namc strategy and budget presentation 2009/10namc strategy and budget presentation 2009/10...

NAMC Strategy and Budget Presentation 2009/10

Presentation to the Parliament’s Portfolio Committee: Agriculture, Forestry and Fisheries

08 July 2009Mrs Ntombi Msimang -

Chairperson: NAMC

Mr TR Ramabulana -

CEO: NAMC

1

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

2

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

3

Key Messages influencing NAMC strategyKey Message from the President:

Minimising imports

Creating decent work

Aggressive implementation of AgriBEE

Support for women, youth and the disabled

Comprehensive rural development strategy linked to land & agrarian reform and food security

Strengthening regional integration

Key message from the Minister:Investment in agro‐processing

Expand international markets for producers

Key message from DoA:Develop an agricultural tariff policy framework as well as agric marketing policy

Conclude the review of the MAP Act

Restructuring of fresh produce markets in RSA

Business plan for the establishment of fresh produce collation infrastructure in the provinces

4

5

Role of agriculture

Agriculture’s real value to the economy is embedded in several other not so obvious economic functions These include:

agriculture’s forward and backward linkages, its ability to earn foreign exchange, employment, and provider of food and food security.

NAMC & food price monitoring

6

In 2002 high food price inflation was cause for concern among policy makers

In November 2002 the Minister of Agriculture established a food pricing monitoring committee (FPMC)

An NAMC Council Member led the Committee

Source: Stats SA

Cabinet intervened

NAMC & food price monitoring

7

Urban data are obtained from Stats SA & AC NielsenRural data are collected in collaboration with the 9 provincial depts of agric (PDA’s) Outputs:

4 Quarterly urban and rural food price releases per year1 Annual Food Cost Review

Global drivers of food price inflation

8

Demandfor

Maize prices

Oilseed prices

Oil priceExport

restrictions

Rice prices Weather

shocks

Wheatprices

Asiandemand

Declinein stocks

Lowinterestrates

Financialspeculation

Cross-cuttingfactors

Source: IFPRI

Effects of the food price crisis

More severe impact on the poorer sections of the world populationMore than 100 million people thrown into poverty worldwideFood net importing countries’ import bill has risen and continues to riseMalnutrition has worsened – poor resort to less nutritious alternatives

9

Has the food price crisis abated?

These ‘global drivers of food price inflation’have now reversed direction since second quarter of 2008 – leading to lower commodity pricesThe world financial crisis has now entered the fray – putting pressure on world income growthWhat does this mean for food prices at the supermarket shelf?

10

Has the food price crisis abated?

Good news: Retail level food price inflation is slowing (from peak of 18.8% in Aug ’08 – we’re now at 13.7%)Some of the decreases in food commodity prices are slowly being filtered into the retail shelf prices

Bad news:13.7% is still too high (upper limit is 6%!)Retail level inflation is taking too long to come down (in some cases, e.g. bread, maize meal, sunflower oil)

Recession: not likely to have any major impact on food prices

11

Issues & developments in SA

Weather conditions affect size of local cropWeaker Rand increases price of food importsChallenges with land reform implementation have affected investment in agriculturePrice collusion (fines by the Comp Comm), insufficient competition, high concentration in the food industry at the input, processing and retail sectors

12

Issues & developments in SA

Role players in the food supply chain have seen increasing pressure to look at their pricing practicesThis has led to retailers (PnP) & suppliers engaging to find solutions – no concrete solutions so farSome of the outcomes of the PnP/supplier meetings:

Ways of cutting costs to be further investigatedRole players encouraged to report areas of monopoly in input items (packaging, wax, glass, fertilizer, etc.)Development of alternative sources of supply in case of severe concentration

13

Future outlook & policy optionsGlobally, food commodity prices have gone downHowever, the crisis is not overThe crisis presents an opportunity to re-look the global food system (food production & security are fundamental in development!)Globally, investment levels in agriculture are still too low.Moves towards invoking a Green Revolution in Africa are encouraging – these need to be bolstered

14

Future outlook & policy optionsLocally, food supply response has seen prices stabilizing slightly – but prices remain far too highPolicy responses are being craftedEfforts to get people back to the land in South Africa need to be multiplied & coordinatedSafety-nets are receiving more attentionMedium- to long term plans to boost supply are being discussedTailored support for all classes of farmers need more attention – fiscal constraints remain a challengeThe food supply chain in South Africa needs more in-depth analysis & transparency on the part of the role players

15

Rural Food Price Monitoring

Prices of 26 food items are monitored at 183 rural outlets throughout the country. Done in collaboration with Stats SA and Provincial Departments of AgricultureThis initiative vitally important for the overall food price monitoring project, but some challenges:

The provincial staff responsible for data collection change positions regularly (this after a lot of time and money in training was invested);Forms used to capture data are incomplete and do not reach the NAMC within set timeframes; Logistical, i.e. sending and receiving forms between the different partner institutions, is challenging since strict deadlines must be adhered to;The quality of data relative to the mainstream CPI data collection process is not up to standard and cross verification processes are difficult

Selected projects/studies and recommendations

Report into the functioning of the agricultural

futures market for grains and oilseeds

Retain the location differential system as it is currently designed and constructed.That the JSE should consider the introduction of ‘mini size’ contracts.That the JSE consider publishing a market commentary report.introduction of a ‘commitment of traders’ report issued by the Financial Services Board

Report on the Section 7 Committee on the

National Fresh produce Markets

Ownership and managementLegal frameworkCommission systemMarket access and transformationInfrastructure

Report on the Section 7 Committee

Investigation into the Wheat to Bread value

chain

• ... a comprehensive support and incentive package

must be provided to all farmers as a way of

encouraging progressive increase in the production

of wheat ...

• ... investigation (into) methods and tools that can

be used to provide direct support to wheat

producers and incentivise them ...

• ... determine plausibility and welfare impacts of

improving the levels of protection that the wheat

industry is currently exposed to.

• regulatory mechanism should be devised and

implemented in order to compel retailers to

provide monthly price records of brown and white

bread prices

• Special schemes should be devised in collaboration

with relevant government departments ... to

support the milling and baking industry to invest in

modern equipment and technology aimed at

minimising costs down the chain.

• More efforts should go towards removing barriers

to entry and participation for smaller industry

players

in the food value chain so as to enhance

competition.

Functions financed through statutory levies –

2008

Functions Amount spent

R

% of total levy

expenditure

2008

% of total levy

expenditure

2007

% of total levy

expenditure

2006

Administration 15 789 829 7 8 7

Transformation 51 162 468 23 20 17

Export promotion & Market access 25 777 992 12 9 10

Research 70 680 630 32 39 42

Information and Industry liaison 36 861 025 17 13 15

Production development 2 154 024 1 1 ‐

Plant improvement 2 526 287 1 1 2

Quality control 5 299 026 2 3 3

Local promotion and Consumer

education

12 008 719 5 5 1

TOTAL 222 260 000 100 190 973 237 143 929 703

Levy income and amounts spent on transformation 2008

Industry Total amount of levy

income

R

Amount spent on

transformation

projects

R

% of total

levy income

Prescribed

% of total

levies to be

spent *

Difference

Citrus 27 451 509 3 507 195 12.7 10 2.7

Cotton 1 901 840 614 639 32.0 10 22.0

Dairy levy 27 915 992 3 869 516 13.8 20 (6.2)

Deciduous fruit 30 683 582 4 799 873 15.6 10 5.6

Dried fruit 2 035 888 366 240 18.0 10 8.0

Potato 23 043 688 4 200 786 18.2 20 (1.8)

Red meat 27 082 303 9 172 322 33.9 20 13.9

Sorghum 1 617 756 209 500 12.9 20 (7.1)

Table grapes 11 554 840 1 647 830 10.0 10 ‐

Wine 48 921 443 18 447 538 37.7 20 17.3

Winter cereal 27 198 618 4 327 029 15.9 20 (4.1)

TOTAL 229 407 459 51 162 468 22.3

Volume Change KG (%)

-60

-40

-20

0

20

40

60 PlumsNectarinePeachCitrusGrapeTotal FruitApplesBananasPearsMelonExotic Fruit

Total MarketTNS Superpanel Data 12 w/e 22 March 09

Market Data –

Volume (12 Weeks)

German retailer feedback

KauflandIn total 9% more SA plums sold in 2009 compared to 2008Increase due to strong campaign

EdekaSA achieved growth of 25%Campaign was able to increase sales significantly, satisfied with execution and coordination at the PoS.EDEKA welcomes this SA initiative - enables SA fresh fruit to position itself on a long-term basis”

German retailer feedback

Metro31%more SA plum sold

Kaizers Tengelman40%more SA plums sold

The campaign provided additional consumer benefits, strengthened the relationship between retailer and country of origin

New ApplicationsPoultry industry

Transformation R 4 395 743

Consumer education R 7 522 654

Consumer assurance R 3 639 876

Research and development R 1 240 766

Information, liaison and training R 2 105 073

Administration R 1 890 411

Total expenditure R 20 794 523

Wine industry R 50 million

Sorghum industry R 2 million

Red meat industry R 30 million

Pork industry R 10 million

Winter cereal industry R 30 million

Market development/ consumer education (Apples, pears, apricots, nectarines, peaches) R20 million

SA’s trade in agricultural and food products

South African total agricultural trade, 2006 - 2008 (2008 prov.)

-

5

10

15

20

25

2004 2005 2006 2007 2008

R b

illio

n

Year

Primary exports Primary imports Primary trade balance

South African primary agricultural trade, 2008 (prov.)

-10

-5

-

5

10

15

20

25

30

35

2004 2005 2006 2007 2008

R b

illio

n

Year

Processed exports Processed imports Processed trade balance

South African processed agricultu-ral trade, 2008 (prov.)

SA’s trade in primary agricultural products (value of trade)

0 1000 2000 3000 4000 5000

Corn (Maize)OrangesGrapesApplesWool

WheatPears & Quinces

GrapefruitLemons

MandarinesCorn (Maize) SeedSunflower Seeds

PlumsVegetable Products

AvocadosTobacco

Fruit NesoiPeanuts

Hop ConesNuts Nesoi

Rand million

2008

2007

2006

EXPORTS

0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000

WheatTobacco Stemmed

CoffeeCotton

Kidney BeansBlack Tea FermdtVegetable Seeds

BarleyCorn (Maize)

PeasHop Cones Fresh

PurebredTobacco

Cashew NutsCorn (Maize) Seed

CoconutsFruits of Genus

Milk/CreamHop Cones

Pepper of Genus

Rand million

2008

2007

2006

IMPORTS

Source: World Trade Atlas Source: World Trade Atlas

SA’s trade in food products (value of trade)

EXPORTS

0 1000 2000 3000 4000 5000

Wine >2l Wine

Cane sugar Ethyl alcohol

Pure sucrose refinedFood prep

Sunflower seedWater

Peaches preparedMeat offal

Grapes driedCigarettes

Meal of maizeTobaccoLiqueurs

Macadamia nutsFruit juice

Pears preparedSheep/lamb skins

Fruit mixtures

Rand million

2008

2007

2006

IMPORTS

0 1 000 2 000 3 000 4 000

RiceSoya oilcake

Palm oilWhiskies

Chicken cutsSoybean oil (refined)

Food preparationsSoybean oil (crude)

Beer from maltAnimal offal

MaltSunflower seed

WatersPalm kernel

Sugar confectionAnimal feedCane sugarPeptones

Food preparations ‐ infantsMeat of swine

Rand million

2008

2007

2006

Source: World Trade Atlas Source: World Trade Atlas

SA’s trade in agricultural and food products (Exports)South African agricultural exports to the EU 27 grew to R17.1 billion (2008), an increase of 26% from 2007.

During 2008, 38 % of South Africa’s agricultural exports flowed to the EU 27, compared with 45 % in 2007.The Netherlands, UK and Germany important markets in the EU

South African agricultural exports to the SADC grew to R10.7 billion (2008), an increase of 157 % from 2007.

Nearly one quarter (24 %) of South African agricultural exports during 2008 flowed to SADC member countries, up from 14 % in 2007.Zimbabwe and Mozambique two important markets

Transformation GuidelinesThe 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 a 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

Transformation GuidelinesThrough 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 SchemesIndustries should design and implement initiatives to assist and accelerate the development of black owned agribusinesses.

Skills Development and TrainingIndustries 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.

NAMC Marketing Training Courses

Making Markets Matter Training CourseIts 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 issuesCash flow management, Marketing strategy, financial analysis

AgriBiz Training course for WomenAs a follow up to the above training course, the NAMC 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

Export Promotions This programme is threefold:

1.

Training component, which is export orientedEmerging 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 TripsEmerging 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

3.

Certification ProgrammeThe NAMC has entered into a partnership with ComMark (DFID funded projects) to assist fruit farmers with the cost of food safety compliance codes

The emerging farmers under this programme are assisted to obtain certification that will enable them to export their products to international buyers

TRUST DATE ESTA- LISHED

TOTAL INHERITED ASSETS(transferred from former

Boards)R

CURRENT VALUE OF ASSETS

R

Fixed assets(as part of

value of assets)R

EXPENDITURE(recent financial year)

FINANCIAL YEAR END Admin

and otherR

Payment to beneficiaries

R

Citrus Trust February 1999 16 689 489 14 817 369 - 65 531 1 177 914 Feb 2007

Cotton Trust September

19978 289 880 7 452 016 5 809 866 661 402 700 031 Sept 2007

Deciduous Fruit Industry Dev

Trust

August 1998 13 692 000 16 355 291 - 30 747 450 450 Dec 07

Seed Industry Trust August 1997 2 952 398 2 030 961 219 346 77 559 - Aug 2007

Maize Trust August 2000 264 128 772 861 735 916 - 1 516 282 66 333 330 June 2007

Meat Industry Trust

Red Meat Research & Dev Trust

May 1998

May 199844 363 570

15 000 000

36 725 696

32 167 873

-

-

298 645

202 591

400 000 Sept 2007

Sept 2007

Mohair Trust September

1997101 391 436 195 971 265 9 652 622 281 6 000 000 Feb 2007

Oil and Protein Seeds Dev Trust October 1997 74 086 064 177 398 575 - 5 764 904 2 583 789 Feb 2007

THE FINANCIAL STATUS OF INDUSTRY TRUSTS

TRUST DATE ESTA- LISHED

TOTAL INHERITED ASSETS

(transferred from former Boards)

R

CURRENT VALUE OF ASSETS

R

Fixed assets(as part of

value of assets)

R

EXPENDITURE(recent financial year)

FINANCIAL YEAR END Admin

and otherR

Payment beneficiarie

sR

Sorghum Trust ♣ February 1999 6 554 135 9 134 052 - 165 459 923 750 Feb 2007

Winter Cereal Trust ♣ November 1997 11 239 713 50 378 426 - 1 445 871 26 285 169 Oct 2007

Wool Trust

International Wool Trust

August 1997

September 200387 625 322

IWS (Wool Trade Mark)

204 755 000

18 698 481

158

29 238

7 546 000

-

9 847 000 Feb 2007

June 2007

Potato Industry Dev Trust ♣ September 2004 0 10 321 758 - 2 206 210 16 685 207 June 2007

Dry Bean Trust ** October 1993 6 145 000 ** 6 145 000 - ** Oct 2006

Wine Industry Trust ** December 1998 Transfer from

KWV from 1999 –

2008:

369 000 000

** 140 000

000

- ** Oct 2006

TOTAL FUNDS IN

INDUSTRY TRUSTS

1 784 087 679

IndicatorsStrategic Objectives Strategic Goals Key Performance Indicators

2009/10

Key Performance Indicators

20010/11

SO 1: Increasing market access for all market participants

SO1.1 Linking farmers to markets SO1.1 3 Reports on issues pertaining to

market access to emerging farmers

SO1.1 2 workshops on linking farmers to

markets and contract growing

SO1.1 4 Reports on issues pertaining to

market access to emerging farmers

SO1.2 Development schemes SO1.2 Design one (1) scheme and

Implement one (1)

SO1.2 Design one (1) scheme and

Implement one (1)

SO1.3 Marketing Innovation SO1.3 Develop and implement 4 new

marketing innovations, 1 each quarter,

SO1.3 Develop and implement 6 new

marketing innovations

SO1.4 Realignment of Trusts and

forums to empowerment

SO1.4 Increase industry compliance with

NAMC transformation guidelines to 80 %

SO1.4 Increase industry compliance with

NAMC transformation guidelines to 85

%

SO1.5 Training SO1.5 86 Emerging agribusinesses to attend

4 different training courses

SO1.5 100 Emerging agribusinesses to

attend 4 different training courses

SO1.6 Promotions SO1.6 20 Emerging agribusinesses to attend

local marketing shows and negotiating sales

contracts

SO1.6 25 Emerging agribusinesses to

attend local marketing shows and

negotiating sales contracts

39


2009/10


20010/11

SO2: Promotion of the marketing

efficiency of agricultural products

SO2.1 Statutory measures

investigations

SO2.1.1 15 Statutory measures

investigations & submitted to

Minister for approval


investigations & submitted to

Minister for approval


gazetted


gazetted

SO2.2 Crop Estimate Liaison

Committee (CELC)

SO2.2 3 CELC meetings per annum ‐

May, October and November

SO2.2 3 CELC meetings per annum ‐

May, October and November

SO2.3 Registration with the NAMC

as a DAG

SO2.3 Increase the registration of

DAG’s

by 20 % annually

SO2.3 Increase the registration of

DAG’s

by 20 % annually

SO2.4 Report on the status of levies SO2.4 1 Status of levies report

published in July of each year

SO2.4 1 Status of levies report

published in July of each year

SO2.5 Support to Ministerial

trustees serving In trusts

SO2.5.1 2 Reports to the Minister on

the functioning of trusts ‐

1 every six

months

SO2.5.1 2 Reports to the Minister on

the functioning of trusts ‐

1 every six

months

40


2009/10


20010/11

SO3: Optimisation of export earnings from agricultural products

SO3.1 Trade analysis SO3.1.1 6 TradeProbe

publications

released ‐

1 in each month except

December

SO3.1. 6 TradeProbe

publications

released ‐

1 in each month except

December

SO3.2 Export promotion SO3.2 15 Emerging agribusinesses

to attend international trade shows

SO3.2 20 Emerging agribusinesses

to attend international trade shows

SO3.3 Market Development SO3.3 Cost share activities with

industry on the funding of 2 market

development programmes, e.g. in‐

store promotions

SO3.3 Cost share activities with

industry on the funding of 4 market

development programmes.

SO3.4 Identification of export

markets & trade intelligence

SO3.4 1 Reports on the following

markets released –

Africa and

middle east.

SO3.4 2 Reports on the following

markets released ‐

Africa, North

East Asia, , Asean

(Association of

South East Asia Nations)

SO3.5 Identification of potential export products (Product space)

SO3.5 Continuous scanning of trade

environment. 1 Research paper on

product space

SO3.5 Continuous scanning of trade

environment. 1 Research paper on

product space

41


2009/10


20010/11

SO 4: Enhancement of the viability of

the agricultural sector

SO4.1

Mapping,

understanding

and

quantifying

agro‐food

chains

(including

section 7 reports)

SO4.1.1 2 Agri‐benchmark reports

released annually

SO4.1.1 2 Agri‐benchmark reports

released annually

SO4.1.2 2 Section 7 committee

appointed

SO4.1.2 2 Section 7 committee

appointed

SO4.1.3 2 Section 7 committee reports

released

SO4.1.3 2 Section 7 committee reports

released

SO4.1.4 2 Agro‐food chain reports SO4.1.4 4 Agro‐food chain reports

SO4.2 Food price monitoring SO4.2.1 4 Quarterly food price trends

released ‐

May, August, December and

February

SO4.2.1 4 Quarterly food price trends

released ‐

May, August, December and

February

SO4.2.2 1 Annual food cost review

released ‐

July of each year

SO4.2.2 1 Annual food cost review

released ‐

July of each year

SO4.3 Input cost monitoring SO4.3 4 Input cost monitoring reports

released

SO4.3 4 Input cost monitoring reports

released

SO4.4 Risk management SO4.4 2 Report on risk management

annually

SO4.4 3 Report on risk management

annually

42

Budget Financial Year 2009/2010Budget Financial Year 2009/2010Description Final Budget

2009/10R

Total Income 27 072 000

Total Expenses 27 072 000

Salaries 14 140 000

Administration 6 846 001

Operational Expenses 6 086 000

namc strategy and budget presentation 2009/10namc strategy and budget presentation 2009/10...

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