"South African agricultural, forestry and fisheries sectors will take a leaf from lessons in the past and will aggressively invest in agro-infrastructure, value-chain technical support especially for small and medium enterprises and intensify research and development," Minister Tina Joemat-Pettersson, the South African Minister for Agriculture, Forestry and Fisheries said during a panel discussion at the World Economic Forum in Dar es Salaam today.
Referring to potential growth opportunities, the minister said that South Africa has learnt lessons from missed opportunities that could have been exploited successfully resulting in the further growth of agricultural, forestry and fisheries industries.
Minister Joemat-Pettersson outlined that the current levels of investment in agricultural capital infrastructure and productive assets need to be boosted particularly projects such as dams, irrigation, technology and pipelines to keep up with the population growth and consumer demand.
The focus will also be on sustainable models such as the revitalisation of irrigation schemes. The South African models where a consolidation of one hectare plots are under one irrigation method as well as a common production and marketing management company co-owned by land owners and a strategic investor, have proven to be successful ventures and valuable lessons have been learnt.
While the farmers bring land, labour and governance structure, the government brings funding and capital investment. The strategic investor brings in financial or business management and markets for the targeted food crops.
Using the Limpopo example of the revitalisation of irrigation schemes in South Africa since 2004, Limpopo targeted over 19 000 hectares of irrigation land for capital infrastructure investment, irrigation technology and other appropriate services.
As a result, it has stimulated production and supply contracts with food processing and packaging companies. This particular example, involved the production of potatoes that are processed and packaged by Simba. From this, producers now run enterprises with stabilised and sustained incomes, expanded employment opportunities, increased productivity of the land, increased production of commodities, improved time management by local farmers, rural economic vibrancy and optimisation of water resources in the province.
In the years to come, further allocations in resources will strengthen infrastructure investment and investment in skills development involving agricultural engineers.
"Government will pay more attention to a commodity value chain approach for smallholder development trying to respond to the gap left after the demise of the marketing control boards," Joemat-Pettersson said adding that the assumption that the developed commercial sector will be the pull factor for South Africa's smallholder farming did not happen due to inherent interests of existing players.
The ring-fenced enclosed system simply just shifted its attention to consumers through corporate manufacturers and retail outlets. Minister also added that the application of vertical integration in commodities would always result in better returns for farmers.
She explained: "A group of commodity producers is assisted to acquire technology to add value to the product in question. The government provides financial support, technical support and management of the facility for a given time frame (5 to 15 years). Producers provide land, labour and institutional structures".
In this instance, the ownership of the project resides with the state until the break-even point of the project, thereafter; the project is finally handed over to the targeted commodity organisational structure for further business development. This model worked well in both the Northern Cape Rooibos processing plant (Bokkeveld Rooibos) and Limpopo Black Tea processing plants (Midi tea brand).
Rooibos is South Africa's natural tea that has branded itself over the years. The tea's caffeine free characteristics make it a highly sought-after product. This approach requires that a brand product be the final product that is sold to retailers under the same conditions as any other consumer product. Here the state assists in the establishment of a company that will consolidate the power of smallholder farmers to ensure that they benefit adequately.
The other example relates to wines from South Africa that are sold world-wide under brand names. They compete globally with French and other international brands. Today, South Africa sells more litres of wine in the United Kingdom than most wine producing countries.
Furthermore, the commercialisation thrust (produce to sell or trade with the world and earn forex) based on the commodity value chain approach will have to be relooked and if necessary, re-diverted.
In her address, Joemat-Pettersson further stated that "the initial Land Reform programme focused on a number of hectares reclaimed and less on ensuring that farms remain as going business concerns after restitution".
This she said resulted in production that was not based on consumer needs (manufacturers, processors and value added businesses) and has proven a disincentive for smallholder farmers as market prices vary considerably from season to season.
On time investment in food processing technology, the minister said that food processing is a science based process and consumer behaviour is greatly influenced by the "convenience" of food preparation. Well prepared and packaged food products are attractive to both retailers and consumers because of the "convenience", safety, presentation, shelf life offered and price competitiveness.
The minister said that research and development is also receiving urgent attention by the government. Similar to capital infrastructure, the level of investment in research and development in agriculture has declined over the years.
Search for new products, investment in biotechnology and the management of genetically modified organisms continue to divide nations and trading block members. The level of innovation becomes affected when the quality and number of local scientists decline and dependence on outside scientists and research increases.
Channelling of adequate funding through structured internal funding partnerships and institutions such as the African Development Bank, Industrial Development Corporation (IDC) and other funding institutions is necessary. Most of the recent successful economies had less funding from the International Monetary Fund (IMF) and International Finance Corporation.
The World Economic Forum (WEF) is hosted by Africa under the theme: "Rethinking Africa's Growth Strategy".
For more information contact:
P Tsotso Sehoole
Tel: 012 319 6043 or 7317
Fax: 012 319 7858
Cell: 083 265 8728
E-mail: CCO@daff.gov.za
Issued by: Department of Agriculture, Forestry and Fisheries
6 May 2010
Source: Department of Agriculture, Forestry and Fisheries (http://www.daff.gov.za/)
