete information of the entire farm. Some information is provided daily or instantly. Radio frequency identification Know where the animal is at all Fairly expensive at this stage technology: Used to track and times, and to identify a particular but prices are dropping identify animals. animal instantly for record rapidly. keeping and management purposes. Especially useful to extensive farming systems and game farmers.
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The use of technologies summarised in Table 8.13 can contribute improvements to beef production. By allowing farmers access to such technologies, they will have access to information, produce better quality beef, and have more efficient operations. In terms of the Agri-Park model, the FPSUs will most likely to use and benefit from these technologies.
8.9. Demand and needs analysis
The production versus consumption assessment in sub-section 8.2 demonstrated through Figure 8.1 that the consumption figured for beef are higher than production. Thus, South African beef trends demonstrate a clear demand for beef and therefore, an opportunity to increase local production. In addition, a clear increase in the consumption of beef is also evident.
To summarise the opportunities in specific market segments as discussed under “Specific marketing channels”, there is potential to capture more profit by organising abattoirs to perform just a slaughtering and butchering service rather than selling animals to the abattoirs, then to market the meat directly to small and large retailers, butcheries and catering or hospitality businesses. There is a huge potential to properly brand local grass-fed and organic beef for the export market. Abattoirs as potential customers are important during the initial phase, and the hide industry needs to be further developed.
As highlighted in section 8.2.1 c, Table 8.8, under the “Priority & gaps/opportunities” column, gaps in the market for processed beef products include the introduction of a larger diversity of sausages, American style beef jerky (positioned differently to biltong), and improved packaging and branding.
Therefore, a demand for beef clearly exists and as consumption of beef continues to rise, it can be expected that there will be a continuous demand. The Agri-Park will have a market that is sustained to allow continuous beef production.
8.10. Socio-economic contribution
The production of beef cattle, like any of the other agricultural activity has an impact on the socio- economic development of South Africa. A critical aspect among socio-economic development is that of job creation. The provision of job opportunities by the beef industry is crucial because this results in opportunities to receive an income that will contribute to socio economic-development in terms of eradication of poverty, food security and ultimately the uplifting of livelihoods. The government, including DAFF and DRDLR have supported and exploited the opportunities of the beef production socio- economic impact by initiating various programmes that ensure that the poor and rural communities can benefit from these opportunities.
An estimate of 50 000 commercial farmers, 240 000 emerging farmers and 3 million communal farmers has been stated in The Profile of the South African Beef Market Value Chain. In addition, South Africa has approximately 70 feedlots and 495 abattoirs. Thus, the beef industry is a crucial employer, employing 500 000 people with 2 125 000 livestock economy dependants in 2013 (Department of Agriculture, Forestry and Fisheries, 2014). The following job categories reveal some of the primary job opportunities that are involved in beef production:
General labourer Transfer, sorting and loading of carcass Liarage worker Technical and foreman supervision Processing Hygiene management
Source: Red Meat Abattoir Association
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Agricultural production statistics found in the Waterberg Agricultural Development Strategy 2005 indicate an employment equivalent to the production of a variety of livestock commodities. Although the data was published in 2005, an interpretation of employment opportunities provided can be made, especially in comparison other livestock commodities. Table 8.14 indicates the employment equivalent for the livestock production in the Waterberg DM
Table 8.14: Waterberg production statistics (2005) No Livestock Unit Total Unit Estimated Employment Full- Production Time Job Equivalent 1 Eggs Layers 330 000 doz 8 030 000 80
2 Chickens doc/week 300 000 doc 9 360 000 80
3 Broilers birds/week 150 000 ton 11 934 000 150
4 Pork sows 8 800 ton 12 320 440
5 Diary 1/day 9 600 litre 3 504 000 64
6 Cattle head 482 400 head 121 806 2 700
7 Game 1000ha 1 328 ha 1 325 850 5 303
Source: The Waterberg Agricultural Development Strategy, 2005
Table 8.14 indicates the different types of livestock, the totals farmed in the year 2005, the estimated production and the employment equivalent of the production. In terms of the employment full time job equivalent, 5 303 jobs would have been provided by game production, which is the highest number of jobs out of the livestock. The cattle production has the second highest job equivalent of 2 700 jobs and the other livestock follow from far. Thus, by observing the job equivalent of production, cattle demonstrate a significant contribution to the job creation in the Waterberg DM, when compared. With the increase in beef consumption and production, it can be concluded that beef is creating a significant amount of job opportunities.
Considering the high demand for beef and the hectares of land available in the District, the job multipliers by the Bureau for Food and Agriculture Policy have been used to estimate the employment opportunities that beef production can contribute in the 10-year period. The Agri-Park can provide approximately between 700 and 2 200 direct (0,0143 jobs/ha) and indirect employment opportunities (0,0071 jobs/ha) and assist approximately 600 small-scale farmers.
8.11. Contribution to food security
Food security entails ready access to food that is of sufficient standard and amounts. The beef industry, as part of the livestock sector contributes to food security, as well as provides support to the livelihoods of almost a billion people around the world. Furthermore, 15% of total food energy and 25% of dietary protein is provided by livestock produced (RSA DAFF: 2013). In South Africa, the limited opportunities for crop production have resulted in livestock farming being the prime income generator in many of the rural areas and climatic zones, thus contributing to the income used to purchase maize, wheat and vegetables as staple foods.
As already stated in the socio-economic section above, the government has initiated programmes to ensure effective positive impact of agriculture in communities. Thus, there are also government programmes that support food security, such as Fetsa Tlala and the Government’s Integrated Food Security Production Intervention Programme to support small holder farmers and rural communities.
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A significant contribution by animal food products is towards the quality of the diet. When compared to grain or vegetable products, the biological value of animal product proteins is higher. Vital nutrients are also supplied mainly by animal food, proving nutrients such as Vitamin A and Iron that are usually insufficient in diets of the rural population. (NDA: 2006)
8.12. Regulatory requirements
As a commodity to be processed and marketed through the Agri-Park, the beef industry demonstrates great opportunities for small-scale farmers. However, there are a few regulatory requirements that the production of beef needs to meet. Table 8.15 provides a list of regulatory documents pertaining to the beef industry.
Table 8.15: Beef Industry Regulatory Requirements Regulation Description Agricultural Product Standards Act, 1990 (Act To provide for the control over the sale and No. 119 of 1990) export of certain agricultural products, control over the sale of certain imported agricultural products, control over related products and for matters connected with.
Foodstuffs, Cosmetics and Disinfectants Act, To control sale, manufacture and importation 1972 (Act No. 54 of 1972) of foodstuffs, cosmetics and disinfectants and to provide for incidental matters. Meat Safety Act, 2000 (Act No. 40 of 2000) To provide for measures to promote meat safety and the safety of animal products, to establish and maintain essential national standards in respect of abattoirs, to establish meat safety schemes and to provide for matters connected therewith. Government Notice No. R198 of 30 July 1999 Regulation governing general hygiene requirements for food premises and the transport of food. Meat Safety Act, 2000 (Act No. 40 of 2000) To provide for measures to promote meat safety and the safety of animal products, to establish and maintain essential national standards in respect of abattoirs, to establish meat safety schemes and to provide for matters connected therewith. Abattoir Hygiene Act, 1992 (Act No. 121 of Provides for the maintenance of proper 1992) standards of hygiene in the slaughtering of animals and in the handling of meat and animal products. Animal Health Act, 2002 (Act No. 7 of 2002) To provide for measures to promote animal health and to control animal diseases; to assign executive authority with regard to certain provisions of this Act to provinces; to regulate the importation and exportation of animals; to establish health schemes; and to provide for matters connected therewith. Animals Protection Act, 1962 (Act No. 71 of The act encompasses the prevention of cruelty 1962) towards animals. The act further encompasses the code of best practices for the handling and transport of livestock.
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Regulation Description Fertilisers, Farm Feeds, Agricultural Remedies The act provides for the appointment of a and Stock Remedies Act, 1947 (Act No. 36 of Registrar of Fertilizers, Farm Feeds, Agricultural 1947) Remedies and Stock Remedies; for the registration of fertilizers, farm feeds, agricultural remedies, stock remedies, sterilising plants and pest control operators; to regulate or prohibit the importation, sale, acquisition, disposal or use of fertilizers, farm feeds, agricultural remedies and stock remedies; to provide for the designation of technical advisers and analysts; and to provide for matters incidental thereto. National Water Act, 1998 (Act No.36 of 1998) This act encompasses laws relating to water resources and the use thereof. Occupational Health and Safety Act, 1993 (Act The act aims to provide for the health and No.85 of 1993) safety of persons at work and the health and safety of persons in connection with the activities of persons at work and to establish an advisory council for occupational health and safety. Basic Conditions of Employment Act, 1983 (Act The act encompasses those regulations No. 3 of 1983) associated with fair labour practices. Municipal By-Laws and Regulations, where Municipal by-laws will need to be investigated relevant with regard to the establishment of the abattoir in a municipal area. Marketing Act, 1968 (Act No. 59 of 1968) The Act has authorised an establishment and enforcement of regulatory measures to intervene in the marketing of agricultural products, including the introduction of levies on agricultural products. Stock Theft Act, 1959 (Act No. 57 of 1959) This Act encompasses those laws associated with the theft of animal stock and produce. Consumer Protection Act (Act No68 of 2008) To promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose establish national standards relating to consumer protection. Government Notice No. 26779 of 17 August Regulations concerning the requirements for 2004 the registration of red meat abattoirs and the standard of its facilities. Further regulations refer to hygiene management systems, treatment of animals and slaughtering, export and imports, inspections and marking. Government Notice No. R198 of 30 July 1999 Regulation governing general hygiene requirements for food premises and the transport of food. Government Notice No. R. 15 of 30 January Regulations regarding the classification and 2015 marketing of meat for sale Government Notice No. R.2718 of 23 November Regulations governing the composition and 1990 labelling of raw boerewors, raw species sausage and raw mixed- species sausage
The regulatory in Table 8.15 contains requirements that refers to a few key aspects in the production of beef. The Acts and Government Notices indicated in the table define the requirements for the
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processing, as well as the sale and marketing activities in the beef industry. The Agri-Park’s beef production is bound by these regulatory requirements and the Agri-Park will have to ensure continuous compliance.
8.13. Substitute Products
Substitute products are products that may replace each other in consumption or use, as a result of changing conditions, such as, for example increase in prices, or a change in consumer tastes. This section of the report will focus on substitute products for beef. The substitutes identified will also provide a meaty taste and in some instances will have lower saturated fats and cholesterol making them a healthier choice.
8.13.1. Poultry - broilers and eggs
The poultry industry is the largest segment of agricultural sector in South African, the industry contributes more than 16% to South Africa’s gross domestic product. Poultry is one of the main suppliers of a protein. Poultry meat and eggs had a total consumption of 2.543 million tons, of this, poultry meat, including imported poultry, contributed approximately 2.049 million tons, and eggs and egg products contributed approximately 0.494 million tons during 2014. The total consumption of poultry was approximately 84% more than the combined consumption of beef, pork, mutton and goat (approximately 1.377 million tons combined) during 2014 (South African Poultry Association, 2014). Thus, poultry is a viable alternative to beef.
8.13.2. Pork
The pork industry in South Africa has an important part to play in the overall agricultural sector, although the production numbers are far lower than the likes of the poultry and beef industries, the pork industry still accounts for approximately 2.15% of the primary agricultural sector, the total consumption of pork in South Africa only accounts for 8% of the total meat consumed. To put this amount into perspective, the pork industry on average has accounted for approximately R2.7 billion per year over the past 10 years. There is a growing increase in pork consumption globally, as well as in South Africa due to rising populations and increased spending power therefore, the pork industry has begun to expand. Pork is seen as the cheaper alternative to the majority of other meat sources such as: beef, mutton, venison, etc.: thus, pork can be considered a substitute for beef.
8.13.3. Soya products
In South Africa, there is a growing interest in soybean products because of the health benefits associated with these products. Approximately 60% of South Africa’s soybean production is utilised to make animal feed, a further 32% is utilised for oil and oil cakes, while only 8% is utilised for human consumption. Approximately 18% of a soybean consists of oil, the oil is processed into oil products which is used in the food industry.
Soybean products are a valuable source of proteins for vegans and vegetarians: they also have many health benefits such as combating of heart diseases and lowering cholesterol. Thus, soybeans can be a viable alternative to beef.
8.14. New entrants
Emerging farmers and the agri-business sector need to be accelerated towards being independent in order allow for effective rural development. Therefore, programmes for training, mentorship, introduction
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into commercial and cooperative structures, and investment in emerging and fledgling agribusinesses are crucial. To allow such support the agri-business sector needs to take responsibility to:
• Support training, mentorship and demonstration programmes. • Provide for infrastructural and business based training. • Take in the farmers and entrepreneurs to organised agricultural structures. • Contribute to the formation of co-operative structures with shareholding by participants. • Encourage and contribute to the involvement and representation of black entrepreneurs in agribusiness. • Invest in these projects to form trust and to enable the use of contract suppliers’ services and downstream partners.
The Agri-Park objectives will enable the programme to implement some of the responsibilities included above in order to allow opportunities to new entrants to the beef industry.
8.15. Societal and cultural trends
Society’s perception and their cultural practices and beliefs cannot be ignored with regard to influence in the beef industry. The societal and cultural trends that the Agri-Park should consider are discussed.
Income: A trend that has been observed in South Africa is that as incomes rise so does the consumption of red meat, especially beef. Beef is not easily affordable and as household and individual incomes increase, more people are able to afford beef. This means that those that have a low income cannot afford beef and therefore, beef becomes a privilege when consumed. Thus, societal views have been formed where beef is an indicator of living standards and is a status factor.
Health risks: It has become a rather well known concept that eating beef regularly can be a threat to life expectancy. Health experts are suggesting that beef should be replaced by other protein sources that are regarded as healthier. Red meat has been connected to increasing the risk of diabetes, cardiovascular disease and some types of cancers. Recently, more and more people are becoming concerned with their health status and making efforts to maintain good health. With the popularity of this healthy living trend spreading, the rate of beef consumption can be expected to slow down.
South African indigenous cultures: In many indigenous South African cultures, cattle have long been used for different cultural practices including iLolobolo (the term varies in different cultures). In these practices the cow is slaughtered and consumed by family and the community. Therefore, there is continuous consumption of beef in these cultural groups. Religious beliefs in Hinduism also affect the consumption of beef due to its practices that do not allow for the slaughtering and consumption of beef. With the significant Indian population in South Africa, and a majority of them being Hindu, means that is a significant section of the population does not contribute to the demand for beef.
Cooking time: Another trend is that of more and more women are working to earn an income. As more women and the population in general seek and get jobs, there is less time to focus on domestic duties including cooking. Therefore processed and pre-cooked foods have become more popular as they require little or no cooking time. This contributes to the increase in the demand of processed beef products.
8.16. SWOT analysis
The SWOT analysis for the beef industry is presented in Table 8.16.
Table 8.16: SWOT analysis Strengths
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Existing infrastructure (Abattoirs) Foot-and-Mouth free status Suitable to farm where climate is semi-arid Small scale farming is well supported by government initiatives High demand Suitable climate conditions Weaknesses High input costs Lack of access to ICT support for small scale farmers Water shortages Lack of infrastructure and extension services to small-scale producers in former homelands Opportunities Higher levels of production with increased entry of small-scale producers Growth in the production of beef especially with more small holder producers Growing demand for beef Increase in demand for niche meat products Variety of recent technologies Threats Stock theft Overgrazing Weak and unavailable extension and training services to the red meat value chain Lack of new market development for small-scale producers in former homelands Traditional slaughtering and capturing the hides and skins (goat skins) lost due to the lack of transport of small quantities in rural homeland areas. Climate change affecting production
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Section 9: Maize Analysis
9.1. Production Guidelines
9.1.1. Planting and growing conditions
1. Rainfall: 500 to 700 mm over the growing season from October to March 2. Temperatures: a) Optimum temperature for germination is 18 - 20 ºC b) Optimum growth takes place at 24 – 30 ºC 3. Soil a) Well-drained, deep red and yellow-brown soils allow for the best growth of maize b) Fine-grained sandy loam Avalon soils are highly suitable for dry areas c) A rooting depth of 750mm or more is preferred. d) Maize should be planted at a depth of 50 mm for heavy soils and 125 mm for sandy soils 4. Fertilisers a) All nitrogen is usually applied on well-drained loam and clay soils when planting b) Nitrogen application should be split on sandy soils or soils tending to water clog c) Top-dressed nitrogen should be applied when the plants are at a knee height.
5. Weed control: Controlling the growth of weed avoids competition for moisture and fertilizer by weed plants, thus increasing yields. Weed control should take place as indicated by the following. a) First weeding: Two to three weeks after emergence b) Second weeding: two to three weeks later, if needed, or c) Herbicides should be used during pre-emergence and early post-emergence
9.1.2. Planting and harvesting seasons
a) Planting
Maize planting should take place between late spring and early summer (October to January), where the best planting times are in November and December (Department of Agriculture, Forestry and Fisheries, 2012). The date of maize planting is dependent on a four main factors which indicated as follows: 1. Onset of rains 2. Soil-water conditions 3. Soil temperatures 4. Mid-season drought probability
b) Harvesting and Growth cycle
Maize is usually harvested between late May and end of August (Department of Agriculture, Forestry and Fisheries, 2012).
The growth cycle stages and the period it takes up are presented in Table 9.1.
Table 9.1: Growth Cycle Growth stages Period Establishment 15 -25 days Vegetative Tassel in 25 – 40 days; silk in 10 – 15 days Flowering 10 – 15 days Yield formation 40 – 50 days Ripening 10 – 15 days Source: The Farming Handbook, 2006
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c) Production Output
The yield that can expected for maize are indicated for different amounts of rain in table 9.2.
Table 9.2: Maize yield under different rainfall areas Irrigation Rainfall (mm) Grain (tons/ha) Dryland 700 3.75 800 4.75 900 6.00 Irrigated 8.00 – 10.00 Source: The Farming Handbook, 2006
9.2. Market assessment
9.2.1. Local markets
The South African maize market has matured considerably since the deregulation of agricultural marketing. Producers, traders and other intermediaries interact freely in the marketing of maize. Most of the maize produced in South Africa is consumed locally and as a result, the domestic market is very important to the industry. Before deregulation the maize price was set by the marketing boards. The price was set lower at around R300/ton. Since the implementation of the deregulation policy the price of maize increased gradually because of the adoption of perfect competition in the maize marketing environment in which the prices are determined by market forces i.e. supply and demand factors.
a) Production and Consumption
The production of maize takes place all over South Africa with the Free State, Mpumalanga and North West provinces being the largest producers, accounting for approximately 83% of total production. Almost 90% of maize in South Africa is produced under dry land condition, along with 10% being produced under irrigated conditions. There are 36 grain production regions in South Africa. Figure 9.1 reflects the distribution of maize production in South Africa.
Figure 9.1 South Africa maize production by provinces 2012/13 Northern Cape, 5% Eastern Cape, 1% Western Cape, 0%
\ North West, 18%
Free State, 43%
Gauteng, 5%
Mpumalanga, 22%
KwaZulu Natal, 4% Limpopo, 2%
Source: Profile of Maize Market Value Chain, 2014
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Over the last six years, there has been considerable fluctuations in the total maize production has in all the maize producing provinces. Maize supply consists of maize harvested during that particular season, imports, as well as carryover stocks from the seasons before. Commercial agriculture supplies about 98% of maize in South Africa, while the remaining 2% is produced by the developing agriculture (whilst this figure is somewhat misleading as a significant proportion of smallholder farmer crops are used for homestead food supplements and do not get to the market). Over the past ten years, total maize production has significantly fluctuated, with the lowest production experienced during the 2005/06 and the highest in the 2007/08 production season. In 2014 the crop amounted to 15 million tons harvested from approximately 3 million ha planted.
A comparison of the maize production and consumption, as well as the total area planted is conducted in Table 9.2.
Table 9.2: South Africa total commercial maize area planted, production and consumption (2004 – 2014) Maize: animal Maize: Total area Maize: Total Maize: Human Marketing Year feed and other planted production consumption uses ‘000 ha ‘000 tons
2003/04 3 017 9 732 3 712 3 416 2004/05 3 185 9 391 3 740 3 740 2005/06 2 843 9 482 3 825 3 360 2006/07 2 032 6 947 3 816 3 767 2007/08 2 897 7 339 3 809 4 221 2008/09 3 297 13 164 4 524 4 088 2009/10 2 896 12 567 4 471 4 187 2010/11 3 263 13 421 4 513 4 344 2011/12 2 859 10 924 4 500 4 395 2012/13 3 141 12 468 4 460 4 440 2013/14 3 238 14 982 4 499 4 736 Source: Profile of Maize Market Value Chain, 2014
The Table 9.2 shows that South Africa meets its annual maize consumption requirements entirely from domestic production. This is the result of implementation of more efficient production technologies and practices by producers, the withdrawal of marginal lands from production and the development of high yielding maize cultivars. South Africa produces enough maize to export its surplus to other countries. With regards to consumption, human consumption takes half of the maize consumed domestically (50%) while the remainder is processed for animal consumption (40%) and other industrial uses (10%).
As maize is an internationally traded commodity, it is also subject to the international market conditions. The demand and supply conditions of maize in the international market influence domestic prices directly. Another important factor that impacts on the domestic market is the import tariff, which is used to protect domestic producers from lowly priced maize imports. Whilst prices have generally been on an increasing trend over the past decade, it has also fluctuated substantially in with supply and demand issues. The lowest average maize producers price was recorded in 2004/05 (R513/ton) and the highest was recorded in 2011/12 (R2144/ton)
b) Specific local marketing channels
A choice of marketing channels exists for farmers to sell maize to. The marketing channels can be applied to the Agri-Park’s RUMC component, where the marketing channels that are best for the farmers that are part of the programme. The marketing channels that are available for maize producers are presented in Table 9.3.
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Table 9.3: Marketing Channels Marketing channel Description Volume (%) Advantages Challenges Priority & gaps/opportunities Silos and large regional Farmer sells maize to the 48 Easy way to sell maize. Storage may be Very high priority service cooperatives and local branch of a large Provide services such as expensive. Ease of access and low farmer support businesses cooperative/agribusiness cleaning, grading, Not an optimal barriers of entry. (often originally started as and/or store it at the local blending and drying of channel if the farmer Throughout the district a silo cooperatives e.g. Senwes, silo, often by forward the maize, safe storage, has sufficient is within reasonable Afgri etc.) contract. Silos are usually marketing and transport negotiation and distance. operated by these extensive (loading onto trucks or business skills to farmer support businesses rail). Some also assist the engage in more (although grain millers or farmer to trade on Safex. lucrative marketing other processors may also The stored maize may be channels (especially operate silos, usually at their used by the farmer (who Safex). own facilities). Some also store it there) as collateral Prices highly sensitive operate their own grain to obtain loans. to international price mills, feed and intensive fluctuations and animal production units, oil production figures of crushers, abattoirs and other the current season. business units however, for the purposes of this marketing channel classification those are considered separate channels. Although silo companies may buy and market the product themselves, they often do not buy the maize, but only store it, release a certificate to the farmer indicating the quantity of product stored, then the farmer may sell that certificate to another buyer who then present the certificate to the silo to receive the grain.
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Marketing channel Description Volume (%) Advantages Challenges Priority & gaps/opportunities Grain, oilseed, milling by- These traders buy grain, 15 Maize is usually the main In case the harvested Low priority during later product and other oilseed and milling by- focus. maize volume is too phases when the farmers commodity crop traders products such as chop, bran Traders often fetch the small (smaller than a are well established. and oilcake from farmers or commodity on farms truckload), traders This channel pays relatively processors and distribute it therefore no transport is might be reluctant to low prices. to grain millers, oilseed needed. fetch it on the farm. During the initial phase, crushers, animal feed Some commodity traders In this case a solution traders may be a producers or intensive close forward contracts for a small farmer convenient channel to sell animal farmers producing with farmers, and some might be to deliver to to. their own feed etc. Farmers act as Safex brokers, the nearest silo, where usually sign a forward therefore enable farmers the trader could still contract. They usually act as to engage in futures and become the owner of exporters of grain, including options markets as well. the maize. maize. Prices highly sensitive to international price fluctuations and production figures for the season. Futures and options Trading platform operated 5 Allows the farmer to Require capital and Low priority. contracts (SAFEX) by the Johannesburg Stock minimise price risk, i.e. strong financial and High risk profile. Exchange. Farmer agrees to protection from trading skills to trade Farmers interested in the sell an agreed upon unexpected price fall in successfully in this financial markets may be quantity and quality of the future. market, except if a encouraged to trade on maize for a specified price Price information is broker's service is Safex, but risks remain high. and on a specific date in openly available and made use of. the future. often perceived as fair. Administrative Ideal when the farmer procedures could be produces in sufficient burdensome. quantities and has the Prices are highly business skills and sensitive to knowledge to trade in this international price sophisticated market. fluctuations and Farmer does not need to global competition. trade for him/herself - a Legal consequences reliable broker may be may arise in case the appointed. farmer cannot supply as per contract.
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Marketing channel Description Volume (%) Advantages Challenges Priority & gaps/opportunities Grain millers Sell to grain millers, often by 6 Could generate Most millers, especially Low priority. forward contract. The miller immediate cash. large millers, do not Local millers usually don’t may take ownership of the Some grain mills are buy directly from buy directly from farmers. maize, or could only mill the reliable, consistent buyers farmers because of maize on behalf of the of maize. storage restrictions farmer then the farmer can (neither farmer nor sell the milled product via miller has much various other marketing storage capacity), channels. Milling companies traceability are often owned by other requirements. forms of agri-businesses Difficult task to deal involved in the grain value with many farmers chain. individually. The few millers that do buy directly from farmers generally do not provide transport or other forms of support to farmers. Prices are highly sensitive to international price fluctuations and competition. Animal feed manufacturers Sell to animal feed 26 Strong and consistent Better prices may be Very high priority. incl. larger animal farmers manufacturers or animal demand. negotiated via other There are a number of who produce their own farmers who produce own channels, especially potential buyers in or feed formulations formulated feed, often by for better quality nearby the districts, and this contract. Maize is the major produce. channel may be a means ingredient in feed to reduce transport costs. formulations for most animals including feedlot cattle, piggeries and poultry farms.
.
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The marketing channels presented in Table 9.3 are briefly described and compared according to the advantages and challenges identified, as well as the gaps and opportunities. In addition, the volume column indicates an estimated percentage of total production sold through this channel. By assessing the marketing channels through the volume of products sold, it can be observed that silos and large regional service cooperatives and farmer support businesses contribute to the most sales (48%); followed by animal feed manufacturers including larger animal farmers who produce their own feed formulations (26%); and grain, oilseed, milling by-product and other commodity crop traders (15%). The marketing channels identified are applicable to the Waterberg DM and the prosed Agri-Park due to the presence of silos in the district as well as the existence of livestock farmers needing feed
9.2.2. Global markets
As record harvests continue to materialise in key production regions, global maize production is set to reach record levels for the second consecutive year in 2014/15, despite a reduction in area planted. Having already plummeted by more than 30% from 2013 highs, maize prices are projected to be marginally lower again in 2015, inducing a further consolidation of the maize area in 2016. Despite the projected lower plantings and a return to more normal yields, prevailing stock levels remain high and consequently, lower prices will be sustained in the short term. A gradual recovery is expected towards 2020, as global maize demand, driven largely by the animal feed market, rises above production levels. Barring extreme weather conditions, world production is projected to overtake the growth in demand again towards the end of the baseline period, which may result in a marginal decline in international prices.
a) Exports
The above global market perspective is very important since the maize industry is an important earner of foreign exchange through the export of maize and maize products. In 2013, South Africa exported approximately 2 million tons at a value of R4 billion rand. The South African maize industry exports maize mostly to African countries, particularly BLNS (Botswana, Lesotho, Namibia and Swaziland) countries, as well as Zimbabwe, Kenya, Mozambique, Zambia, and Mauritius. In recent years there have also been substantial exports to Asia (especially Japan) and to Europe.
9.3. Value chain assessment
The value chain for maize models the process from the production of the commodity through to the consumer. Diagram 9.1 presents the maize industry value chain. The demonstration of the maize value chain can be segmented into different stages, namely: inputs; primary production; value addition or processing; distribution and marketing; and sales and consumption.
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Diagram 9.1: Maize Industry Value Chain
According to Diagram 9.1, the primary level inputs are supplied, along with support and tertiary services, followed by the primary production stage where cultivation, harvesting, drying and transportation took place. Input suppliers, producers and silo owners are involved in the primary sector. Silo owners provide storage facilities to handle the crops, to store maize safely, and to supply it to buyers on a continuous basis throughout the year.
The secondary sector is linked to the value addition and processing stage, which entails storage and treatment, processing and packaging. Value addition or processing involves millers and animal feed manufacturers. For human consumption maize is processed into maize meal by millers, whereas yellow maize is processed into broiler and layer feed rations by an animal feed manufacturer. Feedlots use maize that has been processed into hominy chop (a by-product of white maize).
The last two stages in the value chain are distribution and marketing, and sales and consumption, which can be regarded as forming the tertiary sector. The tertiary sector entails traders, retailers and transporters. The maize products are moved to the domestic or export market by traders. Infrastructure and services for the distribution of maize products from the miller to the final consumer are performed by retailers.
9.4. Agro-processing opportunities
Agro-processing is a crucial part of the maize value chain because it allows for product diversification. The term value addition indicates that value is added to maize products through processing, where speciality products are produced and packaging for convenience takes place. The diversification of maize products creates a variety of agro-processing opportunities that will expand the product offering for maize produced in the Agri-Parks. Table 9.4 highlights some opportunities for local value-adding to maize.
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Table 9.4: Maize agro-processing opportunities Process or basic method Product
Milling, packaging and branding Maize meal Cooking and roller pressing. Corn flakes Heating, puffing, seasoning/flavouring and Popcorn packaging. Seasoning/flavouring, heating, shaping, Popped maize cakes pressure application, puffing and packaging. Prolonged cooking, extrusion, cutting, frying Reconstructed maize chips or baking, seasoning and packaging. Milling, high heat and pressure extrusion, Collets: seasoning and packaging. o Cheese puffs o Curls Milling and baking. Baked maize products: o Tortillas o Maize roti o Maize bread o Flatbread Fine milling of endosperm. Starch: o Plastics o Fabrics o Glue o Thickener in gravies, sauces and puddings. By-product of the wet-milling process of Corn steep liquor: maize. o Feed additive o Growth medium in the biotechnology industry. Hydrolisation and sugar extraction. Glucose and Glucose-Fructose Syrup (GFS): o Simple sugars. o Complex sugars e.g. Maltose and dextrin. Starch extraction and fermentation. Fermented beverage Oil extraction from maize kernel germ. Maize oil: o Cooking oil o Margarine o Biodiesel o Pharmaceuticals o Cosmetics Fermentation Ethanol Feed milling (Yellow maize) Animal feed
The processing or value addition opportunities for the maize industry are indicated in Table 9.4 by identifying the process or methods, as well as the products that can be derived. Furthermore, the advantages, challenges, and the priority for the Agri-Park are provided. It is evident that a variety of processing activities and products are possible within the maize industry. The Agri-Hub will be able to cater to the processing activities and allow better valued products to be marketed and therefore a better return for the farmers and other stakeholders in the Agri-Park.
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9.5. Main input suppliers
Suppliers such as Monsanto, Sensako and Carnia are the main suppliers for seeds in South Africa, as well as companies such as Pannar and Pioneer Hybrid International. The main suppliers supplying the following inputs are considered: • Seed • Lime • Pesticides and herbicides • Fertilizer • Inoculants • Farming Equipment
Further input suppliers and input services providers for maize production in the Waterberg DM are indicated in sub-section 9.6.2 in Table 9.4.
9.6. Competitors
Some of the main competitors in the maize industry can be listed as follows (Agri-handbook): • ABC Africa Group • AFGRI • Buhler • Kaap Agri Ltd • NWK • Senwes Ltd • Suidvest Grain • VKB
Main competitors that are specifically located in the Waterberg District and the Limpopo Province are still to be presented in the final report as the information becomes available from the district.
9.7. Stakeholders
The stakeholders for the maize industry in the Waterberg DM are provided below.
9.7.1. Government
National o Department of Rural Development and Land Reform o Department of Agriculture Forestry and Fisheries
Provincial o Department of Rural Development and Land Reform o Department of Agriculture Forestry and Fisheries
District o Waterberg DM o Waterberg DM Local Municipalities o Waterberg DM Agriculture o Waterberg DM Economic Development
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9.7.2. Service providers
Table 9.5 indicates the service providers in the Waterberg districts that are considered to be stakeholders in the Maize industry.
Table 9.5: Maize industry service providers in Waterberg DM Stakeholder Type Town Services Ve Op Rollermeule (EDMS) Bpk Feed Manufacturers Mookgophong Animal Feeds Warmbaths Milling Feed Manufacturers Bela-Bela Animal Feeds Big L Meule Millers Modimolle Maize Milling NTK Mokopane Mill Millers Mokopane Maize Milling Vaalwater Rollermeule Millers Vaalwater Grain Milling Warmbaths Milling (PTY) Ltd Millers Bela-Bela Maize Milling NTK Silo Silos Bela-Bela Maize NTK Silo Silos Bela-Bela Maize NTK Silo Silos Modimolle Maize NTK Silo Silos Mokopane Maize NTK Silo Silos Naboomspruit Maize NTK Silo Silos Mookgophong Maize NTK Silo Silos Bela-Bela Maize NTK Silo Silos Roedtan Maize NTK Silo Silos Settlers Maize
9.7.3. Feed related maize Industry Organisations and associations
Support institutions and associations in the animal feed industry include the following:
Animal Feed Manufactures Association (AFMA): AFMA represents the animal feed industry on various committees and platforms where it is necessary to enhance or protect the interests of industry. Southern African Feed Manufacturers’ Association (SAFMA): SAFMA is a regional association that brings together feed manufacturer representatives from South Africa, Zimbabwe, Botswana, Mozambique, Namibia, Zambia, and Mauritius as part of an effort to harmonise the feed industry in these regions.
The stakeholders that have been presented are form the government, service providers and associations and organisations. Other stakeholders are presented in the role-players section of the Business Plan (Section 5)
9.8. Technology
The use of current technology is very important for the production of maize. An identification of current technologies will reveal what technologies can be used to ensure that the maize production in the Agri- Park is improved. The technologies for maize farming are summed up in Table 9.6.
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Table 9.6: Maize farming technology Technology and short explanation Function or benefit to farmer Significant disadvantages or where needed limits Mechanisation New generation small hand tools Many farming activities, especially Mainly limited to small- repetitive day-to-day work, can be scale farming. greatly enhanced by hand tools designed for the particular task. Speeding up production. Reduce health and safety risk (e.g. back strain, wearing of joints and skin, etc.). Small-scale implements and Farmers benefit from modern Cost may still be prohibitive, tractors: New generation of mechanisation and large leaps in especially for the very small farming implements and tractors productivity even though they farmer. tailored for small-scale farming. farm at small scale, and at a much lower cost compared to conventional implements used by large commercial farmers. Precision farming, integrated farm management systems and software Precision farming: Gaining real- Optimising and tailoring Very taxing in terms of time or exact information within production levels at precise and capital, equipment and particular parts of a single field to small-area level so that yield is skills requirements. determine the most appropriate maximised and inputs are Not well tailored to small- rate of application of inputs. minimised. scale farming conditions yet. Integrated farm management Maximise profitability and Applications for small-scale software: Combines information efficiency, automate some farmers is currently still and management systems from management and administrative limited. various on- and off-farms sources tasks. Some good software and to coordinate farming activities in Coordinate and simplify systems developed by a highly efficient manner. management processes. international vendors are not tailored for South Africa yet. Plan-A-Head Grain Management Integrates with other Plan-A-Head Software Program with Grain farming software to allow for Management System: Software whole-farm enterprise that allows for total management management. of a grain farming enterprise, from Widely adopted therefore, most production to finance and human software bugs has already been resource management. fixed. Particular strong features include the program's mapping, payroll and financial management capabilities. SimJunior: Basic financial Easy to use. management and accounting Ideal for the small-scale farmer software for the small-scale farmer. Accord: Complete human Particularly strong features of the resource management system for system include its simplicity and farmers, including payroll, HR coverage of basic employment record keeping and legislation. administration. Saaiplan: Software that facilitates Could serve as a base for precision comprehensive planning, agriculture. monitoring and record keeping at field level for field crop enterprises. Groundwater access via wells or boreholes Manual well digging or borehole Gain access to groundwater Not an option in case the drilling: resources much more cheaply groundwater table is
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Technology and short explanation Function or benefit to farmer Significant disadvantages or where needed limits compared to conventional deeper than 45 meter or mechanical drilling. where bedrock consists of hard material. Irrigation systems (water delivery) Pre-punched drip tape: tubes Low water pressure requirement. Can irrigate flat land only. comes with holes already Very simple and low cost. Not very effective to provided, therefore easy to install. irrigate orchards. Low uniformity in water application. Button emitter irrigation: button Low water pressure requirement. Can irrigate flat land only. emitters are fitted to irrigation lines, Not very effective to which transport water directly to irrigate orchards. the root zone. Baffle pre-punched drip irrigation: Low water pressure requirement. Can irrigate flat land only. Plastic sleeves/baffles localize Uses 50 - 70 percent less water Not very effective to water flow from pre-punched compared to conventional drip irrigate orchards. holes in the drip line. irrigation. Mini sprinkler irrigation: Low flow Can irrigate flat and sloping land. High water pressure system that requires less pressure Ideal for hilly or sloping terrain or requirement. and is more water efficient than soils prone to water erosion. Not very effective to impact sprinklers and conventional Ideal for areas planted with closely irrigate orchards. sprinkler irrigation. spaced crops but water are too scarce for higher flow irrigation systems such as impact sprinklers. Impact sprinkler irrigation: higher Can irrigate flat, sloping and hilly Very high water pressure flow system that requires more terrain. requirement. pressure and water compared to Ideal for closely spaced crops on Not very effective to mini sprinkler systems. larger fields where water scarcity irrigate orchards. prohibits flood irrigation. Veldt management Land rehabilitation techniques: Stabilise soil, control or reverse May be labour intensive. May differ in technological erosion damage and restore complexity from as simple as brush degraded land so that it can packing to as complex as again be utilised for agricultural biodegradable or long lasting soil purposes. cloths and mesh materials. Soil improvement and prevention of soil erosion In-field rainwater harvesting: Small Enable the soil to absorb much Labour intensive because basins (that can be made with a more water that would have run the micro-basins require shovel) capture rainwater, off the field. regular maintenance. preventing it from immediately Depending on the type of soil, the running off the field during a rain additional moisture may benefit event. the crop for several months and may increase yield significantly. Farm energy Wind energy: Wind energy has Wind is a renewable form of Only a few areas in South been used for a long time in South energy and some areas in South Africa do have sufficient Africa in the form of wind pumps. Africa have sufficient wind wind profiles to justify development potential investment in small wind Appropriate for very small-scale turbines. operations. Less vulnerable to theft Even larger battery storage compared to solar panels. capacity compared to solar energy are required Solar technology incl. photovoltaic Solar energy is a renewable form Large battery storage and thermal panels and solar of energy and most areas in South capacity is required in case drying and cooking: There are two Africa have sufficient wind of photovoltaic panels. main forms of solar energy development potential. Highly vulnerable to theft.
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Technology and short explanation Function or benefit to farmer Significant disadvantages or where needed limits harvesting, i.e. photovoltaic panels In fact, some parts of the southern that produces electricity, and and western Free State, western thermal solar panels or tubes that Limpopo, Gauteng and especially heat water. the Northern Cape and North West have excellent solar power potential even at global standards. Biodiesel: Biodiesel can be Enable the farmer to become At present it is still cheaper generated from a variety of on- independent of imported and for most farmers to buy farm produced sources including increasingly expensive mineral conventional diesel rather oil crops and rendered animal fat. diesel. than producing their own It can be used in the same way as biodiesel. conventional fossil or mineral oil derived diesel. Biogas fermenters: Biogas can be Biogas fermenters: Biogas can be Capital and skills produced from a variety of on- produced from a variety of on- requirements may be farm sources, especially animal farm sources, especially animal significant although very dung of animals kept in confined dung of animals kept in confined low cost alternatives are areas. areas. available. Farm protection, security and visual monitoring Video and photographical Valuable to monitor veldt Advanced systems can be technology: Fixed point conditions, effects of grazing or fire very expensive. photography, security camera control regime, rehabilitation systems and remote sensor- efforts, and to monitor animal or triggered photography. criminal activity in remote parts of the farm. Some systems notify the farmer by SMS of sensed activity and immediately send the footage by MMS or video clips to the farmer's mobile device Apps for mobile phones and tablets AgriApp: Farmer information tool Useful general overview from a Tailored for India, however, for crop production. production perspective. it is still useful for South African farmers. Online and mobile information portals AgriSuite Online: Internet based The system can be accessed on a Not publicly available yet agricultural information system PC or Mac, on tablets and developed and maintained for smartphones, in the office or on farmers. Provide a variety of the farm. general agricultural information Contains the most essential, useful directly to farmers. and concise information in a very simple and user-friendly format. FAO Ecocrop: Provides detailed Enable the farmer to select Information is not readily crop requirement information for suitable crops to farm with, and to maintained. The crop almost any crop that are diversify the farm's enterprises. selection tool is difficult to cultivated throughout the world. use and provides disappointing results. Other Recombinant DNA technology and Large gains in traits such as Negative public genetic modified varieties: The drought, salt, pest, pathogen or perception (in most cases process of natural selection by herbicide tolerance, superior completely irrational to the traditional breeders can be yields, nitrogen uptake ability, disadvantages of millions of accelerated by deliberate taste and texture etc. small farmers in the insertion of genes that code for a Particularly important to sustain developing world) which particular trait into the host future expanding populations and makes marketing difficult or organism, thereby it is possible to to compensate for climate even impossible.
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Technology and short explanation Function or benefit to farmer Significant disadvantages or where needed limits develop crop varieties that have change effects are drought and more desirable traits. salt tolerance, nitrogen metabolism and even fixation, herbicide tolerance (to facilitate weeding, a major agricultural problem) and general yield improvements. Drones: Un-manned aircraft Very useful for general inspections, Models tailored for capable of exploring the farm and monitoring and mapping. agriculture are expensive. taking photos from the air. Advanced models can even Tight regulation is expected perform some remote sensing in the near future. functions. In-field soil and crop sensors: Know exactly when to irrigate or Expensive to install. Measure a variety of soil factors, provide additional fertilizer, and most importantly moisture, pH, how much water/fertilizer to apply. organic matter, and salinity and It may also indicate the best time temperature levels. to harvest. No-till or conservation tillage: Land Significant cost savings in terms of Some pests gain from preparation for crop production diesel (very energy intensive to lift conservation tillage. without tilling the land at all, or just the soil of an entire field, especially Soil texture may need to be partially breaking up of the soil. in case of deep tillage). improved from time to time Increased moisture retention. for some soils. Reduced soil erosion. Not all soils could be conservation tilled. Specialist implements are needed, however, as conservation tillage becomes more common, these implements will become more freely available and will fall in price. Remote sensing: Interpreting Enable the farmer to make Depending on the service satellite images to make farming informed decisions based on subscribed to, it may be decisions. information that otherwise would very expensive. have been too difficult or expensive to obtain. Provides complete information of the entire farm. Some information is provided daily or instantly. Integrated weed and pest Usually much more effective and Requires additional effort. management incl. biological sustainable than chemical control Environmental impact control agents: Consumers and on its own. assessments needs to be governments locally and to export one (at national level, markets place increasing pressure usually not the responsibility on farmers to adopt integrated of the farmer) to ensure management practices to reduce that the biological control reliance on only chemical control. agent does not attach locally native species.
Different types of technologies are identified in Table 9.6 that are applicable to maize farming. Such technologies can be applied at the FPSU level in the Agri-Park model and help in making the farming operations more efficient.
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9.9. Demand and needs analysis
A good indicator of demand and needs of maize products is the consumption of the commodity. Sub-section 9.2.1a presents production and consumption figures for the maize industry for each consecutive year, from 2003 to 2014. Over the 10-year period an increase in the consumption of maize can be observed meaning that the demand for maize has also increased. Furthermore, the productions figure a significantly higher than consumption, meaning that the maize production in South Africa is able to meet the demand. Maize consumption is influenced by both human and animal consumption, which means that as the consumption of meats from poultry and livestock increases, so does that of maize.
The most appropriate channel for farmers that markets collectively, will eventually be to let the hub become a cooperative silo business itself (very much like the traditional “cooperatives” that evolved today into large agribusinesses such as Senwes, Afgri etc.), or to acquire a silo, which then trade in grain like any other grain trading entity. For now in the short term the most promising channels will be to supply to existing silos and/or to sign forward contracts with large feedlots, piggeries and poultry producers that are situated as near as possible to the production areas.
Regarding agro-processing, industrial milling and production of simple snacks may be viable. As production issues are streamlined and strong relationships are built with value chain partners, more complex snacks may be considered, especially health snacks, as well as food products that contain hominy chop (“full-grain” version of maize). Ethanol production is controversial, but there is a consensus amongst many scientists and economists that South African maize farmers are unlikely to be able to compete with maize ethanol producers in major grain producing parts of the world, e.g. the USA, and unlikely to compete with sugarcane as a crop.
With the trend of increasing maize consumption, it is evident that the need for maize continuously exists and that there is a demand for maize products. The presence of functioning silos in the district also confirms the demand and need for maize products and the Agri-Park has the opportunity to use the silos as a marketing channel. Furthermore, the wide variety of agro- processing opportunities and products contribute to the demand of maize.
9.10. Socio-economic contribution
From a socio-economic perspective, the maize industry provides significant employment opportunities throughout the value chain and continues to have significant multiplier effects as a raw material. Agricultural production statistics found in the Waterberg Agricultural Development Strategy 2005 indicate an employment equivalent to the hectares under production for a variety of cash and field crops commodities. Although the data was published in 2005, an interpretation of employment opportunities provided can be made, especially in comparison other crops. Table 9.7 indicates the employment equivalent for cash and field crops production in the Waterberg DM.
Table 9.7: Waterberg productions statistics Employment Cash and Field Estimated No Unit Total Area Unit Full-Time Job crops Production Equivalent 1 Cotton Ha 5 800 ton 7 089 1 153
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Employment Cash and Field Estimated No Unit Total Area Unit Full-Time Job crops Production Equivalent 2 Sunflower Ha 35 000 ton 36 750 1 160 3 Maize Ha 22 165 ton 73 809 2 099 4 Wheat Ha 12 000 ton 36 600 955 5 Sorghum Ha 14 200 ton 36 636 1 345 6 Soya Beans Ha 4 500 ton 9 900 326 7 Groundnuts Ha 1 450 ton 2 335 268 8 Lucerne Ha 600 ton 8 730 70 9 Paprika Ha 300 ton 12 000 151 10 Tobacco Ha 2 480 kg 107 722 2 670 11 Potatoes Ha 1 699 10kg 64 859 438 12 Watermelons Ha 1 700 melons 18 750 561 Source: The Waterberg Agricultural Development Strategy, 2005
As indicated in Table 9.7, in 2005, maize had an employment full time job equivalent of 2099 jobs, making it the second highest after tobacco with 2 670 jobs. Therefore, maize demonstrates a significant contribution to employment and a better employment full time job equivalent can be expected recently as more small-holders participate in maize production. The growth of the meat industry as well, will lead to the growth of maize for feed leading to increased employment opportunities.
Information that is available on the District’s maize production and the potential number of hectares, together with the Bureau for Food and Agriculture Policy, have been used to estimate the employment opportunities that beef production can contribute in the 10-year period. The Agri-Park can provide approximately between 300 to 600 direct (0,01 jobs/ha) and indirect employment (0,005 jobs/ha) opportunities and approximately 1 400 small-scale farmers can benefit from the programme.
9.11. Contribution to food security
Maize is highly important for food security in South Africa, especially since it is part of the group of the most crucial staple foods. What makes maize an important staple food is not only the high production, but mealie meal being a significant part of South Africa’s diet.
Table 9.6 in the previous section indicates that maize was the second highest produced crop in the Waterberg DM in 2006. A more recent study by the Mapping of Agricultural Commodity Production in the Limpopo Province (2012), also demonstrates that maize occupies the second highest hectares of production when compared to other field crops in the Waterberg Region. Therefore, by producing maize at the potential that the Waterberg DM has demonstrated, the Agri-Park will be contributing to feeding not only the district but the rest of South Africa. Furthermore, the Agri-Park will be producing a product that is: nutritious, part of the meat value chain, affordable, as well as accessible to the poor.
9.12. Regulatory Requirements
With the wide range of products resulting from the processing of maize, as well as different consumers (both human and animal), a range of requirements can be expected. In order to regulate the production
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of maize products, Table 9.8 specifies the regulatory documents that lay down the requirements for the maize industry.
Table 9.8: Maize Regulatory Requirements Regulation Description Agricultural Product Standards Act, 1990 (Act To provide for the control over the sale and export No. 119 of 1990) of certain agricultural products, control over the sale of certain imported agricultural products, control over related products and for matters connected with. Foodstuffs, Cosmetics and Disinfectants Act, To control sale, manufacture and importation of 1972 (Act No. 54 of foodstuffs, cosmetics and disinfectants and to 1972) provide for incidental matters. Act 36 of 1947 Fertilizers, Farm Feeds, To provide for the appointment of a Registrar of Agricultural Remedies and Stock Remedies. Fertilizers, Farm Feeds and Agricultural Remedies; for the registration of fertilizers, farm feeds, agricultural remedies, stock remedies, sterilising plants and pest control operators; to regulate or prohibit the importation, sale, acquisition, disposal or use of fertilizers, farm feeds, agricultural remedies and stock remedies; to provide for the designation of technical advisers and analysts; and to provide for matters incidental thereto. Regulations relating to the grading, packing Regulations pertaining to the restriction around the and marking of maize intended for sale in the sale of maize, its classification and the related republic of South Africa standards, the requirements for packing and marking and other requirements for the state of maize. Government Notice No. R198 of 30 July 1999 Regulation governing general hygiene requirements for food premises and the transport of food. Fertilisers, Farm Feeds, Agricultural Remedies Provides for the appointment of a Registrar of and Stock Remedies Act, 1947 (Act No. 36 of Fertilizers, farm feeds, agricultural remedies and 1947) stock remedies; for the registration of fertilizers, farm feeds, agricultural remedies, stock remedies, sterilising plants and pest control operators; to regulate or prohibit the importation, sale, acquisition, disposal or use of fertilizers, farm feeds, agricultural remedies and stock remedies; to provide for the designation of technical advisers and analysts. National Water Act, 1998 (Act No.36 of 1998) Encompasses laws relating to water resources and the use thereof.
Conservation of Agricultural Resources Act Regulates the control over the utilisation of natural No. 43 OF 1983 agricultural resource and promote conservation of soil, water sources, vegetation and combating of weeds and invader plants
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Regulation Description Genetically Modified Organisms Act Promotes the responsible development, production, use and application of genetically modified organisms. Provides for the prevention of possible hazards, dangers and risks. Establish appropriate procedures for the notification of specific activities involving the use of GMO’s. Marketing of Agricultural Products Act To establish and enforce regulatory measures in order to intervene in the marketing of agricultural products, including the introduction of levies and to establish a National Agricultural Marketing Council Agricultural Pests Act Provides for measures by which agricultural pests may be prevented and combated.
Plant Improvement Act Provides for the registration of premises from which the sale of certain plants or the cleansing, packing and sale of certain propagating material may be undertaken; prescribes for the conditions for such plants, or propagation material to be sold; to provide recognition for such plants, to provide for a system of certification with the objective of maintaining quality; and control of imports and exports Plant Breeders Rights Act Grants rights for certain kinds of plants and establishes rights to be complied with to grant the rights. HACCP A management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product (U.S Food and Drug Administration, 2015). ISO Standards Certifies standard requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose. Source: Guidelines on Key Requirements for Government Markets
The regulatory Acts and Government Gazettes specified in Table 9.8 provide requirements that stipulate different aspects related to agriculture and the maize industry. The Agri-Park’s maize production is bound by these regulatory requirements and the Agri-Park will have to ensure continuous compliance.
9.13. Substitute Products
Substitute products are products that may replace each other in consumption or use, as a result of changing conditions, such as, for example an increase in prices, or a change in consumer tastes. This section of the report will focus on substitute products for maize. Maize is one of South Africa’s most important grain crops, as it is a staple food for a significantly large portion of the population. Maize is also a griffin good (remains the cheapest food option even when its price increases): thus, there is no absolute
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substitution product for maize: however, there are close substitutes such as dry beans. Dry beans will be discussed further below.
9.13.1. Dry Beans
Dry beans are rich in plant proteins and are often referred to as grain legumes. There are three types of dry beans that are considered the most important in South Africa, namely: small white canning beans, speckled sugar beans, and large white kidney beans. The speckled sugar beans command the largest share of the bean market and are sold mainly in supermarkets at retail quantities for preparation at home. Dry beans are mixed with many other grain crops, such as “samp” (a maize product), rice, and quinoa, among others. Furthermore, dry beans are utilised as a side dish in many meals. Thus, dry beans can serve as a substitute product for maize as well as a complementary product.
Furthermore, dry beans are a good rotation crop: thus it makes sense, from an economic perspective, to rotate between beans and maize on suitable soils.
9.14. New entrants
The Waterberg DM Agri-Park should also be accessible to new entrants to the maize industry. For new entrants in the maize industry to be accommodated by the Agri-Park, dynamics faced by new entrants need to be known.
a) Maize Barriers to Entry
One of the main issues related to the entry of new participants in the maize industry is the challenges of entering the industry. Barriers to entry are obstacles that make entry into a given market difficult: such as regulations, high infrastructure costs, or competition in the given area. The barriers to enter the maize industry can be listed as follows:
a) Climatic conditions b) High capital investment c) High production costs d) Industry price setting e) Establishing a brand f) Effective marketing campaign g) High risk but low profit margins h) Access to a good transport system i) Product diversification j) Lack of experience k) Location l) Maize quality
For the Agri-Park’s maize market to accommodate new entrants, the above-listed barriers should be paid attention to.
9.14.1. Potential Entrepreneurs
When considering new entrants into the maize industry, potential entrepreneurs should be paid attention to as well. The Agri-Park needs to present opportunities not only to exiting farmers and agri-business is the Waterberg DM, but potential entrepreneurs as well: especially those that are from previously disadvantaged backgrounds. A few programmes have been developed to assist with entrepreneurial opportunities for maize farming, including the following:
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Farmer Development Programme - aims to empower developing grain producers to become sustainable commercial farmers.
Maize Trust Projects – facilitates projects that help emerging farmers financially and provide mentorship, extension services and training.
The Agri-Park can involve such programmes, including others that exist for the development of opportunities for potential entrepreneurship in the maize industry.
9.15. Societal and cultural trends
The production of maize cannot ignore trends that take place within society and existing cultural phenomena. Such societal and cultural tendencies influence consumer behaviour and practices that ultimately have an influence on the demand for maize products. The following discussion considers societal and cultural trends linked to income, health consciousness, current technologies, and cultural activities.
Rising incomes: The trend of increasing incomes within South Africa has provided the local consumer with increased purchasing power and therefore, led to an increased demand for food. Increased purchasing power has also allowed the consumer increased access to a variety of food, including processed, packaged maize products.
Staple household item: Maize meal is one of South Africa’s main staple food items, as is the case within many emerging markets. Maize meal has been used to produce a variety of dishes, including the popular breakfast porridge and pap. Essential macro- and micronutrients are being added to maize meal in order to increase the nutritional quality of the products, since it is a staple in many households. Moreover, when maize meal is compared to other alternative staple and food items, it is the cheaper option.
Health awareness: Recently, vegetables have been considered to be healthy and health experts and fitness enthusiasts encourage vegetable to be part of the daily diet. As more people become aware of health risks and attempt to maintain good health, they are more likely to include more maize in their diet.
Organic Products: An increased production of organic foods has resulted from current trends for organic products. The increasing demand for organic foods is a result of consumer perception that organic is healthier, more sustainable and less chemical residue is left on the product.
GMO: Most consumers are uninformed with respect to genetically modified foods and are often not aware that they may be eating GMO’s. In many cases consumer attitudes and perceptions of GM food products are fears, concern for, and avoidance of the new technology as a result of the negative connotations attached to the foods. Maize is no exception to genetic modification, therefore, the Agri- Park will have to consider the stance of their markets and consumers in the decisions revolving genetically modified maize.
Maize beer (Umqombothi): The traditional South African beer used as a celebratory drink is made of several ingredients including maize. There are large quantities of the beer being produced by artisans in in an unregulated fashion which raises health concerns. As, such, there is an opportunity to produce the traditional beer under regulated conditions, producing a safer product, on a potentially commercial scale that will satisfy consumer demand.
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9.16. SWOT analysis
The SWOT analysis for the maize industry is presented in Table 9.8.
Table 9.9: SWOT analysis Strengths • Maize is the primary staple food • Comparative advantage for white maize • Main feed for animals • Existing production infrastructure • Low entry barriers • Second largest agricultural industry • Ensures food security Weaknesses • Increase in input costs • Fluctuating prices • High maintenance and delivery costs • Highly dependent on climatic conditions Opportunities • Potential increase in demand for feed as demand for meat increases • Wide range of agro-processing opportunities • Employment opportunities • Intensive production Threats • Rising prices of yellow maize adds pressure on animal feed sector • Crop disease • Increase in road transportation, leading to out-loading problems • Pests • Market limitations • Unfavourable climatic conditions • High competition levels
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Section 10: Broiler Analysis
10.1. Production Guidelines
10.1.1. System of production
Broiler chickens are purchased at three weeks old and finished for sale over a period of three weeks, thus old at three weeks old. This allows for the brooding period to be eliminated and the heating equipment is unnecessary. The broiler house is cleaned and after a two week break when broilers are finished at six weeks. A five-week period is required for every broiler group allowing 10 groups to go through the system annually. For finishing, broilers require a finishing ration of 3 kg per bird over a period of three weeks.
10.1.2. General Production guidelines
a) Weight: 1.1 – 2.0 kg b) Mortality: 5% c) Dressing percentage: 80% d) Fattening: between 4-9 weeks
10.1.3. Production conditions
The conditions that need to be maintained in the broiler house include the following:
a) Floor litter is composed of sawdust, wood shavings, sunflower husks and paper cuttings b) Floor space of 10 to 12 birds/m²
Temperature brooder for brooders are displayed in Table 10.1.
Table 10.1: Brooder temperature Period Brooder temperature (ºC) 1ST week 32 2nd week 30 3rd week 28 4th week 24 5th week 21 Source: The Farming Handbook, 2006
10.1.4. Nutrition
Chicken feed must contain some essential nutrients to ensure including the following:
a) Protein b) Fibre c) Calcium d) Phosphosrus e) Water
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10.1.5. Disease control
An important method to help prevent some of the main poultry diseases is vaccination. However, it is critical that chickens are vaccinated before they catch the disease to allow the vaccination to work. Vaccinations programmes differ according the regions and should be undertaken by a qualified veterinarian. The vaccination programme in Table 10.2 can be followed.
Table 10.2: Vaccination programme for broilers Age Disease Vaccine Method of application Day old Newcastle (ND) Hitchner B1 Spray (usually at hatchery) Infectious bronchitis (IB) H 120 Eyedrop or spray (usually done at hatchery) Day 10 - 12 ND La Sota Spray/Drinking water Day 14 Gumboro Mild Strain In drinking water Day 18 ND La Sota Spray/Drinking water Day 21 Gumboro Mild Strain In drinking water Source: The Farming Handbook, 2006
10.2. Market assessment
The market assessment provides an analysis of the local markets, global markets, and the broiler industry within a South African context.
10.2.1. Local markets
About 13 large producers supply approximately 69% of the total broiler production in South Africa, while many small production units and the informal sector are responsible for the remaining 31%. According to SAPA, 26% of broiler production takes place in the North West Province, 22% in the combined Western and Northern Cape provinces, 21% in Mpumalanga, 16% in KwaZulu-Natal, 7% in both the Eastern Cape and Gauteng and the remaining 8% in the Free State and Limpopo provinces. Figure 10.1 demonstrates the share of each province in broiler production.
Figure 10.1: Distribution of broilers in South Africa during 2013
Free State, 6% Limpopo, 2% Eastern Cape & Gauteng, 7%
North West, 26%
KwaZulu Natal, 16%
Northern & Western Cape , 22%
Mpumalanga, 21%
Source: Trends in the Agricultural Sector, 2012
The income from the poultry industry for 2013 was R31.5 billion at farm gate level and R 54 billion at a retail level (eggs and meat together). In 2012 the value of the broiler industry alone amounted to R22 billion. The growth of this industry also had spill-over effects in the grain industry.
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a) Production and Consumption
The number of birds slaughtered has significantly increased by about 60% over the period 2004 - 2013. Both broiler meat production and birds slaughtered followed the same growing trend and in 2013, approximately 1.5 million tons of broiler meat was produced and 947 million birds slaughtered. Following substantial growth from 2004 to 2008, domestic poultry producers have found their margins under pressure and while domestic production has failed to expand sufficiently to meet growing demand over the past 5 years, imports have spiralled. The broiler production and consumption figures are presented in Figure 10.2.
Figure 10.2: Broiler production and consumption 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 Tons 800,000 600,000 400,000 200,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Period (Years)
Production (ton) Consumption (ton)
Source: Profile of SA Broiler Market Value Chain, 2014
Figure 10.2 indicates that South Africa consumes more broiler meat than what is produced locally, and South Africa is a net importer of broiler meat, mainly to satisfy the local demand. The gap continues to widen as rising living standards are pushing larger numbers of consumers towards protein-filled diets. Meat consumption in South Africa has expanded rapidly over the past decade and while continued growth in meat consumption is projected in the coming decade, relative prices and consumer preferences drive the choice between various meat types over time. In this regard chicken is and will remain the most affordable source of protein and while consumption is projected to increase by only 38% over the next decade (compared to 60% through the past 10 years), it continues to dominate the meat market, accounting for 65% of additional meat consumed by 2024. The per capita broiler meat consumption in South Africa has increased from 23 kg per person in 2004 to 35 kg per person in 2013 and it is projected to grow to 44 kg per person in 2024. With chicken consumption projected to surpass 2.5 million tons by 2024, production levels will have to increase substantially resulting in production capacity to just over 2 million tons by 2024. To meet the shortfall in meeting demand (estimated consumption of 2.5 million tons) imports in excess of 550 thousand tons will supply the balance.
The broiler meat industry in South Africa is dominated by two large producers, namely Rainbow Limited and Astral Foods. Together these two companies produce 46% of the total broiler meat production. Rainbow produces approximately 235 million broilers per annum and Astral Food produces about 220 million broilers per annum. Country Bird is the third largest producing 68 million broilers per year. The other 4 medium-sized producers (Tydstroom, Daybreak, Fouries Poultry Farms and Rocklands) produce more than 50 million broilers per year and collectively they supply 22% of the market. These top 7 companies supply about 75% of total South African broiler meat and 25% is supplied by hundreds smallholder producers.
The domestic market consists of approximately 265 formal abattoirs. These abattoirs sell mainly to 5 main retailers (Pick n Pay, Shoprite-Checkers, Spar, Woolworths and Massmart) and SMME’s in the retail sector. These retailers buy the largest share of domestic production.
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b) Specific local marketing channels
There are various marketing channels that are available to the broiler industry. The Agri-Park’s RUMC component will use these channels depending on the suitability for the broiler market. The marketing channels presented in Table 10.3 are available for the broiler industry
Table 10.3: Marketing Channels
Priority & Marketing channel Description Advantages Challenges gaps/opportunities
*Volume Direct sales (farmer- Sell directly to consumers through 14% Simple, easy and Small volumes sold per Very low relevance to-consumer) personal contact, at the farm requires only a few transaction. to the Agri-Park gate or less commonly in the skills. scheme case of chickens, at the farm Direct sales will not stall. provide the desired scale for efficient marketing and distribution. Street hawkers and The farmers sell to informal street 9% Potentially a very It may be burdensome to Low because visiting hawkers traders or hawkers who in turn sell profitable channel for deal with many small competition with (bakkie traders) the chickens to members of the small-scale farmers. hawkers. spent hens and public from their stalls on the Very good prices can Not all hawkers can small-scale broiler street or isolated patches (as be attained in case arrange for transport, farmers are too opposed to large market areas), the farmer has the therefore transport may strong, and better usually in areas where low necessary sales need to be organised by channels can be income people reside, work or negotiation skills. the farmer. accessed by transit through. Although street Ideal when the farmer Visiting hawkers demand a farmers organised in hawkers or their suppliers usually is situated near variety of produce and the Agri-Parks buy chickens from spent hen villages, towns or cities sufficient quantity to fill their system. depots, auctions or free markets, with a large low bakkie, and may not even some do buy directly from income population. visit the farm in case they farmers. The street traders may The farmer does not find sufficient supply arrange to pick up the chickens have to have own elsewhere. at the farm (bakkie traders), or transport since some
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Priority & Marketing channel Description Advantages Challenges gaps/opportunities
*Volume the farmer or an agent may hawkers may be able Proximity to market and distribute it to them. Although to arrange for transport good road conditions are hawkers usually sell fruit and or pick it up themselves very important criteria. vegetables and some other farm as in the case of Larger volumes of higher products, some street traders sell bakkie traders. quality produce can live poultry in a slaughtered or Farmers could establish potentially be sold via live form, although live animals assembly points to other more profitable are usually limited to rural areas make pickup by bakkie channels. or informal settlements. traders easier. Very low prices during Can build strong harvest season. relationships with Entrepreneurial spirit, hawkers thereby gain willingness to accept risk, strong customer invest in sales effort and to loyalty. build customer relationships are important. Spent hens (old layer chickens) compete heavily with broiler chickens on this channel, driving prices down, especially in areas near spent hen depots. Free markets, wet Free markets are market areas 5% Good prices can be Low prices in case Medium to low. markets and live where many sellers (usually not attained. competition with spent Competition with animal markets the farmer him/herself) sell a Ideal channel for small- hens are strong. spent hens and large variety of products, scale broiler farmers if Perception of poor quality small scale broiler including farm products. Some of there are wet markets amongst buyers. farmers are too these markets, especially in within a reasonable Legal and regulatory strong, and better informal settlements or rural distance. considerations. channels can be areas, may sell some live animals accessed by such as poultry. Wet markets are farmers organised in places where many sellers of
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Priority & Marketing channel Description Advantages Challenges gaps/opportunities
*Volume perishable farm products like the Agri-Parks meat, fish, live animals including system. chickens, fruit and vegetables, More viable have stalls at a single location channel for broilers (unlike hawkers who may sell in compared to selling isolated spots or in areas other directly to hawkers than formal market places). because more Apart from a variety of other efficient logistical perishable farm products, a arrangements can farmer could sell live chickens to be made. a stall operator where consumers Some potential for can choose the chicken and development in take it home or let it be case the broilers slaughtered immediately. could be marketed as superior to spent hens, and customers have the means to pay the price premium. Small independent Sell to small, independent 3% Very good prices can To be viable, the retailers Low priority shops or retailers, i.e. shops that do not be attained and need to be nearby to Logistical difficulty supermarkets belong to or are franchises of potentially a very minimise transport costs. and low profit per large national or global groups. profitable channel for Entrepreneurial spirit, transaction. This channel includes general small-scale farmers. willingness to accept risk, dealers, "corner shops", spaza Ideal when there are invest in sales effort and to shops, etc. Will not buy live lots of small build customer relationships chickens from farmers, however, independent are important. the farmer may pay a chicken supermarkets or shops abattoir a fee (known as custom in the area, and the processing) to process the farmer ca be closely chicken into a braai-pack, then
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Priority & Marketing channel Description Advantages Challenges gaps/opportunities
*Volume sell this value added product to involved in selling and retailers. distributing. Can build strong relationships with the shop owners, thereby gain strong customer loyalty. Large retail chains A farmer may supply directly to 4% Large and stable Although some retail chains High priority. large national or global retail demand. do have special programs Retailers are the groups, usually by contract. Highly attractive for to buy from smaller farmers, most important Some large retailer groups buy larger, well established this is not well established channel to reach centrally, while others such as farmers who can yet in the case of broilers. poultry consumers Spar allow local stores to buy produce on a of all income independently which makes it consistent basis. groups. easier for small local farmers to sell to this lucrative and growing marketing channel. Butchers Sell live chickens directly to 7% May often obtain Dealing with many Low priority/ butchers who will process the significantly higher individual butchers may be In case custom bird then sell the meat to the prices from butchers time consuming. processing will be public. Unlike poultry abattoirs, than from other poultry Entrepreneurial spirit, strong arranged, it will butchers sell directly to the public marketing channels. negotiation skills, willingness more profitable to rather than to other butchers or Could be a lucrative to accept risk, invest in sell to retailers retailers, slaughter at smaller channel for small-scale sales effort and to build especially larger scale (therefore, poultry are farmers. customer relationships are retailers. more readily processed by Can build strong important. butchers than livestock) and relationships with Regulatory issues in case usually do not engage in butchers, thereby gain the live birds are sold extensive meat processing. strong customer directly to butcheries. Although chickens are supposed loyalty. to be slaughtered by poultry
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Priority & Marketing channel Description Advantages Challenges gaps/opportunities
*Volume abattoirs, many butchers, especially in less developed areas or in the informal sector, do the slaughtering themselves. Restaurants and Sell to restaurants, pubs, deli's, 1% Good prices can be Legal consequences in Very high potential hospitality businesses fast food outlets, shebeens, attained. case the farmer cannot High demand hotels, lodges and hospitality Strong, consistent and supply as per contract. Farmers organised businesses who will prepare and growing demand. Entrepreneurial spirit, into the Agri-Park- serve chicken in a ready-to-eat Potentially a very willingness to accept risk, Park system will be form directly to the public. profitable channel for invest in sales effort and to able to secure such large farmers or small build customer relationships lucrative contracts. farmers organised into are important. the Agri-Park system who can manage to secure custom processing and a supply contract. Public and private Sell to private or government 1% Can be a very stable Ability to be a reliable and High priority for institutions that institutions or businesses with a market, and prices consistent supplier is very government provide meals to catering unit, e.g. some schools, tend to be fair. important. managed their residents, public university residences and There are good Non-renewal of a supply institutions and food inmates, learners or dining halls, prisons, hospitals etc., opportunities for larger contract may be programs patients, and well- to prepare and serve chicken in previously devastating in case the Sourcing from funded food a ready-to-eat form to their disadvantaged farmer became too previously schemes learners, residents, inmates or farmers to source dependent on a particular disadvantages patients. This also includes well- government institution institution. farmers organised funded government or NGO contracts. Entrepreneurial spirit and as in the Agri-Parks food schemes with formal and willingness to accept risk scheme is an strong food buying contracts. The are important. important sales arrangement is almost government priority, always by contract. therefore it may be
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Priority & Marketing channel Description Advantages Challenges gaps/opportunities
*Volume fairly easy to secure large contracts. Poultry abattoirs and Sell to poultry abattoirs or 56% Strong and consistent Better prices can often be High priority during processors processors, often by contract. demand. negotiated via alternative the initial phase Abattoirs are a very important Ideal when farmer has marketing channels. only. and major marketing channel for birds of good health Transport costs may be An easy channel to broilers. They slaughter the birds and does not have prohibitively high in case start with, but more and sell the meat to butchers, time to sell to individual there are no poultry profitable channels, retailers and sometimes operate butcheries or other abattoir nearby. e.g. large retailers their own butcheries or poultry buyers. Strict quality and bird and fast food meat processing plants. Poultry Some processors health criteria applies. chains, should be processors usually buy from provide support to Birds (often the entire focussed upon poultry abattoirs or even have farmers, although it is batch) that do not pass later. their own poultry farms and not common or health and quality abattoirs, but some processors extensive in case of standards (e.g. being sick) do buy directly from poultry poultry. may be destroyed in which farmers. case the farmer loses the opportunity to sell the birds via other marketing channels. Legal consequences in case farmer cannot supply as per contract with the processor.
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Table 10.1 presents the poultry marketing channels with a description and a comparison of the advantages and challenges identified, as well as the gaps and opportunities. The volume of products sold through each channel is indicated as an estimated percentage of total production sold. Studying the marketing channels according to the volume indicates that the poultry abattoir and processing channel demonstrates the highest production sales at 56%, followed far off by direct sales (14%). For the purpose of the Agri-Park, the poultry abattoir and processing marketing channel is the most suitable as it has highest estimate for production sold and matches the agro-processing functions and objectives
10.2.2. Global markets
An evaluation of South African broiler production in the global context reveals a value chain and production system that is very similar to the leading global producers. Integrated value chains dominate, with the crucial broiler production phase contracted to individual producers. South African companies employ a pricing system that is similar to the tournament pricing used successfully in the US and, based on technical efficiency indicators, South African producers compete well against international counterparts. When the cost of production is considered however, the picture changes, largely as a result of feed cost differentials.
The industry’s ability to compete within the global context and the implications for its long term sustainability has been questioned in light of growing imports to meet domestic demand. From 2001 to 2012, chicken consumption in South Africa increased by 74%, almost 800 thousand tons. Of the additional meat consumed over this period, 65% was produced domestically, with imports accounting for the balance. Since 2010 however, almost 200 thousand tons of additional chicken has been consumed, yet only 35% was produced domestically, with imports accounting for 65%.
In light of these numbers, questions have been raised regarding South African producers’ competitiveness in the global context. Based on technical efficiency indicators, South African producers compete well against international counterparts. When the cost of production is considered however, the picture changes, largely as a result of feed cost differentials. South African feed costs on a per ton basis is significantly higher than the US and Brazil. Feed accounts for up to 70% of variable production costs per cycle, hence differences in feed costs are considered the main driver behind differences in production costs across these regions.
In order to ensure its competitiveness, a number of trade measures are applied within the industry. In 2013, an application for an increase in the general duty applied on imported products was approved, yet the composition as well as the origin of imports diminished the impact of these duties on domestic prices, as products originating from the European Union (EU) remained duty free under the Trade, Development and Cooperation agreement (TDCA). Furthermore, anti-dumping duties have been applied to bone-in portions originating from the United States (US) for more than a decade and in 2014, the industry applied successfully for additional anti-dumping duties on bone-in portions originating from the United Kingdom, the Netherlands and Germany. Beyond the level of tariffs however, the underlying reasons behind the lack of competiveness will need to be addressed in order to ensure the long run sustainability of the sector. (BFAP Baseline Agricultural Outlook, 2015). However, policies and legislation such as the African Growth and Opportunities Act pose challenges for actions to regulate the importing
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of chicken into South Africa. Table 10.4 provides information about broiler production, consumption, exports and imports.
Table 10.4: South Africa broiler production, consumption, exports and imports (2004 – 2013) Production Broilers slaughtered Consumption Exports Imports Years ‘000 Tons Million Birds (Million Kilograms)
2004 928 701 605 1 082 4 182
2005 1 019 769 379 1 204 2 214
2006 1 143 831 441 1 383 2 294
2007 1 200 864 962 1 470 2 276
2008 1 276 924 072 1 508 3 220
2009 1 358 931 443 1 558 19 231
2010 1 430 968 796 1 645 17 265
2011 1 478 978 873 1 753 10 349
2012 1 499 950 366 1 836 7 403
2013 1 529 947 421 1 899 15 391
Source: Profile of SA Broiler Market Value Chain, 2014
Table 10.4 shows that South Africa imports broiler meat to satisfy the domestic demand after exporting smaller quantities. It further demonstrates that the imported quantities exceeded the demand due to the dumping of certain parts of broiler meat from Brazil and United States of America. South Africa enforced anti-dumping duties to the USA and increased the general tariff on imported broiler meat to diminish imports from Brazil, in order to reduce the threat that dumping was posing towards local producers.
a) Exports
As indicated in Table 10.2, South Africa also exports a small amount of broiler meat to neighbouring countries. Mozambique and Zimbabwe has been competing for dominance throughout the decade.
b) Imports
South Africa imported approximately 400 million kilograms of broiler meat in 2013 at an estimated value of R4 billion. The imports quantity and value showed significant increases of 163% and 539% respectively compared to 2003. This drastic increase might have been caused by the alleged dumping of certain pieces of broiler meat from Brazil and Unites States.
10.3. Value chain assessment
The value chain models the process from the production of the broiler through to the consumer. Diagram 8.1 presents the broiler industry value chain.
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Diagram 10.1: Broiler industry value chain
The broiler value chain in Diagram 10.1 illustrates the process in a few stages namely: input, primary production, value addition/processing, distribution and marketing, and sales and consumption. At the input stage, inputs such as feed and day-old chicks need to be supplied as well services from poultry houses and hatcheries. The input supply also involves support and tertiary services such as veterinary services, logistics and extension services, as well as farmer organisation services. Primary production involves agriculture activities such as brooding, the production of day chicks to majority and transportation to the poultry abattoir. At the poultry abattoir, the chickens are slaughtered and processing starts, along with feather removal and evisceration during the value addition/processing stage. Another group of processing activities are listed under processing and packaging and include cutting, packaging, specialisation and chilling. Distribution and marketing follows processing and involves classification of the products, transporting to markets, storage and sending to exporters. At the end of the value chain is the sales and consumption, which involves sales at wholesalers, retailers, butchers and consumption at different establishments and households. The broiler chain fits in the Agri-Parks system where the FPSUs will accommodate the primary level activities (inputs and primary production), the agri-hub addresses secondary level activities (value addition and processing, and distribution and marketing), and the RUMC will provide for tertiary level activities (distribution and marketing, and sales and consumption).
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10.4. Agro-processing opportunities
As indicated in the value chain in Diagram 10.1 the chickens produced through primary production are processed and attain added value. There is a range of processing methods that take place in order to result in a wide range of chicken products that are ready for consumption. Table 10.5 highlights some processing opportunities in the broiler value chain.
Table 10.5: Processing opportunities Process or basic method Product Slaughtering, portioning, filleting, de Whole bird carcass boning, mincing, brining, flavouring, Retail chicken cuts: packaging (incl. branding), chilling and o Breast fillets freezing. o Drumbeat stick o Leg quarters o Minced chicken o Mixed portions o Chicken strips o Schnitzel o Single packs o Thighs o Wings, o Drummettes o Forequarters etc. Freezing and packaging of slaughtered Frozen whole bird carcase meat cuts Cut packs Canning/bottling and pickling Canned chicken Bottled chicken Pickled chicken Salting and possibly smoking of chicken Cured Chicken meat. Smoked chicken incl. chicken ham. Grinding fully/partially cooked and/or Cooked chicken sausages cured chicken meat, blend with seasoning Smoked chicken sausages including Bologna (chicken and possibly binders, and force into a polony) casing (or cook/cure afterwards). Chicken frankfurter. Mincing, mixing with seasoning and Burger patties binders, shaping, possibly crumbling, Meatballs packaging (incl. labelling) and freezing. Nuggets Sticks/fingers (frozen) Offal cleaning, packaging (incl. branding), Various offal products (some of which having potential chilling, freezing and marketing. to be marketed as high value products): o Feet o Fat o Skin o Gizzards o Necks o Hearts o Liver o Bone o Nails o Intestines etc. Rendering Rendering products originating from slaughter waste
The processing or value addition opportunities for broiler production are summarised in Table 10.5 by providing a list of the different products that can be achieved though processing. There is a range of processing opportunities that allows for value addition of chicken. The Agri-Hub has facilities and services that can exploit the agro-processing opportunities presented above.
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10.5. Main input suppliers
Some of South Africa’s main poultry suppliers include Epol, Astral, Nutri Feeds, Feedtek, Meadow feeds, Hatchery Equipment Suppliers. Input suppliers for the following inputs are considered:
Feed Hatchery equipment/facilities Day old chicks Infrastructure
Further input suppliers and input services providers for broiler production in the Waterberg DM are indicated in sub-section 10.6.2 in Table 10.4.
10.6. Competitors
The two biggest broiler producers in the South African are Astral Foods and Rainbow Chicken. Approximately 50% of commercial broiler chickens in South Africa are produced by the two players. Other known competitors, as well as the biggest competitors are described in Table 10.6.
Table 10.6: South African Poultry Producers Name of Stakeholder Description Rainbow Chicken Ltd Rainbow Chicken is considered an integrated broiler producer. It has its own feed mill called Epol Feeds, which it uses to feed its chickens. Rainbow Chicken also breeds chicks, processes, distributes and markets value added chickens. Rainbow Chicken farms are located throughout South Africa, however, the main production areas are Rustenburg in the North West Province, Pietermaritzburg and Durban in KwaZulu-Natal, and Cape Town in the Western Cape. The four main processing farms slaughter approximately 4.7 million chickens per week (Rainbow Chicken, 2015). Country Bird Holdings Supreme Chicken, Ross Africa, Master Farmer and Nutri Feed are subsidiaries of Country Bird Holdings. Supreme Chicken is located in the Free State and the North West Province. The holding also produces feed and chicks. Approximately 1.5 million broiler chickens are slaughtered per week (Country Bird Holdings, 2015). Pioneer Foods Poultry Division The agribusiness segment of Pioneer Foods is divided into three poultry-related segments, namely: Tydstroom Poultry, Nova Feeds, and Nulaid Eggs. Tydstroom is located in Durbanville in the Western Cape. Approximately 1 million chickens are slaughtered per week (Pioneer Foods, 2015). Day Break Farms (AFGRI The leading agricultural solutions and industrial foods company, Poultry) AFGRI, sold its poultry farms to AFPO Consortium Proprietary Limited in 2015. The poultry farms were named Day Break thereafter. The Daybreak Farms are situated in Sundra in Mpumalanga. Day Break has a subsidiary company called MidWay Chicks that producers day-old chicks. Feed is supplied by AFGRI. Day break slaughters approximately 650 000 broilers per week (Day Break, 2015). Astral Food Astra Foods has a sub-division called Astral Poultry. Astral poultry is the second largest producer of broiler chickens in South Africa. It also producers feed and feed pre-mixes, which it uses and sells to the market. Astral has operations in Swaziland, Mozambique,
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Name of Stakeholder Description Zambia, and South Africa. The three major production areas are Camperdown in KwaZulu-Natal, Boschkop in Pretoria, and Manzini in Swaziland. Astral slaughters approximately 4.125 million broiler chickens per week. Sovereign Foods Sovereign Foods was established in 1948. Its broiler farms are located in the Rocklands Valley in the Eastern Cape. Sovereign Foods slaughters approximately 1 million broilers per week.
Information about the broiler industry competitors in the Waterberg District and surrounding regions is not readily available: therefore, the above competitors listed in Table 10.6 are the main broiler producers in South Africa. Furthermore, the main producers listed can be expected to have a market in the Waterberg DM. Therefore the Agri-Park will be competing with a few other producers.
10.7. Stakeholders
The Agri-Park stakeholders involved in the broiler industry are discussed below.
10.7.1. Government
National o Department of Rural Development and Land Reform o Department of Agriculture Forestry and Fisheries
Provincial o Department of Rural Development and Land Reform o Department of Agriculture Forestry and Fisheries
District o Waterberg DM o Waterberg DM Local Municipalities o Waterberg DM Agriculture o Waterberg DM Economic Development
10.7.2. Service providers
Table 10.7 indicates the service providers in the Waterberg DM that are considered to be stakeholders in the broiler industry.
Table 10.7: Service Providers Stakeholder Type Town Service Potgietersrus Abattoir Abattoirs Mokopane Hatchery State veterinarian, primary animal healthcare, import and export, sample collection for diseases State Veterinarian (Lephalale) Veterinarians Lephalale extension
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Stakeholder Type Town Service State veterinarian, primary animal healthcare, import State Veterinarian (Mokopane) Veterinarians Mokopane and export, extension Agricultural property, Platrivier Auctioneers Auctioneers Bela-Bela livestock Livestock auctioneers, Vleissentraal (PTY) Ltd Auctioneers Mokopane agricultural property Retail, livestock NTK Landmark (Naboomspruit) Cooperatives Naboomspruit medicine, equipment Retail, livestock NTK Bpk (Vaalwater) Cooperatives Vaalwater medicine, equipment Ve Op Rollermeule (EDMS) Bpk Feed_Manufacturers Mookgopong Animal Feeds Warmbaths Milling Feed_Manufacturers Bela-Bela Animal Feeds Beneke Boerdery Poultry Modimolle Broiler producer Broiler producer, broiler abattoir, broiler Spif Chickens Poultry Naboomspruit distribution, hatchery State veterinarian, primary animal healthcare, import and export, sample collection for diseases State Veterinarian (Lephalale) Veterinarians Lephalale extension State veterinarian, primary animal healthcare, import and export, sample collection for diseases State Veterinarian (Mokopane) Veterinarians Mokopane extension
10.7.3. Organisations and Associations
Associations related to poultry production are listed and described in Table 10.8:
Table 10.8: Poultry Associations Organisation Description South African Poultry Association (SAPA) In 1904, the South African Poultry Association (SAPA) was established. SAPA serves as a voice for the industry. SAPA has four subsidiary organisations, namely: the developing poultry farmer’s organisation, the egg organisation, the chick producer’s organisation, and the broiler organisation. SAPA engages in a variety of activities among which include lobbying and administration on behalf of its members. International Meat Quality Assurance IMQAS was established in 2001, and serves the quality and hygiene Services (IMQAS) needs of South Africa’s meat industry on an independent basis. South African National Halaal Authority SANHA was established in 1996, promotes professionalism in the (SANHA) certification of halaal products. SANHA is a non-profit organisation. SANHA provides a support base for both the producers and consumers of halaal products.
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10.8. Technology
The poultry industry entails farming operations that depend on technology. By assessing current technology that is available, technologies that will assist in improving the Agri-Parks broiler production can be identified. Table 10.9 explores technologies that are available for poultry farmers.
Table 10.9: Beef cattle farming technology Technology Function or benefit to farmer Significant disadvantages or limits
Mechanisation Small-scale implements and Farmers benefit from modern Cost may still be prohibitive, tractors: New generation of mechanisation and large leaps especially for the very small farming implements and tractors in productivity farmer. tailored for small-scale farming. Precision farming, integrated farm management systems and software Precision farming: Gaining real- Optimising and tailoring Very taxing in terms of capital, time or exact information within production levels at precise equipment and skills particular parts of a single field to and small-area level so that requirements. determine the most appropriate yield is maximised and inputs Not well tailored to small-scale rate of application of inputs. are minimised. farming conditions yet. Integrated farm management Maximise profitability and Applications for small-scale software: Combines information efficiency automate some farmers is currently still limited. and management systems from management and Some good software and various on- and off-farms sources administrative tasks. systems developed by to coordinate farming activities in Coordinate and simplify international vendors are not a highly efficient manner. management processes. tailored for South Africa yet. Plan-A-Head Poultry Broiler Integrate with other Plan-A- Management Software System: Head farming software to Complete management solution allow for whole-farm enterprise for a broiler enterprise. management. A particular strong feature of the system is broiler growth monitoring. The light edition is particularly suitable for small-scale farmers. SimJunior: Basic financial Easy to use. management and accounting Ideal for the small-scale farmer. software for the small-scale farmer. Accord: Complete human Particular strong features of the resource management system for system include its simplicity and farmers, including payroll, HR coverage of basic record keeping and administration. employment legislation. Animal watering
Auto-refill watering troughs: Water Steady and easy to clean Important to make certain the troughs fitted with a small reservoir Re-fill automatically from trough material are UV resistant and low pressure floating valves to a small build-in reservoir, Basin is easy to clean. enable automated re-filling. minimising contamination and risk of wastage. Animal health Vaccination: Vaccines contain Vaccines have a highly Many farmers still believe inactive parts or molecules that positive effect on disease vaccines to be ineffective, resembles surface proteins of a control and even eradication. therefore better education and pathogenic virus or bacterium, Very high return on investment. awareness creation are needed. which are introduced into the In case a certain threshold of animal's blood stream so that animals are not vaccinated, antibodies can be developed. herd immunity may be lost. Antibiotics: Have two main Increased growth rate and Routine feeding of antibiotics as applications in agriculture: 1) To resistance against disease in a method to increase growth
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Technology Function or benefit to farmer Significant disadvantages or limits treat infections, professionals, and case of routine feeding and as a preventative (rather 2) As a routine, feed supplement to supplementation. than curative) healthcare animals in intensive farming method could be regarded as systems. dangerous and unsustainable because it increases resistance to antibiotics. Resistance holds risk to future animal healthcare but also to human health because resistance may also be carried over to human pathogens. Farm energy Wind energy: Wind energy has Wind is a renewable form of Only a few areas in South Africa been used for a long time in South energy and some areas in do have sufficient wind profiles to Africa in the form of wind pumps. South Africa have sufficient justify investment in small wind wind development potential turbines. Appropriate for very small- Even larger battery storage scale operations. Less capacity compared to solar vulnerable to theft compared energy are required. to solar panels. Solar technology incl. photovoltaic Solar energy is a renewable Large battery storage capacity is and thermal panels and solar form of energy and most areas required in case of photovoltaic drying and cooking: There are two in South Africa have sufficient panels. Highly vulnerable to theft. main forms of solar energy wind development potential. harvesting, i.e. photovoltaic panels In fact, some parts of the that produces electricity, and southern and western Free thermal solar panels or tubes that State, western Limpopo, heat water. Gauteng and especially the Northern Cape and North West have excellent solar power potential even at global standards. Farm protection, security and visual monitoring
Biogas fermenters: Biogas can be Enable the farmer to become Capital and skills requirements produced from a variety of on- independent of imported and may be significant although very farm sources, especially animal increasingly expensive mineral low cost alternatives are dung of animals kept in confined or natural gas. available. areas. Especially suitable for intensive livestock, pig and poultry farmers which produce large quantities of animal waste. New techniques enable even small farmers with just a few animals to produce gas in a viable manner. Video and photographical Valuable to monitor veldt Advanced systems can be very technology: Fixed point condition, effects of grazing or expensive. photography, security camera fire control regime, systems and remote sensor- rehabilitation efforts, and to triggered photography. monitor animal or criminal activity in remote parts of the farm. Some systems notify the farmer by SMS of sensed activity and immediately send the footage by MMS or video clips to the farmer's mobile device Apps for mobile phones and tablets
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Technology Function or benefit to farmer Significant disadvantages or limits
The Merck Veterinary Manual Comprehensive animal health Not free Mobile App, available for both and a reproduction reference Android and Apple. It contains not only to vets but to farmers guidelines for the diagnosis, as well. treatment, and prevention of animal disorders and diseases. Poultry: The app helps you to learn Useful for the new farmer to all about poultry farming. This is a help in breed selection. complete guide with tools to run a successful poultry farm. The app also has a question, answer tab, to get clarifications from experts. Online and mobile information portals AgriSuite Online: Internet based The system can be accessed Not publicly available yet agricultural information system on a PC or Mac, on tablets developed and maintained for and smartphones, in the office farmers. Provide a variety of or on the farm. general agricultural information Contains the most essential, directly to farmers. useful and concise information in a very simple and user- friendly format.
Table 10.9 identifies technologies that are available for poultry farming. These technologies will allow farmers to address issues such as technologies, they will have access to information, produce better quality chickens and have more efficient operations. The FPSU component of the Agri-Park is most likely to apply these technologies.
10.9. Demand and needs analysis
The demand and need for broilers can be assessed by analysing consumer trend figures, which provides information about the possible demand of broilers in the future. In sub-section 10.1.1a, Figure 10.2 presents a graph with production and consumption figures for South Africa from the year 2004 to 2013. The trend that can be observed is an increase in the consumption of broilers over the period. Another important observation is that the production of broilers is evidently less than the consumption, which means that domestic broiler production fails to meet the demand. Therefore, there is a significant demand for broilers.
To summarise opportunities in specific market segments as discussed under “Specific marketing channels” above, the most important marketing channels and channels related opportunities include custom processing arrangements with poultry abattoirs, combined with contract farming directly for government institutions, hospitality industry and especially large retailers.
As highlighted in section 10.4 under the “Priority and gaps/opportunities” column, gaps in the market for processed chicken products are mainly limited to simple value adding techniques, including improved slaughtering, branding (huge scope for further development), packaging and freezing, and to some degree market development for chicken offal products. Extensive processing is not recommended during the establishment phase due to global competition and high capital expenditure.
To conclude the section, there is a considerable demand for broilers that the Waterberg district can serve. The prevalence of marketing channels such as abattoirs and contract farming directly to customers indicate that significant needs exist for broiler products that are processed at an initial level.
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10.10. Socio-economic contribution
In 2013, an estimate of 14 481 people were employed by the broiler and rearing industry in South Africa, while 27 564 people were employedn the processing industry, and 6 073 people were employed by broiler distribution industries. In total, 48 118 employment opportunities have been provided by the broiler industry in 2013. According to the South African Poultry Association (2012), as a significant job creation and formal employment contributor, the poultry industry was responsible for approximately 10% of employment in the agricultural sector. Although, the informal sector is where the contribution of the poultry sector impacts of higher numbers of the South African population, through more than 80% of producers including Small, Medium and Micro Enterprises (SMME).
Agricultural production statistics found in the Waterberg Agricultural Development Strategy 2005 indicate an employment equivalent to the production of a variety of livestock commodities. Although the data was published in 2005, an interpretation of employment opportunities provided can be made, especially in comparison other livestock commodities. Table 10.10 indicates the employment equivalent for the livestock production in the Waterberg DM.
Table 10.10: Waterberg production statistics Employment Cash and Field Estimated No Unit Total Area Unit2 Full-Time Job crops Production Equivalent 1 Eggs Layers 330 000 doz 8 030 000 80 2 Chickens doc/week 300 000 doc 9 360 000 80 3 Broilers birds/week 150 000 ton 11 934 000 150 4 Pork sows 8 800 ton 12 320 440 5 Diary 1/day 9 600 litre 3 504 000 64 6 Cattle head 482 400 head 121 806 2 700 7 Game 1000ha 1 328 ha 1 325 850 5 303 Source: The Waterberg Agricultural Development Strategy, 2005
According to Table 10.10, game production and cattle production had the highest job opportunities of 5303 and 2700 respectively, in 2005. Pork and then broilers followed far behind with contributions that are much lower, 440 and 150, respectively. Therefore, a limited contribution was demonstrated for broiler employment opportunities. In addition, the increase in the consumption of chicken over the years is expected to also have had a significant and positive effect on the employment opportunities and ultimately the socio-economic status in the district.
The Agri-Park should be able to provide between 1 800 and 3 700 employment opportunities and develop an average of 100 small scale farmers in the District.
10.11. Contribution to food security
Not only is the poultry industry one of the main contributors to South Africa’s GDP, but it also contributes well in food safety, food security and job creation. The importance of poultry’s contribution to food security is mainly in its affordability as a source of protein.
10.12. Regulatory Requirements
The production of poultry is guided by regulatory requirements that need to be met. Table 10.11 provides a list of government’s regulatory documents for the poultry meat industry along with a short description.
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Table 10.11: Poultry meat regulatory documents Regulation Description Agricultural Product Standards Act, 1990 (Act To provide for the control over the sale No. 119 Of 1990) and export of certain agricultural products, control over the sale of certain imported agricultural products, control over related products and for matters connected with. Foodstuffs, Cosmetics and Disinfectants Act, To control sale, manufacture and 1972 (Act No. 54 Of 1972) importation of foodstuffs, cosmetics and disinfectants and to provide for incidental matters. Meat Safety Act, 2000 (Act No. 40 Of 2000) To provide for measures to promote meat safety and the safety of animal products, to establish and maintain essential national standards in respect of abattoirs, to establish meat safety schemes and to provide for matters connected therewith. Conservation Of Agricultural Resources Act, This Act provides for control over: 1983 (Act No. 43 Of 1983) the utilisation of natural agricultural resources in order to: o Promote the conservation of soil, water sources and vegetation, and the o Combat of weeds and invader plants. Animal Diseases Act, 1984 (Act No. 35 Of 1984) The Act provides for: Control measures for the prevention of diseases and parasites and For schemes to promote animal health. Animal Diseases Act, 1984 (Act No. 35 Of 1984) The Act provides for: Control measures for the prevention of diseases and parasites and For schemes to promote animal health. Abattoir Hygiene Act, 1992 (Act No. 121 Of This Act provides for the: 1992) Maintenance of proper standards of hygiene in the slaughtering of animals and In the handling of meat and animal products. Fertilizers, Farm Feeds, Agricultural Remedies The Act regulates the: And Stock Registration of fertilizers, stock feeds, Remedies Act, 1947 (Act No. 36 Of 1947) agricultural remedies, stock remedies, sterilising plants and pest control operators. Provision is also made for control over the acquisition, disposal, sale and use of fertilizers, farm feeds, agricultural remedies and stock remedies. Livestock Brands Act, 1962 (Act No. 87 Of 1962) The Act regulates the: Registration of a brand in the name of an owner of livestock for the purpose of identifying the livestock. Agricultural Credit Act, 1966 (Act No. 28 Of The Act provides for a: 1966) System of assistance to persons carrying on or undertaking to carry on farming operations, and Control in respect of assistance rendered.
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Regulation Description Agricultural Credit Act, 1966 (Act No. 28 Of The Act provides for a: 1966) System of assistance to persons carrying on or undertaking to carry on farming operations, and Control in respect of assistance rendered. Marketing Act, 1968 (Act No. 59 Of 1968) The Act provides for the introduction of a: System of control over the marketing of agricultural products and Regulates the quantitative control over the import or export of these products. Subdivision Of Agricultural Land Act, 1970 (Act The Act regulates the subdivision of: No. 70 Of 1970) Agricultural land and Its use for purposes other than agriculture. Livestock Improvement Act, 1977 (Act No. 25 Of The Act regulates the: 1977) Collection and sale of semen and ova and the artificial insemination and Inoculation of certain animals, Establishment of a system for the evaluation and certification of the performance of certain animals, Quality control with regard to the importation and exportation of certain animals, semen, ova and eggs, Incorporation of livestock breeders' societies and the maintenance of the legal personality of livestock breeders' societies, and Granting of certain exclusive powers relating to the registration of pedigrees of certain livestock to the South African Stud Book and Livestock Improvement Association. Designated Areas Development Act, 1979 (Act The Act provides for: No. 87 Of 1979) Measures for the promotion of the density of population and of Farming activities in certain areas designated by the Minister for the purpose. Co-Operatives Act, 1981 (Act No. 91 Of 1981) The Act regulates the: Formation, registration, management and functioning of various types of cooperatives and Winding-up and dissolution of co- operatives. Veterinary And Para-Veterinary Professions Act, This Act provides for the: 1982 (Act No. 19 Establishment, powers and functions of the Of 1982) South African Veterinary Council, Registration of persons practising veterinary and para-veterinary professions and Control over the practising of veterinary and para-veterinary professions. Perishable Products Export Control Act, 1983 This Act provides for the control of: (Act No. 9 Of 1983) Perishable products intended for export from the Republic of South Africa and
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Regulation Description For the continued existence of a statutory board to bring about the orderly and efficient export of perishable products from the Republic. Agricultural Pests Act, 1983 (Act No. 36 Of 1983) The Act introduces measures for the: Prevention and combatting of agricultural pests. Agricultural Product Standards Act, 1990 (Act This Act provides for: No. 119 Of 1990) Control over the sale and export of certain agricultural products and other related products, with a view to the maintenance of certain standards regarding the quality of products and The packing, marking and labelling thereof. Agricultural Produce Agents Act, 1992 (Act No. This Act provides for the establishment of: 12 Of 1992) An Agricultural Produce Agents Council (AAC) and Fidelity funds in respect of agricultural produce agents, and For the control of certain activities of agricultural produce agents.
This Act has not been brought into operation in its entirety but will eventually replace the Commission for Fresh Produce Markets Act, 1970 (Act No. 82 of 1970), and the Agricultural Produce Agency Sales Act, 1975 (Act No. 12 of 1975). South African Abattoir Corporation Act, 1992 This Act provides for the: (Act No. 120 Of 1992) Privatisation of the South African Abattoir Corporation.
At the incorporation of the Corporation as a company the Abattoir Industry Act, 1976 (Act No. 54 of 1976) will be repealed. Societies For The Prevention Of Cruelty To The Act provides for control over: Animals Act, 1993 Societies for the Prevention of Cruelty to (Act No. 169 Of 1993) Animals. Agricultural Development Fund Act, 1993 (Act This Act provides for the establishment of and No. 175 Of 1993) control over: An agricultural development fund for the handling of money received for development. Government Notice No. R.946 Of 27 March 1992 Regulation concerning the control over the sale of poultry meat: Government Notice No. R198 Of 30 July 1999 Regulation governing general hygiene requirements for food premises and the transport of food. Government Notice No. R. 1748 Of 26 June 1992 Regulations regarding the classification and marketing of meat. Government Notice No. R.2718 Of 23 November Regulations governing the composition 1990 and labelling of raw boerewors,
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Regulation Description raw species sausage and raw mixed- species sausage Source: Guidelines on Key Requirements for Government Markets
The list of regulatory documents displayed by Table 10.11 consists of Acts and Government Gazettes, where the Acts are applicable to all types of meat production and the Government Gazettes include regulations that are specific to the production of poultry meat. As a result of meeting these regulatory requirements, the production of poultry can be controlled and take place under conditions that ensure clean, healthy, humane and organised production. The Agri-Park’s broiler production is bound by these regulatory requirements and the Agri-Park will have to ensure continuous compliance.
10.13. Substitute Products
Substitute products are products that may replace each other in consumption or use, as a result of changing conditions, such as, for example increase in prices, or a change in consumer tastes. This section of the report will focus on substitute products for broilers.
10.13.1. Eggs
One of the few foods that are used throughout the world are eggs. The egg industry is the fourth largest animal protein industry in South Africa in terms of gross turnover. Hens in most commercial strains lay around 260 eggs per year, while some breeds, which have been genetically improved, can lay around 300 eggs a year. Approximately 12 %( the egg shell), of an egg is inedible; however, the rest of the egg is a mix of vitamins, minerals, energy, and protein. Thus, eggs are considered to be a highly nutritious source of food and typically forms a part of a mixed diet. Eggs are seen as a cheaper protein option compared to beef, mutton, and even poultry meat. Thus, eggs are a viable substitute for poultry.
10.13.2. Pork
Pork is also a considerable substitute for broilers since it a protein source, is considered to taste good, and is affordable. Reference can be made to section 8.12 for further discussion of pork.
10.13.3. Dry Beans
Dry beans are low in fat but are high in fibre and rich in plant protein, and thus have the ability to replace broilers. The Maize Commodity Analysis Section (Section 10.12) has further discussion on dry beans as a substitute product.
10.14. New entrants
There are opportunities for new entrants in the poultry industry with the Competition Commission’s requirement for large producers to sell parent stock to less established producers. However, there are a number of barriers that challenge new entrants mainly related to the difficulty to compete with existing poultry producers. Barriers to entering the poultry (broiler) industry include the following:
High capital requirements Relevant experience and track records Important role of research and biotechnology for feed inputs Abattoir regulations
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The Waterberg DM Agri-Park needs to be aware of the barriers to entry for new entrant in the broiler industry in order to limit the effects.
10.14.1. Potential Entrepreneurs
There are a number of empowerment programmes that potential entrepreneurs who are interested in the broiler industry have access to. The Agri-Park will also be accessible to potential entrepreneurs and hence, needs to be aware of potential agro-entrepreneurs in the Waterberg DM and contribute to their empowerment. Opportunities for the broiler industry’s potential entrepreneurs are available through the following empowerment strategies by the broiler industry and the government:
1. The Land Bank contributes to the distribution of broiler meat bulletin to emerging farmer. 2. SetaSA supports training within the National Skills Broiler Project Fund. 3. South African Broiler Association was the driving force behind the establishment of the Developing Broiler Farmers’ Organisation, which serves as a channel to the distribution of information to developing broiler farmers.
10.15. Societal and cultural trends
There are a few societal and cultural trends that are influential on the trends in the production of poultry. These trends are mainly linked to society’s level of affordability, health consciousness, and everyday activities that occupy time.
Affordability: Poultry is an important source of protein and is more affordable than red meets. With a significant amount of South Africa’s population receiving low levels of income, it can be expected that poultry is consumed more often than red meat.
Health benefits: Poultry has been identified as not only a cheaper but a healthier option than red meats. With all the red meat-linked diseases, many people are consuming poultry more often and replacing red meat. Less fat is found in poultry when compared to red meat, especially when it is skinless.
Cooking time: Poultry is also perceived as easier to prepare than beef. As people become more economically active and have less time for domestic duties, chicken is more likely to be cooked. This also means that processed chicken products can be expected to become more popular since they are usually pre-cooked or ready to eat.
10.16. SWOT analysis
The SWOT analysis for the broiler industry is presented in Table 10.12.
Table 10.12: SWOT analysis Strengths • Increasing consumption of poultry • Wide range of opportunities for agro-processing • Affordable protein source that other meats • Suitable climate conditions Weaknesses • Reliance on imported feed • Some farmers lack the knowledge/expertise on handling diseases on their farms • Lack of abattoirs • Losses due diseases and pests
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• Abattoirs and hatcheries not well located for smallholder farmers Opportunities • Improve competitiveness by supporting research and development for better yield seeds and varieties for feed • Wide range of opportunities for agro-processing • Supply to local markets • Increasing demand • Free range production • Consumer preferences for healthy foods Threats • The increasing cost of production, especially feed and energy • The increasing cost of day old chicks, and variable quality of day old chick supply in the market • Small-scale poultry producers stopping production • Dumping and /or oversupply of imports from the European Union and South America • Effects of African Growth and Opportunities Act (AGOA) on the South African Poultry industry. • Variable control of poultry diseases • Low demand/consumption in neighbouring countries • Unstable electricity supply • Monopolistic behaviour of processors and retailers • Inadequate market access for smallholder producers • Highly concentrated commercial primary sector with less smallholder farmer participation
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SECTION 11: Agri-Park Concept Development
In the Agri-Park Concept Development Section, the concept of how the Agri-Park will be organised and function is developed. The information gathered and analysed in earlier sections of the Master Business Plan will be applied in the concept development. Each of the commodities that were selected for production in the initial phase of the Agri-Parks programme have a specific concept developed, which addresses specific activities that take place in the production of each commodity. Ultimately, an overall concept is developed as well, which refers to the organisation and functioning of the Agri-Park in general.
11.1 Introduction of the Agri-park concept
The Agri-Park concept that has been developed and presented in the following sub-sections is based on the Agri-Park Model that is developed by the DRDLR (refer to Section 2). The three basic units of the Agri- Park Model: the FPSU, AH, and RUMC are the basis of the Agri-Park concept along with the smallholder and emerging farmers. Using the above components as the foundation for the concept development ensures that the concept is aligned with the Agri-Parks model.
1. Smallholder and emerging farmers: The main beneficiaries of the Agri-Parks programme are the smallholder and emerging farmers. Smallholder and emerging farmers are encouraged to use the Agri-Park programme, thereby receiving the support needed to successfully produce and market their products. The Agri-Park concept begins the product flow with the farmers, who produce the goods to be processed and sold to various markets. Commercial farmers are also encouraged to use the Agri-Parks process, although it is most likely that the AH will be their main point of entry.
2. FPSU: Support for the primary production by smallholder farmers is facilitated by the FPSU, through a variety of services. Therefore, the concept explores the activities and services that will be required from the FPSUs in each commodities production flow.
3. AH: Processing of the primary products is the main service of the AH, as well as other production activities such as storage and packaging. The AH’s functions and services and related aspects are specified as part of the concept, according to each commodity.
4. RUMC: Market intelligence and distribution of products is managed by the RUMC and the concept addresses different aspects of the RUMC in the production of the selected commodities.
The Agri-Parks concept developed below also considers the requirements of the location and coverage of the FPSU, AH, and the RUMC.
The concept is developed by the defining the following aspects:
Roles and functions Location Key products/services Infrastructure and equipment Logistics Human Resources (HR) Training
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11.2 Proposed development concept of Beef
The development concept for the production of beef has been developed according to the Agri-Parks Model, as stated in the introduction. The process begins with the production of live cattle by the farmer who produces weaned calves and is supported by the FPSU by providing services such as supplying feed, veterinary assistance, and auctions and sales. Cattle that is not is not intended for processing is sold at the FPSU to the local market, while cattle for further processing is transported to the AH. At the AH, the abattoir will be responsible for slaughtering and performing other production functions through other facilities in the AH. From the AH, the beef products can be sold, or transported to various retail and distribution markets or the RUMC. The RUMC can further transport products to local and international market, while providing information on demand and market trends to the other components. Table 11.1 explores the development for beef production.
Table 11.1: Proposed development concept for beef Smallholder and emerging Product flow FPSU AH RUMC farmers
Key Role and Function Produce livestock cattle. Provides facilities for primary Processing of beef cattle. Links the beef producers to and initial processing local and international Rearing of new calves Intensive feeding/ activities. markets. to weaners. livestock finishing. Supplying and collection Access to abattoir. Provision of market of feed. Provides facilities for intelligence in the beef Provision of veterinary processing, packaging and related industries. services. and labelling. Identification of beef Provision of extension Inspection and quality markets. services. control. Interact and negotiate Weighing. Distribution and with buyers in the various Feedlot equipment hire. transportation of beef market channels. Facilitation of farmer products to the market. Undertakes contractual organisations and Local market sales. agreements associations administrative operations. Local market livestock sales.
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Smallholder and emerging Product flow FPSU AH RUMC farmers
Training of emerging farmers and agriculture students. Location Existing and emerging FPSU’s that will support beef The AH will be located in the It is proposed that one RUMC small scale farms will primary production are to be town of Modimolle. will be provided in Limpopo accommodate primary placed in each Municipality, to serve the Agri-Parks. Thus production functions with a proposal of one FPSU Polokwane (close to the towards the eastern parts per Municipality and thus, 6 Polokwane International of the District. FPSU’s will part of the Agri- Airport) is considered for the Park. development of the RUMC, influenced by the following:
1. Polokwane is the provincial capital and the economic hub of the Limpopo province 2. Has existing infrastructure, and 3. Will position the province for export opportunities.
However, future studies will have to be conducted to determine the feasibility of this proposed location for the RUMC.
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Smallholder and emerging Product flow FPSU AH RUMC farmers
Production products/services New calves and weaners The weaners once at the The AH will facilitate the In linking the products to the are produced (8 Months at FPSU will undergo the following activities market, the RUMC will approximately 200kg) following: undertake the following Slaughtering activities: Feeding (for Cutting and removal of Approximately 90 – 100 skin and hides Sales and distribution days) Packaging and branding Transportation to markets Auction and sales of cattle Freezing Market segmentation Quantity and quality Drying Storage control of cattle Leather tanning Quality and quantity Vaccination of cattle Use of waste from beef control Weighing of cattle processing Sales and distribution of beef products
Transportation of beef products Storing of beef product. Infrastructure/equipment Small-holder farmers will The following infrastructure The following infrastructure Transport vehicles and need access to water and and equipment will be used and equipment will be used infrastructure (roads) and water troughs, as well as at the FPSU: at the AH: storage facilities will be used facilities to keep the cattle by the RUMC. Feedlot houses and Abattoirs such as a kraal or fenced equipment Processing facilities and camps. Weighing facilities equipment Transportation of cattle Waste management Auction and sales centre facilities Training facilities Transport vehicles for Administration offices cattle and beef products Storage facilities Freezing Facilities
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Smallholder and emerging Product flow FPSU AH RUMC farmers
Logistics Farmer organisations and The FPSU will require the The AH will require the Transportation to the co-ops need to be following logistical following logistical different markets from the arranged by using the arrangements: arrangements: AH, especially international FPSU services and facilities markets can also be The quantity of cattle Transportation from FPSU such as communicating arranged through the RUMC. enters, remains and leaves to the abattoirs and information on when The products that are stored the facility and progress in processing units. calves are ready to be at the RUMC holding facilities their growth. Transportation back to the transported to the FPSU. will also be transported to Sales and auctions FPSU for local sales. the identified markets. Transportation of cattle to Transportation from Transportation to the FPSU will also have to primary producers, and to butcheries, distribution take place. AH. centres and other markets as advised by the RUMC.
Technology and ICT The following technology The following technology The following technology Economic and marketing and ICT opportunities can and ICT opportunities can be and ICT opportunities can be computer applications and be used: used: used: programmes can be used by the RUMC. Modern rearing tools Modern farming tools. Castration of bulls that Planning tools and With time, the processing are not meant for computer programmes. machinery used will have to breeding, to prevent Tracking devices on be updated as new inbreeding and farming machinery and technologies are introduced. uncontrolled mating of transport. animals. Computer programmes Oestrous synchronisation related to track keeping of of female animals to cattle production reduce cost of doing activities. artificial insemination Internet access for farmers and other cost related and trainees to raising of young calves. Artificial insemination, to introduce certain
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Smallholder and emerging Product flow FPSU AH RUMC farmers
desirable traits into the herds and also to minimise the cost of having to purchase several bulls to serve the female animals. Mobile devices for subscription to Apps. , to enable them receive information from the RUMC on weather forecast, disease control, etc. Human Resources The core HR personnel that The core HR personnel that The core HR personnel that The core HR personnel that the SHF would require are: the FPSU would require are: the ah would require are: the RUMC would require are:
Farm manager (1) Extension officers (1) Administrative manager Administrative manager Administrative Managers (1) (1) (1 per FPSU) Abattoir manager (1) Marketing manager (1) Addition staff would Animal health specialist (1) Feedlot manager (1) include the following: Logistics operation Additional staff would Farm labourers (feeding, manager (1) Addition staff would include include the following: vaccinating) Meat processing operator the following: Herders supervisors (2) Administration officers Administration staff Food Science Specialists Marketing personnel An estimated amount of Security Guards (1) Economic advisors 620 beef small scale Drivers Quality control manager Training personnel farmers will be part of the Operators (1) IT assistance Agri-Park. Cleaners Hygiene manager (1) Training personnel An estimated range of IT assistants between 20 to 35 jobs can
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Smallholder and emerging Product flow FPSU AH RUMC farmers
An estimated range of Additional staff would include be expected to be created between 20 to 30 jobs can the following: by the AH.
be expected to be created Administration officers by the FPSUs. Processing operators Abattoir operators Feeders Security guards Cleaners Drivers Mechanical operators
An estimated range of between 50 to 70 jobs can be expected to be created by the AH.
Training Continuous training for The following training The following training The following training farmers on recent opportunities can be made opportunities can be made opportunities can be made technology. available: available: available:
Extension services training Machine operation Market analysis skills Regulatory standards and training Supply chain and logistics Other training opportunities requirements training Processing skills skills that can take place for Health and safety training Health and safety training Trading (local and smallholder farms are for Management skills Management skills international) the following skills: Training for emerging Agriculture computer Breeding Techniques farmers programme training. Business skills Agriculture computer Finance skills programme skills Computer literacy
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11.3 Proposed development concept of Maize
The concept for the production of maize in the district also looks at the production flow from the farm to the market (through to the RUMC). Due to maize being a relatively low priced commodity, the primary production of maize will need to take place at a large scale, meaning that large hectares of land are needed and can be provided by the state. The production of maize will entail mechanisation and storage support from the FPSU among other services. The FPSU will support farmers with the planting and harvesting activities, and maize can be transported back to FPSU for local sales and straight to the AH for further processing. Distribution to markets can be facilitated by the AH where possible, otherwise the RUMC will act as a distribution centre and assist with market-related information. Further details on the development concept for maize are found in Table 11.2.
Table 11.2: Proposed development concept for Maize Production flow Smallholder and Emerging FPSU AH RUMC Farmers
Key Role and Function Production of maize through Provides facilities for primary Processing of maize through Links the maize producers to the following: and initial processing activities the following: local and international through the following: markets. Management of farming Provision of storage activities. Provision of inputs. facilities. Provision of market Cultivation of maize crops. Provision of extension Provision of facilities for intelligence in the maize Preparation and services. processing, packaging and related industries. maintenance of land and Provision of machinery and and labelling. Identification of maize crops planted. assistance for farming Inspection and quality product markets. processes. control. Interact and negotiate Facilitation of farmer Product distribution. with buyers in the various organisations and Processing poultry market channels. associations’ produced by commercial Undertakes contractual administrative operations. farmers. agreements. Field preparation and Training. Provision of marketing planting. intelligence to commercial Local market sales. farmers at a price. Training of emerging farmers and agriculture students.
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Production flow Smallholder and Emerging FPSU AH RUMC Farmers
Location and size The farmers will be distributed The local municipalities that The AH will be located in the Polokwane (close to the throughout the district. demonstrate significant town of Modimolle. Polokwane International development of maize crop Airport) is considered for the
farming and can thus be development of the RUMC, In addition to these farmers, considered for the influenced by the following: state owned land can be development of FPSUs, are allocated for the production the following: 1. Polokwane is the of maize. Mookgophong provincial capital and Thabazimbi the economic hub of Mogalakwena the Limpopo province Bela-Bela 2. Has existing Modimolle infrastructure, and Therefore, 5 FPSUs will support 3. Will position the province maize primary production. for export opportunities.
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Production flow Smallholder and Emerging FPSU AH RUMC Farmers
However, future studies will have to be conducted to determine the feasibility of this proposed location for the RUMC.
.
Production products/services The following key products The following activities will be The AH will facilitate the In linking the products to the are produced by the AH: facilitated by the FPSU: following activities market, the RUMC will undertake the following Maize (White and yellow) Tilling Dry Milling activities: Maize Chop Sowing Wet Milling Silage Maize Cultivation Packaging Sales and distribution Harvesting Labelling Planning transportation to Drying Processing markets The following activities are Weighing o Cooking Market segmentation undertaken by smallholder De-hulling and shelling o Baking Quality and quantity farmers: Training o Frying control Research Seasoning/flavouring Soil preparation Extrusion Cultivation Oil Extraction Liming Hydrolisation and sugar Fertilisation extraction Irrigation Starch extraction Herbicide application Fermentation Pest control Feed Milling
The above activities will be
supported by the FPSU through provision of machinery and inputs,
depending on the size of the farm
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Production flow Smallholder and Emerging FPSU AH RUMC Farmers
Infrastructure/equipment Small-holder farmers will The following infrastructure The following infrastructure The RUMC will need the need the following and equipment will be used and equipment will be used following infrastructure and equipment: at the FPSU: at the AH: equipment:
Irrigation systems Silos Milling plants Training facilities Spraying equipment Planter Milling equipment Administrative offices Fertilizer applicators Harvesting Machinery Processing equipment Sheller (extractors, ovens and Dehuller other machinery) Tractors Fermenters Initial processing Silo machinery Cold storage facilities Weighing equipment Administrative office Training and research Transport vehicles facilities and equipment Administrative office ICT centre Logistics Smallholder farmers will need The FPSU will require the The AH will require the The RUMC will require the a logistics plan concerning following logistical following logistical following logistical the following: arrangements: arrangements: arrangements:
Farmer organisations and Management of Transportation from FPSU Transportation to the coops need to be equipment used by the to the milling and different markets from the arranged in using the FPSU farmers. processing units. AH, especially services and facilities in Provision and delivery or Transportation back to the international markets. terms times when services collection of inputs. FPSU for local sales. Products that are stored at are delivered and Supervision and planning Transportation to the RUMC holding facilities quantities of maize of the transporting of distribution centres and will also be transported to involved. equipment, inputs and other markets as advised the identified markets. The machinery and inputs maize produced by the by the RUMC. Keeping track of storage used by the farmers will farms. and the supply to the need to be managed Keeping track of the maize markets. though a reliable system. stored in silos. Transport will need to be arranged in terms of maize transportation and schedules.
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Production flow Smallholder and Emerging FPSU AH RUMC Farmers
Commercial farmers will also be part of the logistics plan where maize produced is to be transported to the AH for processing at a set price.
Technology and ICT The following technology The following technology The AH can use computer Economic and marketing and ICT opportunities are and ICT opportunities can be systems with programmes computer applications and available: used: that will keep a database programmes can be used by and assist with processing the RUMC. Modern farming tools. Modern farming tools. functions and systems. The Planning tools and Planning tools and programmes. computer programmes. processing machinery used Renewable energy Tracking devices on will have to be updated as generation. farming machinery and new technologies are Computer programmes transport. introduced. and cell phone Computer programmes applications. related to track keeping of maize production activities. Internet access for farmers and trainees.
Human Resources The core HR personnel that The core HR personnel that The core HR personnel that The core HR personnel that the SHF would require are: the FPSU would require are: the AH would require are: the RUMC would require are:
Farm manager (1) Extension officers (2) Administrative manager Administrative manager Administrative Managers (1) (1) (3) Silo supervisor (1) Marketing manager (1) Addition staff would include Animal health specialist (1) Logistics operation the following: manager (1) Farm labourers
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Production flow Smallholder and Emerging FPSU AH RUMC Farmers
Addition staff would include Food Science Specialists Additional staff would the following: (1) include the following: An estimated amount of 1 Quality control manager 400 maize small scale farmers Administration staff (1) Administration officers will be part of the Agri-Park. Security Guards Hygiene manager (1) Marketing personnel Drivers Economic advisors Operators Training personnel Cleaners IT assistance Training personnel An estimated range of Additional staff would include IT assistants between 20 to 35 jobs can be the following: expected to be created by An estimated range of Administration officers the RUMC. Processing operators between 30 to 40 jobs can Milling operators be expected to be created Nutritionists by the FPSUs. Security guards Cleaners Drivers Mechanical operators
An estimated range of between 50 to 70 jobs can be expected to be created by the AH.
Training Continuous training for The following training The following training The following training farmers on recent opportunities can be made opportunities can be made opportunities can be made technology will take place. available: available: available:
Extension services training Machine operation Market analysis skills Regulatory standards and training Supply chain and logistics Other training opportunities requirements training Processing skills skills that can take place for Health and safety training Health and safety training Trading (local and smallholder farms are for the Management skills Management skills international) following skills: Training for emerging Agriculture computer farmers programme training. Cultivation Techniques
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Production flow Smallholder and Emerging FPSU AH RUMC Farmers
Business skills Agriculture computer Finance skills programme skills.
Commercial farms can assist with training and mentoring towards smaller farmers.
11.4 Proposed development concept of Broiler production
The production of broilers would begin with the delivery of day old chicks, through the FPSU, to the farmers. Along with day old chicks, other inputs such as feed would be provided as well. The farmer will manage the growth of the chickens until they are fully grown, where the FPSU will collect the chickens and transport them to the FSPU facilities for local sale of live chickens or to the AH for processing and further production. The RUMC will assist with information on markets as well as distribution. The concept is further explored in Table 11.3.
Table 11.3: Proposed development concept for broiler production Production Flow Smallholder and Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
Key Role & Function The primary responsibility of the Provides facilities for primary Processing of broiler products Links the Agri-Park to local and farmer will be the grow-out of and initial processing activities through international markets. broilers. through the following: Logistics Provision of market Facilitation of farmer Processing intelligence in the broiler and related industries. organisation and association Storage/warehousing Identification of broiler administrative operations. Packaging product markets. Supply of inputs. Product distribution Interact and negotiate with Provision of extension Training buyers in the various market support. channels. Mechanisation support. Undertakes contractual Local logistics support. agreements. Primary produce collection.
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Production Flow Smallholder and Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
Provision of marketing intelligence to commercial The FPSUs will have limited farmers at a price. sorting, packaging, storage, and processing for local markets with through-put of excess products to Agri-hubs. Location These farmers will be distributed The local municipalities that The AH will be located in the Thus Polokwane (close to the throughout the district. demonstrate significant town of Modimolle. Polokwane International development of broiler farming Airport) is considered for the
and can thus be considered for development of the RUMC, In addition to these farmers, the development of FPSUs, are influenced by the following: state-owned land can be the following: allocated for the production of 1. Polokwane is the provincial Mookgophong broilers. capital and the economic Mokopane hub of the Limpopo Bela-Bela province Modimolle 2. Has existing infrastructure,
and Therefore, 4 FPSUs in the Agri- 3. Will position the province Park will support broiler for export opportunities. production.
However, future studies will have to be conducted to determine the feasibility of this proposed location for the RUMC.
Human Resources Personnel required to manage The FPSU will provide the The core HR personnel that the The core HR personnel that the the production include: following HR/HR facilities: AH would require are: RUMC would require are:
Administrative manager (1) Administrative manager (1)
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Production Flow Smallholder and Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
Abattoir supervisor (1) Marketing manager (1) Logistics operation manager A farm manager (1) The core HR personnel that the (1) FPSU would require are: Additional staff would include Food Science Specialists (1) the following: Addition staff would include the Extension officers (2) Quality control manager (1) following: Administrative Managers (3) Hygiene manager (1) Administration officers Animal health specialist (1) Marketing personnel Farm labourers Economic advisors
Training personnel Addition staff would include the An estimated amount of 100 Additional staff would include IT assistance following: broiler small-scale farmers will the following: be part of the Agri-Park. Administration staff Administration officers Security Guards Processing operators Drivers Milling operators Operators Nutritionists Cleaners Security guards Training personnel Cleaners IT assistants Drivers
Mechanical operators An estimated range of between 20 to 30 jobs can be expected to be created by the An estimated range of FPSUs. between 50 to 70 jobs can be expected to be created by the FPSUs.
Training The broiler producers will One of the key functions of the Some training would also be Training of personnel on how to require training in: FPSU would be to provide required at the hub, including: disseminate information to the training and extension support Smallholder Farmers, AH and Broiler production Training of processing staff. on broiler production practices the FPSU. Marketing Training on best practices, to the farmers, including: Animal diseases based on changing Broiler production demand and supply.
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Production Flow Smallholder and Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
Phytosanitary Marketing Training on new innovations requirements Animal diseases as they surface. Feeding Phytosanitary requirements Feeding Key Key product: The core activities of the FPSU The core activities of the AH The core activities of the RUMC Products/services are: are: are: Fully grown, live chickens. Logistics Production and Training distribution of day old Dissemination of Input supply including chicks Key Services: information feed Collection of live Maketing and Preparation of broiler Transport of chickens chickens distribution of final house (disinfecting). Extension Slaughter and products to different Production processing wholesalers and major planning/scheduling Packaging retail outlets Farmer production Storage of products
management Marketing Transportion of products to the markets. Infrastructure & Infrastructure & equipment The FPSU would require the The AH would require the The RUMC would require to put Equipment requirements include: following equipment & following equipment/ in place the following infrastructure: infrastructure: equipment/infrastructure: Broiler houses Administrative facilities Feed silos Transport (e.g Bakkie or facilities/ information Agro-Processing Water systems pick-up vehicles) centre facilities Storage facility ICT Packaging facilities Weighing and Quality control facilities packaging equipment Agricultural input (crates) distribution and sales Retail outlet centre Retail facility
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Production Flow Smallholder and Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
Training centre Student and staff housing Logistics and transport facility Large warehouses/ holding facilities Cold storage facilities Administrative offices Logistics A logistics plan will be The FPSU will be required to The AH will be required to liaise The RUMC is responsible for necessary for the transport of develop a logistics plan to closely with the RUMC and marketing and distribution input and final products. move input products to the FPSU in developing a logistics plans. The responsibilities Farmers will need to be farmers and final products to plan. include: grouped and scheduled into the AH. Central pick up and Production and the production plan drop off points should be processing quantities accordingly. Pick up and drop demarcated by the FPSU. The AH will be responsible for Liasing with buyers off points (farms) will need to the distribution of the final Distribution/logistics demarcate for each group processed product to the plans accordingly in order to The logistics schedule should be market. Determining input streamline the logistical planned according to the quantities required for process. production plan developed by output quantites. the FPSU.
Technology/ICT The following technology/ICT The following technology/ICT In order to remain conversant The RUMC will provide would catalyse effective can be used by the FPSU: with the trends in the global, information technologies that production for the farmers: national and local market, so all the various basic units of the Production planning as to make necessary Agri-Park can subscribe to. Modern tools. software adjustments in the production Mobile devices for Logistics planning line, the RUMC would also subscription to Apps. , to software require subscription to certain enable them receive Vehicle tracking Apps from the RUMC. This will information from the devices enable the AH to remain RUMC on weather informed. forecast, disease control
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Production Flow Smallholder and Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
and other relevant information. Broiler management software.
11.5 Combined Agri-park concept for the District
As the programme continues to develop and other commodities are included, a concept similar to the ones above will be implemented. Table 11.4 provides a combined concept that refers to the Agri-Park programme overall.
Table 11.4: Combined Agri-Park concept Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers Key Role & Production of the Provides facilities for primary Processes primary products Links the producers of the Function commodity, including: and initial processing activities. through: commodity to local and Management of the farm Supplying and collection of Access to processing facilities. international markets through: and farming processes. inputs. Provides facilities for processing, Provision of market intelligence Maintenance of Provision of veterinary packaging and labelling. in the beef and related resources and services. Inspection and quality control. industries. infrastructure. Provision of extension Distribution and transportation Identification of beef markets. services. of beef products to the market. Interact and negotiate with Weighing of products. Local market sales. buyers in the various market Equipment assistance. channels. Facilitation of farmer Undertakes contractual organisation and association agreements. administrative operations. Local market sales. Training of emerging farmers and agriculture students.
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers Location Distributed in various areas According to the location of The district will have one Agri-Hub It is proposed that there should be of the district. various farms/projects in the that is linked to the FPSUs and the only one RUMC for all the Agri- district, hectares of land RUMC. Modimolle has been Parks in the Limpopo province. dedicated to each proposed as the location for the However, if the Waterberg’s DM’s commodity, and related Agri-Hub. Agri-Park develops into a feasible infrastructure: the FPSUs are business venture, and there is a proposed to be placed in all Other AH locations in the Limpopo demand for a RUMC in ten years, the municipalities and the province are in: an idea location would be commodities supported by 1. Poopedi – Capricorn DM selected at a district level. each FPSU is determined by the 2. Nwanedi – Vhembe DM prevalence of related farms. 3. Tzaneen - Mopani Thus Polokwane (close to the 4. Groblersdal - Sekhukhune Polokwane International Airport) Therefore 6 FPSUs will be is considered for the distributed through-out the development of the RUMC, district. influenced by the following:
All farmers will be supported 1. Polokwane is the provincial by the FPSUs. capital and the economic Farmers are encouraged to hub of the Limpopo province use FPSU’s closest to the farm 2. Has existing infrastructure, locations. and FPSU’s will not be exclusive to 3. Will position the province for one commodity but where export opportunities. possible services and infrastructure may be However, future studies will have shared. to be conducted to determine FPSUs will be centrally the feasibility of this proposed located where there is a location for the RUMC. concentration of farms.
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers Human Resources The following human The following human resources The following human resources will The following human resources will resources will be needed by will be needed by the FPSUs: be needed by the FPSUs: be needed by the FPSUs: the primary production: Administrative manager IT expert/personnel Extension officers Quality control personnel Administrative manager Farm manager Machine operators Staff to manage the Agro- Assistant administrative Farm labourers Agronomist (for soil testing Processing facilities manager Machinery operators etc.) Research and Demonstration Training personnel (planting, fertilisation and Researchers personnel Marketing agents (to Facilitate harvesting) Administrative Managers Training personnel market linkages, facilitate Assistant administrative Mechanical superintendent contracts with wholesalers and manager Skilled/unskilled workers for major retail outlets and also to Quality-control technician processing operations gather information on prices at Mechanical supervisor Unskilled workers for fresh produce market that Skilled workers for local maintenance and would be communicated to processing and packaging transportation the AH and FPSU) Skilled workers (drivers, Office clerks mechanical and electrical Foremen for processing shifts Itis estimated that the each maintenance) Foremen for maintenance and commmodity will have the Unskilled workers for local transport potential to contribute between processing and packaging Cleaning staffs 20 – 30 direct job opportunities Unskilled workers for Indirect labour (numerous) per commodity. maintenance and transportation It is estimated that the each Indirect labour (numerous) commodity will have the potential Voluntary Animal health to contribute between 50-70 direct expert/ Veterinary doctor job opportunities. Animal/plant nutritionist Established commercial farmers who are willing to form partnership with the FPSU in mentoring the small scale farmers (as many as possible)
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers
It is estimated that the each FPSU will have the potential to create between 20 to 30 direct job opportunities.
Training Smallholder Farmers will The following training The following training opportunities The following training require the following opportunities can be made can be made available: opportunities can be made training opportunities: available: Machine operation training available: Best farm practices Extension services training Processing skills Market analysis skills Use of tools and Regulatory standards and Health and safety training Supply chain and logistics skills equipment. requirements training Management skills Trading (local and Training on how to Health and safety training Training on new innovations international) interpret market Management skills Agriculture computer information and ICT Training for emerging farmers programme training. Breeding Techniques Agriculture computer Business skills programme skills Finance skills Computer literacy
Commercial farms can assist with training and mentoring towards smaller farmers. Key The core activities of the The core activities of the FPSU The core activities of the AH are: In linking the products to the Products/services farmers are: are: Receiving of farm produce from market, the RUMC will undertake Farming Provision of faming inputs. the AH or directly from the the following activities: Maintenance of farm Auction and sales facilities. farms. Sales and distribution infrastructure Quantity and quality control. Cleaning, sorting and grading Transportation to markets Production, growth and Collection and where applicable. Market segmentation collection of agricultural transportation of products. Further Quality control; Storage of products produce. Training. Processing and value- addition. depending on trends Packaging. Quality and quantity control
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers Small-scale/ emerging will Branding (if applicable) be supported by the FPSU in Storage of products. carrying out these core Marketing and distribution. activities. Transportion of products to the RUMC where and when necessary. Infrastructure & The smallholder/ emerging The following infrastructure and The following infrastructure and The following infrastructure and Equipment farmer would require the to equipment will be used at the equipment will be used at the equipment will be used at the hire some equipment from FPSU: FPSU: RUMC: the FPSU. The Farming machinery Processing facilities and Commmercial farmers that Weighing equipment equipment. Transport vehicles) are willing to participate Transport vehicles Storage facilities Storage facilities can also hire or rent Auction and sales centre Waste management facilities Administration offices equipment from the FPSU. Training facilities and Transport vehicles Training facilities and equipment Transport parking equipment Some of the major Administration offices Freezing Facilities ICT equipment will be : Storage facility Administrative offices Water systems Retail facility Retail and distribution facility Storage facilities Distribution Farming machinery Other equipment and infrastructure that is specific to Other equipment and Other equipment and the agricultural produce is infrastructure that is specific to the infrastructure that is specific specified in the commodity agricultural produce is specified in to the agricultural produce development concepts the commodity development is specified in the concepts. commodity development concepts.
Logistics Plan The focus of the logistics plan is to develop a strategy to move farm produce to market as smallholder and emerging farmers seek to become important players in the emerging food supply chain in South Africa. The logistics plan draws on challenges and opportunities
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers faced by the farmers that are likely to participate within the Agri-Parks programme, while the focus remains on recognising the importance that transport plays in the emerging farmer value chains.
Understanding the logistics chain
It is important that the transport segments in the emerging agricultural sector are understood. The segments include the primary, intermediate and final transport route segments, described in further detail below:
1. The primary transport segment, also known figuratively as the first mile, is the segment in which product moves from farm to a consolidation/collection point, which is found on primary roads where collection is typically easier. The key role-players in this segment are the farmers who move the produce from their farm to the consolidation/collection point. 2. The intermediate transport segment realises the movement of produce from the primary consolidation, or collection point to an intermediate point, or in this case an Agri-Hub. The key role-players at this point are larger, commercial farmers, or transporters. 3. The final transport segment will move product from the intermediate point to the final market, or destination.
These segments are exemplified in the following figure:
Primary Intermediate Final transport transport transport segment segment segment Market (Export and Farm Collection points Processing international)
The above figure is a generic emerging, or small-scale farmer’s logistics chain that contains the farm, consolidation/collection points, intermediate processing points, and the final markets for the product. The first mile, in general, is the most important segment since it can be the most expensive segment of the logistics chain. It is often the case that product quality is compromised through bruising and ageing in this segment.
Recommended logistics strategy:
Unlike commercial, large-scale farming, small-scale and emerging farmers produce smaller quantities and farms are spread over a wide spatial territory. As such, it is of high importance that consolidation points are developed in order to collect produce in viable volumes,
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers while coordination with intermediaries and transporters is crucial so that the farmers jointly are able to create economies of scale. Consolidation points should therefore, be developed at strategic locations on easy access roads and a well-structured approach is required in order to assist the farmers in produce consolidation. This is exemplified in the following logistics plan:
In order to do this, appropriate infrastructure is required at the consolidation points along with organised transport coordination (exploiting ICT) that will reduce value deterioration at the farm gate and consolidation/collection points. The following recommendations can be used in order to develop the logistics plan for the Agri-Park:
1. Locate and demarcate specific areas of production that will participate in the Agri-Parks programme. 2. Develop an inventory of what will be produced in the given demarcated areas. 3. Determine quantities to be produced in the demarcated areas. 4. Determine the total value of production that will be produced my small-scale farmers. 5. Determine and map the spatial location and spread of farms that will be producing within the programme. 6. Determine the location of the consolidation/collection points and what facilities should be made available. 7. Assess the potential perishability of the produce/value of the post-harvest losses. 8. Plan for the availability and reliability of transport services to collect produce. 9. Assess the quality of transport infrastructure in the location. 10. Determine the key market locations/destinations in the given area. 11. Develop, or enhance farmers’ organisations and support groups.
The above process will assist in providing a better understanding of how to move produce from farm to market, while a comprehensive and integrated logistics management system can be employed to improve the efficiency in which produce can be moved to markets taking into account rural infrastructure, consolidation management and collection services. The ability to understand the product movement will provide a foundation from which a logistics plan can be developed.
The following steps provide a broad outline toward the logistics plan, in which all elements of the Agri-Park including the farmers, FPSU, Agri-Hub and RUMC are integrated:
1. Demarcate farmer groups within a given production area. 2. Determine a central location of the consolidation/collection point for the produce in each of the demarcated areas. 3. Implement a logistics management system and programme through the FPSU and RUMC that will assist in moving farmers produce to the consolidation points.
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers 4. Implement a logistics management system and programme through the FPSU and RUMC that will move product from the consolidation points to the Agri-Hub. 5. Implement a logistics management system and programme through the RUMC that will move product from the Agri-Hub to the market/final product destination.
The FPSU will be responsible for the movement/transportation of the product. The RUMC will provide the market intelligence and therefore the timing of the movement of the product. Technology/ICT The following technology is The following technology is The following technology is The following technology is available for smallholder available through the FPSU: available for the AH: available for the RUMC: farmers: Modern farming equipment Modern production and Computer programmes related Modern farming and machinery. processing techniques. to economic and market equipment and Modern and improved Computerised monitoring analysis machinery. farming techniques. programmes. Information systems Modern and improved Computer and internet Internet access. Information programmes that farming techniques. access. Tracking devices for transport will link to other components of Programmes and Programmes and vehicles. the Agri-Park to provide and applications providing applications providing Modern security systems. recive information. information on weather information on weather Tracking devices on transport. conditions, market trends, conditions, market trends, farm management and farm management and recent agricultural recent agricultural developments. developments.
The FPSU will also have technology and ICT opportunities available for its services. Interactive training programmes. Tracking devices for transport vehicles and machinery.
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Production Flow Small-Scale/Emerging Farmer Production Support Unit Agri-Hub Rural-Urban Marketing Centre Farmers Information systems to provide updates.
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11.6 Capital Expenditure
The capital expenditure section provides an overview of the capital expenditure that is projected for the Waterberg DM Agri-Park. The FPSU and the AH were used as the basis for the expenditure figures projected, thus calculated estimates were made for the capital needs of the FPSU and AH. Since the RUMC will not be located in the Waterberg DM, the RUMC expenses have not been included in the projections provided. Estimated bulk connections, building and machinery/equipment requirements were used to investigate the capital expenditure. The total capital expenditure estimate is calculated for a period of ten (10) years, and is not an annual capital requirement.
The accompanying capital expenditure projection/estimate is intended solely for the information and use of the Master Business Plan and is not intended to be, and should not be, used for any other purpose. The estimated capital expenditure has been compiled by a Professional Economist and not by a registered Accountant or Auditor. These estimates may contain materiality as it was not compiled in accordance with the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).
Materiality is a concept that is judged in light of the expected range of reasonableness of the information; therefore, users should not expect prospective information (about events that have not yet occurred) to be as precise as historical information.
Table 11.5: Capital Expenditure Estimates Entity Category Item Total Cost FPSU Consolidation/ Cold Storage (Perishables) R146 770 Collection Point Warehousing Facility + Office Space R146 760
Fencing R296 250
Parking R217 600 Electricity Connection R18 875 Water Bulk Connection R65 000
Buildings Agriculture Extension and Office R233 730
Mechanisation Centre and Workshop R105 000
Warehousing Facility (Sorting, Processing, R587 040
Packaging & Storage Facility)
Cold Storage R440 310
Retail R326 160
Auction Facility R525 000
Agri-Tourism Facility R195 680
Training Facility R235 560 Infrastructure Water Bulk Connection R65 000 Electricity Connection R188 750
Road R0
Fencing + Installation R493 750
Equipment Poultry Farm Vehicles R708 226
Transport Vehicles R1 410 800
Implements R160 000 Processing Equipment R442 800
Equipment Red Meat Farm Vehicles R708 226
Transport Vehicles R1 741 800
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Entity Category Item Total Cost Implements R240 000 Processing Equipment R13 345 000 Equipment Maize Farm Vehicles R4 037 098 Transport Vehicles R3 660 800
Implements R4 956 306 Processing Equipment R120 000 FPSU Total Cost R35 817 691 Agri-Hub Buildings Administration offices, ablution and R736 800 change room block Training Facility R471 120
Warehouse + Processing Facility R2 446 000
Retail R380 520 Cold Storage R1 467 700
Infrastructure Water Bulk Connection R65 000 Electricity Connection R453 000
Road R0 Fencing + Installation R987 500 Parking R435 200
Equipment Transport Vehicles R5 000 000 Processing Equipment: Poultry R12 000 000 Red Meat R28 000 000 Maize R7 000 000 AH Total Cost R59 442 840
Table 11.5 is a breakdown of the capital expenditure estimates for the Waterberg Agri-Park. Estimated costs are provided for the FPSU and AH units in terms of capital requirements for each of the units. As indicated by Table 11.5, each FPSU’s estimated expenditure is R35 817 691 and the AH is R59 442 840. The totals for the Waterberg DM Agri-Park are displayed in Table 11.6.
Table 11.6: Total Capital Expenditure District Agri-Park Total Quantity Cost Total Cost FPSU 6 R35 817 691 R214 906 146 Agri-Hub 1 R59 442 840 R59 442 840 Grand Total R270 348 986
The total capital expenditure for the Agri-Park is estimated to be R270 348 986, as indicated in Table 11.6. The FPSU total estimates incorporate the per unit cost of the FPSU, which was indicated in Table 11.5, thus all the FPSU’s (6) that are proposed to be in the Waterberg DM Agri-Park are estimated to have expenditure of R214 906 146. There is one AH in the Agri-Park, therefore the total estimate for the AH in Table 11.5 is R59 448 840.
11.7 Conclusion
The Agri-Park development concept has provided an initial step towards the development of the Agri- Parks programme, which will become the foundation for the operation and functioning of the Waterberg DM Agri-Park. Furthermore, the Agri-Park development concept ensures that the Agri-Park Model put
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forward by the DRDLR is applied by aligning itself to the Model. Using the three main units – the FPSU, the AH and the RUMC as the foundation of the concept, allows the development concept to reflect the model. Another basic component of the concept that addresses the smallholder farmer, ensures that the smallholder farmer benefits from the programme while acknowledging and including primary production. With a basic understanding of the selected commodities production flow, each of the commodities had a specific development concept proposed with the guidance of a combined development concept. The main aspects that need to be considered in the production flow were explored according to the Smallholder farmer, FPSU, AH and RUMC. With the concept having been developed, it was possible to calculate some estimates that would provide guidance to the capital expenditure requirements of the Waterberg Agri-Park. The capital expenditure estimated for the Waterberg Agri-Hub, allocated over the 10-year period, is an amount of approximately R270 348 986: which incorporates the requirements for the FPSUs and AH.
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SECTION 12: Agri-Park Organisational Structure
An explanation of the organisational structure of the Waterberg Agri-Parks is demonstrated schematically in Diagram 12.1
Diagram 12.1: Waterberg DM Agri-Park Organisational Structure
In explaining the organisational structure as demonstrated in Diagram 12.1, there are three sub structures that form part of the Agri-Parks: 1. Advisory Structures, 2. Approval Structures and 3. Implementation Monitoring structures.
12.1. Advisory Structures
The main functions of the advisory structures within the Agri-Parks organisational structure are to give advice to the approval structures. The advisory structures that are currently identified are the National Agri-Parks Advisory Council (NAAC) and District Agri-Parks Management Council (DAMC). It is important to note that the advisory structures’ member primarily comprise of stakeholders and interested party.
12.1.1. The NAAC
This is the National Agri-Parks Advisory Council reports directly to the minister and consists of elected representatives of various organisations. Functions of the NAAC may include (as stipulated in Circular 9 of 2016): To solicit, co-ordinate and advise the Executive, on issues and concerns of the implementation of the Agri-parks Programme;
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To encourage public awareness and education of the Agri-parks Programme; To review studies, plans and proposals as may be referred by the Executive and District Agri-parks Management Councils (DAMCs) and the National Agri-parks Operational Task Team, and to provide comments and advice thereon; To provide advice on policies, legislation and programmes from the Department of Rural Development and Land Reform (DRDLR) that impact on the Agri-parks Programme; To initiate advice on the Agri-parks Programme and implementation of the Master Business Plans as referred to by the DAMCs; To liaise with the Executive, the Management of the DRDLR, the DAMCs and any other stakeholder involved in the Agri-parks Programme as required; and To mediate disputes arising from the DAMCs concerning its operation and/or advice provided to the Department or other bodies that are implementing the Agri-parks programme in a district.
12.1.2. The DAMC
The District Agri-Parks Management Council, also referred to as the “voice” of the stakeholders/interested parties in Agri-Parks. The DAMCs like the NAAC consist of representatives from various organisations. The DAMCs main function is to communicate advice from the council members to the NAAC as well as DAPOTT (District Agri-Parks Operational Task Team). Further functions of the DAMC include, but are not limited to the following: Assist in identifying new business opportunities within an Agri-park; Provide advice on the implementation of the business plans; To advise on regulatory compliance with applicable policies and legislation; To advise on the alignment with the National Development Plan, Agricultural Policy Action Plan, Provincial Growth and Development Strategies and other development frameworks; and To assist in the identification, evaluation and monitoring of risks related to projects.
12.2. Approval structures
These structures are responsible for approvals, feedback, information sharing, monitoring and evaluation regarding land reform activities and Agri-Park project approval. To explain the functioning of the approval structure it essential to understand that in terms of the Agri-Parks organisation the project approval process is started on the district level.
The approval structures that form part of the Agri-Parks include the DAPOTT, District Land Reform Committee, Provincial CRDP (Comprehensive Rural Development Programme) Committee, National Development Approvals Committee (NDAC) and the National Land Allocation and Recapitalisation Control Committee (NLARCC).
Note: It is understood that both the DLRCs and DAMCs can recommend projects/producers to be considered to be part of Agri-Parks.
12.2.1. DAPOTT
The District Agri-Park Operational Task Team (DAPOTT) as part of the Agri-Parks Approval Structure receives advice from the DAMC as well as information from PAPOTT and NAPOTT. DAPOTT appears to have the role to interpret all the information and acting as a monitoring agent to advise on projects and land reform beneficiaries to be included in the Agri-Parks. Some of the functions of the DAPOTT include but are not limited to: To provide technical support and guidance for implementation; To provide oversight of the implementation of the district Agri-parks business plan; To monitor expenditure against the district Agri-parks business plan;
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To identify all district projects that contribute to the district Agri-parks business plan and to compile a district project register (all DRDLR branches); To monitor project implementation against the approved project plan and district Agri-parks business plan; To participate in the identification and packaging of local development projects in support of the mandate of the Department of Rural Development and Land Reform; To advise on proposals that should be submitted to the Provincial CRDP Committee; and To provide an oversight function and monitor the implementation of the Government’s Rural Development Programmes.
a) The Agri-Hub Operational Manager
The main function of the Agri-Hub Operational Manager is to oversee the implementation of the Agri- Hub. Such person is to be appointed at the district level and should report directly to the district operational task team.
b) The FPSU Operational Manager
The main function of the FPSU Operational Manager is to oversee the implementation of the FPSU. Such person is to be appointed at the district level and should report directly to the district operational task team.
12.2.2. DLRC
The District Land Reform Committees (DLRCs), are primarily concerned with land reform in general. However, the DLRCs have additional functions linked to Agri-Parks: To identify the district projects contributing to Agri-Parks business plans; and To align projects and beneficiaries with the identified sites for Agri-Parks.
The abovementioned functions are however secondary to the following main functions: • Identify farms suitable for acquisition by Government (the target is 20% of agricultural land per district); • Identify and interview potential candidates for farm allocation; • Advise the Minister on the strategic support needs of identified farms and support needs of recommended candidates; and • Advise the Minister on resolving land rights conflicts, as might be referred to a DLRC by him/her.
Note: Projects and or beneficiaries identified by the DLRCs and DAPOTT, are subjected to technical compliance checks before being passed onto the PCRDP.
12.2.3. PCRDP
The PCRDP functions as the provincial approval structure that passes projects/beneficiaries identified by the DLRCs and DAPOTTs onto the National Government structures. Regarding this specific structure within the Agri-Parks organisational structure the name of this structure may have changed to the PJSC (unknown) as suggested in a different schematic (see below). The projects/beneficiaries identified are then catalogued into a Provincial Project Register that contributes to the formulation of a provincial spatial target plan. The functions of the PCRDP include: To provide inputs to assist in the compilation of the provincial spatial targeting plan, as provided by the districts;
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To recommend all development, land acquisition and tenure projects in line with a Delegation of Authority Framework to the NLARCC and NDAC through its technical committees; and To provide an oversight function in relation to the work of the Provincial Technical Committees and District CRDP Committees, to eliminate disjuncture and to ensure alignment of projects and funding at a provincial level.
The PCRDP can also include specialists if specialist skills are required to inform decisions to be made regarding project selection.
Projects and or beneficiaries chosen by the PCRDP are subjected to technical compliance checks before being passed onto the NLARCC and the NDAC.
12.2.4. The NLARCC
The function of the NLARCC is to recommend land acquisition and recapitalisation projects to the MCM (Ministerial Coordinating Management committee). The full list of functions of the NLARCC is as follows: To provide inputs to assist in the compilation of the national spatial targeting plan as provided by the provinces; To identify all national projects as per operational plans and compile a national project register To approve land acquisition, tenure and recapitalisation and development projects in line with a delegation of authority framework; and To provide an oversight function in relation to the work of the National Technical Committee and Provincial Committees, to eliminate disjuncture and to ensure alignment of projects and funding at a national level.
Looking at the above function, the NLARCC and PCRDP have the same functions but only on different levels within the government.
12.2.5. The NDAC
The main function of the NDAC is to approve all the national development projects and to give oversight to the PCRDP committees and the National Technical Committees (NTCs part of the land reform approval process). The functions of the NDAC are almost the same as the functions of the NLARCC, but the NDAC does not play a role in the identification of projects or the approval land acquisition, tenure recapitalisation and development projects.
12.3. Implementation and Monitoring Structures
Currently there are only two structures within the Agri-Parks organisational structure that are solely dedicated to implementation and monitoring, the PAPOTT (provincial Agri-Parks Operation Task Team). PAPOTT and NAPOTT are however not exclusively dedicated to Agri-Parks, these two structures also play a role in the monitoring and implementation of other programmes that can influence the Agri-Parks programme. The implementation and monitoring structures are demonstrated by Diagram 12.2.
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Diagram 12.2: The Agri-Park Implementation and Monitoring Structures
12.3.1. NAPOTT
The NAPOTT has various functions that are focussed towards on the operation of Agri-Parks both in terms of implementation and on-going operation. These functions include but are not limited to: Developing the National Agri-Parks Plan; Contributing to the development guidelines of Agri-Parks; Monitoring provincial business plans against the abovementioned guidelines; Monitoring budget alignment as set out in the business plans; Giving inputs to assist in the compilations of provincial Agri-Park business plans; and Managing project project roll out of Agri-Parks in line with approved project plans nationwide.
12.3.2. PAPOTT
The main functions of the PAPOTT is to coordinate and facilitate integrated implementation of Agri-Parks by providing technical support regarding planning and implementation, giving inputs to the compilations of Agri-Parks Business plans etc.
Note: PAPOTT will only remain operational until the Agri-Parks programme has reached a sustainable level, then PAPOTT will be integrated with the PCRDP.
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SECTION 13: IMPLEMENTATION GUIDELINES
13.1. Introduction to the Implementation Guidelines
The purpose of the business plan was to guide the implementation of the Agri-Park Model in the Waterberg District. This entailed various studies, including analysing the socio-economic and agricultural status quo of the district, as well as an analysis of the top three commodities identified. Thus, the above studies informed the concept that has been developed for the Agri-Park and the top three commodities to be developed.
Implementation guidelines provide further information that leads to the realisation of the vision and concept of the Agri-Park. Practical guidelines are provided through which further development of the Agri-Park can be based upon. The Waterberg Agri-Park’s implementation guidelines are presented according to the following:
1. Implementation Process 2. Alignment to Government Programmes 3. Recommendations 4. Roll-Out Plan
The above are discussed in detail in the sub-sections below
13.2. Implementation Process
The implementation process is a step-by-step methodology at which the implementation of the Agri-Park is expected to take place. In developing the implementation process for the Waterberg Agri-Park, the stages that occurred before the development of the Master Business Plan are considered along with the relevant steps that should occur to make sure that the Waterberg Agri-Park is up and running. The top three commodities will be produced, processed and sold to the identified markets through this process.
Diagram 13.1 indicates the implementation process for the Waterberg Agri-Park. The first three steps in the implementation process had taken place by the time the Master Business Plan was composed: the Agri-Park Programme was initiated (Step 1); districts where the Agri-Parks would be implemented were selected (Step 2); and the location for the Agri-Hubs in each district were selected (Step 3). Step 4 is the composition of the Master Agri-Park Business Plan, which is the current document. Following the compilation of the Master Business Plan, institutional arrangements should take place in Step 5 through governance actions and Step 6 will be the development of the funding model. Afterwards, a sequence of steps that involve technical and specific actions should follow, which are titled as: Detailed Business Plans (Step 7), Technical Plans (Step 8), and Construction (Step 9). Once the technical actions have taken place, the Agri-Park Unit’s operations should begin with the FPSU (Step 10) being the next step followed by the start of the training programmes (Step 11), which are also linked to the funding obtained through Step 6. Agro-Processing should start operations (Step 12) after the training has started, followed by the actions involved in the establishment and maintenance of market linkages (Step 13).
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Diagram 13.1: Waterberg DM Master Agri-Park Implementation Process
1 STEP 1: Agri-Park Model
CSIR developed the Agri-Park model. The model has three components. They are FPSUs, Agri-Hubs and RUMCs
2 STEP 2: Selection of 44 Districts 3 STEP 3: Agri-Hub Location Each District Municipality (DM) will have one Agri-Park Each DM will have one Agri-Hub
4 STEP 4: Master Business Plan
Appointment of service providers. Stakeholders consultations. Master business plan compilation for each DM.
5 STEP 5:Governance Formation of institutional structures Establishment of ownership structure Monitoring and evaluation of the programme
11 6 STEP 6: Funding Model 11 STEP 11: Training Development of funding model for 11 Engage and develop partnerships the programme with training institutions 11 Identification of financial institutions Conduct training for farmers, to approach FPSUs, etc.
7 STEP 7: Detailed Business Plans 8 STEP 8: Technical plans Development of detailed business plans for each Secure private investors/ component technical partners
9 STEP 9: Construction Systematically conduct all construction related activities
STEP 10: FPSUs Operations start 10 Provide various forms of support including infrastructure to small holder farmers
STEP 12: Agro-Processing Operation Start STEP 13: Market Linkages 12 13 Design processing facilities Engage off-take agreements Purchase necessary Set prices based on market equipment prices Start processing, packaging & Distribute and market labelling products
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13.3. Alignment with Government Programmes
Section 3 of the Master Business Plan provides an analysis of the policies that are related to the Agri-Park’s development along with the implications involved. However, for implementation that is effective and allows the district’s Agri-Park to function efficiently, the programmes influenced by these policies should also be identified to make sure that the Agri-Park aligns with the programme’s targets. Thus, programmes related to the Agri-Park from different government departments have been identified along with the Agri-Park’s alignment to these programmes. Table 13.1 demonstrates the alignment of the Agri-Park to the government programmes.
Table 13.1: The Waterberg Agri-Park’s Alignment to Government Programmes Implementing Department/Development Programme Alignment Agency Department of Agriculture, Forestry and 1. Agricultural Broad-Based Economic Empowerment One of the key roles that the Waterberg District’s FPSUs Fisheries (DAFF) (AgriBEE) will facilitate is to conduct workshops and training. To do so, close partnerships between commercial The implementation of AgriBEE is based on the farmers and emerging/smallholders will have to be commodity value chain approach. This approach is formed. This aligns to the AgriBEE’s drive of unlocking fundamental to creating partnerships, linkages, and potential to grow the agriculture sector in the form of networks for balanced, mutually benefiting results for all providing support to smallholder farmers and agro- concerned. The AgriBEE is expected to ensure enhanced processing entrepreneurial potential that exists in small competitiveness and sustainable development with industries. expansion of the existing businesses, rehabilitation of agricultural business that are performing poorly and In expanding the sector, the Agri-Parks and most of expanded entry for new businesses in the sector. the primary production farmers will need to expand the production land, require farm implements support As part of the process to unlock the full entrepreneurial from the FPSUs. Therefore, synergies between LRAD potential in the sector, the AgriBEE also encourages programme and Agri-Parks exist. Post the selection of partnerships between established agricultural potential farmer’s participants in the Agri-Parks enterprises and emerging farmers and entrepreneurs. programme, the farmers can approach the department under this programme.
As part of the implementation preparation, training will have to be continuously conducted at the farm level, at the FPSUs, the hubs and for professionals
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Implementing Department/Development Programme Alignment Agency 2. Land Redistribution for Agricultural Development providing market intelligence at the RUMCs. The area (LRAD) of providing training support to the sector players is already pioneered by CASP, thus the recommended The Land Redistribution for Agricultural Development training aligns to CASP goals. Additionally, the Agri- programme was designed to help previously Parks are expected to address food security issues, this disadvantaged citizens from African, Coloured and will be achieved by selling some of the produce for Indian communities to buy land or agricultural the local markets. This will address food security implements specifically for agricultural purposes. shortfalls that maybe existing in the district.
According to DAFF, this programme grant funds In implementing the Agri-Parks projects, some of the available to successful applicants to help supplement technology that will be used will ensure that the what they already have for purchasing agricultural land. farming activities optimise the productivity at the farm This will be done in the form of government grants. level. This will be aligning to the LandCare programme, which encourages communities to ensure land usage 3. Comprehensive Agriculture Support Programme sustainability. (CASP)
To date, the programme has provided agricultural support to land and agrarian reform projects, which contributes towards food security, job creation and poverty alleviation.
According to the department, a total of 84 agricultural farmer co-operatives have been established across the country. These cooperatives are fully registered and linked to financial services and businesses. The programme also facilitated the training and capacity building of all established cooperatives through accredited training institutions and colleges of agriculture.
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Implementing Department/Development Programme Alignment Agency 4. Integrated Food Security and Nutrition Programme (IFSNP)
This programme was initiated by the Food and Agricultural Organisation (FAO). The core goal of this initiative was to reduce hunger and food insecurity. To take further steps toward achieving this objective, the Special Programme for Food Security (SPFS) will be expanded to all nine provinces (DAFF, 2016). The SPFS and CASP have collaborated, and as a result, 10% of the total CASP budget will also be aligned to projects that contribute directly towards food security (DAFF, 2016).
5. LandCare
LandCare is a community-based and government supported programme that seeks to ensure sustainable management and use of agricultural natural resources.
The overall goal of LandCare is to optimise productivity and sustainability of natural resources so as to result in greater productivity, food security, job creation and better quality of life for all.
Department of Rural Development and 1. Comprehensive Rural Development Programme (CRDP) The Agri-Parks programme implementation process is Land Reforms aimed at creating self-sustaining agricultural activities The CRDP core objective is to mobilise and empower in the district. The value addition activities such as rural communities to take initiatives aimed at control of processing will promote enterprise development that their own destiny, with the support of government. As a the CRDP seeks to achieve. result, three phases for programme exists namely; Promoting enterprise development. The establishment of pack houses and processing Establishment of village industries and creation facilities with the hubs will also meet the objectives of of access to credit facilities. CRDP. This in return will create job opportunities for
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Implementing Department/Development Programme Alignment Agency Meeting basic needs of rural citizens. the locally skilled citizens and will meet the basic needs of many households residing in the rural The DRDLR has five programmes which are assessed in villages within the district. Section 3.2.1. For the purpose of this project, programme three will be analysed in this section.
2. a. Programme 3: Rural Development
The rural development has various programmes. The Rural Development programme aims to initiate, facilitate, coordinate and catalyse the implementation of a Comprehensive Rural Development programme (CRDP) that leads to sustainable, equitable and vibrant rural communities. The programme core objectives seeks to address the following: Rural Enterprise and Industry Development (REID) National Rural Youth Service Corps (NARYSEC) Rural Infrastructure Development (RID)
The NARYSEC seeks to enhance skills development by providing unemployed youth in the rural areas with opportunities to work in their communities and to be trained to provide the necessary services for local socio- economic development.
Development of Economic Affairs 1. Economic Planning and coordination The Agri-Parks programme is expected to be the rural Limpopo Department of Economic industrial catalyst and will attract potential investors. Development, Environment and Tourism Economic planning has a number of various dimensions, The Agri-Park programme will also focus on training (LEDET) such as industrial development, employment creation, and capacity building in all spheres, i.e. training for investment patterns, and skills development. Within the farmers. This aligns with the economic planning and programme, the workstream focus on economic coordination objectives which include inter alia development at sectoral level promotes rural economic
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Implementing Department/Development Programme Alignment Agency activities. The purpose of economic development at supporting economic development at sectorial level, sectoral level promotes rural economic development especially in rural communities. and the development of industrial policy frameworks for sectors, in order to support the Industrial Policy Action At a provincial level, the Agri-Parks programmes aligns Plan. to the Province’s economic development programme which seeks to support economic 2. LEDET Programmes activities that will stimulate industry development and exportation of the processed products in the Agri-Hub There are approximately four programmes that guide for various commodities. the provincial drive to growing the provincial economy, ensuring service delivery, promoting sustainable environment management and promoting tourism in the Province. The four programmes consist of the following: Programme one: Administration Programme two: Economic Development Programme three: Environment Affairs Programme four: Tourism
The functions of Programme two are to: To stimulate economic growth through industry development, trade and investment promotion. To stimulate economic growth through industry development, trade and investment promotion. Special Economic Zones 1. O.R Tambo IDZ The planned SEZ for Musina will assist in exporting the products from the Waterberg Agri-Park to potential 1. Gauteng Growth and The OR Tambo IDZ has been recently launched in 2015, market in SADC countries for exportation. Development in Gauteng. The IDZ is expected to attract 2. Agency Limpopo Economic investors through a range of incentives including: The Agri-Park aligns to the proposed Musina IDZ as Development Agency inputs and reduced tax and exemption for some some of its products will be exported from the SEZ. activities. In cases where some of the products cannot be dedicated customs support services. transported through the proposed provincial logistics
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Implementing Department/Development Programme Alignment Agency duty-free importation of production-related raw IDZ, some of the products will have to be exported materials using the OR Tambo IDZ. The OR Tambo IDZ can serve as a point for international exports, especially with the 2. Limpopo SEZ Planning close proximity to the OR Tambo international Airport. Waterberg’s shared provincial/district border with the a. Musina SEZ Gauteng Province allows the district close access to market linkages that will be accessible through the According to an article, the “second special economic IDZ. zone planned for Limpopo”, the Musina SEZ is to be situated west of Musina, north of Limpopo. The Musina SEZ will be a manufacturing hub specialising in logistics, vehicle assemblies (ambulances and fire and game- viewing trucks), a container harbour, packaging and exporting, and electronics and electricals DTI Incentives 1. Export Marketing and Investment Assistance (EMIA) As part of implementation process, smallholder farmers and agro-processors in Waterberg will have to The EMIA scheme develops export markets for South apply for financial assistance. The financial support African products and services and it also recruits new applications will be implementing the DTI’s goal of foreign direct investment into the country. Beneficiaries supporting South Africa’s products that are destined include inter alia, export councils, industry associations, for exports. The agro-processing activities at the Agri- etc. Hub will also be aligning to the DTI’s SSAS, which also supports industrial sectors that plan to pursue export a. EMIA Benefits markets. The EMIA will assist the Agri-Parks products in international market exposures such as one of the The Waterberg Agri-Park will be contributing to available: industrial development through agro-processing and exports, the uplifting of smallholder farming businesses (including black smallholder farmers) and job Individual Exhibition Participation opportunities for the local population. This will assist in Assistance with costs of participation, including travel, increasing the chances of receiving financial support accommodation and exhibition fees. from the DTI’s programmes.
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Implementing Department/Development Programme Alignment Agency 2. Sector-Specific Assistance Scheme (SSAS) To develop and implement the Agri-Parks programme, some core infrastructure resources will This is an export-focused incentive that encourages have to put in place. This will enable the movement industrial sectors prioritised by the dti to pursue export of goods from the farm level up to final markets. The markets. Agri-Parks infrastructure development is expected to stimulate investment growth in line with the CIP. a. SSAS Benefits Developing infrastructure to support the Agri-Parks programme also means that the Waterberg’s Project Funding – 80/20 cost-sharing grant for projects to infrastructure dependant development needs will be develop particular sectors, find new export markets and able to benefit from the implementation of critical promote black SMMEs, women, youth and people with infrastructure. disabilities.
Project Funding for Emerging Exporters – Travel & accommodation, exhibition costs, transport of samples and marketing materials, to a maximum of R1.5
b. Critical Infrastructure Programme (CIP)
The Critical Infrastructure Programme (CIP) objective is to leverage investment by supporting infrastructure that is deemed to be critical, thus lowering the cost of doing business.
According to the DTI, infrastructure is deemed “critical” to the investment if such investment would not take place without the said infrastructure or the said investment would not operate optimally. The applicants will have to meet mandatory requirements as set out by the DTI.
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According to the analysis presented in Table 13.1, there are few government programmes that are related to the Agri-Park programme. Furthermore, the Agri- Park programme can benefit from the listed programmes, while contributing to accomplishing the goals set up by the programmes.
13.4. Recommendations
A number of recommendations have been compiled to contribute to the implementation guidelines for the Waterberg Agri-Park. The basis of the recommendations is drawn from studies conducted and presented in earlier sections of the Master Business Plan. Therefore, it can be said that the recommendation not only provides implantation guidance but also ensures that impediments to the development of the Agri-Park are addressed. Table 13.2 provides a list of recommendations that should be considered for the development of the Agri-Park in the Waterberg DM:
Table13.2: Table Showing the Specific Recommendations for the Waterberg DM Agri-Park. Key Areas Recommendations Infrastructure All the dead and unsurfaced (gravel) roads around the proposed location of the Agri-Hub should be upgraded and developed, to facilitate easy access to and fro the Agri-Hub. The road network that will link to the various market centres (e.g. the fresh produce market) must be carefully considered and upgraded where necessary. The district should consider tapping into rail and roads for the transportation of large and heavy agricultural produce to long distances. The district should capitalise on all already existing initiatives and infrastructure for the establishment of the Agri-Park. There should be upgrading and revitalisation of any existing infrastructure that can be used to support the Agri-Park process. The establishment of infrastructure that will aid the recycling of water should be explored.
Natural Resources Considering that the entire district is water scarce, more work should be done in determining water availability for agricultural production around the proposed location of the Agri-Hub, FPSU(s) and around all the major areas where primary production potentials is huge as well as areas where the available water sources can be used to support primary production. The district should also look into water allocations and the existing irrigation schemes in the major production areas and maximise the use of these existing infrastructures. Small-scale farmers are recommended to have rain harvesters (e.g. Jojo Tanks) on their farms to serve as water reservoirs in the absence of rain fall. Relevant measures should be taken ensure soil capabilities are sustained.
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Key Areas Recommendations Agri-Park Efforts should be made in ensuring that products processing and packaging (value –addition) comply with international commodities standards, to enhance products’ suitability for the export markets. Although, the initial phase of the project will support the development of the value-chain of the three (3) pre-dominant commodities in the Waterberg DM, it is recommended that processing facilities should be expanded in subsequent phases to accommodate the production of crops that will be produced during the period of crop rotation. For example, soya bean and wheat can be produced as rotational crops for maize production, subsequent phases of the project should support the production and processing of these commodities. Production can also be vertically integrated into red meat production.
Technology The telecommunication services in the district should be upgraded (e.g. erection of cell towers and access to internet) in areas that are currently underserviced, particularly in the rural areas, since most of the farmers that would be targeted are located in these areas. The Government should subsidise telecommunication services (e.g. provision of free Wi-Fi) in some of these rural areas to enable them overcome the cost barrier associated with their low levels of connectedness. All the technologies that are to be adopted (particularly in the area of farm mechanisation) throughout the Agri-Park process should be those that will not lead to a decline in the number of job opportunities. The ICT to be adopted or introduced to the farmers should be user friendly and not be too complex to accommodate those with limited computer literacy.
Training The FPSU should establish partnerships with certain research institutions for research and development, and also to facilitate training programmes. Partnerships should also be established with commercial farmers in this regard. Practical manuals and information packages should be developed for the small scale and emerging farmers to assist them in their production processes. These manuals and information packages should cover aspects relating to: regulatory requirements, information on support programmes, production guidelines, etc. Where possible, manuals should be developed in language of choice to enhance easy understanding. Farmers should be provided with training that are specifically targeted at helping them change their perception about farming or agricultural production as a whole. For example, training on educating farmers on how to see the business angle to agriculture rather than as a sign of wealth.
Agri-Park Units The FPSU(s) should be strategically located around productive farms and areas with huge potentials for primary production. Where possible, FPSU’s should be shared between commodities, especially where the production areas are in close proximity. The group of farmers that would be earmarked for production, for the Agri-Park, should be identified as part of the kick-off programme. Business plans should be developed for each of the basic units of the Agri-Park as well as the farmers that would participate in the Agri-Park process.
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Key Areas Recommendations Logistics A comprehensive logistic plan should be developed as a separate document that would guide the implementation of the Agri-Park process. Smallholder farmers with small production capacities should be encouraged to work in joint ventures in order to participate in supplying the Agri-Park. Internal transport facilities (e.g. buses) should be arranged for the purpose of transporting staff who are unable to reside at the residential quarters that are provided AH and FPSU. District should develop a committee that will look into stakeholders’ engagement and logistical arrangements concerning them. Policy Environment Cross-border relationships and partnerships should be encouraged or formed with neighbouring districts, where infrastructure and resources can be shared, should the district be short of or have excess of certain resources. The establishment and management of committees and structures will contribute to maintaining the Agri-Park’s principles and drive its development. The district should develop a strategic plan that can be reviewed after a short term period, to allow for the normative context of the Agri to be upheld, and also to allow for the evaluation of the Agri-Park’s development.
Funding /investment The district should develop funding mechanisms that would encourage and attract foreign investments. Investment policies that would encourage more investments on agricultural land should be established.
Integrated Considering that the Waterberg DM is a destination for tourists and people visiting the Limpopo Province, the structures Development within the RUMC and the AH should be developed in such a way that it will allow for Agro-tourism e.g. school excursion, visits by tourist, etc. Other related government Departments should assist with the development of the Agri-Park through well planned strategies, in aspects such as training, infrastructure, social responsibilities and economic development amongst others.
Market More programmes that would be directed towards establishing market linkages should put in place. The district should form partnerships with some of the existing main players in the various industries to enable them penetrate the international market.
Incentive programme Incentive programmes and packages that would make agriculture more attractive, (especially to the youth) should be developed. For example, awarding scholarships that would encourage young individuals to study in the field of agriculture, creating a youth centre within the Agri-Park, to help the underprivileged youth in a way such that they render services to the Agri-park, while they get taken care of in return.
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Key Areas Recommendations Possible joint A number of agricultural services and agro-processing companies exist in the district, which the Agri-Park can form partnerships Ventures and with: partnerships o Input suppliers (NTK, Obaro, Wenkem, Panner) o Millers (NTK Mokopane, Ve-Op Rollemeulle) o Abattoirs o Processing Units o Service providers (Veterinary services, finance, irrigation installers, fertilisers etc.) Forming partnerships with these existing business will lead to fruitful synergies as a result of providing business opportunities to each other and sharing resources. PPPs between the Agri-Park and current producers, such as NTK, Tiger Brands with infrastructure technologies and markets, should be formed, allowing the Agri-Park to have access to markets, infrastructure (abattoirs, poultry houses and silos,)and other services, while the private companies will have access to agricultural produce, Agro-Processing opportunities, supply and market linkages. Farmer joint ventures that have been recommended above (logistics) should also function as cooperatives in order to have better supply and receive better returns on their products. This provides better chances of competing with existing commercial farmers Farmers of commodities that have value chain relations should also work together to leverage opportunities for input supply and other activities in their value chains. For the purpose of the Waterberg Agri-Park, farmers of livestock can join up with maize and other feed producers, where instead of buying feed from other producers that are not part of the Agri-Park, feed can be supplied within the Agri-Park. Long term contractual agreements between the Agri-Park (smallholder farmers) and potential buyers such as Tiger Foods, Spar, Shoprite and others, can be established. Commercial farmers should be encouraged to participate in the Agri-Park through the following: o Provide mentorship too small scale farmers o Assist with infrastructure o Provide their supply to be processed through the Agri-Park o Utilise the distribution services of the Agri-Park. On the other hand, the Agri-Park should use incentives to encourage commercial farmers’ involvement in the Agri-Park, such as the following: o Providing services such as equipment hire, agro-processing and distribution at decreased r=charge rates. o Making ICT and market information accessible.
The recommendations in Table 13.2 address the a few aspects where recommendations that refer to similar aspects have been grouped under key areas. These key areas assist in understanding the main aspects that are important to consider in the implementation of the Agri-Park
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13.4.1. Recommended Catalytic Projects
Over and above the recommendations compiled in Table 13.2, projects that will assist in the kick starting and supporting the Agri-Park’s success are recommended. These are referred to as catalytic projects that will be the main focus of the Agri-Park.
a) Beef: The Waterberg DM Abattoir is located in Modimolle under local government ownership. Private consumers and hawkers who purchase offal products are served by the abattoir, which is of high throughput class. However, the abattoir is not up to standard, yet its capacity and location is ideal for the Agri-Park. Some of the major issues revolve around non-compliance to health and hygiene regulations, water sources, as well as limited cooling and storage capacities. By renovating and refurbishing the abattoir, the issues named above can be addressed leading to a compliant and efficient abattoir with increased capacity and client base. Furthermore, higher revenues can be attained though the abattoir. Therefore, the Agri-Park will be able to facilitate primary products from small farmers to be processed through the abattoir. Furthermore, the abattoir is close to the proposed AH location, allowing for the abattoir to share some of the AH’s functions.
b) Maize: Most if not all the silo’s in the Waterberg DM are privately owned, thus small scale farmers that are part of the Agri-Park will need their own storage facilities. A silo in a strategic location can be constructed, providing storage for maize produced and some processing functions including milling. With its own silo, the Agri-Park will be able to have high yields of maize produced that can be processed and distributed efficiently.
c) Broilers: In order to support small-scale broiler production, poultry/white meat abattoirs such as those in Mogalakwena and Modimolle should be revamped to ensure that they are up to standard and will have the capacity to process broilers produced. Currently, white meat abattoirs in the district have limited capacities and efficiencies to meet the demand for broilers. The revamping of the abattoirs will allow higher production of broilers as well as create further revenue as production increases.
13.5. Roll-Out Plan
For the successful implementation of any project, specific actions to implement the project along with time frames need to be defined. Thus, a roll out plan has been compiled to specify the actions and timeframes involved in the implementation of the Waterberg Agri-Park. The actions identified for the implementation are based on the implementation process in Section 13.2 and are actions that will allow each of the steps identified in the process to be achieved. With that being said, it should be noted that the roll out plan therefore, carries through the concepts developed in section 11.
The roll-out plan lists a number of actions to take place at different periods during the 10-year roll out period. Each year within the 10-year period is considered and the actions are allocated according to a year or over a number of years within this period. A Gantt chart is used to demonstrate the Waterberg DM‘s Agri-Park roll out plan in Figure 13.1.
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Figure 13.1: Waterberg DM Roll-Out Plan Project / Action Description / Plan Time Frame (Years) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 STEP 1: Agri-Park 1. Development of policy framework for the Agri-Parks. Model 2. Approval of policy framework for the Agri-Parks. 3. Establishment of national Agri-Park project support facility to support and coordinate district base operational teams.
4. Development of detailed plan and design of a prototypical Agri-Park that is adaptable, based on commodity types. 5. Selection of district municipalities and Status Quo analysis/report for the selected district municipalities.
6. Establishment of NAPOTT, PAPOTT AND DAPOTT. 7. Appointment of District Agri-parks Advisory Councils (DAAC's). STEP 2: Agri-Hub 1. Development of a site selection methodology and Location Selection location criteria. 2. Initial site identification together with the generation of site specific maps with district specific narratives and selection criteria. 3. Property selection process. 4. Sign-off of final Agri-Park sites by each district municipality. STEP 3: Master 1. Appointment of service providers to develop Master Agri- Agri-Park Business park Business Plans for each district municipality. Plan 2. Stakeholder consultations. 3. Commodity identification. 4. Policy and strategy alignment. 5. Identification of major role-players. 6. Development of an industry report. 7. Feasibility assessment of three prioritised commodities.
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Project / Action Description / Plan Time Frame (Years) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 8. Concept development. 9. Development of an implementation plan. 10. Economic advisory services. STEP 4: 1. Establishment of Agri-Park Working - Group/ Governance Implementation structure. 2. Development of an ownership structure. 3. Development of an institutional structures. 4. Ongoing Policies and procedures: Establish design and content of policy manuals and associated procedures that will ensure frequency of reporting and communication on the progress of the programme. 5. Monitoring and evaluation: defines scorecards, measures, and metrics to track performance. STEP 5: Funding 1. Development of a funding model for the establishment Model of Agri-Parks programme. 2. Identification and analysis of Development Financial Institutions in South Africa. 3. Identification and analysis of incentives in South Africa. 4. Identification and analysis of commercial funding organisations in South Africa. 5. Run a financial model based on various scenarios on project gearing. 6. Conduct a sensitivity analysis. STEP 6: Technical 1. Design of Agri-park specific incentive schemes. Planning 3. Identification of potential Public Private Partnership's. 2. Secure private investors / technical partners. 3. FPSU - Role should be expanded and spin-off opportunities should be expanded towards these areas in order to widen the scope and influence the agro- processing activities. 4. Agri-Hub - core activities, production cycles and distribution functions of the Agri-Hub should be evaluated.
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Project / Action Description / Plan Time Frame (Years) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 5. RUMC - Investigate market intelligence. 6. Identification of land parcels related to farming areas (mapping. 7. Consultations with technical specialists. 8. Development of the Agri-parks Monitoring and Evaluation Framework STEP 7: Detailed 1. Development of detailed business plans for each Farmer Business Plans Production Support Unit. 2. Development of a detail business plan for the Agri –hubs. 3. Development of a detail business plan for the RUMC's. 4. Development of a detail business plan for small holder farmers. 5. Development of a detail business plan for the Agri-park logistics. STEP 8: Financing 1. Selected targeted financial institutions to apply for financing. 2. Determine the minimum requirements of each financial institutions. 3. Prepare application pack. 4. Apply for financing. 5. Project financial close. STEP 9: 1. Finalise the project designs and drawings. Construction 2. Conduct a bill of quantities. 3. Prepare tender documentation. 5. Tender evaluation and selection process. 7. Site preparation. 8. Construction facilities & upgrade of existing infrastructure. 9. Site handover. STEP 10: Primary 1. Identify emerging farmers and their capacity to supply Production the different agri-businesses; assess the capacity of the
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Project / Action Description / Plan Time Frame (Years) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 farms to see what the capacity of the farms are for production.
2. Provide the emerging farmers with the necessary infrastructure, training, and livestock to be able to supply the adequate level of products. 3. Production of the identified commodities. 4. Training of personnel at the FPSU that will assist farmers with various activities such as, for example, seeding, fertiliser spreading, and harvesting. STEP 11: Training 1. Training, if required, of small-scale and emerging farmers Programmes Roll- at the FPSU. Out 2. Training of personnel at the Agri-Hub that will participate in the processing and value-adding of commodities.
3. Training of personnel at the RUMC that will conduct market research and utilise various technologies.
4. Identify local skills capacity for each of the agri- businesses and sync training activities with the lack of skills or/ and capacitate local skills base. 5. Engage and develop partnerships with training institutions. 6. Expansion of emerging farmers’ capacity to produce adequate supply for agri-businesses: this should be incorporated with committed local mentors and continuous training programmes to increase the farmers and co-operative management skills. STEP 12: Agro- 1. Define the product idea, features, availability and Processing benefits to the consumers. 2. Product development, which includes all aspects such as packaging, labelling and branding. 3. Analyse processing volumes and capacity. 4. Investigate prospective buyers, possible distribution and marketing channels, possible export destinations.
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Project / Action Description / Plan Time Frame (Years) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 5. Design processing facilities/ production lines, taking into consideration procedures to prevent contamination, proper food handling hygiene, sanitation system, pest management system etc. 6. Identify product(s) regulations and food safety requirement. 7. Develop a comprehensive logistic plan of how products will be received for processing. 8. Develop a quality control system 9. Purchase of: processing equipment, production materials, identification of suppliers’ location, 10. Recruit and train employees. 11. Secondary processing of primary processed products, packaging, labelling, and storage. STEP 13: Product 1. Conduct market analysis to determine: opportunities, Marketing (RUMC) available market for the product, distribution channels, what price to set for the product depending, competitors, prospective buyers/consumers, industry analysis, etc. 2. Assess the market to determine local, national, regional and international trends, available market information, product market, market size, supply performance, market drivers and constraints, competitors, potential poverty reduction impacts, etc. 3. Set market price, depending on cost of production, competition, quality and the target market. 4. Engage off-take agreements based on future production in terms of quantity, quality etc. 5. Determine promotion and advertising channels that are best suitable to influencing consumers' decision to buy the products. 6. Distribute and market products. 7. Continuous engagement with potential/future clients. 8. Hosting of Road shows, Trade fair, industry summits, etc.
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As displayed in Figure 13.1, the actions are organised according to the steps of the implementation process and the time allocated is highlighted under the specific year(s). The time frame for the Agri-Park roll-out plan is a duration of ten years, as mentioned earlier, which begins in 2015 and continues to 2024. The Gantt chart indicates that the Agri-Park Roll out programme began in 2015 with the establishment of the Agri-Parks Programme and the development of the model and preparation for implementation. While actions such as those in the first step take place in one year, other actions start in a specific year and are continuous throughout the period. The roll out plan facilitates the development of the Agri-Park so that by the end of the 10 year period, the Waterberg DM Agri- Park can function independently in a self-sustainable manner.
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National Planning Commision. (2011). National Development Plan: Vision for 2030.
Regional, Standardised (Quantec). (2015, October 28). Retrieved from Easy Data by Quantec: http://quanis1.easydata.co.za/
The Department of Trade and Industry. (2014). Industrial Policy Action Plan. Pretoria: The Department of Trade and Industry.
Waterberg District Muncipality. (2005). Agricultural Development Strategy.
Waterberg District Muncipality. (2014). Waterberg Distric Municipality LED .
Waterberg District Municipality. (2014). Waterberg District Muncipality Spatial Development Framework Review.
Waterberg District Municipality. (2015). 2015/16 Integrated Development Plan.
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Annexure A
Agriculture Service providers
The table below presents a list of agriculture service providers in different area in South Africa.
1: INFORMATION GROWING TECHNIQUES AND PROBLEMS
Tomato Producers Organization, Pretoria Plant & Quality Control Export imports of plants SA Flower Growers Association and export SANSOR SA National Seed Organization Potato South Africa Association for Vegetables under protection 2: CHEMICALS & TO CONTROL PESTS AND DISEASES
ARC Plant Protection Chemical spraying and equipment information AG - Chem Africa Plaas Chem: Chemicals - Herbicides Avonrod: Plant Protection - Chemicals Zeneca: Chemicals - insects/diseases/herbicides Bayer: Chemicals - Insects/diseases/herbicides/foliar sprays - stickers Sasol Nutro Agricultural Services Sanachem: Chemicals-Insect/diseases/herbicides Novartis: Chemicals-Insect/diseases herbicides Multispray: Chemicals-Insect/diseases/herbicides Syngenta: Chemicals-Insect/diseases/herbicides foliar sprays - stickers Du Pont: Chemicals-Insect/diseases/herbicides BASF Chemicals ANSA Network SA Philagro- Chemicals 3: IRRIGATION EQIUPEMENT DRIPPER SYSTEMS - PRESISION DOSING
Water Pleasure Dosmatic SA: Dripper systems-Injectors Willgrow irrigation-drip-fertigatin Wet wall equipment Technologies A&J Plastics 4: SPRAYING/IRRIOGATION PUMPS, IMPLEMENTS, TRACTORS AND EQUIPMENT Farmer Products, Pretoria Multispray (Pty) Ltd Rovic and Leers Agric machinery/ spraying/ equipment Grundfos- Complete range of water pumps Michigan - Tractors 5: SEEDLING MEDIUMS Bark Enterprises Trollip Coir Substrate Suppliers Multi Media Chemserve Perlite van Niekerk
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Hygrotech Seed Mandoval Vemiculite 6: PRORECTIVE CLOTHING WHEN USING CHEMICALS North Savety A - Chem Africa 7: FERTILIZERS Aquasol Nutrients Agrofert Ocean Agriculture Foliar prays/stickers/wetners Fleuron (Pty) Ltd Kynoch / Hydro Fertilizers Omnia Fertilizers - Also leaf analysis Organic Agricultural Association Conatec (Pty) Ltd Grow How Ag - Chem SA Haifa fertilizers 8: SEEDS SEEDLINGS (GRAFTED SEEDLINGS) AND NURSERIES Mayford Seed, Lanseria (Head Office) Taylor Seeds, Pretoria Hygrotech Seed Also seed trays, sterilized seedling medium/ foliar sprays vermiculite etc. Klein Karroo Seed Asera Agricultural Products (Also flower / bulbs) Starke Ayres Dicia farms distrubators for Rijk Swaan McDonald Seed, Pietermaritzburg Film Flex, New Germany Plantforum Pretoria (Seedling Nurserie) Ferax Seeds Conatech (Pty) Ltd Seedling Growers Association of SA Bouquet Garni Nursery (Herbs) Straathoff's Seedcor. Also agents for Farrax seed Premier Seeds Kameelfontein Organic (Seedling Nursery) Voorspoed Seed, City Deep Spoedwell SA. G.G.A S A Garlic Grower Association Hishtil SA Ltd Grafted seedlings 9: SWEET POTATO VINE GROWERS AND POTATO TUBER DISEASE FREE MATERIAL AND EQUIUPEMENT Sweet potato vines Sweet potato vines. Hoedspriut Sweet potato vines. Paarl RSA Potato. Certified seed pockets, lables Unicom. Potato lifters, sorting machines ect Potatoes South Africa-Certified Potato Tubers First Potato Dinamics seed potatoes Cape Agri - certified potato tubers 4155 Callaway Potatoes - Certified potato tubers GWK Limited. Potato certified tubers
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Wes Vrystaat Aartape l Moerkwekers Dormas Potatoes Equipment Aartapeinetwerk Siud Africa (ANSA) Turner Potato lifters Ivanhoe. Seed potatoes 10: WATER AND SOIL ANALYSIS ARC - Institute for Soil, Climate and Water Central Analytical Laboratories Potchefstroom University Pieter & Martie de Goede 11: SHADE NETTING AND CONSRUCTIONS Knittex, Randfontein Plus Net (Netting for all) Alnet, Olifantsfontein Landpak Agrishade Corrie Appelgryn Shade Net Construction 12: PLASTIC PLANTING BAGS AND PACKAGING MATERIAL Naboom Plastics Greamark. Planting bags, plastic cheats frost covers Gundle Plastics - Hydrolines, Plastic sheets. Dam lining Transpo Packaging Material C.W Plastics Croplast consumer packaging - seed trays Goldpack Handing and packaging products Chairman organic SA. Tim Jackson Producer 13: PLASTICS TUNNELS CLIMATE CONTROL HEATING COOLING SYSTEMS AND ASSESORIES
Chris Hever Tunnel constructions and installations
Dynastrad tunnels and installations Haygrove tunnels and installations Gundle Plastics API - Dam / Hydroponic liners Conskilde Heating and installations Climax - Erect & Fix greenhouses Combustion Ethnology - Oil/Gas & Boilers Richeal tunnels and installations Rhino Plastic & Tunnels and installations Vegtech and installations Willgrow - Plastic sheeting - Shade net houses Packaging material Geo Plastics all Hydroponic equipment Dicla Farm and Seeds Munters. Climate control - tunnels and installations Green Zone - Greenhouse equipment Venturatec Exhaust and circulation fans Well Pith and installations Aquilo Africa. Geenhouse without diseases 15: MARKET AND AGENTS Fresh Produce Market Mark agents - Tshwane Market Botha and Roodt Boere Trust
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Du Plessis and Wolmarans Noodvaal Edms Protea Mark agents Citifresh mark agents
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