Presentation of the strategy and APP 2016/17 finacial year.

Acting Chairperson: Mr. A Young CEO: Mr. Tshililo R Ramabulana

CFO: Ms. S Muvhulawa

Acronyms ARC - Agricultural Research Council DAFF - Department of Agriculture, Forestry and Fisheries DPFO - Developing Poultry Farmers Organisation DRDLR - Department of Rural Development and Land Reform FAO - Food and Agricultural Organisation FPEF - Fresh produce Exporters Forum GDP - Gross Domestic product GFADA - Grain Farmers Development Association IDC - Industrial Development Corporation MERC - Market and Economic Research Centre MMM - Making Market matter MPO - Milk Producers Organisation NERPO - National Emerging Red Meat producers Organisation PPECB - Perishable Products Export Control Board RPO - Red Meat Producers Organization SAGIS - South African Grain Information Services SAMIC - South African Meat Information Company SAMAC - South African Macadamia Growers Association SAPPO - South African Pork Producers Organization SAWIT - South African Wine Industry Trust SAWIS - South African Wine Information Services S&DEC - Supply and Demand Estimates Committee SIP - Strategic Integrated Projects WIDA - Wine Industry Development Association WOSA - Wines of South Africa WFP - World Food Programme

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Outline

• Corporate governance and alignment

• Partnerships

• Food prices

• Marketing

• Transformation and empowerment

• Budget and administration

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Objectives and Mandate

Divisions •Market and Economic Research Centre •Agricultural Trusts •Agribusiness Development •Statutory Measures •Corporate Services

Mandate and Objective

•Advisory body that advices the Minister of DAFF and DAG on all matters relating to marketing of agricultural products.

• Increase market access for all participants.

•Promotion of efficiency of marketing of agricultural products.

•Optimise export earnings from agricultural products.

•Enhance the viability of the agricultural sector.

NAMC Council Members Mr. Andre Young- Deputy Chairperson & Acting Chairperson Ms Mina Gill- Council Member Mrs JM v/d Merwe- Council Member Dr. John Purchase- Council Member Mr. Andries Cronje- Council Member Dr Litha Magingxa- Council Member Mr. Augustinus Hendricks- Council Member Ms Thami Zimu – Council Member

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Vision & Mission

Vision

Strategic positioning of agriculture in a dynamic global market.

Mission To provide agricultural marketing advisory services to key

stakeholders in support of a vibrant agricultural marketing

system in South Africa.

5

Policy Alignment National Development Plan •Maximising use of communal land and enhancing productivity of land reform projects •Opportunities to expand high value crops Outcomes •Seeks to assist in the achievement of Outcome 4, Decent Employment through Inclusive Growth, and •That of Outcome 7, Comprehensive Rural Development and Food Security.

IPAP •Infrastructure pillar of IPAP •Value chain analysis of target industries •Roll-out AIMS

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7

Partnerships

NAMC

Trusts

12 Industry Trusts

Current asset value amounts to a total of R2 424 million

Industry bodies (administrators of statutory levies)

18 industry bodies collected a total amount of R409 million in the past

financial year

Statutory Measures

Examples of statutory information critical to APAP implementation

• All fruit kinds- Fruit hub,

• All grains -SAGIS,

• Wine- SAWIS, and

• All red meat- SAMIC.

• Wool- Cape wools

• Mohair- Mohair SA

Background

•18 industries collecting statutory levies

•In 2015/16 financial year – R409 mill collected

•20 industries administering statutory measures relating to registrations, records & returns

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INDUSTRY Administrating body Statutory Measures

Levy Registration Records &

Returns

Citrus (export only) Citrus Growers Association

Cotton Cotton SA

Dairy Milk SA

Deciduous fruit (pome & stone) HORTGRO Services

Dried fruit Dried Fruit Technical Services

Fynbos (proteas) HORTGRO Services

Grains (Maize, Oilseeds,

Sorghum, and Winter Cereals)

The South African Grains and Information

Services (SAGIS)

Lucerne Lucerne Seed Organisation

Macadamias Southern African Macadamia Growers’

Association (SAMAC)

Mangoes Subtrop

Milk Milk Producers’ Organisation

Mohair Mohair SA

Olives SA Olive

Pecan nuts SA Pecan Producers’ Association

Summary of statutory measures

applicable in South Africa 2015/16

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Functions Amount spent

R

Percentage of

total levy

expenditure

Administration 23 382 174 5,55

Transformation 97 857 656 23,21

Research 129 488 083 30,72

Local promotions 41 781 397 9,91

Export Promotions 61 125 753 14,50

Information 42 289 121 10,03

Quality control 18 024 659 4,28

Plant improvement 4 732 794 1,12

Production development 2 885 571 0,68

TOTAL 421 567 208 100.00

Functions financed through Statutory Levies

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Information function funded by statutory levies

Industry Company From date

Citrus for export Citrus Growers Association 1998

Cotton Cotton SA 1998

Dairy Milk SA 1998

Deciduous and dried fruit and fynbos

HORTGRO 1998

Lucerne National Lucerne Trust 1998

Mangoes SA Mango Growers Association 2010

Olives SA Olive 2012

Pecans SA Pecan Growers Association 2012

Pork SA Pork Producers Organisation 2010

Potatoes Potatoes SA 1999

Red meat Meat Statutory measures services 1998

Table grapes SA Table Grape Industry 2004

Wine SA Wine Information Services 1999

All grains and oilseeds South African Grains Information Services NAMC Crop Estimates Liaison Committee NAMC Supply and Demand Estimates Committee and Liaison Committee

1998 1998 2013 11

Export and local promotion, funded by statutory levies

Industry Company From date

Citrus for export Citrus Growers Association 1998

Deciduous fruit HORTGRO 1998

Mangoes SA Mango Growers Association 2010

Olives SA Olive 2012

All fruit mentioned above FRUIT SA 2000

Cotton Cotton SA 1998

Dairy Milk SA 1998

Pork SA Pork Producers Organisation 2010

Potatoes Potatoes SA 2013

Red meat Red Meat Industry Forum 1998

Table grapes SA Table Grape Industry 2004

Wine Wines of South Africa (WOSA) 1999

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Industry Statutory measures Reason

Pork Levies, Registration and Records & Returns Continuation

Citrus Levies, Registration and Records & Returns Continuation

Dried fruit Levies, Registration and Records & Returns Continuation

Olives Levies, Registration and Records & Returns Continuation

Tables grapes Levies, Registration and Records & Returns Continuation

Wine Levies, Registration and Records & Returns Continuation

Wheat and Soybeans Possible endpoint royalties

Statutory Measures to be promulgated during the

2016/17 Financial Year

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Transformation and equity

Pillar Activities (examples) Percentage

Enterprise development

Production material/inputs Extension services Mentorship Soil preparations Accreditation (certification for accessing export markets) Market facilitation (Assist smallholder farmers to access the markets) Business plan development Industries to assist black farmers to gain access to finance

More than 50%

Skills development

Bursaries Farmers and other role players in value chain Farm workers (if motivated properly due to AgriSETA cuts)

Approximately 20%

Employment equity To promote equity in the workplace Approximately 30%

Management control Salaries for transformation managers

Preferential procurement

Procuring from Black owned enterprises/businesses (QSE’s/EME’s)

Socio Economic Development

Provision of good housing, clean water, sanitation, electricity, recreation facilities and health care programmes

Ownership Increase the number of Black People to participate in the economy.

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Citrus industry

Project title Objectives and outcome Number of beneficiaries Amount (R)

Human Capacity

Development: Citrus

Academy

To address: low skills levels, employment equity, scarce and critical skills, land transition and

quality skills delivery

Bursary Fund – 64 students (R1 441

533)

Holiday work programme – 9 students

Industry exposure programme – 31

students

Internships – 10 students

1 925 000

Deciduous fruit industry

Land Reform and Tree

Planting Project

To establish deciduous fruit - actual plantings was 98 ha

To increase production footprint of PDI farmers significantly

To help small scale farmers reach commercial status

Integrate small scale and PDI farmers into commercial structures

Provision of technical assistance and support

The establishment and maintenance of suitable land reform models

Conduct feasibility studies

Evaluation of business plans for new and existing projects

Source additional funding for land reform projects

Financial assistance as required from NAMC to give PDI farmers exposure to markets

Continued support to DFDC in terms of coordination and implementation of alternatives

150 2 646 793

Dairy industry

“Promoting of sustainable

commercialization of

existing black dairy

farmers” project

To promote the development of existing black milk producers to become sustainable,

commercial milk producers

Optimalize the level of milk production through the supply of cows

Optimalize the level of milk production through infrastructural and other support services

Up to 8 farmers in the Free State were assisted with electrification of farms, supplied with

heifers, veterinary services and with market access. Through this project the farmers have

created approximately 60 jobs.

8 4 900 00

Examples of transformation projects funded by statutory levies

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Lucerne industry

Project title Objectives and outcome Number of beneficiaries Amount (R)

Taung Lucerne hay production -

• The Lucerne Trust is donating lucerne seed to black farmers

• In Taung area, back farmers producing lucerne under irrigation (pivot

system)

• The Trust already assisted 20 farmers on a total area of 200 ha (10 ha per

farmer)

• The plan is to assist another 20 farmers on a further 200 hectares

• Farmers also being assisted with the harvesting and the marketing of their

lucerne

20 farmers 372 942

Potatoes industry

Enterprise Development

Programme

To assist in setting up, supporting and growing viable new black owned potato

producing enterprises.

To develop an economic programme that is aimed at sustainable potato production

by small holder farmers in order to utilise available land and assist to the maximum

benefit of an integrated production system

To develop small holder farmers to grow and produce commercially in a

sustainable way

To establish sustainable fully fledged commercial farmers

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KwaZulu-Natal: 9

Eastern Cape: 6

Free State: 2

Limpopo: 1

3 067 871

Table grapes industry

Preferred Cultivar,

Preferred Country

programme- Enterprise

Development

Up to 8 enterprises assisted to purchase market scarce cultivars. Nearly R 12

million in outside funds leveraged in support of capital requirements, fiduciary

requirements and feasibility studies for these enterprises. SATI's professional time

spent advocating for enterprise needs.

513 635 657

Agricultural Trusts Focus

• Appointment of Ministerial trustees (25)

• Reporting (annual report, annual AGM with the Minister)

• Increase the allocation of funding to transformation projects

Background

•11 agricultural industry trusts.

•25 ministerial trustees. (excl. SAWIT)

•Total assets- approximately R2 billion

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Trust Name (12 in total)

Administrator Ministerial Trustees (25 in total exl SAWIT)

Current Asset value

(R)

Citrus Industry Trust Dr Konani Liphadzi Mr Godfrey Rathogwa (Chairperson), Ms Patricia

Motlogeloa & Mr Alex Sithole

16 611 994

Deciduous Fruit

Industry Development

Trust

Mr Anton Rabe Mr Ismael Motala (Chairperson), Ms Mamsey Rangaka,

Mr Elton Jephtas & Mr Mxoli Poto

15 480 860

Maize Trust Mr Leon du Plessis Mr Sandile Ndlungwane (Chairperson), Dr Toto Hewu

Ms N Mahlati

1 086 368 772

Meat Industry Trust Ms Alet du Plessis Dr V Toni Penxa, Mr Mike Mlengana & Dr PM Maduna 41 942 462

Mohair Trust Mr Deon Saayman Mr Mashologu 280 627 631

National Lucerne Trust Mr Derrick Engelbrecht Ms Mina Gill 2 698 107

Oil and Protein Seeds

Development Trust Mr Gerhard Keun Ms Connie Seoposengwe 326 883 435

Potato Industry

Development Trust

Ms Elsabe Els Mr SM Mabuza 14 682 897

Sorghum Trust Mr Leon du Plessis Mr Happy Mohane 26 097 897

Winter Cereal Trust Dr Simon Letsoalo Mr Neo Masithela (Chairperson), Mr Andrew Makenete,

Mr Tato Make, Ms Mmaphefo Mabe, Ms Johlene

Ntwane & Rev Nosey Pietersen

114 099 225

Wool Trust Mr Andre van der Venter Mr Zandisile Wapi 488 230 467

SA Wine Industry

Trust

Mr Charles Erasmus Ms Sharon Marco-Thyse (Chairperson), Barry

Stemmet, Fatima Shabodien & Willie Williams

10 690 634

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Annual publications to be published

• Status reports on statutory measures

• Report on agricultural trusts

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Market & Economic Research Center Outputs

Portfolio Deliverables

1. Price Analysis Monthly & Quarterly FPM report

Annual Food Cost Review

Annual Input costs report

Quarterly farm to retail price spread

Grain & Oilseeds Supply and Demand Estimates Reports

2. Markets Sectoral market studies - fruit exports into Africa

Trade Probe

Fruit flow

Agripreneur

Market access tracker

3. Supply Chains Supply chain studies (wheat, fruit- rest of Africa)

Transport costs analysis

4. Policy Transformation monitoring report

Levy evaluations report

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Staple basket prices • The cost of the staple basket increased by

approximately 19% from January 2015 to January 2016. • NAMC projections further increase by 10% in quarter 1

of 2016 (this is additional to the 19% year on year increase.

• Based on staple food share of total CPI food, double digit food inflation likely from second quarter of 2016.

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Food item Estimated changes in selected food items:

Dec 15 to Dec 16)

Bread & Cereals 30,63%

Meat 24,95%

Fish 19,27%

Milk, eggs & cheese 24,95%

Oils & fats 19,27%

Fruit 24,95%

Vegetables 40,00%

Sugar & sweets 5,00%

Other food 10,00%

Total weighted change in food inflation. 25,80% Effect on CPI 3,66%

Effect on Food inflation (Drought & exchange rate)

• Food inflation is expected to increase (year on year) with 30% at the end of 2016

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Monthly food price monitoring (latest trends)

• Based on the Stats SA basket, prices between rural and urban areas are largely comparable except in few cases (Table 1)

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Product Rural Food Prices

February 2016

Urban Food Prices

February 2016

Price difference

R/unit

Full cream milk – long life 1ℓ 12.63 12.63 0.00

Loaf of brown bread 700g 10.83 11.22 0.39

Loaf of white bread 700g 12.00 12.39 0.39

Special maize 2.5 kg 19.48 19.47 -0.01

Super maize 2.5 kg 22.82 22.78 -0.04

Margarine spread 500g 21.09 22.85 1.76

Peanut butter 400g 22.39 22.52 0.13

Rice 2kg 24.04 24.34 0.30

Sunflower oil 750mℓ 21.44 22.03 0.59

Ceylon/black tea 62.5g 11.42 11.90 0.48

White sugar 2.5kg 30.07 30.04 -0.03

Average 0.36

Table 1: Comparison between rural & urban prices – selected products

Source: Stats SA (2016)

Monthly food price monitoring (latest trends) - continued

• Figure 2 compares the year-on-year cost of specific food groups within NAMC’s basic food basket

• The figure illustrates the dominance of vegetables, fats and oils, breads and cereals and animal protein foods, within the cost of the basic food basket

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Figure 1: Nominal cost of specific food groups within the NAMC’s basic food basket

Source: Stats SA (2016) & BFAP calculations

SIP 11

Source: StatsSA, 2013

Background

• National Infrastructure Plan - will be operationalised through legislation (Infrastructure Development Act)

• Current focus is on mobilisation of funding for many of the anchor projects (currently only R3 billion funding has been secured)

NAMC’s Role

•Assisting project owners (DAFF, provinces, local government) to strengthen the project business cases to raise funding

•Coordinating reporting on existing and proposed new high-impact/anchor agro-logistics & rural infrastructure projects

– Quarterly reporting on a total of over 800 infrastructure projects nationally (R26 bn)

– Draft Business Plan consisting of 28 proposed or recently initiated high-impact/anchor projects (R18 bn)

•Assist to bring stakeholders to work together to enable implementation of these projects

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Industry specific interventions

• Witzenberg initiative – Assist DRDLR implement 45 BEE projects aimed at planting 4000 ha

with fruit.

– 12 000 new permanent jobs

• Brandvlei irrigation scheme – R800 million investment targeting additional 4000 ha.

– 6000 new permanent jobs

• One stop shop for fruit exports – Improved efficiency in fruit export

– Compliance to export protocols

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Supporting infrastructure development: SIP 11 (continued)

• Funding shortfall to be addressed as part of the broader Revitalisation of Agriculture and Agro-processing Initiative (part of the President’s nine-point plan). The following potential funders will be approached: – Industrial Development Corporation (IDC) – through the localisation

and developmental initiatives

– DTI’s Black Industrialist Programme

– Public-private partnership funding (as it is currently the case with the Vaalharts-Taung Irrigation Scheme)

– Departmental mid-term expenditure framework (MTEF) funds

– Other development finance institutions

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Supporting infrastructure development: SIP 11

• Total of 26 anchor projects (the list is growing)

• Total value of anchor projects = R28bn

• 40 000 jobs created

• Challenge: lack of funding for some of the major projects (out of R28bn, only R15,3bn is funded – mostly through IDC, DAFF, DRDLR & provinces), i,e. R12,7 bn funding shortfall

Legend

SIP11 Anchor Projects

Existing Infrastructure

Marketing SA agriculture • South African agriculture faces a significant issue in terms of visibility in

both the export and local market.

• There is not enough appreciation of the role of agriculture and the food sector in the country’s economy and society

• There is opportunity for consolidation of currently fragmented marketing campaigns into a single one that promotes the entire agricultural sector as a brand

• NAMC is working through the Agriculture CEO’s Forum to design and implement an agriculture branding campaign to achieve the following:

– General public appreciation of the role of agriculture in society (see Video)

– Quantifying of the role of agriculture in the economy through academic publications (NAMC, ARC and Land Bank to publish a book in this regard)

– Promotion of South African agricultural products in the export market

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Agricultural development Schemes

• Industries – for technical support

• Provincial and national government departments ( DAFF, DRDLR) – farmer supports including extension services

• Financiers – funding of projects

• Government agencies (e.g. PPECB) – compliance and certification

• Buyers – market access

• The schemes are designed and implemented to uplift the black producers in the agricultural sector and to encourage their integration into the commercial mainstream. This programme is driven to address food security and domestic market access. Designs are and guided by developmental impact and feasibility

Work in collaboration with different stakeholders:

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Agricultural development Schemes

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The following projects will continue in the 2016/2017 financial year under irrigation

Product

Province No of farmers / projects

Size

Market

Vineyard Northern Cape 9 sub-projects Target 500 ha of vines

Distell, OWK

NRMDP Operational in KZN (5), EC (8) 2016 new sites

KZN – 5 additional CFPs NW - 2 MP - 1 LP - 1

keep over 15 000 per 90 days cycle

Formal (auctions & abattoirs) and informal markets

Carrots Gauteng

2 farms 30 ha for the pilot

Mc Cain

Agricultural development Schemes cont.

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The following projects will continue in the 2016/2017 financial year under irrigation

Product

Province No of farmers / projects

Size

Market

Dry beans

Limpopo 5 Farmers 80 ha Tiger brands

Macadamia Limpopo 14 farmers 114 ha Royal Macadamia and Green farm nut company

Sugar beans

Limpopo 1 cooperative with 5 members

10 ha pilot NTK

Vegetables Limpopo 65 farmers 100 ha fresh produce markets (JHB & Rhodes)

Smallholder Market Access Tracker (SMAT)

• There’s not enough progress in addressing integration of black smallholder farmers in South Africa’s mainstream economy

• One of the founding objectives of the NAMC, as stipulated in the Marketing of Agricultural Products Act (Act 47 of 1996), is to increase market access for all participants.

• NAMC is leading a project to develop a composite index as a measure of progress towards achievement of “market access for all participants” – black smallholders in particular

• Reference Group has been set up to advise on the development of the Smallholder Market Access Tracker (SMAT) Index

• A baseline report on the SMAT Index is expected at the beginning of the next financial year - will be updated on at least a bi-annual basis.

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Training and Capacity Building Programs

Making Markets Matter - MMM

• Agribusiness training and mentorship program aimed at emerging agribusiness entrepreneurs

• Driven by the need for Human Capital development in agriculture to meet the goals of South Africa and to redress past imbalances

• Develop entrepreneurs in agribusiness - necessary business skills - successfully and sustainably competition locally and internationally .

AGRIBIZ for Women

• The management training for women in agribusiness branded AGRIBIZ.

• Designed for women entrepreneurs engaged in on- and off-farm production and services and in the entire value chain of natural products, food and agricultural products.

The MMM and AGRIBIZ training programmes take place every year in

May in Cape Town. MMM - 150 farmers trained since 2008

( ± 15 per year) AGRIBIZ - 287 famers trained since 2008

( ± 35 per year)

Collaboration • DAFF & PDAs – female famer of the year nominees and funding • CASP Funded projects – participants & funding • PPECB – compliance and certification • Buhle Farmers Academy – facilitation

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NAMC stakeholder outreach

• NAMC produces research output on topical issues on an annual basis – these are aimed at various stakeholders

• NAMC research output is disseminated in various ways (website & portal, email, media, conferences and other public fora)

• More recently NAMC decided to be more pro-active in disseminating its research output – the 1st Research Symposium was held in March – will be held annually

• In addition, NAMC will participate in commercial & smallholder farmer events such as farmers days/ study groups – to increase dissemination and accessibility of research findings

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NAMC Red Meat Indaba • Through the National Red Meat Development Programme

(NRMDP), NAMC has assisted communal farmers to realise

commercial value out of their livestock

• Since 2011, Red Meat Indaba events were held to engage local

stakeholders about the NRMDP:

– 2011: Fort Cox College, Eastern Cape

– 2012: Mount Frere, Eastern Cape

– 2013: Ncorha, Eastern Cape

– 2014: Elliott, Eastern Cape

• The programme is expanding into other provinces (KwaZulu-Natal,

Northern Cape, North-West and Limpopo)

• The 2016 national Red Meat Indaba will be held either in KwaZulu-

Natal or North-West Province, with a possibility of provincial-level

Indabas in all five provinces

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MTEF BUDGET SUMMARY 2016/17 -2018/19

The NAMC has received MTEF budget allocation letter for the period 2016/17 -2018/19 from DAFF. The budget allocations are as follows:

2016/17: R 35 005 000

2017/18: R 41 917 000

2018/19 R 44 348 000

This resulted in the following percentage fluctuations

From 2015/16 – 2016/17: 1% increase

From 2016/17 – 2017/18: 20% increase

From 2017/18 – 2018/19: 6% increase

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MTEF BUDGET PER EXPENDITURE CATEGORIES

Expenditure categories

MTEF budget 2015/16

R’000

MTEF budget 2016/17

R’000

MTEF budget 2017/18

R’000

MTEF budget

2018/19 R’000

Personnel 22 959

24 761 26 423 28 023

Administration 7 566 8 057 11 008 11 174

Professional services

3 977 2 119 4 169 4 703

Assets 133 67 317 447

Total 34 635 35 005 41 917 44 348

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2015/16 vs 2016/17 Budget

Expenditure categories

MTEF Budget 2015/16

R’000

MTEF budget 2016/17

R’000

Variance amount

R’000

Variance %

Personnel 22 959

24 762 1,803 8%

Administration 7 566 8 057 491 7%

Professional services

3 977 2 119 (1 858) (47%)

Assets 133 67 (66) 50%

Total 34 635 35 005 370 1%

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Budget per category as a percentage of total budget 2016/17

Expenditure categories MTEF budget 2016/17 R’000

Percentage allocation

Personnel 24 762 70%

Administration 8 057 23%

Professional services 2 119 6%)

Assets 67 1%

Total 35 005

NB. The personnel budget indicated above does not include personnel

expenditure for time spent by project managers relating to sponsored projects.

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Budget per category as a percentage of total budget: 2016/17

Expenditure Categories:

Personnel - 70%

Administration - 23%

Professional - 6%

Capital/Assetss - 1%

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Thank you

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