South African Business 2016 edition

OVERVIEW Agriculture

OVERVIEW Agriculture South Africa is ploughing forward. The past year has not been an easy one within the agricultural sector as South Africa was plagued by the worst water shortages in 23 years along with drought conditions yet, despite these challenges, exports continue to grow fast. Fruit, sugar and wine are the products that have performed best in the modern era. These commodities have helped ensure that agricultural products make up about 7% of the country’s total export basket. Within that total, more than 50% of agricultural export is made up of processed agricultural products, a promising development for the future of agri-processing. National trade policy strategies are intended to enhance this development. Avocados and tomatoes are among other important export crops, while the macadamia nut industry has grown exponentially in recent years. Transport and logistics South Africa has about 200 silos, mostly concentrated in the central grain-growing areas. Getting agricultural produce from these silos to market accounts for nearly 40% of the price that the end-user pays. If a plan of the National Department of Trade and Industry comes off, many more silos will have to be built. The plan, in conjunction with African Micro Mills and Kuvusa Mills, is to develop small-scale mills in rural areas all around South Africa. Rural development The Land and Agricultural Development Bank of South Africa (Land Bank) and the African Development Bank have committed to a R1-billion fund to help emerging farmers get access to finance. The development of small-scale farming and co-operatives is also being promoted at the level of provincial government and district municipality. In KwaZulu-Natal, partnerships with the private sector are boosting the provincial government’s One Village, One Product campaign. Beer producer SABMiller sources 5 000 tons of yellow maize SOUTH AFRICAN BUSINESS 2016 68

OVERVIEW from the subsistence farmers of Bergville, while the smallscale farmers of Weenen supply chicory to the Estcourt factory of Nestlé. The entire value chain of agriculture is under scrutiny with the aim to help smallscale farmers by improving infrastructure, creating new markets and assisting them to gain access to the big buyers such as supermarkets. In many areas, private companies such as South African Breweries, Woolworths and Pick n Pay are already onboard. Massmart is committed to creating opportunities for emerging farmers through its Direct Farm Programme. Pick n Pay has contracted to buying more than 200 tons of organic vegetables from a co-operative in Tzaneen in Limpopo. Woolworth’s organic-food sales are on course to go past R1-billion annually. Also in Limpopo, Woolworths has agreed to buy 700 tons of tomatoes from three emerging farmers. NGO TechnoServe and food-supply company, Qutom, are assisting the farmers. In addition, the Woolworths Foundation made a loan of R1.25-million that is being used to prepare 10 hectares. DAFF aims to increase the number of smallholder producers in the country exponentially. As the DAFF strategic plan says, ‘There is a need to coordinate and integrate all the support provided to smallholder and subsistence producers.’ Dams are being built, a national fencing scheme is being rolled out and produce markets are being established in small rural towns. Crops South Africa produces a full range of crops, from sub-tropical fruits, nuts, grapes and sugar to maize, wheat and sunflower seeds. The Orange River supports the cultivation of citrus and grapes of many kinds. The region is particularly well suited for the cultivation of Valencia oranges, lemons and grapefruit and the dry, hot conditions mean that it is easy to control pests. Maize and wheat A total of 70% of South Africa’s grain production is maize, which covers 60% of the cropping area of the country. The North West Province produces one third of South Africa’s maize and about 15% of its wheat. The Free State is the country’s largest supplier of wheat (37%) and maize (34%). The Western Cape has 350 000 hectares of wheat-producing land. Fruit South Africa is famous for its fruit. Export volumes, particularly in tropical fruits such as mangoes and avocados, have been growing rapidly in recent years. The sector is highly sophisticated and is skilled at the refrigeration and packing required for European Union standards. Large volumes of exports are achieved in deciduous fruits such as apples, table grapes, pears, peaches, plums and apricots. Avocadoes thrive in Mpumalanga and Limpopo and production volumes above 110 000 tons per year have been achieved. 69 SOUTH AFRICAN BUSINESS 2016