1 namc strategic plan and budget presentation portfolio committee on agriculture 06 march 2006...

1

NAMC Strategic Plan and Budget Presentation

Portfolio Committee on Agriculture06 March 2006

Strategic Positioning of SA Agriculture in Dynamic Global Markets

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2

Structure of Presentation

• Questions from last Portfolio Committee briefing

• Highlights for 2006/07

• The Strategic Plan for 2007/08

• Budget 2007/08










3

Questions & Answers

• Improved communication with the Minister

– Over four sessions with the New Minister

– Numerous meetings with the Minister’s economic advisor

• Review of the Agricultural Marketing Environment

– Report submitted to the Minister










4

Guiding Documents

• Marketing of Agricultural Product Act

• The Strategic Plan for South African Agriculture

• Draft Transformation Charter for Agriculture

• Accelerated and Shared Growth Initiative for South Africa










5

Highlights










6

Market Intelligence

• Undertook numerous studies aimed at monitoring developments in existing markets and changing direction of trade

• Examples of studies:

– Computer analysis of the potential change to the SA, SACU, India, Mercosur/Brazil agricultural trading relationships

– Possibilities for fruit export to Russia

– Foreign market development for potato industry

– A study to assess the impact of RSA Class 1 exports to Africa and Indian

Ocean island countries










7

Markets and Economic Research Centre

• Collaborated with industry and other donors to fund market research to the value of R3,4 million

• Examples of research:

– Nine sub-sector studies on those sectors identified as key to the success of ASGISA

– SA-New Zealand Comparative study on effects of deregulation

– Study on taxes in agriculture










8

Section 7 Investigations

• Fresh Produce Markets

• Game Section 7 Investigation

• Sorghum Section 7 Investigation

• Citrus Exports Section 7 Investigation

• Input Cost Monitoring Section 7 Investigation










9

Food Price Monitoring

• Collaboration with DoA, University of Pretoria & StatsSA

• Published Food Cost Review & Quarterly (4) Food Price Trends

• Capturing rural food price data from identified rural stores & Spazas

• The 2006 copy of the Urban and Rural Food Cost Review will be available in July 2007










10

Use of Statutory Levies Collected


Total value of production

R’ million

Levies collected

R’ million

Levies available for PDIs

R’ million

Levy collection success rate

Citrus 2 900 19.8 1.9 (11%) 78%

Cotton 124 3.7 0.49 (10%) 100%

Dairy 4 012 12.0 2.8 (36%) 80%

Deciduous Fruit•Pome Fruit•Stone Fruit•Table Grapes

2 203773

1 439

17.56.3

11.4

1.7 (10%)0.6 (10%) 1.1 (10%)

96%98%95%

Dried Fruit 192 2.0 0.2 (11%) 98%

Potato 2 221 13.3 1.5 (11%) 99%

Sorghum 172 0.8 0.1 (12%) 67%

WineWinetech (Grapes)WOSASAWIS

2 626 37.4 11.8 (32%)99%99%99%

Winter Cereal 2 970 23.5 1.4 (6%) 96%

Red Meat (4 months)

2 867 1.0 0.08 (8%) 76%

Total 22,499 149.1 24.0 (16%)









11

Management and Control

• Leadership:

– Council headed by M Karaan; 9 other Council Members - all part-time

• Management:

– CEO

– CFO

– MANCOM

– Research Committee

– ATAF Committee










12

Markets and Economic Research Centre










13

R&D SCOPE AND NATURE


National conferences

Inreach: Personnel development, seminars

Outreach: Bursaries, national & international engagement with stakeholders and partners, publications

×××Market development and feasibility studies

×××Committee 7 studies (link to value chains)

×××Sub-sector studies using SCP framework (link to value chains)

×××Linking farmers to markets (specific emphasis on small-scale and emerging farmers)

×××Risk management [tools, trends, volatility]

×××Information management system [data, analysis & interpretation =information, trends, reports, FPMC, etc]

×××Competitiveness [at different levels, sources of productivity, comparisons]

×××Trade [tariffs, TRQs, NTB's, trade agreements, trade flows (intra and inter)]

×××Mapping, understanding and quantifying value chains

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Sub-sectorR&D focus areas

National conferences

Inreach: Personnel development, seminars

Outreach: Bursaries, national & international engagement with stakeholders and partners, publications

×××Market development and feasibility studies

×××Committee 7 studies (link to value chains)

×××Sub-sector studies using SCP framework (link to value chains)

×××Linking farmers to markets (specific emphasis on small-scale and emerging farmers)

×××Risk management [tools, trends, volatility]

×××Information management system [data, analysis & interpretation =information, trends, reports, FPMC, etc]

×××Competitiveness [at different levels, sources of productivity, comparisons]

×××Trade [tariffs, TRQs, NTB's, trade agreements, trade flows (intra and inter)]

×××Mapping, understanding and quantifying value chains

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Sub-sectorR&D focus areas









14

Markets & Economic Research Fund

• Research Fund of R10,3 million

– Other donors encouraged to contribute

– Fund ring-fenced for Economic Research purpose only

– Introduced a peer review mechanism to evaluate terms of reference, proposals, reports

– Fund will serve to address government objectives as outlined in the agricultural programme of action and support the development of trade policy support models










15

Trade Policy Support Models

• Models

• BFAP/NAMC – Econometrics

• PROVIDE/DoA – Computable General Equilibrium

• Tralac/NAMC- GTAP

• Free State University/NAMC – Spatial Equilibrium

• Objective

• Better understanding and interpretation of SA & International Trade policy

• Increased collaboration between economic researchers










16

Trade Intelligence

• Understand requirements of markets

– Market research

• Trends, key supplies, size, consumption patterns, channels of distribution, price formation, etc.

– Develop new markets

• Change direction of trade from Europe to Near, Middle and Far East

• Target countries with capita income of over $5,000

• India, Vietnam, Kazakhstan, Iran, Bangladesh & Oman

– Maintain access to existing markets

• Consumer research

• Market development campaigns










17

Academic Support Programme


University Number of students

MSc /PhD

Research Topic

KwaZulu Natal 1 An institutional analysis of SA new Co-operative Act

1 Factors influencing the sustainability of smallholder co-operatives in KwaZulu-Natal

Stellenbosch 1 An enquiry into the potential for change management by selected wine producers co-operatives in the Robertson wine district

Venda 1 Economic analysis of Thohoyandou town and Tshakhuma informal fruit and vegetable markets

Ghent Strategies to promote competitiveness and equity in South African agribusiness: A case of black economic empowerment in the Sa wine industry

Total 5









18

Fresh Produce Markets Investigation Report Roll-out

• Engagement with SALGA and DPLG to agree on implementation of recommendations

• Reconstitute Section 7 to facilitate implementation

• Appointment of special committee to look at amendments and/or redrafting of legislation

– Agricultural Products Agency Act, no. 12 of 1992

– Various Municipal By-laws

– Agricultural Products Standards Act (enforcement)










19

Support to Agricultural Economics Association of South Africa (AEASA) & Making Markets Matter

(MMM)

• MERC will continue to support the two annual events. The events will be used to:

– Test research results with AEASA members (premier agricultural association)

– Identify future research items

– Provide a platform for the Agricultural Economics fraternity to advise on implementation strategies for various NAMC and DoA programmes

– Train black agribusinesses on various business management issues

– Networking platform for black agribusinesses










20

Agri benchmark

• The NAMC will be part of the international agri benchmark initiative.

• Initial focus:

– Grain and beef sub sector

• Benefits:

– Being able to provide competitiveness indicators based on international comparisons

– Comparing different policy instruments

– International expert panel










21

Electronic Research Library

• Latest NAMC research report available on request:– Fresh Produce Section 7 investigation – Game (wildlife ranching) Section 7 investigation– Solutions for sustainable export in the citrus industry– Sorghum industry study– Wheat to bread value chain study– Possibilities for fruit exports to Russia– Impact of RSA class 1 fruit exports to African and Indian Ocean

Island countries– Sub-sector studies (Regulatory constraints & challenges, possible

government intervention to remove bottlenecks)– Study on taxes on the agricultural sector– Supply and demand models for potato industry– Rural and Urban Food price monitoring– Input cost monitoring– Impact of deregulation on agricultural efficiency and productivity










22

Other Activities

• Undertake Section 7 Investigations on:

– Honey production

– Mohair

– Olives

• Information Management Systems

– Rural & Urban Food Cost Review

– Quarterly Food Price Trends

– Input cost Monitoring






23

Enterprise Development










24

Key Activities

• Marketing Schemes

• Farmers business support models

– Business linkages model

– Franchise model on niche products, eg. olive marketing (targeting women as beneficiaries)

• Management and growth of database of emerging enterprises

• Agribusiness Technical Assistance Fund

• Linkages with major buyers of produce

• Export promotion

• Distribution of market information to emerging enterprises

• Re-alignment of trusts to AgriBee objectives










25

Summer Grains Schemes

• Start Date: 2007/08 planting season

• Focus:

– Input cost insurance

– Mentorship/extension support

– Initial soil preparation

– Temporal post harvest grain storage

• Partners: Co-operatives

• Funding: R40 million from Maize Trust, Oilseed Trust

• Target: 5000 black grain farmers over 5 years










26

Other schemes• Citrus

– Access to international markets

– Extension service through pack houses and agents

– Part payment of packing costs for black citrus exporters– Cost sharing of trees with black farmers expanding orchards

• Livestock– Innovation fund for abattoirs and feedlots sourcing livestock directly from

black farmers

– Training on livestock marketing

• Fresh Produce Markets– Through the implementation of Section 7 report on fresh produce markets

– Reduction of commission by black agents from current 5% to 2,5%

– Staged payment into fidelity fund by black agents

– Space for black agents










27

Agribusiness Technical Assistance Fund

• Allocated R2 million to the Agribusiness Technical Assistance Fund to support black owned Agribusinesses in the database

– Fund ring-fenced for Black Agribusiness Technical Support only

– A policy on the use of the fund has been developed

– The fund will be used on a cost sharing basis with agribusiness contributing a certain amount

– The black owned agribusinesses will be assisted through existing industry structures, eg. ABC, Trust, etc.

– Agribusiness will be encouraged to apply for specific technical assistance, eg. appointment of technical advisors on AgriBEE transactions, business plan, certification, export promotion, training, etc










28

Statutory Measures










29

Key Activities

• Statutory Measures Investigations

• Monitoring and review

• Registration of Directly Affected Groups

• Conducting of pools

• Records and returns

• Crop Estimate Liaison Committee oversight










30

Statutory Measures Investigation

• Pigs statutory measures (Levies, Records & Returns)

• Red meat (cattle and goats) statutory measures (Levies, Records & Returns)

• Wool statutory measures (Records and Returns)

• Wine statutory measures (Levies adjustment for inflation)

• Stone and Pome fruit statutory measures (Levies, Records and Returns)

• Grapes statutory Measures (Levies, Records and Returns)










31

Administration and Budget










32

Budget


Council and Admin

MERC Enterprise Development

Statutory Measures

Total

Salaries 4,987,000 3,500,000 950,000 900,000 10,337,000

Admin 3,851,520 1,132,480 565,000 295,000 5,844,000

Operational expenses

654,000 10,500,000 2205,000 250,000 13,609,000

Stores 210,000 0 0 0 210,000

Total 9,702,520 15,132,480 3,720,000 1,445,000 30,000,000









33

Administration

• The Council has the following governance structures that will continue to comply to Treasury Regulations and the PFMA:

– National Agricultural Marketing Council

– Executive Committee

– Audit Committee

– Management Committee

– Human Resources Committee

– Risk Management Committee

– Bargaining Committee

– Research Committee










34

Dare to Dream

• We have established smart targets

– Stretch greater than reach

– Measurable

– Agreement on what to measure

– Record progress

– Time limits set

• Through the implementation of the differentiation policy, we will be able to:

– Identify each employees’ talents and stretch them to achieve set targets

– Manage around non talents










35

Emerging Issues

• Redrafting of the Marketing of Agricultural Products Act

• Need for policy on costs sharing with industry on key activities:

– Research

– Export promotion

– Trade marks

– Academic support

• Reporting line for the NAMC










1 namc strategic plan and budget presentation portfolio committee on agriculture 06 march 2006...

Documents

existing markets

namc strategic plan

rural food cost review

investigation sorghum

food price trends

rural food price data

market research

fruit export