1. Overview on South African Agriculture and Agribusiness
USA NAMPO Exhibitors
15 May 2011
John Purchase

2. Content Introduction SA Agriculture SA Agribusiness
Prospects & Challenges

3. Introduction
Well developed commercial sector and subsistence oriented sector – dual economy
Only ~12% of land area arable, of which 22% high potential
~1.3 million hectares under irrigation
Water major limiting factor – SA semi-arid
Deregulation & market freedom
Number of competitive advantages
- Near world-class infrastructure
- Counter-seasonality to Europe
- Biodiversity
- Trade agreements
- Competitive input costs
- Access to latest technology & innovation

4. SA Economy Role of Agriculture in
Strategic sector – provides food, fiber, wine & beer, satisfying two basic needs of man (+ others!)
Has provided national food security since the start of the 20th century (Pop: ~4,0 million), right through to the 21st century (Pop: ~49,0 million, ~60% in urban areas)

5. Contribution of Primary Agriculture to GDP (Source: Statssa)%
Graph: ABC

6. SA economic growth: Tradable goods sectors lag the non-tradable goods sectors
Source: StatsSA
Graph: ABC

7. Source: AMT, 2011

8. FAO Food Price Index
Source: FAO

9. Inflation
Source: AMT, 2011

10. Exchange rate
Source: AMT, 2010

11. SAARF LSM Segments: Proportion of SA adult population and average monthly household income in 2009
Source: SAARF (2010a) & BFAP, 2010

12. LSM class mobility: All adults during the period 2004 to 2008
Source: SAARF AMPS data for the period 2004 to 2009, as quoted by BFAP

13. SA Resource Situation Land issue: sensitive now, awaiting Green Paper
Energy crisis and energy security situation
Electricity price hikes (31% + 25% pa next 3 years)
Scarce high potential agricultural land to mining, esp. Mpumalanga, and urban development
Water and water quality crisis
Climate Change effects create uncertainty
Soil degradation/erosion
Resources for sustainable expansion?!
Greater competition for resources

14. Global warming: Effect?!

16. Content SA Agriculture Introduction SA Agribusiness
Prospects & Challenges

17. Commercial Agric Census 2007
Indicator
1993
2002
2007
Farming units
45 818
39 982
Gross Farm income (R x )
19 620
53 329
79 544
Employees Remuneration (R X )
3 637
6 216
8 611
Paid employees
Expenditure (R X ) (Current & Cap)
16 377
45 038
54 072
Market value of assets (R X )
66 905
98 428
Farming debt (R X )
15 295
30 857
37 090
Ratio between Farming Debt and GFI (%)
78,0
57,9
46,6
Source: StatsSA

18. Performance of Sector Gross Value of Production in R million
Source: DAFF, 2010.

19. Performance of Sector
Source: DAFF, 2009.

20. Net farm income
Source: AMT, 2011

21. Cost price squeeze
Source: AMT, 2011

22. Source: DAFF, 2010.

23. Farming Debt (X R )
Source: DAFF, 2010.

24. SA Agricultural Sectors
Field crops
- Maize (Corn), wheat, sugar, sunflower,
soybean, groundnuts, dry beans, etc.
Horticulture
- Wine/Viticulture, Citrus, Deciduous fruit,
sub-tropical fruit, table grapes, vegetables
Animal production
- Poultry, beef, dairy, mutton, wool, mohair,
ostrich, game/venison

25. Field crops Maize – major importance, net exports, GM
Wheat – also staple food, net imports
Sugar – net exports, move into Africa
Soya – growing importance, cake imports, GM
Sunflower – growing importance, S/D balance
Groundnuts – net exports, but declining
Dry beans – net imports, also from China

30. Horticulture Totally deregulated market
Viticulture & Wine – major export industry
Citrus – 2nd biggest global exports, growing
Deciduous fruit – major net exports
Table grapes – major net exports
Sub-tropical fruit – net exports
Vegetables – S/D balance, some imports/exports

31. Marketing
Fresh Produce Markets (FPM’s) play major role as basic price discovery mechanism and wholesale market
However, reduction in trade from 64% to 53% of total production from 1994 to 2004
Marketing following global trend of retailers (supermarkets), processors and wholesalers procuring directly from producers – shortening/integration of supply chain

32. SA Wine Production, Consumption & Exports
Source: BFAP, 2010

33. Vegetables Value of total production in 2009: US$1.2 billion

34. Source: DAFF
Graph: ABC

35. Fruit Value of production (2009): Deciduous fruit: US$0
Fruit Value of production (2009): Deciduous fruit: US$0.9 billion Citrus: US$0.7 billion Viticulture: US$0.4 billion Exports (2009): Wine: US$728 million Citrus: US$667 million Table grapes: US$380 million Apples: US$365 million

37. Source: BFAP, 2010

38. Animal Production Value of production in 2009:
- Broilers R22.5 billion
- Beef R13.3 billion
- Fresh milk R9.1 billion
- Eggs R6.6 billion
- Mutton R3.1 billion
- Pork R3.1 billion
- Wool R1.1 billion

39. SA Meat consumption
Source: BFAP, 2010

40. SA Fluid milk production & utilization
Source: BFAP, 2010

41. SA Consumption of dairy products
Source: BFAP, 2010

42. Content SA Agribusiness Introduction SA Agriculture
Prospects & Challenges

43. SA Agribusiness
Strong input sector: Seed, fertilizer, crop protection and veterinary chemicals, animal feed, packaging, agricultural machinery, fuel, etc.
Financial sector: Major banks, DFI’s, insurance companies, auditors, agribusinesses, etc.,
Storage, trade and agro-logistics
Agro-processing and packaging
Retail Sector

44. Agricultural trade trends
Total
Primary
Processed
Source: DAFF/NAMC, 2009.

45. South African Agricultural Trade
(Source WTA & GTA, USDA-FAS)
(US$ billions)
Agricultural exports $ $ $5.2
% of total SA exports % % %
Agricultural imports $ $ $4.2
% of total SA imports % % %

46. Major agricultural products exported:
(US$ millions)
Wine $ $ $727.5
Citrus $ $ $667.1
Corn $ $ $444.6
Table grapes $ $ $379.7
Apples $ $ $364.7
Sugar $ $ $386.7

47. Major export destinations (2009)

48. Major agricultural products imported:
(US$ millions)
Rice $ $ $458.8
Wheat $ $ $282.0
Soybean cake $ $ $297.1
Palm oil $ $ $232.1
Soybean oil $ $ $106.9
Whisky $ $ $201.6

49. Major countries imported from (2009)

50. Content Introduction SA Agriculture SA Agribusiness
Prospects & Challenges

51. South African Agriculture: Prospects and Challenges

52. Challenges Government: - Food security, both household and national
- Access to safe, nutritious and affordable food for all
- New Growth Path: Job creation, Shared Growth &
Opportunities
- Empowerment of PDI’s, e.g. AgriBEE, EE, etc.
- Land Reform & Rural Development
- Industrial Policy Action Plan II: Agro-processing
- Competitive environment (Competition Act)
- Sustainable resource management, e.g. CC
- African development, JADAFA, etc.

53. Challenges Private Sector: - Profitability and competitiveness
- Transparent and reliable markets (Integrity!)
- Engage Govt ito enabling policy environment:
Create confidence for long term investment
- Need for inclusive Strategic Framework/Plan
- Sustainable transformation
- Institutional and value chain support (R&D,
SPS matters, resource base management,
trade facilitation, training & skills development, crop
estimates, agro-logistics, Act 36 of 1947, etc.)
- African opportunities

54. Overall Prospects
Much greater food security awareness, both globally and locally – very positive. Priority for G20, Paris.
Awareness by government to work closer with Private Sector
Greater awareness by all of the need to support both commer- cial and developing agriculture. Better implementation NB!
Substantial markets: locally, regionally, globally, and especially to the East. Need market development, though!
General commodity and agribusiness infrastructure is good basis – build on this & other institutional capacity.
New technology/expertise through especially multinationals.
New global investors looking to Africa for food production –
major development.

55. Conclusion Healthy and robust agro-food industry
Technologically advanced, globally competitive
Challenges: Agro-logistics, climate change, water availability and quality, environmental sustainability, food safety regulations, R&D, etc.
Opportunities: Growing population, consumer spending trends, new markets (esp to East), etc.
Major contributor to Food Security, growth
and employment in RSA.

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