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Nurturing, understanding, partnering
effectively and building wealth for all
19 June 2019
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Transformation
• What do we mean by transformation
• The South African definition
• Land redistribution as a tool for restorative justice.
• The literal meaning - The four R’s
• Reframe – Take a fresh look at the challenge.
• Restructure – Adapt to improve competitiveness
• Revitalise - Grow by investing new opportunities
• Renew – Empower people by making part of an ongoing process of growth
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Transformation: Challenges at a global level
• Climate change and threating ecological collapse• Droughts and famine in developing world
• Irregular and weather phenomena
• Sustainable- Regenerative practice - CA
• Increasing distrust in the social order.• Increasing wealth gap especially in the west.
• Increasing xenophobia and religious intolerance word wide.
• A rise in political and religious extremism e.g. The alt right and Trump. And Islamic fundamentalism.
• Increasing social division and political instability.
• Disruptive technology – Artificial intelligence, merger between info tech and biotech as well as automation
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• Massive unemployment, increasing poverty and extreme inequality
• Low economic growth
• Heightened social and racial tensions
• Political uncertainly
• Policy uncertainty about land reform
• Weak SOE’s
• Rural decline and urbanisation
• Institutional decline and corruption
• Weak water infrastructure and droughts
• Impeding legislation
The South African Transformation Environment: Challenges
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Core Assumptions
• Political social and economic ambiguity and uncertainty is unlikely to stop in the foreseeable future.
• Fundamental change is a reality.
• Core values of democracy, liberty and equality are under threat.
• There is a move to the extremes and positions are hardening.
• Protecting extremes is isolating and does not provide us with answers on the shared challenges we face going into the future.
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A vision for transformation?
• Transformation Imperative 1: Grow the economy
• Transformation Imperative 2: Provide quality training
• Transformation Imperative 3: Access to finance
• Transformation Imperative 4: Industry leading the way
• Transformation Imperative 5: Embracing the 4th Industrial Revolution
• Transformation Imperative 6: Deliver on Existing Plans through Private and Public Sector Agricultural Targeted Development Partnerships
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Transformation Imperative 1: Grow the economy
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Transformation Imperative 2: Provide quality training
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Transformation Imperative 2: Provide quality training
CURRENT POLICY FRAMEWORK
WHAT DOES THIS TELL
US CHALLENGES
PROPOSED
SOLUTIONS
• National Skills Development
Strategy III (2013)
• Agricultural Education and
Training Strategy (2005)
• Skills Development Act (Act
No. 97 of 1998)
• Skills Development Levies
Act (Act No. 9 of 1999)
• Continued skills
shortages in the
artisanal, technical
and professional
fields
• Training needs and
targets not met by
AgriSeta
• Skills levies for
18/19 amounts to
R398 million and
projected income
for 19/20 amounts
to R415 million
• Research reports
express concerns
about quality of
training
• AgriSeta income
too little to fund
all applications
• Limited number of
skills levy players
• No assessment of
impact of training
initiatives funded
by AgriSeta
• Restructure and
position
Agricultural
Colleges and
AgriSeta as
world class
farmer and farm
worker training
institutions
• Establish
industry-
academia
linkages
• Develop an
integrated,
impact driven
and targeted
system based on
agri-training best
practices
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Transformation Imperative 3: Access to finance
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CURRENT POLICY FRAMEWORK WHAT DOES THIS TELL US CHALLENGES PROPOSED SOLUTIONS
• National Credit Act• Land and Agricultural
Development Bank Act, 2002• The National Policy on
Comprehensive Producer Development Support (NPCPDS)
• Blended Financing Model to respond to Black Producers Commercialisation program (BPCP)
• According to the Land Bank’s 2018 Financial Year Report:
• R5.4 billion of gross loan book is classified as transformational projects (2015: R2.3 billion)
• R1.55 billion disbursed to Transformational projects
• R74 million in interest rate subsidies provided
• Approx. 1500 Black farmers supported through direct channels
• Commercial bank’s loan margins are based on the borrower’s overall risk grade
• Commercial bank’s struggle to finance emerging farmers due to:
― Lack of mandate
― Type of loan required (term)
― Lack of security (title over property)
― Lack of water rights
― Lack of operational track record
• Position and restructure the Land Bank as the conduit for financing developing farmers
• Establish an Agri-Development Fund (ADF)
• Blended finance model (Grant funding and private sector funding)
• Establish partnerships with Commodity Organisations, Agri Businesses, NGO's etc to assist with mentoring, risks mitigation and implementation of development programmes
Transformation Imperative 3: Access to finance
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Transformation Imperative 4: Industry leading the way
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Transformation Imperative 4: Industry leading the way
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Cotton SA
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National Wool Growers Association (NWGA) Case Study
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Grain SA Case Study
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Sernick Group
660
emerging cattle
farmers
1433
jobs
R165 Mil
Jobs Fund
R138 million
Sernick
Macthfunding
R100 million
in kind
infrastructure and
equipment
R100 mil
Loan
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Sernick Group
• How does it work?
• Emerging farmers apply to become members.
• Tier 1 consists of 360 farmers with no land or less than 25 cattle with low level intervention.
• Tier 2 consist of 300 farmers with Land or lease of more than 5 years and more than 25 cattle with more intervention which include working capital from the profits of the custom feeding program.
• Tier 3 consists of 50 carefully selected farmers out of Tier 2 that will be brought up to full commercial farming status. Most of the interventions are in Tier 3.
• Two important Enhancers
• Project makes full use of the complete value chain existing within the Sernick Group. We supply and take off.
• An Integrated database will collect relevant information and track the progress of each beneficiary as information is collected by the monitors every three months.
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Transformation Imperative 5: Embracing the 4th
Industrial Revolution
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• 4th Industrial Revolution: Information Technology
• 4th Industrial Revolution’s Game-Changers for Agriculture
• Data: Improved data and accessibility is assisting
in understanding and predicting climatic,
ecological market related risks and opportunities.
• Examples are:
• Improved farm specific data collection
• Affordable GIS information systems such as
airbus satellite imaging.
• Improved climate and yield prediction
• Electronic data based management systems
• Know your market – Big data and consumer
behaviour.
• Crop efficiency technology. Improved and targeted
genetics. More efficient irrigation, plant nutrition and
pest control farm specific data collection and analysis .
• New farming techniques: No till, regenerative farming
techniques, contained and vertical farming.
• New markets such as converting by product to Bio-
chemicals and bio-energy:
• Food technology: Development of plant based high
conversion protein as a substitute for traditional meat
based protein.
Transformation Imperative 5: Embracing the 4th
Industrial Revolution
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Transformation Imperative 6: Deliver on Existing Plans through Private and Public Sector Agricultural Targeted Development Partnerships
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Transformation Imperative 6: Deliver on Existing Plans through Private and Public Sector Agricultural Targeted Development Partnerships
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Transformation Imperative 6: Deliver on Existing Plans through Private and Public Sector Agricultural Targeted Development Partnerships
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Response to create opportunities in agriculture
• Tools that can be used
• Partnerships
• Collaborative digital platforms
• Think tanks
• Value chain inclusivity
• Reform rural education
• Decentralised food systems
• Blockchain and financing
• Biotech and infotech
• Support organised structures
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Conclusion
• If organised agriculture is weak, our sector will be weak.
• Our competitiveness and ability to transform is undermined by our inability to harness the resources in our institutions and to strengthen cooperation in the private sector.
• We do not have the luxury of expecting that the failing state institutions will recover in the short term.
• Our skills on all levels are tested in discomfort.
• We need to own our destiny and swiftly coordinate work in our commodities and strengthen partnerships.
• The idea is to collaborate, not duplicate.
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Transformation Imperative 5: Embracing the 4th
Industrial Revolution
• Professional agriculture must feed agrowing population
• For that we need a professional farmer
• In 1950 the world population was 2.5 billionand only 746 million people lived in cities
• By 2014 the world population had reached7.2 billion with 3.9 billion living in cities
• The world population is projected to reach9.6 billion by 2050 and urban population6.4 billion
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Transformation Imperative 6: Deliver on Existing Plans through Private and Public Sector Agricultural Targeted Development Partnerships
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Transformation Imperative 6: Deliver on Existing Plans through Private and Public Sector Agricultural Targeted Development Partnerships