PRESENTATION ON THE DISBURSMENT OF FUNDS FROM THE AGRIBEE FUND TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES BY DAFF AND AGRIBEE CHARTER COUNCIL 05 NOVEMBER 2013 CAPE TOWN

2 1.PURPOSE 2.BACKGROUND 3.KEY OBJECTIVES OF THE FUND 4.DIFFERENCE BETWEEN THE AGRIBEE FUND AND OTHER FUNDING PROGRAMMES OF THE DEPARTMENT 5.CRITERIA FOR FUNDING 6.EXCLUSIONS 7.CURRENT BALANCE OF THE FUND 8.CHALLENGES 9.CURRENT PROCESS FLOW 10.PROPOSALS PRE-SCREENED TO DATE 11.CONCLUSION CONTENTCONTENT

3 PURPOSEPURPOSE 1.To brief Members of the Portfolio Committee on Agriculture, Forestry and Fisheries on the implementation of the AgriBEE Fund

4 1.AGRI-BEE Fund is a support intervention emanating from empowerment framework to enable participation of businesses owned by Africans, previously excluded from mainstream economic activities 2.In terms of BBBEE Act, the codes of Good Practice and the AgriBEE Charter Empowerment is considered and measured against seven (7) elements, i.e. Equity ownership Management and Control Employment Equity Skills Development Preferential Procurement Enterprise Development Rural Development, Poverty alleviation, Corporate Social Investment 3.Annual allocation to the fund is R35million, with the balance currently at R231 million. BACKGROUNDBACKGROUND

5 THE NEW GENERIC SCORE CARD 1.Elements of Generic Score card: Ownership Management and control Skills Development Enterprise and supplier development Socio Economic development The AgriBEE Charter will be aligned to the new codes which come into effect within the twelve months of publication of the codes of October 2013.

6 1.To support the economic empowerment and successful entry of black people into the Agricultural, Forestry and Fisheries Sectors, thus ensuring that there is an increased number of black people who own, manage and control sustainable enterprises within the sector. Thus ensuring improved participation by designated groups as stated in the AgriBEE charter. 2.Promote entry and participation of black people in the entire agriculture, forestry and fisheries value chain through provision of funding for: –Equity funding –Enterprise development »Agro-processing and Value addition KEY OBJECTIVES OF THE FUND

7 THE AGRIBEE FUND PRODUCTS 1.For Equity ownership and interest acquisition, the funds shall be utilized across sector value chains as follows: New equity deals – the empowerment of designated groups who are starting new projects which would result in their equity ownership. Increasing Equity Ownership and interest Acquisition – For funding increased equity share in profitable businesses in the sector. 2.Start-up Agro Processing/Value adding enterprises: clusters/Cooperatives, incubators The Fund will avoid duplication with other government programmes, e.g. Land reform, CASP, MAFISA, etc.

8 DIFFERENCE BETWEEN THE AGRIBEE FUND AND OTHER FUNDING AVAILABLE WITHIN DAFF AgriBEE Fund MAFISA Equity Agro-processing and value adding CASP On/off farm infrastructure and production inputs Production inputs

9 CRITERIA AND PRE-REQUISITES FOR FUNDING 1.Applicants must : Be black South African with valid identity documents Be a legal entity (Certificate for registration/incorporation is required) Contribute own contribution of 10% for application less than R5 million and 20% more for than R5 million 2.Provide a financially and economically viable business proposal 3.Complete and submit the AgriBEE Fund application form 4.Preference will be given to project applicants whose membership consist mostly of women, youth, people with disabilities, farm workers and whose proposal is linked to commodity strategy of a specific commodity group.

10 EXCLUSIONS NOT FUNDED 1.In terms of equity: Purchasing of farms and farming/ fishing / forestry infrastructure at primary level (the Fund supports post production activities such as agroprocessing and value-addition). 100% acquisition of a business at initial investment by the applicant. New applicants must hold at least 49% in the initial period. Applicants who are not involved in the sector in terms of farming, fishing and forestry activities will be excluded (passive investors). Preference shall be given to applicants who want to acquire equity in viable entities that operate within their line of commodity. 2.In terms of Agro processing and value addition: Projects must indicate clustering of primary producers organised around a specific commodity

11 PROCESS FLOW 1.PDAs Assist farmers in project formulation and the preparation of commercially viable business plans Provide advisory services and monitor the implementation of projects 2.DAFF Receive applications and/or proposals from provinces and screen (check against criteria) and forward them to the Land Bank for further due diligence 3.Land Bank Receive from DAFF those applications that have gone through pre- screening Screen / appraise applications and undertake due diligence assessments Approve or decline applications, where applications have been approved the Land Bank shall in consultation with DAFF disburse funds  From the Land Bank feedback to DAFF, DAFF to Province, Province to Applicants.

12 BUSINESS PROPOSALS PRE-SCREENED TO DATE 67 business proposals have undergone assessment and outcomes are as follows: 11 applications were passive investments 6 applications were farm acquisitions 41 applications were production infrastructure 3 applications were 100% acquisition of equity 6 applications have been recommended for funding

13 BUSINESS PROPOSALS PRE-SCREEN TO DATE, CONT…. CRITERIA LPGPKZNFSMPECWCNCNWTotal Passive investments Farm acquisition Production infrastructure % equity Recommended for funding Total

14 BUSSINESS PROPOSALS PRE-SCREEN (Graph)…..

Name of ApplicantProvinceType of dealAmount 1. Tropical mushroomsGautengEquity R3.0 Million 2. Zivuseni CooperativeGautengEquity R2.3 Million 3. Cortina FarmWestern CapeAgro processing R5.4 Million 4. Siyavuselela CooperativeEastern CapeAgro processing R7.0 Million 5. Muka-Tangi Farming/ Easy FarmLimpopoAgro processing R3.5 Million 6. Valley Farm Processing CompanyLimpopoAgro processing R4.3 Million TOTAL AMOUNT R25.5 Million RECOMMENDED DEALS FOR FUNDING

16 CONCLUSIONCONCLUSION 1.The Fund supports resource-poor farmers to acquire equity from existing commercial enterprises and also to establish agroprocessing and value adding projects. 2.The Fund compliments CASP and Mafisa but may not be used as a substitute for these funding programmes 3.Only Proposals that fit the criteria may be recommended for funding 4.A process flow that shows how Proposals should be handled has been created 5.67 Proposals have been evaluated and at least 6 have been recommended.

17 17 PULA!PULA!