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Regional Agricultural Policy for Southern
Africa Development Community (SADC)
GOSA Symposium 2014 John Purchase 19 March 2014
Global demographics
Absa, 2013
FAO Food Price Index
Source: FAO, 2014
Food Security Imperative
Many definitions to food security, but the one we will use
is the FAO definition (World Food Summit 1996):
“A situation that exists when all people, at all times,
have physical and economic access to sufficient,
safe and nutritious food to meet their dietary
needs and food preferences for an active and
healthy life”.
Components of Food Security
FOOD UTILISATION • Nutritional Value • Social value • Food safety
FOOD ACCESS • Affordability • Allocation • Preference
FOOD AVAILABILITY • Production • Distribution
• Exchange/trade
Complex concept:
Difficult to measure
and evaluate.
Stability over TIME
Food Security
Purchasing power
key to access
Score 0-100, 100=best environment
Best performance
Good performance
Moderate performance
Needs improvement
Global Food Security Index
Source: Economist Intelligence Unit/Du Pont (2013)
http://foodsecurityindex.eiu.com.
Economic Growth Prospects
Global GDP Growth: 2014 forecast IMF’s 2014 GDP forecast for Sub-Sahara Africa: 6.1%
Africa Trade Environment
Spaghetti bowl of African trade agreements
From: N Vink, US
- SSA $0.5bn trade surplus (1980’s) now a >$10bn deficit. - Growing net imports of cereal, livestock & oilseed products
Africa’s Imports and Exports of Agricultural Products (current values)
Africa’s net Imports of Food Groups (current values)
Value Chain Development & Agribusiness
Agribusiness & Value Chains Hot Topic McKinsey & Company Lions on the Move: The Progress & Potential of African economies + Others
Shoprite to open 171 new stores by June 2014, including 47 outside home market.
Global food jungle: Survival of the smartest
Consumers
Output Markets
- Wholesale
- Retail
Service providers
- Processing
- Storage
- Manufacturing
- Packaging
Primary agriculture
- Smallholders
- Commercial
Input service providers
- Finance & Insurance
- Seed, Fert’s, Agro-chemicals, etc.
- Livestock inputs
Value Chain Approach
Polic
y &
Legis
lation e
nvironm
ent
Po
licy &
Legis
lation e
nvironm
ent
Mineral Supplements
US$ 1,307.3
Genetics
US$ 1,313.9
Pesticides
US$ 1,084.2
Feed Supplements
US$ 553.3
Animals sent to slaughter
US$ 30,770.4 millions
Exports of Live Cattle
US$ 658.7 millions
Animal Health
US$ 496.1
Vitamins & Additives
US$ 23.1
Fertilizers
US$ 332.4
Forage Seed
US$ 203.0
Agricultural Lime
US$ 108.0
Diesel Oil
US$ 3,757.2
SLAUGHTERHOUSES
US$ 42.0 billions
Tanning industry
FINAL
CONSUME
R
Facilitating Agents – US$ millions
Food Industry and Food Service
Fencing & Posts
US$ 1,684.2
Facilitating Agents
US$ 23.4 billions
Domestic Sales: 37.2
Exports: 4.8
US$ billions
Meat
US$ 35.8 billions
Domestic Sales: 31.9
Exports: 3.9
Other Products
US$ 6.2 billions
Domestic Sales: 5.2
Exports: 0.9
Figure 3. Brazilian Beef Chain (gross revenue). Source: Neves et al. prepared with data generated by Markestrat and Scot Consultoria.
Tractors & Implements
US$ 527.9
SISBOV Ear tags
US$ 3.4
Water Filters
US$ 37.1
Refrigerant Gas
US$ 41.4
Packaging
US$ 804.3
Eletricity
US$ 496.0
Maintenance Parts & Equipment
US$ 151.1
Fuel Oil for Boilers
US$ 83.2
Chemicals for Cleaning
US$ 41.9
PPE
US$ 27.4
Lubricants
US$ 8.9
Leather
US$ 1,147.6
Offal & Glands US$ 1,110.2
Industrial Meat US$ 887.9
Feet, Instestine, Stomach, etc US$ 741.5
Tallow US$ 722.3
Prepared & Canned Foods US$ 498.2
Tripe US$ 437.6
Byproducts for Industry US$ 322.8
Meat Meal & Bone Meal US$ 194.6
Bladder US$ 75.5
Blood Meal US$ 31.3
Trading
US$ 246.8 millions
Meat: 163.2
Byproducts: 83.6
Retailers
US$ 42,883.3 millions
Meat: 25,060.7 Byproducts: 1,601.5
Distributors/Wholesalers
US$ 14.493,8 millions
Meat: 13,976.1 Byproducts: 517.8
Cosmetic
Food
Animal Feed
Pharmacy
Other Industries
Meat: 15,119.0 Byproducts: 928.8
Meat: 163.8 Byproducts: 9.5
Small and midsize retailers
Slaughterhouses own retail stores
Major Retail Chain
BEFORE FARMS
US$ 11.4 billions
FARMS
US$ 31.4 bilhons
INDUSTRIAL INPUTS
US$ 1.7 billions
DISTRIBUTION
US$ 57.6 billions
US$ millions
Finished Steer
US$ 19,646.0
Cows
US$ 7,162.3
Young bulls
US$ 3,953.5
Veal
US$ 8.6
Distributors/Wholesalers/Trading Retailers
US$ 14.740,6 US$ 42.883,3 US$ millions
US$ millions
US$ billions
US$ billions
US$ millions
US$ millions
US$ millions
US$ millions
Exports US$ 1,729.2 millions
US$ millions
Freight and Diesel: 2,252.2 Farm Credit: 17,100.6 Payroll: 3,913.3 Traceability: 23.0
Transport to exports: 59.5 Agregated Tax: 16,531.6 Research: 23.1 Animal Register: 10.0
Livestock (millions of heads): 209.5 Slaughtering Capacity (heads/day): 198.731 Cattle Slaughtered (millions of heads): 42.8
BRAZILIAN BEEF PRODUCTIVE CHAIN Sum of Sales of the Various Links: US$ 167.5 billion in 2010
South Africa Ghana
Tanzania
Agribusiness as ‘Hub’
Source: Marcos Fava Neves
Resources: Land – Water – Energy NEXUS
Africa represents about 60% of the potentially available cropland in the world...
1 Cropland defined as land producing output greater than 40% of maximum yield under rain-fed conditions, excluding forest areas.
80
970
2009
590
300
Sub-Saharan Africa
Latin America
Others
Others
Tanzania
Central African Republic
Mozambique
DRC
Angola
Sudan
Zambia
Others
Venezuela
Argentina
Brazil
Additional available cropland, 20091
Million hectares
Source: McKinsey Global Institute
•Part 1, Introduction:
Outlines the purpose and context of the policy.
•Part 2, Conceptual Policy Framework:
Sets out the goal, overall and specific objectives.
•Part 3, Policy and Strategy Statements:
Outlines policy issues and strategic interventions towards the
attainment of the overall policy goal and objectives.
•Part 4, Policy Implementation Mechanisms:
Provides an overview of proposed implementation plan and
mechanisms to operationalize the policy.
Introduction
PART 1: INTRODUCTION
1. PREAMBLE
- SADC Member States recognise the importance of Agriculture to
economic growth, socio-economic development and poverty reduction
2. PURPOSE OF THE POLICY
- Define common agreed objectives and measures to guide, promote and
support actions at regional and national levels in the agricultural sector
of the SADC Member States in contribution to regional integration and
the attainment of the SADC Common Agenda.
3. KEY DEFINITIONS (AU & NEPAD + UN’s COFOG)
4. JUSTIFICATION
5. POLICY GUIDING PRINCIPLES
1. GOAL
- contribute towards the attainment of the SADC Common Agenda
which promotes sustainable and equitable economic growth and SED
2. OBJECTIVES
- Enhance sustainable agricultural production, productivity and competitiveness;
- Improve regional and international trade and access to markets;
- Improve private and public sector engagement and investment in the Ag-VC’s
- Reduce social and economic vulnerability of the region’s population in the
context of food and nutrition security and the changing economic and climatic
environment.
3. OVERALL CONCEPTUAL FRAMEWORK
PART 2: CONCEPTUAL POLICY FRAMEWORK
1. Part 3A: Enhance sustainable agricultural production, productivity and competitiveness
2. Part 3B: Improve regional and international trade and access to markets of agricultural products
3. Part 3C: Improve private and public sector engagement and investment in the agricultural value-chains
4. Part 3D: Reduce social and economic vulnerability of the region’s population in the context of food and nutrition security and the changing economic and climatic environment
PART 3: POLICY STATEMENTS AND STRATEGIES
PART 3A: Enhance sustainable agricultural production, productivity and competitiveness 1. Land administration, use and management 2. Productivity-enhancing inputs 3. Farm support systems and services 4. Forestry and Fisheries
PART 3B: Improve regional and international trade and
access to markets of agricultural products
1. Improving the efficiency and effectiveness of the region’s
input and output markets and stimulating broad farmers’
participation
2. Improving the regional and international trade
environment for agriculture
3. Improving the development of agriculture related market
infrastructure
PART 3C: Improve private and public sector
engagement and investment in the agricultural
value-chains :
1. Value-chain promotion involving agriculture
2. Mobilisation of financial capital for agriculture,
agro-industry and agribusiness
PART 3D Reduce social and economic vulnerability of the region’s population in the context of food and nutrition security, and the changing economic and climatic environment. 1. Addressing chronic and transitory vulnerability to the diversity of food security risks in a changing economic environment 2. Addressing climate change, variability and related vulnerability 3. Mitigating gender related vulnerability and marginalisation 4. Mitigating hiv/aids related vulnerability and marginalisation 5. Mitigating the vulnerability of migrant/mobile rural people 6. Fighting against unemployment and marginalisation of the rural youth
1. Conditions for successful implementation
2. Phased planning and implementation (5 years ite.)
3. Financial instruments (RAIP & ADF)
4. Institutional and corporate governance
structure
- Council of Ministers
- M&E
- Stakeholder responsibilities
PART 4: POLICY IMPLEMENTATION MECHANISMS
•Broad framework at best, providing policy guidelines to SADC member countries.
• Generally addresses major issues and correctly
focussed on market-based approach.
BUT, • SADC has very little implementation capacity
and power - e.g. SADC Tribunal recently abandoned.
• SADC very divided and very little adherence to policy.
• Base business strategy on individual country
approach.
Agbiz take on SADC RAP…….
• Joint Agribusiness Department of Agriculture Forum for Africa (JADAFA) - www.jadafa.co.za
• Southern Africa Agricultural Development Platform (SAADPP), established by the NEPAD Business Foundation (NBF) – Removing the barriers.
• Southern Africa Grain Stakeholders’ Network – new private sector initiative
•Southern Africa Trade Hub (USAID funded): - MoU with Agbiz - Feed the Future: US-SA Strategic Partnership Grant Fund
•Others: UNDP, AGRA, Grow Africa, FARA, UNECA,
Mazungumzo, IFAMA………
Agbiz involved in various initiatives…….
•Demographic development: growth & per capita income
• Improving democratization & political stability
• Improving policy dispensation and food security awareness - AU’s CAADP important
•Economic growth prospects remain strong
• Land and water resources availability
• Linking smallholders to markets, both input and output markets
•Establishing globally competitive value chains
Opportunities
Challenges
Government form and policies
- Dictatorships and totalitarian governments – more
democratic governments now.
- Poor policies in terms of property rights (land tenure),
market access & development, production strategies,
agro-processing support, land, agriculture & value
chain finance, trade & tariff policy, regulatory policies,
infrastructure, skills development and training, etc.
- Lack of recognising multi-functionality of
agriculture.
Challenges
• Lack of, or limited, local markets with integrity (Info?!)
• Lack of disposable income for food purchases
•Distorted international agricultural trade environment
•Poorly developed agro-processing industry
•Poor productivity in production environment (lack of skills, finance, inputs, equipment, post-harvest technologies, etc.)
•Cost of doing business (Infrastructure, bureaucracy, etc.)
•Various legal and finance risks – importance of BIT’s
• Lack of institutional capacity, especially in private
sector.
•Know your environment before you invest, and that environment can and does change (Rules of the Game)
•Understand your market and business strategy
•Choose right partners in the value chain
•Ensure talent/skills factor
• Introduce appropriate technology
•Ensure cutting-edge management
To Conclude: How should agribusinesses approach Africa?
