REVITALIZATION OF THE AGRICULTURE AND AGRO-PROCESSING VALUE CHAIN By Department of Agriculture, Forestry and Fisheries Department of Rural Development and Land Reform 24 JUNE 2015

INTRODUCTION The purpose is to update the Portfolio Committee on Rural Development and Land Reform on the status of the State of the Nation Address (SONA) priorities on Revitalization of agriculture and agro-processing value chains and Agri-parks. the integration of Agricultural Policy Action Plan (APAP) and Agri-parks.

Contents Strategic Overview Governmental initiatives 3

Key Growth Constraints Strategic Overview GROWTH TARGET: Annual increase of 0.5% (Current contribution to GDP: 2.5%) Current Status (Jun.15’) Index of production output in agro- processing, 2014-15 unchanged 103.9 (unadjusted) Gross value add for Agriculture; Forestry & Fisheries increased by 5.6% in 2014. Total jobs in Agriculture increased by 183 000, between 2014 and 2015 (total of 891 000) \ 2019 Target Growth increase of 2.5% (0.5% p.a.) Percentage change in Gross Value Add of 10% (2% p.a.) Job increase of 500 000 (100 000 p.a.) and 1 million by 2030 Challenges Key Interventions 1. High Inputs Costs [animals and other products (11,3%), Animal feed 10,2%) of total expenditure] 2. Competing land use 3. Anti competitive behaviour as a result of growing market dominance 4. Climate change: drought, floods, fires 1. Agri-Parks 2. Fast Tracking Land Reform 3. Producer Support 4. Nine (9) Strategic Value Chains 5.Research and Innovation 6.Market Access and Trade Dev Key Growth Constraints Enablers 1. Policy Certainty 2. 122 million ha of land (10% arable of which 1.5% is high potential) 3. Agriculture and agro-processing labour intensive 4.Growing demand for food and agro-products 4

Strategic Overview… Multiplier Effects R1 investment on increase in GDP R1 million investment on job creation R1 investment on export receipts R1 investment on fiscal revenue 5

Contents Strategic Overview Government initiatives: - No critical challenges , and on schedule or completed. - No critical challenges, but behind schedule. - Critical challenges, and behind schedule - Undetermined 6

Target or catalytic effect Agri-Parks KEY DECISIONS Target or catalytic effect CHALLENGES PROPOSAL Technical capacity at District level Project Management Support Unit established Fast Track regulatory approvals Utilise multi-sectoral team established to deal with EIA’s; water approvals; etc to reduce time Strategic Scope: Crowding in private sector investment in agro-processing; local economic development and job creation Target (2016/17) Establish Agri-Parks in 44 districts Jobs target (2019) Detailed calculations will be based on business plans per site Gross Value Add (2019) Free State Agri-Parks PROGRESS TIME LEAD: DRDLR Activity Start date End date 36 of the 44 districts have confirmed sites Feb-15 May-15 Prototypical agri-park completed; evaluation criteria developed May 2015 36 of the 44 districts have confirmed the sites; 7

Prototype Agri-Park Completed Agri-Parks PROGRESS TIME LEAD: DRDLR Prototype Agri-Park Completed Activity Start date End date Farmer and stakeholder consultation Feb 2015 June 2015 Business plans being developed (agro processing; market access) (all Provinces) August 2015 Production plans and capacity building plans underway for all sites (quickwin projects fully costed); projects started to increase production July 2015 Infrastructure plans; designs; approvals; construction (commence August 2015); construction started in NW May 2015 Market Access DAFF to lead in opening up market opportunities, and providing market access. Provinces busy with market plans both domestically and internationally September, 2015 Training and capacity building DAFF to lead in providing all required training, both through extension services, and private public partnerships with the private sector. April 2015 March 2016 36 of the 44 districts have confirmed the sites; 8

36 of 44 Agri-Park sites selected Province Site (district municipality) Eastern Cape Ncora (Chris Hani), Mtata (OR Tambo), Matatiele (Alfred Nzo), Lady Grey/ Sterkspruit (Joe Gqabi), Butterworth (Amatole) Free State Springfontein (Xhariep), Phuthaditjhaba (Thabo Mofutsanyane), Thabanchu (Mangaung), Wesselsbron (Lejwelephutsa) Gauteng Randfontein (West Rand) Limpopo Tzaneen (Mopani), Groblersdal (Sekhukhune), Modimolle (Waterberg), Aganang (Capricorn), Nwanedi (Vhembe) KwaZulu Natal KwaDukuza (Ilembe), Umgeni LM area (Umgungundlovu), Horseshoe Farm -Izingqoleni area (Ugu) Dundee (uMzinyathi), Vryheid (Zululand), Dannhauser (Amajuba), Ebutha farm (state land), Umzimkhulu (Harry Gwala), Eshowe (Uthungulu), Okhahlamba LM area (uThukela), Mkhuze (Umkhanyakude), KwaDukuza (Ilembe) Mpumalanga Bushbuckridge (Ehlanzeni); Mkhondo (Gert Sibande; JS Moroka (Nkangala) Northern Cape Kuruman (John Toalo Gaetsewe), Springbok (Namakwa) North West Springbokpan (Ngaka Modiri Molema), Vryburg (Ruth Segomotsi Mompati), Makapanstad (Bojanala) 9

Fast tracking Land Reform KEY DECISIONS Target or catalytic effect CHALLENGES PROPOSAL Protracted process of acquiring land in variuos provinces Expedite the completion of revising business process of acquiring land to established uniformity across provinces Strategic Scope: New policy framework for Land Reform piloted and finalised. Agrarian transformation; Target (2019) 50:50 Policy Framework piloted with 10 properties; Production Target (2019) 2 million hectares of strategically located high-value agricultural land acquired for key APAP commodities PROGRESS TIME Activity Start date End date 100 submissions received for piloting 50:50 policy, from which 10 properties will be selected. February, 2015 September, 2015 Of the 242 074 ha, 100% are acquired, and 100% are transferred. April 2015 March 2016 LEAD: DRDLR 36 of the 44 districts have confirmed the sites; 10

Improving Producer Support 11 KEY DECISIONS Challenge Proposal Ineffective models of producer support. Absence of uniform criteria and definitions. Unable to effectively plan, invest or measure smallholders A new policy and model for Producer Support (with particular emphasise on smallholder) supported by a review of the existing financial instruments Slow pace in the issuing of water licences Proposed Incentive Programme for Climate Smart Agriculture (CSA) remains unfunded. To submit a list of strategic projects to DWS for fast tracking To submit a proposal to the Green Fund. Competing demands of land PDALF & SPLUMA to deal with protection of Agric. Land. In consultation with DMR & DRDLR, to finalise how deal with co-existence with mining. Target or catalytic effect Strategic Scope: South Africa’s Producer Support Estimate is currently 3,2%, versus 4,6% for Brazil, 7,1% for the US, and 18,6% for the OECD average. Improved producer support will create an enabling environment improve comparative advantage. Target (2019) To increase Producer Support Estimate from 3,2% to 5%. PROGRESS TIME Activity Start date End date Comprehensive Producer Support Policy Framework & Integrated Agriculture Development Finance Policy, finalised for cabinet submission. Feb 2015 Aug. 15 Implementation of AET strategy for training of smallholder farmers. Aprl-15 Mar-16 Cofimvaba agricultural school revitalisation (DST funded) Total number of farmers supported through CASP and Ilema: ~ 60 943 farmers, R2.1 bil LEAD: DAFF 36 of the 44 districts have confirmed the sites;

Break Down of National Training Programme   Province Beneficiaries for Credit Bearing Training Beneficiaries for Non Credit Bearing Training Total Beneficiaries To Be Trained Eastern Cape 310 1930 2240 Free State 2010 855 2865 Gauteng 535 2770 3305 KwaZulu Natal 765 196 961 Limpopo 9789 71 9860 Mpumalanga 3249 Northern Cape 1718 North West 350 Western Cape 140 2924 3064 TOTAL 13 899 13 713 27 612 12

Target or catalytic effect Production: Poultry KEY DECISIONS Target or catalytic effect Challenge Proposal Ready-to- roll projects blocked Political intervention in LP Project: 2000 jobs + revitalise disused broilers Import (dumping) e.g., AGOA Provinces to cluster projects e.g. 5 GP poultry projects into bankable poultry High input costs PPP with DTI, EDD around IDC investment in crushing facilities. Agri-Park to deal with high input costs Strategic Scope: To contribute to 1 million hectares of under-utilised land in communal areas To contribute to 2% annual growth in Gross Value Add in Agriculture. Target (2019) Add 14 481 jobs to the current 107 784 jobs through increased poultry production of 663,500t by 2019. Add 14 173 jobs through expansion of 238 500 hectares of soya production. Increased contribution to gross value of Agriculture GDP from R32.9 bil (21.8%) to 41.13 (25%) by 2019. PROGRESS TIME LEAD: DAFF Activity Start date End date Private Sector Invest: To plant 687,300 hectares, producing 942,850 tons soya beans (↑36,7%) Apr-15 Mar-16 Public Sector Invest. Land under acquisition = 1 536ha Hectares of soya:3 647ha[-44,053ha] [Production in tons and total value add to be determined ] Limpopo: Lebowakgomo Chicken Abattoir 36 of the 44 districts have confirmed the sites; 13

SOURCE: … 14

Target or catalytic effect Production: Red Meat KEY DECISIONS Target or catalytic effect Challenge Proposal 20% growth in consumer demand, met by 10% imports Import replacement through the commercialisation of communal herds Veterinary services inadequate and I in accessible Funding proposal to implement OIE gap report recommendation Commercialisation of communal herd owning 40% of national herd. Buy-in and PPP with traditional authorities for effective expansion of the communal herd. Strategic Scope: To contribute to 1 million hectares of underutilised land in communal areas To contribute to 2% annual growth in Gross Value Add in Agriculture. Target (2019) Targeting 75 448 jobs (41 100 jobs in beef and 34 348 jobs for mutton) translated from expanded production of 286 200t (BFAP). PROGRESS TIME LEAD: DAFF Activity Start date End date Private Sector Invest (2014): No. of livestock: 13,896 cattle (↑0.25%); 24,048 sheep (↓1.96%). April 2015 March 2016 Public Sector Invest. Land under acquisition = 11 890ha (size of farms) Total hectares for livestock production = 1.3 million ha (farm size) [Production output in tons and total value add to be determined] 140 Veterinarians will be deployed by Q4 Free State: construction of the 14 animal handling facilities 36 of the 44 districts have confirmed the sites; 15

SOURCE: … 16

Production: Wheat and other crops KEY DECISIONS Target or catalytic effect Challenge Proposal Import 50% of wheat . Progressive replacement of wheat by canola and soya Research on suitable wheat cultivars 40% of input cost is from fertilizer. DMR, DTI and DAFF to review feasibility of SA becoming self reliant in fertilizer and in agricultural mechanisation. Strategic Scope: To contribute to 1 million hectares of under-utilised land in communal areas To contribute to 2% annual growth in Gross Value Add in Agriculture. Target (2019) To increase production from 1,2 mil tons by an additional 200 000 tons by 2019. To create an additional 8,000 new jobs to the existing 28,000 by 2019. To expand areas planted by an additional 61,000 hectares . PROGRESS TIME Activity Start date End date Private Sector Invest (2014): The sector is projected to plant 481,300 hectares of wheat (↑1% ). Apr-15 Mar-16 Public Sector Invest. Total hectares for Wheat (CASP and Ilima Letsema) = 150 hectares (farm size) [- 96,110ha p.a] April 2015 March 2016 LEAD: DAFF [- 96,110ha]36 of the 44 districts have confirmed the sites; 36 of the 44 districts have confirmed the sites; 17

SOURCE: …

Production: Fruit and Vegetables KEY DECISIONS Target or catalytic effect Challenge Proposal SPS matters (CBS) 19 Fresh Produce markets derelict Infrastructure investment in NFPM in collaboration with CoGTA Strategic Scope: To contribute to 1 million hectares of under-utilised land in communal areas To contribute to 2% annual growth in Gross Value Add in Agriculture. Target (2019) Currently, over 50% of fruit produced is exported, and less than 20% of fruit and 46% of vegetables are sold through National Fresh Produce Markets (NFPM). To increase the output of NFPM by 10% and exports by 20%. Western Cape: Hortgro tree planting project – Ceres PROGRESS TIME LEAD: DAFF Activity Start date End date Private Sector Invest: To put 64 510 ha under production, with an expected export volume of 1,7 million tons, a total production ~2.6 million tons. Apr-15 Mar-16 Public Sector Invest. Total hectares under production for Fruit and Vegetables = 31 059 ha (farm size) Orange River Vineyard Project, female smallholders, 500ha Wolfberg Fruit Processors – Agri Hub (DST) [- 96,110ha]36 of the 44 districts have confirmed the sites; 36 of the 44 districts have confirmed the sites; 19

SOURCE: …

Target or catalytic effect Production: Sugar KEY DECISIONS Target or catalytic effect Challenge Proposal Land claims To encourage that all sugar plantations under land claims are kept under sugar production through strategic partnerships. Strategic Scope: To contribute to 1 million hectares of under-utilised land in communal areas To contribute to 2% annual growth in Gross Value Add in Agriculture. Target (2019) Expand small scale grower production in communal areas by 28 655 hectares by 2019 8000 jobs preserved, 34 303 new jobs created through the renewable energy and biofuels interventions. 2% biofuels penetration about 400 million litres per annum) into national liquid. PROGRESS TIME LEAD: DAFF Activity Start date End date Private Sector Invest (2015): The sector is projected to plant 3 900 hectares of sugar cane and 18 million tons of cane crushed. April 2015 Mar-16 Public Sector Invest. Total hectares under sugarcane production = 2 957 hectares (farm size) - ↓2776ha p.a. Production in tons to be determined March 2016 [- 96,110ha]36 of the 44 districts have confirmed the sites; 36 of the 44 districts have confirmed the sites; 21

Target or catalytic effect Production: Wine KEY DECISIONS Target or catalytic effect Challenge Proposal Greatest's contributor to agricultural exports/trade but is the least transformed sector PPP agreement, and charter for the industry to address transformation Strategic Scope: To contribute to 1 million hectares of under-utilised land in communal areas To contribute to 2% annual growth in Gross Value Add in Agriculture. Target (2019) There is currently 99 463 ha under vineyard production and there is a potential to increase by 4 707 ha by 2019. Wine industry employs 289 151 people and will expand by 10 000 to a total of 282 625 by 2019. Wine industry contributes R30 billion to South African GDP there is a potential to increase up to R32 billion in 2019. Western Cape: De Goree (Robertsons) PROGRESS TIME Activity Start date End date Private Sector Invest (2014): The sector is projected to plant a little over 100,000 hectares of vineyards, a total of 2 000ha of new plantings, and about 1.5 million tons of wine grapes. April 2015 March 2016 Public Sector Invest: Total hectares: 1 544 ha (farm size) RECAP and Enterprise Dev. Production in tons to be determined LEAD: DAFF [- 96,110ha]36 of the 44 districts have confirmed the sites; 36 of the 44 districts have confirmed the sites; 22

23 SOURCE: …

Technology Dev. and Innovation 24 KEY DECISIONS Target or catalytic effect Challenge Proposal Under investment (-0.1%) in R&D Capacity: no’s, expertise Infrastructure Inability to apply/integrate innovation Aging senior researchers Proposal (cost benefit anaflysis) for investment in the research and innovation value chain Strategic Scope: To contribute to 1% annual growth in Gross Value Add in Agriculture. R&D agenda linked to key sectoral interventions and Value-chains: Target (2019) 2–3 % of Agriculture GDP invested in R&D annually An effective integrated sector R & D governance system Critical mass of competent and appropriately skilled and placed researchers and extension personnel. PROGRESS TIME Kwazulu Natal: Post-graduates in Agric. Engineering at the Univ. of Kwazulu Natal Activity Start date End date Status Model for R&D governance structures developed with clear TORs completed Apr-15 Mar-16 RFP for R&D projects issued 15 post graduates funded (DAFF) and 135 students (post graduate + interns) by DST E-agriculture - DST-funded initiative at ARC. Manufacture and distribute WEMA drought resistant maize seed LEAD: DST [- 96,110ha]36 of the 44 districts have confirmed the sites; 36 of the 44 districts have confirmed the sites; 24

Market Access and Trade KEY DECISIONS Target or catalytic effect Challenge Proposal 75% of local procurement under discussion between National Treasury and Department of Small Business Development DAFF to apply for designation of certain products for smallholders. Greater synergy between IPAP and APAP IPAP and APAP 2016/17 to determine common commodities to support and strategic approach. Strategic Scope: To increase market access for agriculture, forestry and fisheries products, both domestically and internationally (increased export trade and import replacement) Equitable and active participation by SMMEs and smallholders across the value chain. Target (2019) 200 GAP certified smallholders Implementation of 75% local procurement specific to smallholder producers. PROGRESS TIME Activity Start date End date SADC-EU-EPA SA will be allowed, for the first time to export 150 000 tons of sugar into the EU duty-free on an annual basis. Wine will be allowed into EU on a duty free basis, up from 47 million litres to 110 million litres. Tripartite Free trade area (COMESA; SADC and EAC) 20 Farms are identified for final audits and SA-GAP certification. Negotiations initiated with Fort Cox College to expand existing MOU to offer record keeping workshops nationally to support for PPECB’s SA-GAP certification programme. April 15’ March 16’ LEAD: DTI Tripartite Free trade area (COMESA; SADC and EAC) SACU has exchanged Tariff Offers with Kenya, Tanzania, Uganda, Burundi & Rwanda]. [- 96,110ha]36 of the 44 districts have confirmed the sites; 36 of the 44 districts have confirmed the sites; 25

RECOMMENDATIONS It is recommended that the Portfolio Committee Take note of the status of the SONA priorities on Revitalization of agriculture and agro-processing value chains and Agri-parks. Take note of the integration of APAP and Agri-parks.

KE YA LEBOGA THANK YOU