1. Role of the dti in supporting the development of a strong and vibrant agriculture industry Date : 17 September 2010 Stephen Hanival Chief Director: Agro-processing Shanival@thedti.gov.za +27 12 394 1350 Portfolio Committee on Agriculture, Forestry and Fisheries

2. Outline  Agriculture/agro-processing value- chain  The dti’s mandate in agro-industries  Draft Strategic Framework for Agro- processing  IPAP2 Priorities  The dti’s incentives

3. Agro-Industry Value Chain Source: R.Coetzee, IDC

4. The dti’s Mandate in Agro- Processing  Manufacturing – production processes that are not primarily influenced by nature  Typically off-farm, value addition, transformative  Exceptions are: –High-value agric. such as horticulture –Aquaculture –Organic produce

5. The dti’s Mandate in Agro- Processing  But reality is that agriculture/agro-processing are part of same value chain:  Policy work therefore necessarily extends to primary agriculture to some extent  Strategy development cognisant of value-chain imperatives  Incentives broadened to include pack-houses, aquaculture  Regulatory activities include focus on primary agriculture  Trade policy and support (tariffs, export incentives)

6. Strategic Framework for Agro-processing Global trends: -World population growing rapidly -Land under agriculture relatively stable -Per capita income growth in large economies, India and China -Consumer preferences for ‘sustainable food’ in Developed Economies -Important opportunities for SA Agro-industries…

7. Strategic Framework for Agro-processing SA trends: -Demographic changes as a result of decade of growth -Mismatches in demand and supply in certain products - oilseeds, meat, processed food -Basic food prices remain stubbornly high -Rural food production lower than in comparator countries -Food security concerning in rural and urban areas

8. Strategic Framework for Agro-processing SA trends: -Major portion of agriculture and agro-processing industries are mature, potential for growth limited – canning, tea, sugar, grains, industrial crops -Nascent sectors have tendency to stall before ‘take-off’ phase – ostrich, honeybush tea, proteas, olives, biofuels -Flow of new sectors, products, processes low compared to equivalent countries – Australia, Brazil -High concentration levels likely stifling competition esp. in rural areas

9. Strategic Framework for Agro-processing Trade Deficit

10. IPAP2/Business Plan Priorities Food security – small scale milling, CompCom investigations, enforcement of bread standards Mature sectors – fruit and veg canning, rooibos tea, food control, Nascent sectors – biofuels, organic produce, aquaculture, New sectors – development of Agro- processing Development Centre concept

11. Expected Impacts Food security – increased affordability, value for money and rural production Mature sectors – stabilisation of at risk sectors, improved competitiveness positioning through export market support and product development Nascent sectors – accelerated policy and strategy development New sectors – accelerated flow of new products and process innovations Leading to: Demand pull from primary agriculture combined with new industry opportunities: Agro- Industrial Complex development

12. Support from the dti Incentives Enterprise investment Programme (EIP) Grant accessible to local and foreign owned entities investing in SA. Objective is to stimulate investment in manufacturing. Qualifying investment costs: machinery, equipment, land and buildings, and commercial vehicles. Priority Sectors: Manufacture of food products, beverages and tobacco products Production, processing and preserving of meat, fish, fruit, vegetables, oils and fats. Manufacturing of grain mill products, starches/starch products and prepared animal feeds. Manufacturing of dairy products, beverages and other food products.

13. Support from the dti Incentives Cooperative Incentive Scheme (CIS) Promote co-ops through the provision of a matching grant. Improve the viability/competitiveness of co-ops by lowering the cost of doing business. Assist co-ops to acquire their start up requirements. Build an initial asset base for emerging co-ops to enable leveraging of other support. Priority sectors in Manufacturing, Retail, Service and Agricultural Sector. Offering is a 90:10 matching cash grant for registered co-ops. The maximum grant is R300 000. Can be used for business development services.

14. Support from the dti Incentives Export Marketing and Investment Assistance (EMIA) Partially compensates exporters for costs incurred in developing export markets and recruiting new FDI into SA. Matching grants for primary export marketing research to develop new export markets. Agro-processing.

15. Support from the dti Incentives Export Councils Farmed Abalone Export Council (FAEC) SA Flower Export Council (ASSO Flowers) SA Ostrich Business Chamber (SAOBC) Wines of South Africa (WOSA) Fresh Produce Exporters’ Forum/ Fruit SA SA Fruit & Vegetable Canners’ Export Council Meat Exporters of South Africa SA Dairy Foundation

16. Support from the dti Incentives The Sector Specific Assistance Scheme Cost-sharing grant scheme to non-profit business organisations for collective sectoral development. Agro-processing Agriculture Chemical Allied Industries Electronic Industries Textile and Clothing Metals and Allied Industries Machinery, Allied and Electrical Industries Motor Industry Components Creative Industries ICT

17. THANK YOU The end 17