Agro-processing: Department of Agriculture, Forestry and Fisheries briefing

Meeting report

Opening Remarks

The Chairperson said the meeting was being held under unbearably hot conditions, and hoped that despite the heat, the objectives of the meeting would be achieved. Apologies had been received from Ms C Labuschagne (DA,Western Cape), Mr A Singh (ANC, KwaZulu-Natal) and Mr L Gaehler (UDM,Eastern Cape).

Mr Bheki Cele, Deputy Minister, DAFF, read an apology from the Minister, Mr Senzeni Zokwana, who was away in Buffalo City. He said the main growth for agriculture would come from agro-processing if it were done correctly, adding that the government -- through the State of the Nation Address (SONA) -- had instructed the Department of Agriculture Forestry and Fisheries (DAFF) to create jobs and food security.

The world at the moment was completely food insecure, as 800 million people were below the bread line, and 14.1% of these people were in South Africa. Food security remained an issue, as it was not quite clear whether it was a case of non-availability or non-accessibility. The crux of the matter was that many were hungry, and the highest numbers of this category of people were found in KwaZulu-Natal (3 million), Gauteng (2.3 million) and Eastern Cape (2.1 million). Many people had run from the rural areas to Gauteng in the hope of finding jobs and food security, and had ended up getting trapped as well, adding to the numbers.

He said job creation also remained a big issue, especially for young people, as there was tremendous hunger and suffering in Diepsloot. In the SONA, the President had demanded 6% of the gross domestic product (GDP) from the sector, but it was currently at 2.5%, adding that it was a long walk to the 6%. He commented that agriculture was Number Two on the Nine-point Agenda, and the points were according to their strength. He said the presentation would help to find answers and to ascertain if there had been improvements.

Briefing by DAFF on the Agro-processing Sector

Mr Billy Morokolo, Chief Director, DAFF, briefed the Select Committee on the agro-processing sector. He said agriculture’s share of GDP had dropped from 7.1% in 1970 to 2.2% in 2014. In 2014, food, beverages and tobacco had had a 20.5% share of total GDP, and 251 000 people had been employed. Textiles, clothing and leather goods had had a 3.2% share, with 114 000 employment. Petroleum products, chemicals and plastics had had an 8.6% share, with 155 000 employment. The total had made up 32.3% of the total of employment in 2014.

In 2013, the agro-processing sector’s contribution to the total manufacturing sector had been 4.8% of GDP, 3.6% of employment and 3.1% of investment. The National Development Plan (NDP) had set an economic growth target of at least 5% by 2019, with the GDP increasing by 28.7%, employment by 39.3% and investment by 16.2%.

The agricultural trade ratio of exports to imports compiled by the Bureau for Food and Agricultural Policy (BFAP) in the period from 1961 to 2011 had shown a negative trend. The NDP postulated a positive trade balance of primary and processed agricultural products.

The trade balance by value for 2013/14 showed the country was exporting a lot of citrus fruit, wine, maize, apples and pears, and grapes (in the order of strength), and importing a lot of rice, wheat, palm oil poultry meat, and soya-bean oil-cake (in that order).

The NDP required the rural economy to be revived through an increase in production and the subsequent processing of primary products.

The South African population of 48 million in 2005 was estimated to be 54 million by 2023, which meant the demand for imports of primary and processed food would also grow.

Agro-processing had been identified in the NDP as having the potential to significantly create jobs, as the Industrial Policy Action Plan (IPAP) depicted agro-processing as the highest employment multiplier.

Challenges included access to finance, a lack of appropriate technology, non-compliance with market standards and inadequate infrastructure. These factors would result in high post-harvest losses and limited participation of small and medium enterprises (SMEs) in agro-processing, causing the country’s economic development, employment and food security potential to be under-realised.

Plans and policies for intervention included developing emerging broiler producers, provision of support to the fruit and vegetable value chain, and the revitalization of agriculture and the agro-processing value chains. The strategic intervention pillars were entrepreneurial support, enterprise development through the provision of access to finance and markets, industry research and technology transfer, and agro-processing infrastructure investment.

The opportunities for investment and growth included exploitation of international and local food demand. The intervention channels were value addition, improved competitiveness and import replacement.

The Valley Farms Processing Company was the only black-owned agro-processor of fruit purees and concentrated and dried fruit in South Africa. The fruit processing facility was situated in Levubu, Limpopo province.

Ms Elaine Alexander, Deputy Director General (DDG): Economic Development, DAFF, said there were various levels of processing into which there was an opportunity to move, as 50% of all concentrates were imported. The DAFF was building a relationship with the Department of Trade and Industry (DTI) in that regard.

Mr Cele said there clearly a lot of gaps, as a recent report had stated that Africa imported 83% of its food, and South Africa had not been spared from this. He had asked for the source of the report.

Employment and exports were on the decrease and there was a lot to be done. He was glad that officials from the DTI and DAFF were working on it, as the issues had to fall in line. Agro-processing was about what already existed. The NDP was a living document, and the DAFF did not agree with the findings in the NDP that forestry had a slow growth process. He added that all the gaps would be closed and the agro-processing sector would go forward in the near future.

Discussion

Mr E Mlambo (ANC,Gauteng) said the Deputy Minister had raised the issue of forestry, as it had much to offer towards the GDP. The DAFF had not touched strongly on the issue of fisheries -- a lot was happening in the area of aquaculture, and there had been no mention of its importance in the presentation.

Mr Morokolo replied that food and beverages had covered all food, including fish products.

Mr Mlambo said there were a lot of post-harvest losses, and asked what measures had been put in place to avoid those losses.

Mr Victor Thindisa, Director, DAFF, replied that the Department had partnered with the Council for Scientific and Industrial Research (CSIR) and the Agricultural Research Council (ARC) for indigenous knowledge on ways to preserve some of these foods -- through cooking, packing, juicing, heating and drying for short-term ways to reduce the losses.

Mr Mlambo questioned the meaning of “non-compliance with market standards” and the assertion that people that were not complying.

Mr Morokolo replied that non-compliance related to food safety and quality standards. He said retailers had their standards, and DAFF had entered into agreements with the South Africa Bureau of Standards (SABS) to make sure standards and safety requirements were met. The DAFF could not do it on its own as a department, and the agreement with SABS was to make sure that the problem was solved and to avoid complaints from buyers.

Ms E Prins (ANC,Western Cape) said if agro-processing had been identified in the NDP to increase employment, what state department was going to lead the expansion of agro-processing.

Mr Morokolo replied that there would be a meeting on 18 November of the DAFF and the DTI. The purpose of the meeting was to acknowledge the need for more players, as the DAFF had taken the initiative to develop policies and strategies in partnership with other parties it had identified.

Mr C Smit (DA, Limpopo) said it was encouraging to learn that the DAFF wanted to move into the rural areas for industrialization of the agro-processing sector, as the highest level of unemployment was found there. He questioned how the DAFF was going to establish the industry there, in terms skills development and training. How would the DAFF stimulate an entrepreneurial spirit among the communities and provide the funding to make sure the supply chain went on line? Would the industries be cooperatives or partnerships?

Mr Morokolo replied that there were industries that were doing very well in the rural areas, and the DAFF had visited some tomato paste industries as case studies. He said the Department had also had meetings with Tiger Brands, which was willing to partner with the DAFF. Through this effort, it would be able to build momentum and identify more partners. It was not going to be easy, but would thrive if well managed.

Mr Cele said the industrialisation of the rural areas was an idea that had to be implemented. He referred to Makhathini Flats, which had a huge river and excellent weather conditions. There was a lot of room for rural industrialisation, adding that politicians should make the policies and the DAFF would implement them. He commented that Makhathini Flats could be the new agricultural city, as the Minister in the Presidency had called for a submission and the development of proposals, as it had a huge potential for growth.

The Chairperson commented that there were some Communal Property Associations (CPAs) that were doing well, such as the one in Levubu, Limpopo. Many CPAs should use that as a case study and duplicate the successes. It was horrible that many people in South Africa were sitting below the bread line, and it was irrelevant whether or not it was as a result of the accessibility or availability of food. The bulk of the food came from Africa and especially South Africa, yet people were sitting with serious problems of hunger and inequality. He said the DAFF had a huge potential, adding that the health and safety issues in some rural areas in Mpumalanga and in the Eden District on the eastern side of the Western Cape should be considered and addressed.

Mr Cele said that the Department would follow up on the issues in Mpumalanga and Eden District.

He said South African fruit exports were under attack and there would be a huge reversal if the matter was not vigorously dealt with. He also said that in Iran, three people with doctorates had been assigned to take care of 50 000 tons of fish, while currently in South Africa there was only one person with a doctorate assigned to all the fish. 

The meeting was adjourned because of the unbearable heat conditions.