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Presentation on Recapitalisation and Development Programme 4 February 2015 SA SUGAR INDUSTRY.

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Presentation on theme: "Presentation on Recapitalisation and Development Programme 4 February 2015 SA SUGAR INDUSTRY."— Presentation transcript:

1 Presentation on Recapitalisation and Development Programme 4 February 2015 SA SUGAR INDUSTRY

2 Where we are located

3 Industry structure - representation LOCAL GROWER COUNCILS Tongaat Hulett Sugar Ltd 4 Mills) Illovo Sugar Ltd (4 Mills) TSB Sugar RSA Ltd (3 Mills) UCL Company Ltd (1 Mill) Umfolozi Sugar Mill (Pty) Ltd (1 Mill) Gledhow Sugar Company (Pty) Ltd (1 Mill) SA SUGAR COUNCIL ASSOCIATION GROWERS MILLERS SA CANE GROWERS’ ASSOCIATION SA SUGAR MILLERS’ ASSOCIATION

4 Contribution to the economy The Sugar Industry on average represents: Rural based industry and the key economic driver in many small towns in KwaZulu-Natal and Mpumalanga Sugarcane is the second largest South African field crop by gross value. Sugarcane production represents 17.4% of total gross annual field crop production value. (DAFF: Abstract of Agricultural Statistics – 2012)

5 Land reform status Most progressive commodity terms of land transfers hectares transferred (22% of freehold commercial land under sugar cane production). Black ownership will exceed 50% as the pace of restitution gains momentum.

6 Why growers need support ? KZN

7 Participation in the RADP Millers responded to public tender process in Appointed as Strategic Partners for specific projects. Policy changes thereafter, resulted in the accreditation of Millers as Mentors. Service level agreements signed with each participating Miller. Project specific tripartite agreements signed with DRDLR, Miller and the Grower. Joint bank accounts opened for each project so that the grower and strategic partner are in control of the funds.

8 A partnership model DRDLR

9 Implementation of the RADP No mentorship fees charged. 100 % of funds reaches the farm gate. Agricultural project officers deployed to support growers. On farm support to the grower. Systems in place for approvals of quotations, payments and accounting of funds. Regularisation of the farming entities = VAT registration, SARS compliance, etc.

10 Implementation of the RADP 177 projects being recapitalised. Generally, growers have been committed to programme. No proxity growers in programme. Retention savings for farmer to cover operation costs for the next season. Quarterly performance review meeting between DRDLR, Strategic Partners, and participating growers.

11 Implementation support Co-ordination arrangements in place: Land Reform Development Committees at regional level. Industry provides training: on-farm practical training for the grower and farm workers, support by business and financial management training. Specialist extension support by SASRI. Business plans (143) and production guidelines, business management support. Co-ordination arrangements in place: Land Reform Development Committees at regional level. Industry provides training: on-farm practical training for the grower and farm workers, support by business and financial management training. Specialist extension support by SASRI. Business plans (143) and production guidelines, business management support.

12 GROWER DEVELOPMENT FUNDING FACILITY Implementation support Governance Support Project being implemented. Industry has invested R16 million in the project to stabilise large restitution projects – building governance systems, business training. Sugar Industry Trust fund for Education: Established in 1965, assisted students from rural communities with bursaries, build classroom, installed boreholes, and supports various interventions at a school level – maths and science. Governance Support Project being implemented. Industry has invested R16 million in the project to stabilise large restitution projects – building governance systems, business training. Sugar Industry Trust fund for Education: Established in 1965, assisted students from rural communities with bursaries, build classroom, installed boreholes, and supports various interventions at a school level – maths and science.

13 Funds received and impact Miller Total funds received (R) Total funds spend on vehicles, equipment, infrastructure (R) Totals funds spend on ratoon management (R) Total hectares ratooned Total funds spent on cane establishment (R) Total hectares established Number of black contractors Permanent jobs Seasonal jobs Umfolozi 27,634, ,771, ,339, ,523, Gledhow 70,846, ,376, ,819, ,650, THS97,045, ,978, ,400, ,286, Illovo80,972, ,012, ,763, ,797, Tsb 50,008,69720,343, ,169, ,586, TotalR ,139, ,323, ,258,

14 Impact: enterprises, jobs, hectares

15 Impact: tonnage delivered

16 Grower training and development

17 Impact of the RADP

18 Received R3 million: replanting, ratoon management, irrigation infrastructure for bananas. Resulted in a 61 % increase in production. 9 permanent jobs and 70 seasonal jobs created. Hosted her own youth day programme in 2013 on her farm.

19 Impact of RADP Glendale Valley ( KwaDukuza / Illembe) Development has been driven by local leadership: Nkosi Qwabe, community. Industry provided technical support. Holistic approach, with sugar cane primary crop = 730 hectares under cane and under irrigation, 10 hectares under cash crops, housing and electrification underway, R30 million annually into local economy, 38 permanent and 225 seasonal jobs. Plans for commercial livestock, energy / commercial centre to be built by ENGEN. Glendale Valley ( KwaDukuza / Illembe) Development has been driven by local leadership: Nkosi Qwabe, community. Industry provided technical support. Holistic approach, with sugar cane primary crop = 730 hectares under cane and under irrigation, 10 hectares under cash crops, housing and electrification underway, R30 million annually into local economy, 38 permanent and 225 seasonal jobs. Plans for commercial livestock, energy / commercial centre to be built by ENGEN.

20 RADP challenges Farm size versus sustainability production finance. Most successful where growers did the contracting themselves. Beneficiary selection (good business acumen in addition to agricultural expertise. Dedicated on farm supervisor is key to sustainability. RADP funds to focus on infrastructure and cane development. Farm size versus sustainability production finance. Most successful where growers did the contracting themselves. Beneficiary selection (good business acumen in addition to agricultural expertise. Dedicated on farm supervisor is key to sustainability. RADP funds to focus on infrastructure and cane development. What factors are having an impact on the success or failure of land reform growers on the North Coast?

21 RADP challenges Delayed transfer of funds. Funds coming late make it impossible to spend within 120 per policy (if planting days as season has passed. Loss of invoices and reports between Province and National. Too many Committees in approval process. Alignment between Restitution and Land Reform branches to ensure that restitution projects are allocated funding.

22 Joint planning in October/ November each year for next season. Transfer of funds by June of each year. Modernise the reporting system – electronic invoicing and project reporting systems. Registration of Notarial Deeds to prevent freehold growers to sell farms after recapitalisation. Alignment of services of various Branches – seamless support Despite these challenges – industry is most appreciate of support, and we are improving the programme and systems Joint planning in October/ November each year for next season. Transfer of funds by June of each year. Modernise the reporting system – electronic invoicing and project reporting systems. Registration of Notarial Deeds to prevent freehold growers to sell farms after recapitalisation. Alignment of services of various Branches – seamless support Despite these challenges – industry is most appreciate of support, and we are improving the programme and systems What needs to be done? operational

23 Commodity based approach: formal agreements with the commodity – oversight of strategic partners, support to farmer, evaluation of business plans, monitoring of impact. Move to a loan /grant financing model using DFI’s or Commodity Financing Vehicles. What needs to be done? strategic JV between Liguguletfu Co operative (744 individual black growers) and Tsb Sugar. 10 different loan products in order to fund everything from working capital to Irrigation Infrastructure. Injected R982 million into the emerging grower market in Mpumalanga since its inception. JV between Liguguletfu Co operative (744 individual black growers) and Tsb Sugar. 10 different loan products in order to fund everything from working capital to Irrigation Infrastructure. Injected R982 million into the emerging grower market in Mpumalanga since its inception.

24 Thank you


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