1. NAMC Annual Report Presentation 2008/09 Presentation to the Parliament’s Portfolio Committee: Agriculture, Forestry and Fisheries 10 November 2009 Mrs Ntombi Msimang - Chairperson: NAMC Mr TR Ramabulana - CEO: NAMC Mrs K Mahlathi- Acting CFO: NAMC 1

2. Documents to be tabled Thank you for affording the NAMC the opportunity to present its 2008/09 Annual Report The NAMC will also take this opportunity to present the Annual Food Cost Review for 2008 as well as the Status of Statutory Measures Report for 2008 2

3. The NAMC in brief Established in terms of an Act of Parliament (MAPA, 1996) to advise the Minister and other Directly Affected Groups on agricultural marketing policy Four main objectives:  Increasing of market access for all participants  Promotion of efficiency of the marketing of agricultural products  Optimization of export earnings  Enhancement of the viability of the agricultural industry 3

4. Members of the NAMC Council The current members are:  Mrs NM Msimang (Chairperson)  Dr ASM Karaan (Vice-Chairperson)  Prof HD van Schalkwyk  Mr AD Young  Prof JF Kirsten  Mrs SE Moolman  Mrs C Molo  Mr DB Montshwe  Mrs M Mannya  Mrs M Gill 4

5. Council Committees Human Resources Mr A Young (Chairperson) Mrs L Moolman Mrs M Mannya Audit Committee Mr Victor Nondabula (Chairperson) Ms Mathebe Moja Mr Raymond Matlou Ms Gina Mill Prof H van Schalkwyk 5

6. Employment Equity Senior Managers 2 Female African 3 Male African 2 Male White Total Staff 12 Female Black 10 Female White 12 Male Black 3 Male White

7. NAMC Divisions The NAMC does its work through he following Divisions:  Agribusiness Development  Statutory Measures  Agricultural Trusts  Markets and Economic Research Centre 7

8. This programme is threefold: 1. Training component, which is export oriented Emerging farmers that are export ready are trained on the following topics  Supply chain and logistics training,  Contract negotiations training,  Compliance (social codes, company codes, sector codes, manufacturing codes and Generic codes) The purpose of this course is to prepare emerging farmers that are export ready for the challenges that they have to face when entering an export market 2. AgriMatch Trips Emerging producers that are export ready will be supported to participate on exposure AgriMatch trips to a European country The objective of the trip is to afford the emerging producers to experience the challenges that have to meet when exporting through engagement with importers Export Promotions

9. 3. Farmers compliance to private standards: ComMark/NAMC Small-Grant Fund A small grants scheme to assist emerging farmers achieve private standards certification and thereby increase their agricultural exports  It provides the means to lower the transaction costs associated with private standards certification  GlobalGAP, Tesco’s Natures Choice, and/or Fair Trade Project involves:  Supply side assessment: ID export ready farmers  Demand side assessment: ID potential service providers  Pre-audits: Conduct pre-audits on farms to assess action necessary to obtain certification.

10. Results on the programme Training  35 agribusinesses participated Agrimatch trip  15 agribusinesses participated visited international markets  20 agribusinesses participated in other export promotion activities Farmers compliance to private standards  20 agribusinesses participated 10

11. Agricultural Schemes The main purpose of the schemes are to uplift the black producers in the agricultural sector and to encourage their integration into the commercial mainstream Development and implementation with industry partners Current schemes:  Grain development scheme - through Grain farmer development association  Livestock scheme - Eastern Cape Red Meat Project (ECRMP) New schemes  Wine and brandy schemes The NAMC has since established 2 new trusts in an effort to raise additional funding required to ensure meaning impact of the programme 11

12. Making Markets Matter Training Course  It’s an intensive 5 day business development training workshop for African agribusinesses  In partnership with University of Stellenbosch and Cornell University  80 agribusinesses attended the course  The farmers were trained on the following issues Cash flow management, marketing strategy, financial analysis AgriBiz Training course for Women  As a follow up to the above training course, the NAMC in partnership with University of Stellenbosch and Cornell University designed a 3 day training course specifically for women that are involved in agriculture  The course offers training in marketing, financial and strategic management  30 women entrepreneurs attended  The NAMC is conducting an after care programme so that participants can implement what they have learnt from the course into their businesses NAMC Marketing Training Courses

13. Transformation Guidelines The NAMC is in the position to influence the manner in which levy funds should be spent by industries In an attempt to influence how statutory fund (R222 million in 2008) should be spent, the following guidelines has been adopted  10 % for administration purposes  70 % for research, market information, market development, etc.  20 % for transformation purposes The NAMC further developed transformation guidelines to guide the industries how to utilize the 20 % portion of transformation The NAMC was guided by the transformation charter when developing those guidelines

14. Transformation Guidelines Through the transformation guidelines, the NAMC proposed the activities below to industries as a means of contributing towards transformation taking place within the respective industries.  Enterprise Development /Development Schemes Industries should design and implement initiatives to assist and accelerate the development of black owned agribusinesses  Skills Development and Training Industries should design and implement initiatives that will capacitate black entrepreneurs in their respective industries  Management Control Industries should facilitate, within their membership, incorporation of black people at management positions in enterprises and industry structures  Transformation Monitoring Industries should develop a database of black agribusiness, indicating their business size and production

15. Statutory Measures The MAP Act provides for the following statutory measures:  Levies  Records and returns  Conducting of pools  Control of exports  Registrations  Appointment of inspectors 15

16. 16 Statutory Measures applicable during the 2008/09 financial year IndustryAdministrating bodyStatutory Measures LevyRegistrationRecords & Returns Citrus (export only)Citrus Growers Association  CottonCotton SA  DairyMilk SA  Deciduous fruit Pome fruit Stone fruit Plum export promotion Sterile Insect Technique Deciduous Fruit Producers Trust    Dried fruitDeciduous Fruit Producers Trust  Grains (Maize, Oilseeds, Sorghum, and Winter Cereals) The South African Grains and Information Services (SAGIS)  LucerneLucerne Seed Organisation  MilkMilk Producers’ Organisation 

17. 17 Statutory Measures Applicable During the 2008/09 Financial Year... Continued IndustryAdministrating bodyStatutory Measures LevyRegistrationRecords & Returns PotatoPotatoes SA  Red meatRed Meat Levy Admin  SorghumSorghum Trust  Table GrapesSA Table Grape Industry  WineSAWIS (information) Winetech (research) Wosa (export promotion) WIDA (transformation)   Winter CerealsWinter Cereal Trust  WoolCape Wools SA  MohairMohair SA  PorkSA Pork Producers’ Organisation 

18. 18 Functions financed through Statutory Levies 2007/2008 financial year FunctionsAmount spent R Percentage of total levy expenditure % Administration15 727 6367 Transformation51 224 66123 Export Promotion25 777 99212 Research70 680 63032 Information36 861 02517 Production development2 154 0241 Plant improvement2 526 2871 Quality control5 299 0262 Consumer education12 008 7195 TOTAL222 260 000100

19. New Applications Poultry industry R 20 794 523 Wine industry R 50 million Sorghum industry R 2 million Red meat industry R 30 million Pork industryR 10 million Winter cereal industry R 30 million Market development (Apples, pears, apricots, nectarines, peaches) R20 million Market Development (Grape fruit Japan)R12 million

20. Trusts available funds TRUST NAME FUNDS AVAILABLE(R) Oil and Protein Seeds Trust 178 057 076 Winter Cereal Trust 42 000 000 Meat Industry Trust 27 992 849 Deciduous Fruit Ind.Dev. Trust 13 000 000 Maize Trust 670 175 940 Wool Trust 247 595 220 Sorghum Trust 9 278 562 Mohair Trust 188 792 761 Citrus Industry Trust 16 462 196 Cotton Trust 7 452 016 Wine Trust 79 840 839 Lucerne Trust 77 559 ____________ TOTAL 1 480 725 018 20

21. Food and input cost monitoring In 2004 the Cabinet approved establishment of a national food price monitoring system Two publications, namely:  Quarterly Food Price Monitor (Urban & Rural)  Annual Food Cost Review Done in collaboration with DAFF and Stats SA Monitor and review trends in food prices NAMC was mandated to coordinate input cost monitoring on behalf of the whole agricultural industry (DoA and DAG workshop in 2006) Several Input Cost Monitor reports since 2007 Monitor and review trends in input costs in agro-value chains

22. Trade related research The NAMC in collaboration with the Directorate International Trade of the DoA published 11 TradeProbes.  The aim of the TradeProbe is to create knowledge of trade-related topics  Topics covered include trade profiles, trade relations and trade gap analysis Collaborative research on selected topics  For example: “South Africa’s way ahead: looking east” together with Tralac Trade related workshops (Trade Reference Group activity)  Workshop on “Dispute settlement mechanism of the WTO” at the 2008 AEASA conference.  Workshop on “Non-tariff measures”

23. Currently Funded Projects SA Fruit and Wine Export Sector to deal with Climate Change: Carbon Footprint Study of the Indian marketing for a range of SA produced fruit products SA’s trading relationship with Brazil and Argentina Investigation into Farmer Controlled Businesses in South Africa: Options and lessons learnt Mapping, Understanding and Quantifying the SA Ostrich Value Chain The role of transport in logistics cost for agriculture Agribenchmark: Beef and grain sub-sectors Assessment of contractual agreements for agricultural market access in South Africa: A smallholders' perspective Exploring the impact of local alternative food quality dynamics on small scale farmers' access to markets Marketing strategy development for Sharon Fruit in the informal sector Emerging Farmers to comply with private standards: ComMark/NAMC Small- Grant Pilot Fund Fruit trade flow

24. Study of the Indian marketing for a range of SA produced fruit products Aim:  Understand the Indian fruit market from a consumer and supplier perspective in order to evaluate the potential of establishing a sustainable and profitable export market to India Project intends to :  Understanding the attitude of Indian importers and traders on doing business with South African suppliers;  An analysis of the market structures and promotional culture in India and;  The development of the market SWOT analysis  Recommendations on market entry strategies for South African exporters will be formulated Marketing strategy development for Sharon Fruit in the informal sector Aim: –Develop a strategy to address the smaller trade and informal Sharon fruit sectors Project intends to: –Developing a good understanding of the perceptions towards Sharon Fruit in these sectors visa vie competing products and implementing strategies to address them. –Developing a good understanding of the supply needs of traders in these sectors. –Developing supply structures that will give optimum service to these sectors. –Developing merchandizing and marketing supports systems for these sectors.

25. Market development activities Plum Promotions in the UK and Germany 4 years project Year 1 increased volumes of sales by 41% Other fruit kinds promotions in UK and Germany Grape fruit promotion in Japan Local market for Sharon fruit 25

26. Statement of Financial Performance Year Ended 31 March 2009 2008/09 R’000 2007/08 R’000 Revenue24,36117,138 Grants and transfers Other Income 22,459 1,902 17,020 118 Expenses24,69517,451 Administrative expenses Staff costs Other Operating expenses Depreciation and amortisation Loss on disposal of fixed assets 2,924 11,610 9,743 388 30 2,066 9,069 6,049 254 13 Deficit from operating activities (334) (313) Net interest received 1,614 336 Net Surplus for the year 1,280 23

27. Irregular Expenditure IncidentAction TakenR’000 Failure to follow the tender process Measures have been put in place to ensure that SCM Policy is followed and understood by all R1,051